[Senate Hearing 105-427]
[From the U.S. Government Publishing Office]
[DOCID: f:39866]
S. Hrg. 105-427
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
on
H.R. 2158/S. 1034
AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENTS OF VETERANS AFFAIRS
AND HOUSING AND URBAN DEVELOPMENT, AND FOR SUNDRY INDEPENDENT AGENCIES,
BOARDS, COMMISSIONS, CORPORATIONS, AND OFFICES FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 1998, AND FOR OTHER PURPOSES
__________
American Battle Monuments Commission
Consumer Product Safety Commission
Corporation for National and Community Service
Department of Defense--Civil
Department of Health and Human Services
Department of Housing and Urban Development
Department of the Treasury
Department of Veterans Affairs
Environmental Protection Agency
Executive Office of the President
Federal Emergency Management Agency
General Services Administration
National Aeronautics and Space Administration
National Credit Union Administration
National Science Foundation
Nondepartmental witnesses
Selective Service System
U.S. Court of Veterans Appeals
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON APPROPRIATIONS
TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington DALE BUMPERS, Arkansas
MITCH McCONNELL, Kentucky FRANK R. LAUTENBERG, New Jersey
CONRAD BURNS, Montana TOM HARKIN, Iowa
RICHARD C. SHELBY, Alabama BARBARA A. MIKULSKI, Maryland
JUDD GREGG, New Hampshire HARRY REID, Nevada
ROBERT F. BENNETT, Utah HERB KOHL, Wisconsin
BEN NIGHTHORSE CAMPBELL, Colorado PATTY MURRAY, Washington
LARRY CRAIG, Idaho BYRON DORGAN, North Dakota
LAUCH FAIRCLOTH, North Carolina BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas
Steven J. Cortese, Staff Director
Lisa Sutherland, Deputy Staff Director
James H. English, Minority Staff Director
------
Subcommittee on VA, HUD, and Independent Agencies
CHRISTOPHER S. BOND, Missouri, Chairman
CONRAD BURNS, Montana BARBARA A. MIKULSKI, Maryland
TED STEVENS, Alaska PATRICK J. LEAHY, Vermont
RICHARD C. SHELBY, Alabama FRANK R. LAUTENBERG, New Jersey
BEN NIGHTHORSE CAMPBELL, Colorado TOM HARKIN, Iowa
LARRY CRAIG, Idaho BARBARA BOXER, California
ROBERT C. BYRD, West Virginia
(ex officio)
Jon Kamarck, Clerk to Subcommittee
Carolyn E. Apostolou
Minority Staff
Sally Chadbourne
C O N T E N T S
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Thursday, February 25, 1997
Page
Executive Office of the President: Council on Environmental
Quality and Office of Environmental Quality.................... 1
Department of the Treasury: Community Development Financial
Institution.................................................... 27
National Credit Union Administration............................. 63
Tuesday, March 4, 1997
Corporation for National and Community Service................... 81
U.S. Court of Veterans Appeals................................... 109
American Battle Monuments Commission............................. 121
Department of Defense--Civil: Cemeterial Expenses, Army.......... 139
Selective Service System......................................... 145
Tuesday, March 11, 1997
Consumer Product Safety Commission............................... 155
General Services Administration: Consumer Information Center..... 165
Department of Health and Human Services: Office of Consumer
Affairs........................................................ 169
Tuesday, March 18, 1997
Federal Emergency Management Agency.............................. 193
Tuesday, April 8, 1997
Environmental Protection Agency.................................. 247
Tuesday, April 22, 1997
Executive Office of the President: Office of Science and
Technology Policy.............................................. 433
National Science Foundation...................................... 457
Thursday, May 1, 1997
Department of Veterans Affairs: Office of the Secretary.......... 511
Tuesday, May 6, 1997
National Aeronautics and Space Administration.................... 601
Tuesday, May 13, 1997
Department of Housing and Urban Development...................... 665
Nondepartmental witnesses........................................ 723
Department of Veterans Affairs............................... 723
Department of Housing and Urban Development.................. 732
Environmental Protection Agency.............................. 830
Federal Emergency Management Agency.......................... 889
National Aeronautics and Space Administration................ 896
National Science Foundation.................................. 909
Miscellaneous................................................ 923
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
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THURSDAY, FEBRUARY 25, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:38 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Stevens, Bennett, Mikulski,
and Lautenberg.
EXECUTIVE OFFICE OF THE PRESIDENT
Council on Environmental Quality and Office of Environmental Quality
STATEMENT OF KATHLEEN MC GINTY, CHAIR
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning, and welcome to the VA, HUD, and
Independent Agencies Subcommittee meeting. We will come to
order.
My apologies. I have spent the better part of the morning
stuck in traffic. If this were the D.C. appropriations
subcommittee, I would have questions on the construction
schedule. But all I can do now is apologize to the witnesses,
guests, and fellow members.
This is the subcommittee's first hearing on the fiscal year
1998 budget. I welcome the new members of the subcommittee, and
I look forward to working with our ranking member, Senator
Mikulski, and she probably has a story about traffic on the
Baltimore-Washington Parkway which will exceed my story.
I welcome our witnesses and guests.
We will face another year of very difficult budget
decisions as Congress continues to focus on its priorities and
seeks to balance a budget by the year 2002. I must emphasize
the need to continue to be proactive in consolidating and
reforming our many Federal programs, including many under the
jurisdiction of this subcommittee. There was much to be done
over the last several years, but there is a lot of work still
to be done.
In particular, after 4 years of sharp decline, the Federal
deficit is likely to begin to increase again, so that by 2010,
when some of us, past baby boom and baby boomers, begin to
retire, the deficit is going to skyrocket unless Congress makes
meaningful policy and spending changes. It took us more than
200 years to acquire our first trillion dollars of debt. We are
now increasing our outstanding debt by $1 trillion about every
5 years. This is a mortgage on America's future that is going
to be difficult to sustain.
I note, with interest and some concern, the President's
budget proposes some $92 billion in budget authority for the
departments and agencies under the VA, HUD, and Independent
Agencies Appropriations Subcommittee jurisdiction, of which $72
billion is discretionary spending. I would note that this
amount represents a proposed increase of approximately $8
billion over the current level. As I understand it, there are
discussions underway between leaders, the Congress, the White
House, and OMB about reaching a budget agreement. We have some
very important spending priorities to meet in this
subcommittee, and I will fight to assure that all of our
programs are adequately funded, but I would have to say that
unless some agreement is reached that is a very ambitious goal
for our 602(b) allocation.
prepared statement
This morning we will hear testimony from four of the
independent agencies under the subcommittee's jurisdiction,
Council on Environmental Quality, the National Credit Union
Administration, the Neighborhood Reinvestment Corporation, and
the community development and financial institutions fund.
While programs covered by today's hearings are small relative
to others in the subcommittee's portfolio, they are very
important programs and activities that impact millions of
Americans.
[The statement follows:]
Prepared Statement of Senator Bond
The VA, HUD and Independent Agencies Appropriations Subcommittee
hearing will come to order. This is the Subcommittee's first hearing on
the fiscal year 1998 budget. I welcome the new Members to the
Subcommittee, and, as always, I look forward to working closely with
our Ranking Member, Senator Mikulski. I also welcome our witnesses and
guests this morning.
The Appropriations Committee and the VA/HUD Appropriations
Subcommittee will face another year of very difficult budget decisions
as the Congress continues to refocus its priorities and seek to balance
the federal budget by the year 2002. I cannot emphasize enough the need
to continue to be proactive in consolidating and reforming our many
federal programs, including many under this subcommittee. We have done
much over the last several years, but there is still a lot of work to
be done.
In particular, after four years of sharp decline, the federal
deficit is likely to begin to increase again so that by 2010, when the
babyboomers begin to retire, the deficit will skyrocket unless the
Congress makes meaningful policy changes. While it took us more than
200 years to acquire our first trillion dollars of debt, we are now
increasing our outstanding debt by a trillion dollars every 5 years,
with the total national debt now standing at some $5.3 trillion. This
means that every man, woman, and child in our Nation has an individual
debt of almost $20,000. This is the mortgage on America's future that
we must begin to pay off now.
In particular, I am concerned that the President's budget proposes
some $92 billion in budget authority for the departments and agencies
under the VA, HUD and Independent Agencies Subcommittee, of which $72
billion is discretionary spending. The amount proposed represents an
increase of approximately $8 billion over the current level. And I must
tell you, absent some very compelling reasons, it is going to be very
difficult for this subcommittee to provide any increases over our 1997
budget levels.
This morning we take testimony from 4 of the independent agencies
under the subcommittee's jurisdiction: the Council on Environmental
Quality, the National Credit Union Administration, the Neighborhood
Reinvestment Corporation and the Community Development Financial
Institutions fund. While the programs covered by today's hearing are
small relative to others under the subcommittee's portfolio, they are
important programs and activities that impact millions of Americans.
panel i
We will hear first from Ms. Kathleen McGinty, Chair of the Council
on Environmental Policy or CEQ, which is responsible for coordinating
federal policy on environmental issues as well as primary
responsibility for implementation of the National Environmental Policy
Act (NEPA).
The Administration is requesting a budget for CEQ for fiscal year
1998 of $3.02 million and 23 Full-Time equivalent employees. This
Budget Request represents an increase for CEQ of $584,000, a 24 percent
increase over the fiscal year 1997 Appropriation and an increase of 4
FTE's.
I look forward to your testimony this morning.
panel ii
The second panel consists of Mr. John Hawke, Jr., the Under
Secretary for Domestic Finance for the Department of the Treasury, and
Ms. Kirsten Moy, Director of the Community Development Financial
Institutions fund program. The Administration's Budget Request for the
CDFI Fund asks for an increase of $75 million from $50 million for
fiscal year 1997 to $125 million for fiscal year 1998. I also
understand that the President also plans to ask for increases each year
to bring the 5-year total to $1 billion by fiscal year 2002.
The CDFI fund was established in the Community Development and
Regulatory Improvement Act of 1994 to provide equity investments,
grants, loans, and technical assistance to new and existing community
development financial institutions such as community development banks,
community development credit unions, community development loan funds,
community development venture capital funds and micro-loan funds.
CDFI funds are intended to enhance the capacity of these
institutions to finance economic development, housing, and community
development in distressed urban and rural communities.
I am very concerned about the amount of the CDFI funding request,
especially as we prioritize the funding needs of some of the primary
programs and activities under this subcommittee, such as the renewal of
expiring section 8 housing assistance contracts and the additional cost
of Veterans medical care. The CDFI fund is the new kid on the block--it
has no track record and looks like a number of other programs and
activities that are designed to revitalize distressed communities.
In addition, we need to see how well the CDFI funds will leverage
other public and private investment in distressed communities and also
to what degree any leveraged investment is being drained from other
activities and programs currently serving distressed communities. I
also am interested in understanding the extent to which CDFI's
discourage traditional financial institutions from opening branches and
lending in distressed communities. Opening special banks for distressed
communities is not necessarily the best way to revitalize and
incorporate these communities into, hopefully, the overall economic
growth and revitalization of our urban and rural areas.
I look forward to hearing your testimony
PANEL III
The third panel consists of Mr. Norman D'Amours, Chairman of
National Credit Union Administration (NCUA), and Mr. George Knight,
Executive Director of the Neighborhood Reinvestment Corporation.
NCUA is responsible for the chartering and regulating of federal
credit unions. In addition, NCUA administers an insurance fund to carry
out a program of insurance for member accounts in federal credit unions
and State-chartered credit unions which apply and qualify for
insurance. There are currently some 7,200 federally chartered credit
unions and it is estimated that approximately 4,500 State-chartered
credit unions will be insured by NCUA by the end of 1997.
The NCUA is self-funded through an operating fee on its member
institutions and from reimbursements from the insurance fund for
administration of the insurance fund.
Second, Mr. Knight will testify on the Administration's budget
request for the Neighborhood Reinvestment Corporation which calls for
flat funding of $50 million for fiscal year 1998. Neighborhood
Reinvestment was created in 1978 to help local communities establish
working partnerships between residents and representatives of the
public and private sectors through nonprofit entities which include
neighborhood housing services, mutual housing associations and
apartment improvement programs. Collectively, these nonprofits are
known as the NeighborWorks' network.
Neighborhood Reinvestment and the NeighborWorks' network
have a long track record and have become a good model of how the
federal government can spend a small amount of money and reap
tremendous benefits. For example, as the written testimony ably states,
$38.7 million in fiscal year 1996 appropriations allowed the
Neighborhood Reinvestment and NeighborWorks' to leverage
$420 million in affordable housing investments.
Again, I look forward to the testimony.
STATEMENT OF FRANK R. LAUTENBERG
Senator Bond. In the absence of Senator Mikulski, I will
call on Senator Lautenberg for his opening statement.
Senator Lautenberg. Thank you, Mr. Chairman. I will be
relatively brief, and relatively brief around here may have
different meanings for different people, but we will try.
[Laughter.]
I thank you for calling this hearing. I welcome Ms.
McGinty. If I may be so familiar, Katie, you have made many
important contributions here. We are glad to see you here
making the case for your small department--small, but
important.
Mr. Chairman, the Federal Government may have a single
agency devoted to environmental protection, but every agency
has environmental responsibilities and interests. The
Department of Energy spends more money on hazardous waste
cleanup than EPA. The Navy has taken dramatic steps to reduce
pollution at sea. And NOAA's weather satellites have provided
dramatic scientific information on the ozone hole and global
warming.
Additionally, although EPA enforces Superfund, the largest
responsible parties are not Fortune 500 companies. They are the
Department of Defense and the Department of Energy. Given the
many agencies involved in environmental protection, it is
important that some organization coordinate environmental
policy. And the Council on Environmental Quality performs that
critical task. And it generally does a good job.
One area where there have been problems is the processing
for reviewing disputes under NEPA, the National Environmental
Policy Act. I have some concerns about the process, and I am
pleased that the President has proposed to review it, to
reinvent it perhaps. For one thing, we need to ensure that
environmental impact statements are easier to understand so
that public participation can be more meaningful. It is also
critical that the environmental impact statement process become
a real tool in agency decisionmaking rather than a paperwork
exercise, to justify an agency previous intention.
I understand that the President's budget would provide
increased funding for four new staffers, to establish primarily
a new NEPA process. And I hope that we can find the funds to
make that happen. I think it is a very important step. I think
that it needs to be attended to, and I think it is a relatively
small request to take this important step.
So I look forward to Ms. McGinty's comments on these
issues, and I, once again, Mr. Chairman, thank you for holding
this hearing.
Senator Bond. Thank you very much, Senator Lautenberg, and
since we have been joined by the chairman of the full
committee, I would like to call on Senator Stevens for any
comments.
Senator Stevens. Thank you. I have no comment.
Senator Bond. Thank you.
I will now welcome and turn to our ranking member, and say
that we are looking forward to working together in another
challenging year, and hope that we can pass one good VA, HUD,
and Independent Agencies bill, and move on with the business.
Senator Mikulski, welcome.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and
again, I apologize for my tardiness today. We oversee the space
program, and I wish I could do as good a job getting down from
Baltimore on the Baltimore-Washington Parkway as our astronauts
do fixing the Hubble.
I would like to welcome our new members to the panel,
Senators Craig, Harkin, and Boxer, who I know will be active
participants, and in this, today's hearing. I am looking
forward to hearing what Ms. McGinty has to say about the CEQ's
effort to study the effectiveness of its authorizing
legislation, the NEPA, and to examine proposals aimed at
reinventing the interagency process to carry out that statute.
As we look at so many of the issues impacting on the
environment, interagency coordination is absolutely essential.
I will also be looking forward to listening to Mr. George
Knight of the Neighborhood Reinvestment Corporation, which is
really one of the best little agencies I think we have in the
Federal Government. It has a modest budget of $50 million, and
really does help communities empower themselves. I think you
and I appreciate its self-help initiatives.
Also on the issues of the community development, the CDFI,
we look forward to hearing what they have to say, particularly
leveraging Federal dollars, and the role that they will play in
microenterprise initiatives, which I know will be crucial to
economic development in our own country. We have seen how they
work abroad. I would like to see how they work in our inner
cities, and hopefully they can be a tool to welfare reform.
And last but not at all least, I welcome an old colleague,
Congressman D'Amours, on behalf of the National Credit Union
Administration. I am worried about the credit unions. There are
a lot of lawsuits about credit unions. Some are in fragile
condition. I just want to be sure that they again are a tool
for empowerment at local levels, but yet do not leave us with
another unfunded fiasco.
Senator Bond. Thank you very much, Senator Mikulski. We
will now hear first from Ms. Kathleen McGinty, Chairman of the
Council on Environmental Quality [CEQ], which is responsible
for coordinating Federal policy on environmental issues, as
well as the primary responsibility for implementation of the
National Environmental Policy Act [NEPA], which has already
been mentioned here today.
I note the administration is requesting a budget for CEQ in
fiscal year 1998 of $3.02 million and 23 full-time equivalents.
This budget request represents an increase for CEQ of over $\1/
2\ million, or a 24-percent increase over fiscal year 1997
appropriations and an increase of four full-time employees.
I look forward to your testimony. Welcome, Ms. McGinty.
STATEMENT OF KATHLEEN MCGINTY
Ms. McGinty. Thank you very much, Mr. Chairman and members
of the committee. It is a pleasure to appear before you today
to present the President's request for CEQ for fiscal year
1998. I want to start by thanking all of you, and especially
your staff, who have been very much available to CEQ in the
last years to really help us do our job.
I would like to focus today on three things: First,
briefly, the level of our request; second, our work over the
past year; and third, I'd like to turn to our top priority for
the coming year, which is the reinvention of the National
Environmental Policy Act. First, the level of our request.
As you know, Mr. Chairman, CEQ currently operates at a
staff level of 19 FTE's and a budget of $2.4 million. Our
request today is for 23 FTE's, which would be $3,020,000. As
you noted, Mr. Chairman, especially in these budget times, this
increase in percentage terms is significant. However, I would
like to emphasize to the committee that even at 23 FTE's, CEQ
would still be significantly below the average in the Bush
administration, which was 31 FTE's, and very significantly
below CEQ's peak staffing level of nearly 70 FTE's during the
Nixon administration.
These resources are critical, Mr. Chairman, if CEQ is to
take on what I will describe in a moment as our very first
priority, the comprehensive reinvention of NEPA. Many,
including the Western Governor's Association, industry,
nongovernmental organizations, and others, have urged us to
undertake this effort, and I agree with them, it is a top
priority. But I do need resources to get that job done,
resources that could be taken out of the daily fire fights that
we find ourselves constantly involved in and consumed by,
people who are senior, professional, dedicated staff who really
can get this job done.
As I noted, I will return to the substance of this endeavor
in a moment. Before doing that, I want to turn briefly to some
of CEQ's work over the past year that we anticipated in our
meetings last year. As this committee is aware, CEQ has
responsibility both for immediate oversight of the
environmental impact assessment process conducted by every
Federal agency, as well as in our capacity as the President's
senior environmental policy advisers, policy coordination, and
dispute resolution among agencies on environmental matters.
First, environmental assessments. CEQ has worked hard over
the last year to use NEPA as it was intended, to improve agency
implementation and decisionmaking. For example, CEQ used NEPA
to design a process that will allow us to conclude even the
most complex habitat conservation plans, and these are the
plans that we have developed under the Endangered Species Act
that provide for species protection but also gives certainty to
landowners. Through NEPA we will complete those processes for
even the most complex HCP's in 10 months or less.
I recently returned from Washington State, where I signed
our latest HCP with the Governor of Washington. That HCP will
cover 1.6 million acres, and gives the State of Washington 70
to 100 years certainty that it has fulfilled its Federal
Endangered Species Act obligations. We achieved that through
NEPA.
In addition, CEQ responded to the request of Gov. Tony
Knowles, the Alaska delegation, members of the oil industry,
and others, to launch a process to identify lands for possible
oil production and environmental protection in the national
petroleum reserve in Alaska. Because of our efforts and because
of NEPA's ability to integrate various statutes, we will be
able to see that process through to completion in 18 months or
less. This builds on our effort that we achieved in just 6
months to allow for the export of oil from the Alaska North
Slope.
Through NEPA, CEQ has also worked, for example, to cut
processing times for timber salvage sales. Now, we complete
them in 1 year instead of the 3 years that was previously
required. We worked recently to resolve a longstanding dispute
between the Air Force and the FAA that now allows military
training activities again to be commenced in Alaska. And we
provided most recently for the transfer of the Homestead Air
Force Base in Florida to Dade County, FL, but in a way that
will ensure that Everglades restoration is not impaired. So we
are improving the environmental assessment process and
implementation.
On the policy front, CEQ has worked hard coordinating the
agencies and resolving disputes. CEQ developed, for example,
targeted reforms to RCRA. These reforms will avoid duplication
between RCRA and the Clean Water Act. They were developed and
signed into law last year, and in their implementation industry
will save tens of millions of dollars. CEQ also worked to
achieve an agreement that will ensure the financial viability
of the Bonneville Power Administration, while also securing
significant resources and sufficient resources to protect and
restore salmon in the Columbia and Snake Rivers. This agreement
was significant not only in substance, but also for the first
time it opened up Federal salmon decisionmaking to the tribes
and to State and local governments. That had not been done
before.
Working with the States' Attorneys General and the
International Association of Police Chiefs, CEQ also designed a
bill to take on environmental crimes. This bill, among other
things, will provide for enhanced partnerships and the sharing
of resources between Federal and State and local law
enforcement officials.
Finally, CEQ worked to craft significant reforms in a
wetlands program, and now with OMB to ensure that nonstructural
options are offered to flood victims in the wake of the recent
flooding experiences we have seen. So CEQ has worked hard to
ensure coordination, coherence, and efficiency in environmental
policy matters. NEPA is an effective tool to that end.
Turning briefly now, Mr. Chairman, to our proposal to
reinvent NEPA, we hope to build on the progress we have made
and that I have just discussed, as well as the new learning and
insights we have gained as a result of our NEPA effectiveness
study. We are already underway, working with the Western
Governors Association; Governors Geringer and Kitzhaber most
particularly have launched working groups in three areas:
timber, oil and gas, and grazing. But as the committee knows,
NEPA applies to every major Federal action, so there is much
more to be done.
We can use NEPA better to integrate environmental concerns,
and we know for sure that NEPA is the tool through which we can
provide much more access to citizens and State and local
government. I would like to launch a multistakeholder process
to get this done. I would like to bring in our universities and
our best scientists and academic talent. It is indeed my top
priority, but, Mr. Chairman, I do need additional resources to
get the job done. I look forward to working with the committee
to that end.
Thank you.
Senator Bond. Thank you very much, Ms. McGinty. Your full
statement, of course, will be made a part of the record. We
appreciate your summaries.
ELIMINATION OF CEQ
Ms. McGinty, the first year President Clinton was in office
he proposed eliminating CEQ as part of a streamlining effort,
and later reversed his decision and decided to support CEQ, but
to keep staffing at a modest level. I would note that CEQ is
not at the lowest historical staffing level, which was 13, from
1984 to 1989. In fact, the average staffing level, as opposed
to the authorized level for the past 16 years, has been just
below 19 FTE's. Can you provide us any specific examples from
last year which would illustrate where your staffing level fell
short?
Ms. McGinty. Throughout the course of the last several
years, Mr. Chairman, our staffing level has fluctuated. As you
noted, in the beginning of the administration the proposal was
to establish a new office in the White House to handle these
matters. That office would have been staffed at 10 FTE's.
Over the course of the last several years, CEQ has been
built back up from 10 to the current level of 19 FTE's, so we
have been on average in that range of staff, from 10 to now we
have built back up to 19.
Senator Bond. What work was not getting done?
Ms. McGinty. I am sorry. For example, on the lesser levels
of staffing we are about to present to the committee a combined
CEQ annual report. As the committee is aware, Senator Mikulski
has often looked to this report for the data, very important
data, it contains.
CEQ fell behind in preparing that report. But now we are
finally on the verge of catching up, and we have done that by
combining 2 years' worth of analysis into one single report.
In addition to that, we also have just recently finished
the NEPA effectiveness study, but that, too, was delayed by
1\1/2\ years because of reduced funding levels.
Senator Bond. How much of your time do you spend on putting
out these reports? Senator Mikulski has suggested making it
biannual. Is there that much new information every year that
you have to come up with a new report? How much time and effort
do you put in on that?
Ms. McGinty. It is a significant investment of time and
effort. What we have found, however, and we found it when we
were lapsed 1 year in providing the report, is that
particularly in academia and many scientists really rely on
that annual series of data. They use it for their own studies,
their own reports, and again, we found that out as we fell
behind in producing that volume of data.
It is a significant investment for us. We do take it very
seriously, and what we have found is that there are many people
who rely on it.
PROJECT XL
Senator Bond. You mentioned project XL in your written
testimony, and you say it is the centerpiece of the
administration's effort to reinvent environmental regulation,
and the President has indicated his strong support, saying it
marks the end of one size fits all Government regulations. When
we look at the reality as opposed to the rhetoric, we are a
little concerned about it.
You testified 2 years ago the administration would be
launching 50 initiatives in 1995. Yet today, as I understand
it, there have only been three project approvals, and, in fact,
of the eight original pilot XL projects announced in November
1995, only one has been given final approval, and only three
additional projects are in negotiation. Three of the original
project participants have withdrawn completely, and industry
executives have told us that EPA is too enforcement oriented
for a voluntary program to succeed. The senior director for
environmental affairs for Annheuser Bush, one of the eight
pilot projects which later withdrew, said, ``we could not seem
to get the out of the box thinking we wanted to get out of
them.''
What lessons have you learned over the past 2 years from
project XL? Why have there been so many problems, so little
progress, and specifically, what are you doing to see the
President's commitment for alternative compliance approaches is
carried out?
Ms. McGinty. Senator, the project XL, as you indicate, has
been a comprehensive effort to really try to produce a whole
new way of achieving environmental excellence. Now, in setting
that ambitious of a target for ourselves, we also have run into
some significant difficulties in getting the job done. I think
the difficulties speak really to the newness and the magnitude
of what we are trying to take on.
What we have done to continue to work through the program
is to reconvene a series of meetings with various stakeholders
to really understand the issues that they are encountering with
the program. And they seem to boil down to two. The program
requires that there be stakeholder participation in
implementing the environmental performance plan. The program
also requires that in ``throwing away the rule book,'' that a
company be willing to achieve superior environmental
performance.
Both of those phrases--stakeholder participation and
superior environmental performance, have not been well enough
understood so that as each project has moved forward there has
been confusion with regard to those elements of the program.
Recently, a Federal Register notice was issued to help
flush those conflicts out, and a stakeholder process convened
to comment on the new suggestions that have been made. Now,
over the next several weeks what we will do is reissue that
Federal Register notice, taking in the comments now of
participants in the program and try to help provide some
clarity with regard to those two concepts that do seem to have
proven to be difficult.
Senator Bond. I will come back to that, because I have a
couple of more questions on that. But let me turn now to
Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman.
Ms. McGinty, the NEPA effectiveness study identified
certain areas, in which there was poor interagency
coordination, conflicting regulations, inadequate public
participation, too much paperwork, and so on. And having
identified those, which can be true of almost any organization
in America, your report had no navigational chart or no series
of recommendations on how to address those individual issues.
Do you have a specific list that you want accomplished and
defined timetables that you want? In other words, some of these
are more pressing than others. Would you outline your tasks and
timetables on addressing the effectiveness study, because
resources and staff should define mission and purpose, and
mission and purpose is dealt with in these issues. Do you want
to comment?
Ms. McGinty. Yes; thank you. Starting from the
effectiveness study and the five or six themes that came out of
that that you just articulated, we have moved from those themes
to try to apply them now in the first phase of this reinvention
effort to three specific areas. The first one is timber, the
second is oil and gas production, and the third is grazing. And
what that means is that we want to look in those three sectors
to see what the experience is of whether there are conflicting
regulations, whether the public is not sufficiently involved.
Yes?
Senator Mikulski. Just to continue a conversational
approach here, so rather than saying I am going to address too
much paperwork, what you are doing, then, is taking a topic
that actually affects a private sector, like grazing and
timber--of which our colleagues here have intense interest in,
and then take these four problem areas and look at a topic that
affects private sector environmental concerns and does direct
impact on the local community. I think that is an excellent way
to go about it, rather than something called--not good
coordination.
Ms. McGinty. Instead of just generalities, we really wanted
to get very specific, and one specific thing, for example, that
we would like to do, and the timing and the paperwork problems
that you mentioned, we want to give people who are seeking
Federal leases the opportunity, the right, to come in and
negotiate a timeframe, so that they know that the permitting
process will take x amount of time. But they have the right to
come in and be given that certainty. They do not have that now.
Senator Mikulski. Let us just take the grazing issue. I
know Senator Burns will probably have followup questions in
this, but that is what I hope we can do, a more conversational
approach.
Grazing is one of your tasks to be dealt with. Do you have
a timetable where you say at the end of this period we then
hope we will have resolved our internal management processes to
have dealt with creating procedures. Not necessarily to make
everybody happy with the decisions, but at least our internals
and our mechanisms will be in place.
Ms. McGinty. Yes; we hope, actually, over the next several
months, in a short timeframe, to be able to produce several
very concrete recommendations, in the grazing sector for
example. We will take those recommendations, and then open the
process up. I visited extensively with Governors Geringer and
Kitzhaber about this. The University of Wyoming and the
University of Montana will be engaged in providing a forum for
us to have our recommendations aired by the folks who are most
affected.
Senator Mikulski. Is it reasonable to expect that those
three topics could have been dealt with by the beginning of the
fiscal year, October 1?
Ms. McGinty. Oh, I believe so, yes. In terms of very
specific concrete recommendations, yes.
Senator Mikulski. Well, I'd like to ask, Ms. McGinty, that
when we are actually at our markup stage we would like to have
a progress report, and then what you need to do that, because
then, one, we will see if you have made progress, with all due
respect, and then second, what it took to make the progress.
Ms. McGinty. OK.
Senator Mikulski. The second thing is FEMA. You know we are
a FEMA-obsessed committee here because that is where all the
natural disasters come in. FEMA, as you know, has raised
concerns and yellow flashing lights that often environmental
mandates, particularly emergency rehabilitation, often impede
their efforts. We are not talking about long-range restoration.
I wonder if you could talk about your coordination with FEMA,
not that we waive or cavalier or swashbuckle over these regs,
but when they are out there and we have got floods on the
Missouri or like what we faced in Western Maryland, the
Potomac, et cetera, you have got to make decisions and you
cannot go through a lot of complicated environmental stuff.
Ms. McGinty. Yes; absolutely, especially in the context of
emergency response. We very recently were faced with this,
especially in the wake of the flooding in California. I was
contacted by Senator Feinstein and Congressman Fazio, who laid
out to me that they thought their constituents were very
concerned and confused about this, not certain that they could
take emergency actions to respond to the flood.
We called the relevant agencies together--FEMA, the Fish
and Wildlife Service, the National Marine Fishery Service, EPA,
all of them--and quickly got an analysis done that yes, in
fact, there are emergency provisions in each one of these
statutes, and that the conditions in California warranted the
invocation of those emergency procedures. Within 36 hours we
put out statements in California and the Pacific Northwest to
make clear that the environmental statutes in no way slowed
down or would impede emergency actions to respond to the flood.
Senator Mikulski. I am going to offer two suggestions to
you, and I know my time is up. It would be wonderful to spend
the whole morning talking about this. But two things: First of
all, hats off on the California response. But this is going to
happen everywhere. And I am going to suggest two things. One,
that you might want to think about SWAT teams from these
agencies to work with FEMA exactly on that, at a significant
senior level where decisions will have validity.
The other is that when FEMA does its maneuvers, and they do
them in States, and they do them in special situations, the
earthquake maneuver and so on, their simulations, that you be
part of that simulation. And, I think, it would be very
innovative, so that when they simulate how to respond to save
lives, then you are there to talk about what you would do to
follow up to save communities. And think about that, talk to
James Lee Witt, and, I think, it could be very innovative, and,
I think, it would be very energizing for your staff.
Ms. McGinty. That is an excellent suggestion. I will do
that.
Senator Mikulski. To have SWAT teams and maneuvers.
Ms. McGinty. Sounds exhilarating.
Senator Lautenberg. It sounds like they will be out there
with flack jackets. [Laughter.]
Senator Mikulski. I have seen several environmental issues
in Maryland where we have had horrendous national disaster
years, as has Senator Bond. Senator Lautenberg has very serious
issues in New Jersey relating to chemicals.
Anyway, enough said.
Ms. McGinty. Thank you.
Senator Bond. Thank you, Senator Mikulski. I feel like we
are almost in the Defense Appropriations Subcommittee.
Senator Mikulski. Senator Stevens is having a profound
impact on my psyche.
Senator Bond. That is a good idea, and you will want to go
to Alaska, like the rest of us do this year. It is not
required, but it is not a bad idea.
Now let me turn to Senator Burns.
PREPARED STATEMENT OF CONRAD BURNS
Senator Burns. I have a statement that I want to put in the
record, Mr. Chairman.
Senator Bond. Without objection, it will be so ordered.
[The statement follows:]
PREPARED STATEMENT OF SENATOR BURNS
Thank you, Mr. Chairman. Good morning, ladies and gentlemen. Mr.
Chairman, I would like to take this opportunity to commend you on your
prompt attention to appropriation matters this Congress. We have a lot
of work to accomplish this year and, considering our present fiscal
situation, it might not be easy to choose which projects to fund.
Therefore, it is important that we begin our work quickly with close
attention not only to the needs of Federal agencies individually, but
to the needs of the Nation.
For example, Mr. Chairman, I have noticed that some agencies are
requesting more than double the amount they requested in fiscal year
1997. Mr. Chairman, with the economy in the shape that it is, each
Federal agency should be trying to limit their expenses, not increase
them, because if we increase the funds for one agency, it means that
another agency will have to accept higher cuts than it would have
normally expected.
And, unfortunately, Mr. Chairman, we will have to determine if each
Federal agency is really a needed organization in today's economy. We
must do all that we can to ensure that we do not have two or three
agencies performing the same tasks--this only leads to confusion and/or
double billing the Federal Government for essentially the same work. It
is our job to ensure to the American people that we are spending their
hard earned tax payer funds with due diligence.
Again, thank you, Mr. Chairman, for the opportunity to comment on
these proceedings and for your timely attention to these vital matters
to our Nation.
Senator Burns. Ms. McGinty, I was going to have you give me
10 reasons why you should be funded at all. Now, I want you to
give me 19 reasons why you should be funded at all.
Ms. McGinty. OK. I guess I can try. One, I think that we
need better coordination among our agencies on environmental
matters, and that is CEQ's role.
Two, I think we need to streamline and cut paperwork, and
that also is CEQ's role.
Three, I think that in many different Federal decisions
environmental impact should be taken into account, and that,
again, is CEQ's role.
Four, NEPA is the statute that provides for State and local
government participation in Federal decisionmaking.
Senator Burns. Let us stop right there now. I will let you
make 15 of them in writing to me.
It just seems to me if we have, and EPA, they do not want
to visit with any other agency, you do not want to visit with
any other agency, no other agency wants to visit with you, I
just feel like, because you all went to Montana and made a
little deal, and that ain't going to fly, is it?
Ms. McGinty. I believe we are on track with that, although
I am very respectful of your views on this subject.
Senator Burns. Well, you tell me how it is going to fly,
because I will tell you what, Plum Creek has pulled out.
Ms. McGinty. Yes; that is right. The Governor, as you might
know, is still very much engaged, and has been working with us
closely on it. The company is still very much engaged, and has
worked in good faith from the beginning of this process, and
continues today. The agencies, I think, are producing a lot of
good work on this front.
Senator Burns. But your groups--in other words, your
environmental groups in Montana--are not going to allow this
thing to move forward, and I think I said at the git-go that
this was a pie in the sky, that it just jerks people around,
that their lives are in the balance locally. This is policy
that was made on a feel-good methodology, and then to come in
here and ask for more money and more people to do more crazy
things, it is absolutely--I do not see how you can justify it,
Katie. And I will tell you what, and I love your smile and I
think you are a bright young woman, but I will tell you what,
as far as any value to the American people or to the community
of Montana or Wyoming or Idaho, and Utah will love you, you
tell me what value--and you go out there and you say things to
the press that sound good, but it is just not like that. And
you made this deal, and then you ask for more money. Boy, I
will tell you one thing. I thought I was pretty brazen as an
auctioneer, but I am not near as brazen as this.
Ms. McGinty. Well, Senator, I certainly respect your
opinion, and I certainly understand, and you have made very
clear, and have been clear to us from the beginning with regard
to the New World Mine proposal about your views on that. But I
do believe that CEQ has performed a very valuable role, and
continues to, on issues that, I believe, are also very
important to your constituents.
Senator Mikulski and I were just discussing what we have
done, already, to help streamline things like grazing
practices, and to make it easier to provide----
Senator Burns. How many people do you have there in that
CEQ that knows one thing about grazing? Do you have anybody
down there from the Society of Range Management?
Ms. McGinty. No; I do not.
Senator Burns. That is right. You do not have one soul down
there that can tell us diddly doo about what a cow will eat and
what they will not, what a sheep will do and what they will
not. Now, you might have some people down there who know the
difference between clean water and bad water, but that is about
all. And this is what I am saying. We have got an Agriculture
Department. In other words, all of this is redundant.
I am going to be right honest with you. I am going to vote
to defund this whole thing, because you have not been honest
with people, and I am just to the point of frustration like you
cannot believe. People's lives are in the balance. And that is
what I am saying. We have got people that are making policy
that do not know diddly doo about nothing. And I am probably
one of them.
Ms. McGinty. Senator, it is true that CEQ is not an
institution that has specific substantive expertise in the
various areas. What CEQ works to do, though, it is the statute
that says that people with expertise have to be brought into
the decisionmaking process. NEPA is the statute that says you
have to open the doors, you have to let the public in, you have
to disclose what your intentions are.
I would not presume to second-guess the technical judgment
of a particular agency. But when you have two agencies with
clashing technical judgment, or when you have an agency that
does not want to let State or local government or private
citizens participate, that is when we get involved, to try to
help repair where there are differences or to ensure that
people have an opportunity to participate.
But you are exactly right. It is not an institution with a
cadre of scientists or a cadre of economists in specific
disciplines.
Senator Burns. But you put a lot of weight on NEPA. Yet you
went out there and interjected your own decision before the
NEPA process was allowed to be completed. You do not even have
faith in your own law in NEPA. You made that decision on the
New World Mine before the NEPA process was completed.
Ms. McGinty. That is absolutely true, Senator.
Senator Burns. Well, then why?
Ms. McGinty. Because the NEPA process is invoked when a
Federal Government agency is going to undertake an action and/
or when a citizen requests that a Federal Government agency
takes an action.
Senator Burns. But the process was in progress. Let it be
completed.
Ms. McGinty. The requesting company in this instance asked
that that action cease and desist because they wanted to pursue
an alternative course.
Senator Burns. They are just as wrong as you are.
Ms. McGinty. Well, the action was undertaken at their
instance.
Senator Burns. Well, but I am saying that they are just as
guilty as you are.
Senator Bond. Thank you very much, Senator Burns.
Senator Burns. I will go upstairs and jump on Babbitt. He
is upstairs. I will vote to pull all of your funds on this.
Senator Lautenberg. Mr. Chairman, may I?
Senator Bond. Senator Lautenberg.
Senator Burns. I have no use for it.
Senator Lautenberg. Thank you very much, Mr. Chairman.
Ms. McGinty, when did you write the NEPA law?
Ms. McGinty. Senator, it was written in 1969, and signed
into law by President Nixon.
Senator Lautenberg. Oh, so you did not write it.
Ms. McGinty. No; I did not, sir.
Senator Lautenberg. So, are you here defending what you
think is a legitimate process?
Ms. McGinty. Senator, I have come to see it as invaluable.
Senator Lautenberg. I do not think you are so brazen. I
think you have got to do it. You are the lawyer in this case.
You are defending an agency in which you have deep belief. So
stick with it.
Now, I would like to know how many of those who made
decisions here--perhaps you can help me--make decisions about
defense who have never seen war. I would like to know how many
scientists have been up in the ozone hole who are making
decisions here? What the devil do they know about ozone holes?
They have not been there.
Ms. McGinty, stick to your guns. You have an important
function to maintain there. We have agencies all over the place
who are involved in environmental decisions. And Lord knows
that we will save more lives and make lives more pleasant for
millions of people if you and the others who are involved in
environmental questions here can solve the problems that we
have.
I do not want my grandchildren drinking toxic or
contaminated water or breathing toxic air. Neither do I want my
aunt or my uncle, elderly people, breathing toxic air. You have
got to do what you have to do. You are on the side of right.
You are saving lives, and you have got to stick with it.
Do you know the TRI process and the TRI program?
Ms. McGinty. Yes; I do.
Senator Lautenberg. You know I have some involvement with
it. Are you aware that the toxic release inventory, on a
voluntary basis, has saved, in the period from 1989 to present
day or last year, 44 percent--reduced by 44 percent--toxic
emissions in the air. It is a voluntary program.
I can tell you in my State, which Senator Mikulski
acknowledged, we have very serious environmental problems,
because we are a crowded State. We have a proud industrial
past. Unfortunately, that past has caught up with us in the
wrong way, and as a consequence we are flooded with Superfund
sites and toxic air problems. Our neighbors to the west are
very generous. They deposit their contaminants all over our
soil with no charge, by the way, I might add. The fact of the
matter is that companies in New Jersey sprung to the idea of
participating in this voluntary program.
The success was enormous. Some companies save 90 percent--
reduced by 90 percent--the toxic emissions that they were
putting previously into the air, and many of them found that
they had a recoverable asset going out of those smokestacks,
and they brought them back into the shop and used them to make
paints and other solvents and things of that nature. And they
found out not only did they contribute to the neighborhood and
the community, but they also contributed to their bottom line.
So then, why should not an XL program work, if we can enlist
the support of the private sector?
Ms. McGinty. Senator, I have every confidence that it will,
and, in fact, it has. There are three agreements that have been
reached under project XL already, and some of them are huge.
One of them in particular is the difference between the
economic cutting edge competitiveness of an industry and
falling behind, and that is the one with Intel. The Intel
Corp., as you know, is involved in the development of
semiconductors. And with computer technology constantly
changing, the competitiveness of that industry depends on being
able to change their production processes very rapidly. They
can do that under XL. If it were not for XL, they would face a
very serious competitiveness challenge.
Now, the chairman does point to some of the challenges we
are having in broadening the program, but I really do believe
that is because it is a very ambitious program, and it is going
to be tough.
Senator Lautenberg. I want to say, for the chairman of this
subcommittee, who has many times mentioned his interest in
securing a budget that balances and making certain that we
reduce our expenses wherever we can, but Mr. Chairman, I have
got to compliment you, because you have stuck with some of the
programs that I know you had some questions about because you
were persuaded by the evidence that these were decent programs,
and I commend your objectivity even as you focus on the budget
reductions that you obviously advocate.
Ms. McGinty, I close by just saying that I hope you
continue doing what you do. I think you have to make the case a
little more clearly. I think it does look redundant. We have
EPA, and people are not quite sure in the outside world--I am
not even sure if we on the inside world are certain about it,
but what are the functions. But when you lay it out, and you
say yes, there is defense, and yes, there is energy, and yes,
there is agriculture, all these departments performing what I
think are fundamentally excellent and required services. Can
they do them cheaper? Perhaps. Can they do them better?
Certainly. But I think coordination of all of these departments
is essential, and I hope that CEQ can achieve the mark that it
was originally designed for.
Thank you.
Ms. McGinty. Thank you.
Senator Bond. Thank you, Senator Lautenberg. I appreciate
your kind comments. I believe that we must work toward a
balanced budget. I think there is bipartisan agreement there. I
happen to think, as I have stated on many occasions, that this
subcommittee has taken more than its share of cuts. We have
some very, very important priorities with costs that are
continuing to escalate. The housing area is one that we will be
discussing later.
Senator Mikulski. That is going to be a big balloon.
Senator Bond. Is that a big enchilada?
Senator Mikulski. The section 80 spiraling contracts.
Senator Lautenberg. I was stuck in traffic that day.
Senator Bond. We all may be stuck in traffic. [Laughter.]
SPENDING PRIORITIES
Senator Bond. But there are some difficult problems. I
raised the question about the budget in the beginning because I
am not sufficiently optimistic to think that we will get a
602(b) allocation which would accommodate all of the spending
priorities the President recommended.
Ms. McGinty, I want to come back to project XL. I believe
in the concept of project XL. I do have some problems with how
it is being implemented, and I noted in your testimony you
seemed to think that the problem was primarily with
understanding by the other non-Federal Government agencies that
they just did not get it as to how XL would work. And I note
that when 3M withdrew from project XL, the Minnesota Pollution
Control Agency said--we were all there, it was clearly stated--
there were elements at EPA who had not weighed in, powerful
elements. Intel, itself, you cited as one of the examples. The
Governors affairs manager said there were too many EPA offices,
too many levels of regulators, they were negotiating with
people who were not making the decisions.
I wonder, are you listening to the people who are getting
out of the program, the States and the private sector? Because
frankly, there has not been a lot of progress, and there have
been a lot more dropping out than are staying in the program.
So there is a problem. Are you listening to the people?
Ms. McGinty. Yes; and I think fair enough, Mr. Chairman, in
terms of pointing not only to those who might participate in
the program not understanding the elements of it, but the
agency itself trying on a new suit here, and one that does not
necessarily fit exactly right the first time around. That is
certainly involved here, too.
One of the things that we have seen in the program, again
listening to participants, is that it is uneven. Some regions
of EPA have taken this issue up and have implemented it much
more smoothly than other regions. There seems to be some
regions who kind of get the idea more quickly than others. So
there are internal difficulties.
Senator Bond. Let me ask this, and I apologize that we are
short on time, the global environmental management initiative
received a draft report which said that both CSI and project XL
suffered from a lack of clear ground rules, raising serious
questions about the viability of the programs without
fundamental statutory reforms. The President's Council,
Presidential Congressional Commission on Risk Assessment and
Risk Management, says EPA needs the legal authority to provide
flexibility. The President's Council on Sustainable Development
says that it needs a new regulatory system with greater
flexibility and alternative compliance legislation. In the past
we have raised this question. It has been the position of the
administration we get the job done without new statutory
authority.
It looks like the evidence is beginning to come in that
there does need to be some statutory changes. Are you ready to
support any such changes in alternative compliance legislation?
Where do we stand on those issues?
Ms. McGinty. Well, we did feel, Mr. Chairman, that it was
important to road test some of these issues, and that is what
we have been doing over the last year.
I think we will get further evidence in as this work that I
mentioned before continues, to try to elucidate, as you just
pointed to, what are the ground rules. Frankly, it has been a
little surprising to us that in trying to eliminate some of the
rules, to allow people to choose their own way and get there as
efficiently as they can, they have come back and said but we
need at least a few more ground rules.
So we do have some experience now, and I would look forward
to working with you and your staff and talking about that and
see what we might do now with this information that we have in
hand.
SMALL BUSINESS REGULATORY ENFORCEMENT
Senator Bond. Would you please let us know about the people
who want more ground rules? I had not heard that. I would be
interested to see that. But I really think we have gotten to
the point where we need legislation, Amoco, Yorktown, and
others.
Let me ask you about the ozone fine particles. You know
that this has raised a great deal of concern. Senator Chafee,
chairman of the EPW Committee has even suggested EPA should
delay the fine particle standard. We passed a little measure
last year that I played a role in called the Small Business
Regulatory Enforcement Fairness Act, which requires the
participation by small business in the process, plus other
standards to take care of the concerns of small business.
No. 1, I am concerned about the process. Have you looked
at, from the administration's standpoint, whether EPA's rule is
subject to the Small Business Regulatory Enforcement Fairness
Act? And No. 2, do you see a need for further scientific
evidence on the benefits of the proposed standards? Everybody
recognizes there is a scientific concern about the health
risks. The second part of the question is from a substantive
standpoint and an impact standpoint, do you see need for the
delay that Senator Chafee has suggested?
Ms. McGinty. Mr. Chairman, let me step back for a second
and describe CEQ's role in the context of this pending
rulemaking. What we have worked to do and will continue now as
the comment period is still continuing but will come to a close
in the middle-end of March, is to work with the other offices
in the White House, and particularly OMB and the National
Economic Council, to ensure that as comments are coming in that
they are made available in real time to the other agencies that
have an interest in this and that have technical expertise
themselves to be able to review and comment.
The second thing we will do is to provide a forum, whether
it is State or local governments or various interested parties,
to be able to come in and comment personally on the proposed
rules.
Separate and aside from that process, we will ensure that
there is adequate time for review of the rule before it goes
final. But at this point in time, while we are still in the
comment period, I do not have a separate substantive judgment.
I can assure the committee that I will be engaged as those
reviews and judgments come in, but the rule is still pending
and the comment period is still open on it. And so we are
awaiting those comments coming in.
Senator Bond. I did not catch your answer to the question
about small business.
Ms. McGinty. On the small business SBREFA, in terms of the
applicability of SBREFA to a particular standard--first of all,
let me say that SBREFA is a statute the administration
wholeheartedly supports, and we very much welcome your
willingness in letting us work with you last year and your
staff working with us to put that together. So we are very much
supportive of it.
In terms of the applicability of the statute to a
particular standard, to a particular proposed standard or rule,
that is a determination that is economically involved, legally
and technically involved. It would be on this issue as on other
issues that are a matter of such technical expertise, I would
not normally form a separate opinion of it. I would look to the
agency that has expertise in that area. In this instance it
would be a combination of EPA and the office in the White House
that is charged specifically with these kinds of matters, which
is the Office of Information and Regulatory Affairs. And I know
that they have reviewed that question, and I know that they
have come up with a determination about it. I have not
undertaken to make a separate determination of it myself.
Senator Bond. Senator Mikulski.
Senator Mikulski. Ms. McGinty, again, there are many topics
that we could cover in our conversation with you. But I think
what is arising here is first of all there is a lack of clarity
about what CEQ does. This is no-fault with you. Please do not
misunderstand me. And, therefore, what are the models? Are you
the EPA czar? Are you the equivalent of McCaffrey on the
environment? Are you supposed to be the EPA czar? That is a
different function.
Are you to be more like the Office of Science and
Technology Policy, which coordinates on certain topics like
ozone or science education, and an advisor to the President,
but you are not the science czar for America?
I think we need a clarification on this, because I think it
is more the latter model. You were not meant to be the
environmental czar, therefore, not be held accountable for
every environmental perceived screw-up, whether it is Interior
or EPA or agencies within Interior or Agriculture or whatever.
The second point here is that I recall when I first chaired
the subcommittee, all the work with CEQ was spent producing
this report, and often they were late, and that is what they
did. That is all they did. And more often than not, they did
not do it that well or in a timely fashion. And that is when
there began doubts on what the function of CEQ was.
Now, I believe your predecessor under Mr. Bush laid new
groundwork and things began to move more smoothly, and now this
is what you are doing. I think as we move forward here we need,
and I think it is appropriate, that you articulate what your
role is.
If we look at the models, first of all we love czar. We
think that somehow or another that is going to accomplish it.
If czars worked so well we would not have had revolutions.
[Laughter.]
Ms. McGinty. Senator, in terms of those models, the more
apt one, and a very apt one, is the Office of Science and
Technology Policy. The role is to coordinate the various
agencies, and every agency has some environmental mandate or
mission.
To take the Superfund Program, for example, I do not
implement it. I do not enforce specific remedies at specific
sites. However, I have to be concerned with the fact that we
have got a Department of Energy and a Department of Defense
that are themselves responsible for Superfund cleanups.
Senator Mikulski. But Dr. Gibbons, and we will talk to Dr.
Gibbons, neither proposes new legislation or new regulatory
frameworks, but essentially just more efficiently coordinates
the resources, particularly topical when they go across agency
lines.
Ms. McGinty. Yes; exactly. Exactly right. That is exactly
the model.
On Superfund, again, the reforms that we have seen to take
land use into account when planning a cleanup, that is the kind
of thing that comes out of a process that CEQ chairs, and we
hear from a DOE and a DOD to share their experience under the
Superfund Program, and we get insights. So we have ideas as to
how to reform the programs.
Senator Mikulski. Well, I think this is what we need to
talk about in terms of your funding and expectations of you,
and not hold you accountable for every faulty decision or
perceived faulty decision in these particular areas. And I am
afraid this is where we are drifting to, because as I
understand, the Office of Science and Technology proposed no
new legislation, no new regulatory framework, it did not solve
the science problems. Dr. Gibbons is not out there finding a
cure for cancer, for prostate cancer, but essentially advising
the President and the Vice President on how we should organize
our resources on life sciences, am I right?
Ms. McGinty. Exactly right, yes. That is the model.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you, Senator Mikulski.
Senator Bennett.
Senator Bennett. Thank you, Mr. Chairman. I appreciate your
willingness to let me visit a subcommittee that I very much
enjoyed. I am sorry I had to leave because of other priorities.
Senator Bond. Well, we miss you, and we are delighted to
have you as a member emeritus.
Senator Bennett. All right.
Ms. McGinty, you and I have had some exchanges, both in
hearings and in writing, and I appreciate the chairman's
willingness to let me use this forum to pursue some of those
exchanges.
It will come as no surprise to you that I want to talk
about the monument in southern Utah, and to lay the predicate
again for this record. The decision to create this monument was
made without any consultation whatsoever with any elected
official in the State of Utah. The Governor was kept out of any
considerations. Senator Hatch and I were both kept out of any
consideration. Congressman Orton, in whose district it was, was
kept out.
I asked you in a hearing before the Energy and Natural
Resources Committee if you would provide us, and provide me
specifically, with all of the written background relating to
this decision, because, as I rehearsed there, while we had the
conversations prior to the designation of the monument, people
from your office kept insisting this was being handled by the
Interior Department. My conversations with the Secretary and
people in the Interior Department show they insist that this
was being handled by the White House and no one would admit to
having been the lead agency or the lead staff group to advise
the President.
So I asked you to give me all of the background that was
used in the decisionmaking process. And on Valentines Day I
sent you a letter that was not necessarily a valentine saying
that almost 6 months had gone by and I had heard nothing. And I
received back from Shelly Fidler, Chief of Staff, a letter
saying you were traveling but they wanted to be responsive
immediately and apologizing for the delay, and this is what I
got as the substance of what went into the President's decision
to create 1.7 million acres of a national monument in Utah
without any consultation from any elected official in Utah:
A manual entitled ``The Ecosystem Approach, Healthy
Ecosystems and Sustainable Economies,'' dated June 1995; a
legal description of the Antiquities Act and what you could do
under it; a speech given by Ray Clark, Council of Economic
Quality of the United States, in Quebec City, dated June 16,
1994; and then written answers to questions from other Members
of Congress--James Hansen, that was useful, he is from Utah;
here is a letter signed by Bruce Babbitt written to Carol
Browner dated May 29, 1996; and questions for the record for
Ms. McGinty from Senator Thomas and other members of the
committee, and your response to Senator Thomas.
Frankly, I do not consider that responsive to my letter,
and I wanted to come here and raise this with you.
Second, I will tell you if you do not know that a number of
publications in Utah have submitted freedom of information
requests for the same information and have been denied. They
are anxious about that. They are pursuing their rights under
the Freedom of Information Act, and feel that they have a right
to more information about the process that was followed in the
creation of this.
Further, people in the press--and we all learn what we
learn about the press, have reported names of people who were
involved, who were consulted, who were part of the
decisionmaking process, including people from the Southern Utah
Wilderness Alliance and other environmental groups, the Sierra
Club, et cetera, who were allowed access to information that
was denied elected officials. That is, they were part of the
process of drawing maps and making decisions concerning land
use in this monument.
I am not going to attack anybody. I am not going to send
somebody to break their knees or knock out their windshields or
scratch up their cars or do anything. I simply want to know to
whom the President turned, or you as the President's agent, to
whom did you turn for information on this?
This is a very, very significant issue. It affects a very
large number of my constituents. It is a major environmental
effort on behalf of all of the people of the United States,
creating one of the largest, if not the largest, national
monument in the country, and we have no official idea who did
it. And yet we are faced with a 3-year management plan to try,
in the words of Leon Panetta when he called me to tell me about
it, to pick up the pieces after the fact. It will be much
easier for us to pick up the pieces after the fact if we have
some understanding of the pattern, the thoughts, the
motivations, that went into the creation of this thing in this
particular fashion.
So I am here to ask you once again if you will review my
letter of February 14 where I get very specific in the things
that I ask for, and do your best to be responsive to those
specific requests, and however well-meaning your staff was to
try to get you off the hook and get me something in a hurry, I
am not really interested in copies of speeches that were 2
years old prior to the decision the President made.
Ms. McGinty. Thank you, Senator. There are three or four
points I think you made. I will do my best to respond to them.
First, in terms of the materials that were sent to you
after your February 14 letter, they were the exact and complete
set of materials that we sent to the committee immediately
after the hearing, which was September 26, including in the
hearing record, because your request was part of the hearing
record to have those materials submitted, we submitted that
stack of papers that is specific to the monument that you
pointed to. That outlines the analysis. That is the complete
analysis that was done supporting the designation of the
monument. I tried to deliver that immediately. It was part of
the hearing record.
We were told at that time that the committee separately
would make it available to each member. I suppose that did not
happen, and so what my staff did 1 week ago was to resubmit
those materials to your office directly. And so what you have
there is both the materials that were directly responsive to
your question, but just in order to not leave anything out you
have the entire set of materials that were offered to close the
hearing record.
Senator Bennett. If I may, I do not consider this
responsive to my question. I can understand why the committee
did not circulate all of the materials to me.
I want to know the specific analysis that went into this
monument. I do not want general statements about the
Antiquities Act, I do not want general statements about
ecosystems, this was a very significant act taken by the
President of the United States deliberately keeping a number of
people in the dark with respect to what was going on. It
obviously did not burst full blown from the head of Zeus. There
was obviously a great deal of staff work that went into it.
I want to know the names of the people who participated in
those sessions, and I want to see the memos they created. And
as I said to you, and will repeat again, as far as the press is
concerned, they are now quoting people outside of the
administration as saying they were part of the process, and I
want either confirmation or denial of that, and the only way I
can get that is to get a list of the names of the people who
really were involved.
Again, I am not going to put out a contract on somebody who
was involved. Nobody has anything to fear. I just want to know
the process that was followed and the people that were
involved. This is clearly not responsive to that request.
Ms. McGinty. Fair enough. Let me mention two things, if I
might. One is the materials that you have there are not just
generalities about the Antiquities Act. That package of
materials includes the complete itemization of all of the
archeological, geological, and cultural factors that were
identified in the monument area, and as you know, that is
required to be identified pursuant to the Antiquities Act. So
the materials are very specific in terms of where those
archeological sites are and what they are.
Senator Bennett. I do not disagree, but they are very
incomplete.
I am sorry I have taken so much time, Mr. Chairman.
Senator Bond. Senator, I apologize. We have two very
important panels to follow. Let me just say that I think that
Senator Bennett has made a reasonable request. To the extent
that you and CEQ have knowledge and participated, I will be
interested personally in reviewing your response to his
question to, the extent that CEQ was there, who did what, and
when. I am sure that Senator Bennett will enjoy reading about
the Antiquities Act. I believe he wants to know who did what,
and that will be of interest to us.
Senator Mikulski, any further questions to Ms. McGinty?
ADDITIONAL COMMITTEE QUESTIONS
Senator Mikulski. No; and I will look forward to hearing
the followup on this conversation, and particularly the FEMA
part, which I think offers a great opportunity for saving lives
and saving communities.
Ms. McGinty. Yes; thank you.
Senator Bond. Thank you very much.
Ms. McGinty. Thank you, Mr. Chairman.
[The following questions were not asked at the hearing, but
were submitted to the Council for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
Question. NEPA Effectiveness Study. Recently CEQ released its
``NEPA Effectiveness Study.'' CEQ found that while the NEPA process
overall is sound, at times its implementation fell short of goals. For
example, ``interagency coordination is hampered because agencies often
have different timetables, requirements, and modes of public
participation;'' and ``citizens sometimes feel frustrated that they are
being treated as adversaries rather than welcome participants in the
NEPA process.''
While deficiencies with the NEPA process were identified, the
report contains no specific recommendations for change. Why?
Answer. On the occasion of the 25th anniversary of the National
Environmental Policy Act (NEPA), CEQ initiated a study to examine the
effectiveness of NEPA and prospects for improvements in the NEPA
process. In January 1997, CEQ released the findings of this study,
``The National Environmental Policy Act: A Study of its Effectiveness
After 25 Years'' (hereinafter referred to as the NEPA Effectiveness
Study).
To summarize briefly the findings of the Study; first, NEPA works.
Agencies must now take a ``hard look'' at the environmental
consequences of proposed actions before they make a final decision.
They must consult with other federal agencies and tell the public what
they are proposing to do, invite public views on their proposals, and
respond to those views. NEPA also calls for agencies to tell state,
local, and tribal governments of their plans, and provides agencies
with a mechanism to coordinate overlapping jurisdictional
responsibilities. In large part due to NEPA, federal agencies today are
better informed about the consequences of their actions on communities
and are more likely to take community views into consideration. Used
well, agency implementation of NEPA reduces conflict and saves scarce
resources.
Despite these successes, however, as you noted, NEPA's
implementation at times has fallen short of its goals. In some cases,
the NEPA process takes too long and costs too much. Agencies produce
documents that are overly long and sometimes too technical for most
people to use. Training for agency officials, particularly senior
officials, is at times inadequate. Some agencies confuse the purpose of
NEPA, acting as if the detailed statement called for in the statute is
an end in itself, rather than a tool to enhance and improve decision
making.
The purpose of the NEPA Effectiveness Study was not to provide a
detailed blueprint for change, but to give an overall assessment of the
statute and to provide a starting point for our reinvention efforts.
Instead detailed recommendations will be forthcoming as part of our
NEPA Reinvention effort.
CEQ believes that many of the deficiencies identified in the
application of NEPA can be corrected through improvements in agency's
NEPA processes. The first phase of the our Reinvention effort focuses
on the grazing, timber, and oil and gas sectors to determine what types
of process changes can be effected to increase the efficiency of NEPA.
If we find barriers that require regulatory change, we will pursue such
changes.
Question. Will it be up to the individual agencies to devise
improvements to the way they carry out the NEPA process? What guidance
will CEQ provide to the agencies to streamline and improve the process,
and what exactly will CEQ's role be in improving NEPA's effectiveness?
Answer. Inasmuch as each agency has different missions and
different planning processes, it is unlikely that a ``one-size-fits-
all'' approach from CEQ would be productive. It is more likely to be
successful if agencies understand the opportunities for improvement and
make those improvements within the context of their own mission.
Agencies are currently responsible for their NEPA compliance and
their management of the NEPA process. Improvements will necessarily
come from within. Reforms can be institutionalized in each agency's
NEPA procedures, and CEQ is encouraging all the agencies to review
their procedures with an eye toward streamlining. CEQ will consult with
each agency as they review their NEPA procedures.
Question. Two years ago, you testified that one of your priorities
was reinvention of the NEPA process, including cutting processing time
and consultation time. What specific improvements--such as the numbers
of duplicative or inconsistent regulations which have been eliminated--
have been made in the last two years?
Answer. One of the most important steps in this regard was the
elimination of duplication between the processes for complying with
NEPA and the Endangered Species Act for Habitat Conservation Plans
(HCP's). These are plans that permit landowners to conduct certain
activities over a long period of time, with the certainty and stability
of a site-specific tailored agreement. Previously, applicants were
going through two separate processes to comply with the two statutes.
This resulted in duplicative analyses and public hearings for the same
actions. This duplication has now been eliminated, significantly
reducing permit processing time for private applicants. In fact, even
the most complex HCP can now be completed in under ten months.
CEQ has also expended considerable effort in working with the Food
and Drug Administration (FDA) over the past two years to streamline
their NEPA process and reduce unnecessary submissions. According to the
FDA, the changes being made as a result of that effort will result in
an annual cost savings to industry of approximately $15.7 million, as
well as improve FDA efficiency by eliminating unnecessary agency review
costs of approximate $1 million. Equally important is that the
regulations do not compromise the FDA's efforts to promote NEPA's
policies and goals for better, more informed decision making.
Similarly, CEQ worked with the Department of Energy (DOE) as they
developed proposed revisions to their NEPA regulations. DOE's final
rule includes several streamlining features such as: establishing new
categorical exclusions; expanding existing categorical exclusions; and
eliminating the preparation of extensive documentation prior to
preparation of an environmental impact statement (EIS). In consultation
with CEQ, DOE simplified public notification requirements and
streamlined the requirements for the content of Findings of No
Significant Impact. These changes, and others like them, focus
available resources on significant environmental issues, and reduce
costs and staff time while ensuring the environmental assessment
process is useful to decisionmakers and the public.
CEQ is currently working with the Air Force to find streamlining
opportunities. One clear opportunity to save time and money is to
eliminate the necessity to have public hearings instead of informal
public meetings. We have pointed out to the Air Force that public
hearings are more expensive and not required by CEQ regulations. We are
also reviewing additional categorical exclusions which will reduce the
amount of documentation associated with Air Force NEPA compliance. We
are also jointly exploring opportunities for integrating analytical
requirements, eliminating duplication of effort. We expect that these
revised regulations will be final this summer.
As you may recall, CEQ and the Federal Highway Administration
(FHWA) cosponsored a conference in 1995 which focused on methods to
streamline the NEPA process used in the development of highway
projects. As a result of this very productive conference, the
Department of Transportation (DOT) is developing a proposed rulemaking
that will link NEPA and its principles to DOT's decision making
process. The proposed rules will affect the Federal Highway
Administration (FHWA), the Federal Railroad Administration (FRA), the
Federal Transit Administration (FTA) and the Coast Guard. The objective
of these DOT agencies is to develop a single NEPA regulation that will
reduce paperwork, streamline and expedite transportation planning and
decision making, and lead to one overall public interest decision that
integrates social, economic and environmental effects and
considerations, including economic development, health and
environmental protection and community and neighborhood sustainability.
CEQ is also working with other agencies as they amend their NEPA
procedures, including the Department of Housing and Urban Development
and the U.S. Army. I want to reiterate that CEQ will continue to take
advantage of these reinvention opportunities but we hope to institute
even more sweeping changes through our NEPA Reinvention initiative.
Question. What specifically do you anticipate to be accomplished
this year through the new NEPA reinvention initiative?
Answer. We have already begun a process to examine current NEPA
practices with regard to grazing, timber and oil and gas. Federal
agencies that have responsibilities for NEPA issues in these three
sectors are working cooperatively to suggest areas where improvements
can be made.
As you may know, the lead CEQ staff member on NEPA Reinvention is
currently on maternity leave. As I mentioned to your staff, CEQ has
brought on Robert Cunningham to lead our NEPA Reinvention Team. We also
expect Ms. Mesa to return to resume her work after her leave is
completed.
The University of Wyoming will host a conference this week to help
us identify additional activities we can cooperatively engage in to
broaden the dialogue and to help us make additional progress. The
University of Montana, as well, has offered to help us contact
stakeholders and to use the University as a resource in our project.
The Western Governors' Association and the Western States' Foundation,
as well, have expressed interest in working with us to accomplish NEPA
Reinvention.
In addition, we are shortly to begin meetings with stakeholders to
review the product of the initial interagency discussions and to
solicit stakeholder input. Within several months, we also hope to begin
discussions with the leadership of the federal agencies with
responsibilities in our three sectors to educate them about the
opportunities for reform that we have identified.
Needless to say we will bring the products of all of these
discussions with interested Senators and House Members and their
staffs.
By the end of this fiscal year we expect to have specific
recommendations for some significant changes to current NEPA practices
in the three sectors we have identified as our targets of opportunity--
grazing, timber and oil and gas. The kind of improvements we would
consider a success would reduce the time necessary to make decisions;
result in more cooperation between federal agencies; reduce costs; make
processes more transparent for the user communities; improve public
participation; as well as other efficiency improvements that are
identified through the examination of options.
Question. FEMA has told my staff of their frustration of meeting
NEPA requirements in projects resulting from Presidentially-declared
disasters. Staff who administer disaster programs often have limited
expertise or time to evaluate effectively and document environmental
considerations. NEPA is often seen as significantly slowing the funding
and construction of these very critical repair, renovation, rebuilding
and mitigation projects following disasters. FEMA tells my staff that
the most important support CEQ can provide to FEMA is guidance on
measures FEMA can undertake to expedite the NEPA process. What are you
doing to help FEMA in this regard, and will you report back to the
Subcommittee on progress made?
Answer. FEMA recently consulted with CEQ and we provided guidance
to clarify that a project that has already been categorically excluded
from NEPA documentation under FEMA's NEPA procedures can proceed
without further documentation. We are consulting with FEMA regarding
procedures related to several particular projects, including the Rodeo
Channel Stabilization in Hesperia, California, the Rolling Hills storm
drain and slope restoration in Yorba Linda, California, and certain
projects in Hawaii. In addition, we are reviewing FEMA's NEPA program
related to disasters generally, so as to identify possible
opportunities for streamlining. We will be happy to report back to the
Subcommittee on our progress later this spring.
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions
STATEMENTS OF:
JOHN H. HAWKE, JR., UNDER SECRETARY OF TREASURY FOR DOMESTIC
AFFAIRS
KIRSTEN MOY, DIRECTOR
opening remarks
Senator Bond. The second panel consists of Mr. John Hawke,
the Under Secretary for Domestic Finance with the Department of
Treasury; and Ms. Kirsten Moy, Director, Community Development
Financial Institutions Fund Program. The administration's
budget request for CDFI asks for an increase of $75 million,
from the $50 million for fiscal year 1997 to $125 million to
fiscal year 1998, and the President has indicated the intent to
include increases for a 5-year total to $1 billion.
This fund was established in the Community Development
Regulatory Improvement Act in 1994, and to provide equity
investment grants and loans, and the purpose is to enhance the
capacity of these institutions to finance economic development
housing and community development.
I am concerned about the amount of funding in the CDFI
request as we have to prioritize and deal with the other
competing needs I am also concerned that CDFI does not have
much of a track record. I need to understand to what degree
leverage investment is being drained from other activities
serving distressed communities, and how and whether CDFI is
discouraging traditional financial institutions from opening
branches and lending in distressed communities.
I look forward to hearing your testimony.
Mr. Hawke, I guess if you would begin.
STATEMENT OF JOHN H. HAWKE, JR.
Mr. Hawke. Mr. Chairman, thank you very much for affording
me the opportunity to make a brief statement in support of the
community development financial institutions fund. CDFI has
been a high priority of the President since the time he took
office. It is a program with great potential for bringing the
residents of our inner cities into the economic mainstream, an
effort that I believe is vitally important to all of us.
The fund's aim is to expand access to credit and financial
services in poor urban, native American and rural communities,
areas in which one of the biggest obstacles to economic
development is a lack of access to private sector capital.
Access to financial institutions is fundamental to the efforts
of residents of these economically distressed areas to lift
themselves out of poverty.
When CDFI was assigned to the Treasury Department, it was
established as an independent office reporting to the Under
Secretary for Domestic Finance. In October 1965, Kirsten Moy
was brought on board as Director of the fund.
She brought to the fund a wealth of experience from her
work as senior vice president of the real estate subsidiary of
the Equitable Life Assurance Society of the United States, and
portfolio manager of Equitable's Community Mortgage Fund, a
pension fund vehicle for investments in affordable housing and
economic development. I believe that everyone who has observed
the great skill that she has brought to bear on this task would
agree that we are extremely fortunate to have her in this
position.
In January 1996, CDFI received 268 applications for CDFI
awards, with requests for funding 10 times the amount
available. After a rigorous review by the fund, 32 CDFI's were
selected to receive nearly $37 million in financial and
technical assistance. The CDFI Fund also received 50
applications under the Bank Enterprise Award Program, and 38
banks and thrifts were selected to receive bank enterprise
awards.
Last month, the President announced the winners of the
Presidential Award for Excellence in Microenterprise
Development to highlight the accomplishment of entrepreneurs in
this area. The fund has effectively promoted partnerships
between community-based financial institutions, banks, and
other private sector sources, leveraging scarce Federal
resources to attract private dollars into credit-starved
communities. That, in turn, fosters cooperation and synergy in
efforts to revive economically distressed areas.
For example, Senator Bond, in your State, Douglass
Bankcorp, the oldest African-American owned bank west of the
Mississippi is receiving $1.9 million in equity and technical
assistance from the fund to support its expansion to serve
Kansas City. In partnership with Kansas City Neighborhood
Alliance, they are developing a comprehensive plan to promote
affordable housing and small business development to foster
market activity in low-income neighborhoods.
In addition, Senator Mikulski, in Maryland the Bank
Enterprise Award Program helped trigger a $10 million
investment by NationsBank in the employment opportunities fund,
which invests in small businesses located in or employing
residents of the Baltimore empowerment zone.
In this era of scarce budgetary resources, we must choose
our priorities carefully and focus on those that have long-term
payoffs for our economy and our society. The fund is a top
priority of the President precisely for that reason. It uses a
very modest amount of Federal funding as a base for attracting
private capital, and its payoff is in the long-term health of
our national economy by helping break the cycle of poverty,
make our Nation more productive, and fostering higher economic
growth.
We have been and continue to work diligently to make the
CDFI and the BEA programs a success.
PREPARED STATEMENT
Mr. Chairman, I appreciate this opportunity to speak to
you, and Mrs. Moy will now discuss the program in greater
detail.
[The statement follows:]
PREPARED STATEMENT OF JOHN D. HAWKE, JR.
Mr. Chairman, distinguished members of this Subcommittee, I thank
you for the opportunity to testify this morning on the President's
fiscal year 1998 budget request for the Community Development Financial
Institutions Fund.
CDFI has been a high priority of the President since taking office.
It is a program with great potential for bringing the residents of our
inner cities into the economic mainstream, an effort that I believe is
vitally important to all of us--no matter where we live or what our
incomes may be.
The Fund's aim is to expand access to credit and financial services
in poor urban, rural and Native American communities, areas in which
one of the biggest obstacles to economic development is a lack of
access to private sector capital. Access to financial institutions is
fundamental to the efforts of residents of these economically
distressed areas to lift themselves out of poverty.
When CDFI was assigned to the Treasury Department, it was
established as an independent office reporting to the Under Secretary
for Domestic Finance. In October 1995, Kirsten Moy was brought on board
as Director of the Fund. She brought to the Fund a wealth of experience
from her work as Senior Vice President of the real estate subsidiary of
the Equitable Life Assurance Society of the United States and Portfolio
Manager of Equitable's Community Mortgage Fund, a pension fund vehicle
for investments in affordable housing and economic development. I
believe that everyone who has observed the great skill she has brought
to bear on this task would agree that we are extremely fortunate to
have her in this position.
Since it began operating in October 1995, the Fund has already made
a significant contribution to increasing access to private sector
capital, by catalyzing interest in this program. In January of 1996,
CDFI received 268 applications for CDFI awards, with requests for
funding ten times the amount available. After a rigorous review by the
Fund, 32 CDFI's were selected to receive nearly $37 million in
financial and technical assistance. CDFI also received 50 applications
under the Bank Enterprise Award program, and 38 banks and thrifts were
selected to receive Bank Enterprise Awards. Last month, the President
announced the winners of the Presidential Awards for Excellence in
Microenterprise Development to highlight the accomplishments of
entrepreneurs in this area.
The Fund has effectively promoted partnerships between community
based financial institutions, banks and other private sector sources,
leveraging scarce Federal resources to attract private dollars into
credit starved communities. That in turn, fosters cooperation and
synergy in efforts to revive economically distressed areas. For
example, Douglass Bancorp, the oldest African-American owned bank west
of the Mississippi, is receiving an investment from the Fund to support
its expansion to serve Kansas City, Missouri. In partnership with
Kansas City Neighborhood Alliance, they are developing a comprehensive
plan to promote affordable housing and small business development to
foster market activity in low income neighborhoods. In addition, the
Bank Enterprise Award program helped trigger a $10 million investment
by NationsBank in the Employment Opportunities Fund, which invests in
small businesses located in, or employing residents of the Baltimore
Empowerment Zone.
In this era of scarce budgetary resources, we must choose our
priorities carefully, and focus on those that have long term payoffs
for our economy and our society. The Fund is a top priority of the
President precisely for that reason: It uses a very modest amount of
Federal funding as a base for attracting private capital, and its
payoff is in the long-term health of our national economy, by helping
break the cycle of poverty, making our nation more productive and
fostering higher economic growth. We have been and continue to work
diligently to make the CDFI and the BEA programs a success.
Mr. Chairman, members of the Subcommittee, I appreciate this
opportunity to speak to you today. Ms. Moy will now discuss the program
in greater detail.
STATEMENT OF KIRSTEN MOY
Senator Bond. Ms. Moy.
Ms. Moy. Chairman Bond, Senator Mikulski, distinguished
members of the subcommittee, this is my first opportunity to
testify before you, and I appreciate it very much.
The CDFI fund, as you mentioned, was authorized by the
Riegle Community Development and Regulatory Improvement Act of
1994, and its purpose was to address the critical problems of
capital access in urban, rural, and native American
communities.
To this committee, the problems of access to capital are
surely no stranger. Access to capital is an essential
ingredient for creating and retaining jobs, developing
affordable housing, revitalizing neighborhoods, and building
local economies.
The fund runs two programs. The first of these, the CDFI
Program, stimulates the creation and expansion of a diverse set
of private community-based for-profit and not-for-profit
financial institutions. These CDFI's, as they are known,
complement the role of traditional financial institutions by
filling market niches which such institutions are not well
positioned to serve.
The CDFI's themselves include a broad range of
institutions. They include community development banks,
community development credit unions, loan funds,
microenterprise funds, community development venture capital
groups, and these CDFI's provide a wide range of financial
products and services to distressed urban and rural communities
and underserved populations. They do not only housing or
consumer loans, but commercial loans, loans for small business,
loans for community facilities, and many other things.
The Bank Enterprise Awards Program, which is designed to
work hand-in-hand with the CDFI Program, recognizes the key
role that traditional financial institutions, banks, and
thrifts, have played in community development lending. They
complement the CDFI Program by strongly encouraging these
institutions to support CDFI's, and they also incentivize
increased lending in distressed communities by these
organizations.
Of the institutions recognized in the first round of the
Bank Enterprise Award Program nearly two-thirds supported
CDFI's, with a total of nearly $66 million in support. For many
of these organizations, it was their first effort to support a
community development financial institution.
The Treasury Department, we believe, is uniquely situated
to carry out the CDFI initiative. As the executive branch's
leading agency in setting financial institutions' policy, the
Treasury Department is strongly committed to increasing access
to capital and investment in distressed communities.
The Department does this through the efforts of the CDFI
fund, but also through its commitment and the commitment of the
Office of the Comptroller of the Currency, and the Office of
Thrift Supervision, to a strong and effective Community
Reinvestment Act.
The Treasury Department is also strong in its support of
Federal tax policy for such efforts as the low income housing
tax credit.
During the first year, as Under Secretary Hawke mentioned,
we received and reviewed 268 applications, undertook a rigorous
and comprehensive look at all of them, announced the selection
of 32 CDFI's to receive approximately $37 million in awards,
and announced the selection of 38 banks and thrifts to receive
approximately $13 million in bank enterprise awards.
Just last month in January, President Clinton announced the
award winners for the Presidential Awards for Excellence in
Microenterprise Development, a nonmonetary award program
implemented by the fund which is designed to recognize the best
in the business of microentrepreneurship, a growing phenomenon
in the United States.
I would like to remind the committee that in the midst of
all these activities, the fund, as a startup organization, also
managed the challenge of developing almost from the ground up
internal controls, financial management systems, monitoring and
evaluation functions, and a host of other organizational
development issues. These systems we feel are critical to
ensure the effective use of scarce public resources.
Though the fund is young, its impact can already be seen. I
believe that the fund has been proven particularly effective in
six areas: Leveraging of private resources, forging linkages
with the financial services industry, creating viable self-
sustaining institutions that will not need to be assisted or
subsidized forever, expanding access to the economic
mainstream, restoring healthy marketing activity, and
catalyzing new community development activity.
You have already heard Under Secretary Hawke talk about
initiatives in Kansas City and in Baltimore to forge
partnerships and restore healthy market activity. Let me
mention a few more examples.
The fund's ability to leverage private sector funds in
distressed communities is truly dramatic. The fund first of all
requires, at a minimum, that every dollar awarded under the
CDFI Program be matched by at least $1 of non-Federal moneys.
But it does not stop there. In the near term over the next 2 to
3 years, the $37 million awarded to CDFI's will, in our
conservative estimate, leverage three to four times the amount
of the original awards.
Over the long term, the fund's investments are expected to
support lending and investment in these communities of 10 to 20
times the amount awarded.
The CDFI fund is very focused on creating viable, self-
sustaining institutions. The Vermont Community Loan Fund, for
example, which is a relatively small organization at $2.5
million of assets, finances housing, small business, and
community facilities.
Very importantly, the Vermont Community Loan Fund, through
its good business practices and track record, has achieved
notable success in attracting investments from a diverse array
of private sector players, including individuals, religious
institutions, foundations, and corporations. The fund's
investment in Vermont will help the loan fund build on its
record to expand its services to communities across the State.
The CDFI fund is also focused on catalyzing new activity,
we seek to use our scarce resources to jump-start new
initiatives, not permanently subsidize them. For example, the
fund's investment of a $1 million loan in Tlingit-Haida
Regional Housing in Alaska will begin home mortgage lending in
Alaska's three urban areas. These will be among the first
sources of mortgage loans that are available and affordable to
lower-income Alaska Natives.
I see my time is up.
PREPARED STATEMENT
Senator Bond. Ms. Moy, we will be delighted to make your
full statement a part of the record, and we apologize if we
have run longer than we intended.
[The statement follows:]
PREPARED STATEMENT OF KIRSTEN S. MOY
Chairman Bond, Senator Mikulski, and distinguished members of the
Subcommittee, I would like to thank you for the opportunity to testify
this morning on the President's fiscal year 1998 budget request for the
Community Development Financial Institutions (CDFI) Fund which is
within the U.S. Department of the Treasury. The President's budget
requests $1 billion over the course of the next five years for the CDFI
Fund. In fiscal year 1998, the request proposes $125 million to support
the Fund's initiatives.
The CDFI Fund, which was authorized by the Riegle Community
Development and Regulatory Improvement Act of 1994, was created to
address the critical problems of urban, rural and Native-American
communities that lack access to capital. Access to capital is an
essential ingredient for creating and retaining jobs, developing
affordable housing, revitalizing neighborhoods, and building local
economies. Over the past decade, much evidence has been presented that
there are significant capital gaps in distressed communities. Given the
unique character of the credit market in low-income communities, this
market niche is often not recognized or well understood--making it
difficult for conventional market players to meet the needs of this
market without local partners. Thus, in many communities, needed
financial products and services may be entirely lacking or may not be
available or offered at prices that low-income people can afford.
The CDFI Fund represents a new direction for community development
initiatives. It leverages limited public resources to invest in and
build the capacity of private sector institutions to finance community
development needs in distressed communities. The Fund's efforts are
designed to help turn dysfunctional markets in distressed communities
into well functioning local economies--thereby stemming the tide of
disinvestment and creating economic opportunity for residents. The Fund
accomplishes its mission by working with community based financial
institutions and conventional banks and thrifts. The partnerships
formed by these players will play a key role in helping to restore the
functioning of distressed markets, enhance capital access for these
communities, and enable them to join the economic mainstream. The
Fund's investments are targeted to organizations that emphasize market
discipline and performance as a strategy for restoring markets.
The Treasury Department is uniquely situated to carry out this
initiative. As the Executive Branch's lead agency in setting financial
institutions policy, the Treasury Department is strongly committed to
increasing access to capital and investment in distressed communities.
The Department does this through the efforts of the CDFI Fund, its
commitment and the commitment of the Office of the Comptroller of the
Currency and Office of Thrift Supervision to a strong and effective
Community Reinvestment Act, and Federal tax policy including strong
support for the Low Income Housing Tax Credit. Nearly seventy-percent
of the Fund's awardees under the CDFI and Bank Enterprise Award
Programs are credit unions, banks, thrifts, or bank holding companies.
The commitment of the Department to integrate distressed communities
into the greater financial services industry and the economic
mainstream is key to future viability of neglected and disinvested
neighborhoods.
FIRST YEAR ACCOMPLISHMENTS
Calendar year 1996, the first full year of the Fund's operations,
was a very exciting and significant year:
--In January, the Fund received 268 applications for the CDFI Program
and more than 50 applications for the Bank Enterprise Award
Program in response to its interim regulations and Notices of
Funds Availability issued in October 1995.
--The Fund undertook a rigorous review process of the CDFI Program
applicants including a thorough analysis of an applicant's
financial and programmatic track record, financial strength and
stability, management capacity, business development strategy,
matching funds, and projected community development impact.
--Secretary Rubin announced the CDFI Fund's selection of 32 CDFI's to
receive nearly $37 million in financial and technical
assistance.
--Secretary Rubin announced the CDFI Fund's selection of 38 banks and
thrifts to receive $13 million in Bank Enterprise Awards.
--In January 1997, President Clinton announced the award winners for
the Presidential Awards for Excellence in Microenterprise
Development, a non-monetary award program implemented by the
Fund which is designed to recognize the best in the business of
entrepreneurship.
--In the midst of these activities, the Fund also managed the
challenges of starting up a new organization including
developing financial systems, internal controls, monitoring and
evaluation functions, and other organization development
issues. As a new organization, the Fund has built many of its
management systems virtually from the ground up, or has been in
the process of converting transitional, temporary systems to
permanent ones, and creating and refining needed control
systems. These systems are critical to ensure effective use of
scarce public resources.
NEED AND IMPACT
The capital needs of urban, rural and Native-American communities
are indeed great--but very difficult to quantify. I believe that the
dramatic response of the private sector to the initiatives of the Fund
provide a clear illustration of the vast unmet capital needs. In its
first funding round, the Fund received 268 applications for the CDFI
Program from community based organizations in need of investment
capital and technical assistance. The requests for funding exceeded
$300 million--approximately 10 times the amount of resources initially
made available for the first funding round. It should be noted that
applicants that submitted requests represent only a portion of the
universe of organizations that are likely to be eligible for the
program and represent only those communities that are fortunate enough
to have a community based financial institution. The Fund also received
applications from over 50 banks and thrifts--an excellent start for a
program relatively unknown among the banking industry.
Although the Fund is young, its impact can already be seen. The
Fund has proven effective in leveraging resources, forging linkages
with the financial services industry, creating viable self sustaining
institutions, expanding access to the economic mainstream, restoring
healthy market activity, and catalyzing new community development
activity.
Leveraging Private Resources
The Fund's ability to leverage private sector funds into distressed
communities is dramatic. The Fund requires, at a minimum, that every
dollar awarded through the CDFI Program be matched by at least one
dollar of non-Federal monies. In the near term--over the next two-to-
three years--the $37 million in equity and debt capital awarded to
CDFI's will conservatively leverage three-to-four times the original
awards. Over the long term, the Fund's investments are expected to
support lending and investment of 10-to-20 times the amount awarded.
Self-Help of North Carolina is a national leader in community
development finance. Yesterday, the Fund executed a $3 million grant to
Self-Help. Over the next five years, it is conservatively projected
that the CDFI Fund's grant and matching funds will enable Self-Help to
provide more than $100 million to finance affordable housing and small
business loans over and above what they could have done without the
Fund's assistance.
Forging Linkages with the Financial Services Industry
In a short period of time, the Fund has been successful in forging
key partnerships between banks, thrifts and CDFI's through the Bank
Enterprise Awards Program. The $13.1 million in Bank Enterprise Awards
generated nearly $66 million in equity investments and other financial
support to CDFI's. In addition, the program generated $60 million in
direct lending and financial services in some of the nation's most
distressed neighborhoods. For example, the Bank Enterprise Award
Program helped catalyze a $10 million investment by NationsBank in the
Employment Opportunities Fund which invests in small businesses located
in or that employ residents of the Baltimore Empowerment Zone.
Creating Viable Self-Sustaining Institutions
The Fund is distinctive from many other Federal initiatives because
it focuses on the development of viable, self-sustaining institutions
to carry out the work of financing community development. The Vermont
Community Loan Fund, a small organization that finances housing, small
businesses and community facilities, has achieved notable success in
attracting investments from a diverse array of individuals, religious
institutions, foundations, and corporations. The Fund's investment will
help the Vermont loan fund build on its highly successful track record,
expand its services to communities across the state, and provide new
investment in Burlington's Old North End Enterprise Community where
over thirty-percent of its residents live in poverty.
Expanding Access to the Economic Mainstream
The activities of the First American Credit Union illustrates how
the Fund's resources will help bring under served communities into the
economic mainstream. The credit union, which serves Native-American
reservations throughout Arizona, New Mexico and Utah, provides basic
financial services. These basic financial services include checking and
savings accounts and consumer and home improvement loans--for people
that otherwise would have no access to these services. The Fund's
assistance will be used to expand lending and introduce ATM services to
rural, sparsely-settled low-income communities.
Restoring Healthy Market Activity
Douglass Bancorporation, the oldest African-American owned bank
west of the Mississippi, will receive an investment from the Fund to
support its expansion to serve Kansas City, Missouri. Douglass, in
partnership with the Kansas City Neighborhood Alliance, has developed a
comprehensive plan to restore healthy market activity to low-income
neighborhoods by promoting affordable housing and small business
development.
Catalyzing New Activity
The Fund's philosophy is to use its scarce resources to catalyze
and jump start new initiatives--rather than permanently subsidize them.
For example, with the Fund's investment of a $1 million loan, Tlingit-
Haida Regional Housing will begin home mortgage lending in Alaska's
three urban areas. This will be among the first sources of mortgage
loans that are affordable to low-income Alaska Natives in these
markets.
SUMMARY OF FIRST FUNDING ROUNDS
The CDFI's selected to receive investment from the Fund represent a
broad array of institutional types--both non-profit and for-profit--and
provide a broad range of financial products and services including
consumer loans, affordable housing loans and investments, small
business development, and community facilities such as day care and
health care facilities. The group of selected CDFI's serve communities
in 46 states and the District of Columbia. Approximately half of these
initiatives serve predominantly urban areas, 25-percent serve
predominantly rural areas, and the balance serve a combination of both.
Twenty-four of the 32 awardees serve an Empowerment Zone or Enterprise
Community.
Through the Bank Enterprise Award Program, the Fund has made awards
to 38 banks and thrifts located in 18 states and the District of
Columbia that ranged in asset size from a small community bank of $21
million to a major money-center bank of $320 billion. The awardees
include national banks, Federal savings banks or thrifts, state-
chartered commercial banks, and one state chartered mutual saving bank.
the president's fiscal year 1998 budget request
The President and Secretary Rubin strongly support the increased
funding for the CDFI Fund. The $125 million requested for fiscal year
1998 is proposed to be allocated as follows: $80 million to be invested
to support CDFI's; $40 million for the Bank Enterprise Awards Program;
and $5 million for administrative related costs. Most of the $80
million to be used to support CDFI's will be invested directly in such
institutions in the form of equity investment, loans, capital grants,
and deposits. As part of its provision of assistance to CDFI's, the
CDFI Fund intends to launch an important training initiative which will
significantly enhance the capacity of private sector organizations to
provide a full range of training and technical assistance services to
CDFI's at affordable prices. In addition, a new secondary market
initiative that the Fund will implement has the potential to leverage
substantial new sources of private capital to support CDFI's.
CDFI PROJECTS
Senator Bond. I am going to turn to Senator Mikulski for
questions after asking just one question to begin. We have
heard all of these glowing reports. It is no surprise to me
that everybody is anxious and making applications for funds,
but--maybe my staff is not up to date--I do not find any
evidence that a single dollar of the $32 million in CDFI funds
has actually been obligated or leveraged on a single project.
Has anything happened yet on this?
Ms. Moy. Indeed it has, Senator. First of all, the money
has all been obligated.
Senator Bond. I mean, has any money gone out to a project?
Has it been spent?
Ms. Moy. Yes.
Senator Bond. Is something happening?
Ms. Moy. First of all, we run two programs, Senator, so
that in the Bank Enterprise Award Program, which is a very
important program, 75 percent of our moneys have actually been
disbursed in that program to the participating banks, who have
already completed their activities and who have already showed
the impact of what they have done.
Under the CDFI Program, we have closed one transaction to
Self-Help in North Carolina for $3 million. We have spent the
first year putting the systems and procedures in place to make
sure that as we disburse this money we can monitor the impact
and trace the actual use of the moneys.
We now have in place our infrastructure to disburse these
moneys. For instance, we have all the appropriate legal
documents. In the next 4 to 6 weeks we expect to disburse all
of the money that we can to organizations that are ready to
receive them, which is approximately one-half of the
organizations.
Senator Bond. So you are saying no money under CDFI has
actually gone out.
Senator Mikulski.
Senator Mikulski. Mr. Hawke, good morning. Ms. Moy, first a
cordial welcome to you from the committee.
I would like to just say, looking at your background, that
we are very fortunate to have someone of such strong private
sector experience managing the CDFI fund. I know that the whole
issue of access to credit for low-income communities has been
part of my life for more than 30 years, and yet, at the same
time, I had enormous skepticism about creating the CDFI fund.
Just very quickly, when I was a young social worker in
Baltimore I helped start a credit union in an African-American
community. Of course, all they had was the opportunity to
borrow money from, really, street-corner or store-front usury
programs. Then, working as a city councilwoman and then a
Congresswoman, I dealt with the red-lining provisions, and then
came the famous Community Reinvestment Act.
When the CDFI fund was proposed, my question was, why do we
need this? Why don't we just push the big banks to do community
reinvestment, that was the big concern, rather than create new
Government entities where we played banker, instead of letting
the banks who know how to be banks be banks in communities.
Do you follow all that?
Ms. Moy. Yes; I think so.
Senator Mikulski. Now, you present this really excellent
testimony, and I have been looking at the WEB Program, the
Women Entrepreneur Program in Baltimore, as well as the
NationsBank effort to work with the Baltimore empowerment zone.
Could you just tell me very briefly, because we must move
ahead. Your testimony essentially answers many of the fears and
concerns that I had. But if you could: These issues of linkage,
leverage, and availability to people, like $6,000 level loans
for women, could you tell me how this actually worked in
Baltimore? Maybe take one of those projects on linkage and
leverage, and tell me why the Community Reinvestment Act would
not have met that need, or are we playing bank when maybe we
should pursue other options?
Ms. Moy. Those are excellent questions, and they are truly
intertwined. The whole concept of CDFI's is that they are
specialized, private institutions that fill niches that
traditional financial institutions cannot fill.
Why can't these banks fill these niches? It would be too
easy to say that they simply do not want to do it, though in
some cases that is true.
Capital gaps often arise not because of risk or return, and
not even perception. They arise for very nitty-gritty reasons
and for very unglamorous reasons. For instance, the size of a
transaction--you mentioned the $6,000 loan. It is not economic
for most traditional financial institutions to make investments
in that size because of their infrastructure and because of
their overhead.
Size is a common problem. Volume is a common problem.
Financial institutions look to cookie-cutter their investments
in order to do large volumes, which improves their profit
margins. This is not possible with many types of community
development loans, I have found. I have not been at it as long
as you, Senator, but I am older than I look, and I have been at
it for some 20 years.
Senator Mikulski. I am not. [Laughter.]
Ms. Moy. In the 20 years that I have been doing this in the
private sector, I have been able repeatedly to build products
for my company that capitalized precisely on those capital
gaps, areas they could not serve well.
I think the real way to make an impact is to push banks to
do as much as they possibly can, and to work in partnership
with CDFI's to cover the areas that they cannot.
In virtually every instance, our CDFI's are working with
traditional banks, and with the Bank Enterprise Award Program,
many of them are beginning to get more support from these banks
than they ever have.
Senator Mikulski. So you are not in lieu of the bank?
Ms. Moy. Oh, absolutely not. I think the private sector
works because people specialize. People do what they do best,
and that is what they should be doing in the private market
system. Our CDFI's in many cases are second to none in
delivering certain types of credit.
In many cases, they develop an innovative product, show the
private sector how to do it. And there are actually banks that
are beginning to do small amounts of microenterprise lending,
based on some of the models that have been pioneered by the
CDFI's. The fund made a $450,000 grant to FINCA, which is a
microenterprise organization working in Washington, DC, and in
Baltimore. FINCA works with different local community-based
organizations, one of them being WEB, and they have pioneered
the peer lending----
Senator Mikulski. Which is the Women Entrepreneurs Program.
Ms. Moy. In Baltimore, exactly, with a peer lending model,
and they are adapting that international model, which has had
so much success overseas, to the domestic market, and WEB is
one of the first groups they are working with.
Senator Mikulski. What do they do?
Ms. Moy. In this country, microenterprise groups do not do
just lending. They provide significant amounts of technical
assistance. They do a lot of handholding. They train people in
sound business practices. They help them actually startup their
businesses. They provide peer and other group support to small
organizations, which inevitably run into challenges during
their first year, and they are there to provide additional
capital as these organizations grow.
Mr. Hawke. If I could add just one comment, Senator
Mikulski, the CDFI fund also functions to leverage private
capital from sources other than ordinary banking institutions,
so it does tap into a broader range of leveraging.
Senator Mikulski. Like what?
Ms. Moy. Individuals, religious organizations,
corporations, foundations.
Senator Mikulski. Well, thank you. I look forward to
learning more about this. I know that my time has expired. You
have answered many of my questions. I mean, my questions first
of all about the CDFI fund. This is why these hearings are so
important.
I knew WEB was important, and I knew NationsBank was coming
into Baltimore, but they needed a trade group, a channel, a
fiscal channel to get the resources down to the right level.
The reason WEB is working is not only because of the money, but
the technical assistance. A local credit union in a church
might be able to give microloans, but they would not have done
the technical assistance for someone who might be opening a
home-based business like sewing and alterations.
Ms. Moy. Yes; many of them are in home-based businesses,
actually.
Senator Mikulski. I really look forward to learning more
about it. I have a great passion for microenterprise, I've seen
how it has worked around the world. It really fortifies me to
hear that it is now working in Baltimore and other communities.
I think we need to closely monitor this with lessons learned,
but I think the fact that it is beyond the Community
Reinvestment Act, which was kind of a mandate, this is really
helping them fulfill a social responsibility, but in a way that
is most effective at the street corner or neighborhood level,
is that right?
Ms. Moy. That is correct.
Senator Mikulski. Well, thank you very much.
Ms. Moy. Thank you, Senator.
Senator Bond. Thank you, Senator Mikulski.
I have been very much impressed by the testimony, as
Senator Mikulski was, but I am very much concerned about the
performance. As we put out the first $3 million, we will be
waiting to see if it works.
PERFORMANCE STANDARDS
I am going to have a series of questions about your
standards, about how we know if it is going to work. You
present a great vision for something that might work, and
before we go down the path of building this $50 million to $125
million to $1 billion, you have got to show me that this thing
works.
I mean, nobody can argue with the glowing testimony. It
sounds great. But there is an awful lot I want to see about how
this works, what the standards are. I will submit that for the
record.
Let me ask you here one nasty little question. How are you
regulating CDFI to ensure that the funds are being used
appropriately, that these entities will pose no financial risk
to the taxpayer, and what happens to a financially troubled
CDFI?
Ms. Moy. Senator, I do not regard that as a nasty question.
I think it is a fundamental question that is a very important
one.
The time that we have spent putting systems in place is
precisely for this reason. I do not think anyone wants another
program that does not work or has a troubled record. Our
statute requires us to negotiate with each CDFI a set of
performance goals that go right into the legal document that
becomes the legal vehicle by which we award them moneys. They
are required to report to us quarterly and annually on these
goals, and we can take sanctions if they do not satisfy them.
Among the performance goals that are negotiated are
financial and programmatic goals, and financial covenants of
various sorts.
In doing so, the fund is cognizant of the individual needs
of each organization and how it is different. At the same time,
we require performance from everyone. The organizations that we
selected we selected because of their impressive financial
situation, condition, stability, management capacity and so
forth.
Senator Bond. Will you be doing examinations of them?
Ms. Moy. Absolutely.
Senator Bond. And Treasury is responsible for that? When it
goes bad, who do we hang, you? [Laughter.]
Mr. Hawke. Senator, I am confident that we will be
insisting on systems being in place to achieve the objectives
you have right from the beginning of this program.
Senator Bond. But who do we hang out to dry?
Mr. Hawke. This is an operation of the Treasury Department,
Senator Bond.
Senator Bond. So you are volunteering? You are the one? You
are the belly button we point at?
Mr. Hawke. Yes, sir; this is one of our bureaus. We do not
interfere with the independence of the decisionmaking of the
CDFI fund, but the one thing that Director Moy and I have
talked about again and again from the very beginning of this
program was the need not only to have systems in place to
assure that the process of making grants was transparent and
had integrity to it, but that the followup process was
demanding.
Senator Bond. You are responsible for what happens if one
of them gets troubled. What do you do with it?
Ms. Moy. It depends on why they are in trouble. I mean, it
is possible for people to get into trouble through no fault of
their own. When you constantly monitor an organization and look
at their financials on a quarterly basis, you are generally not
surprised by things that happen. You see trends.
The best answer, actually, the best solution is to
intervene before you have a problem. We certainly do not want
to be surprised by a problem.
Senator Bond. I just realized--do you take it over? I tell
you what. Let me ask that you send me those answers, because we
do have a series of questions that we would like to find out
about, the goals, the standards, the performance objectives,
and I am going to ask our staff, both sides of the staff to
monitor what is actually happening, and I thank you very much
for your testimony.
You present a great vision of what might happen, and we
want to see that it does.
Senator Mikulski. And as you can see, there is both support
and skepticism here. The skepticism is not harsh. We want to
know what are we getting into, what our obligations are, and
make sure it is not another hollow opportunity.
Perhaps in following up with our staffs, you could do it in
a case example tracing through microenterprise, what happens if
an individual defaults, what happens if the organization is in
trouble, et cetera, et cetera. But also, how do you work in the
first place: The anatomy of the good news, and then what would
happen if there is bad news. This is asked in a no-fault way,
but we need to get to know each other.
Ms. Moy. We would be happy to do that. Thank you, Senator.
[The information follows:]
OBJECT CLASSIFICATION SCHEDULE--DIRECT OBLIGATIONS
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year
--------------------------------------------------
Object classification 1997 proposed 1998 budget
1996 actual operating level estimate
----------------------------------------------------------------------------------------------------------------
Personnel compensation: Permanent positions.................. 590 1,500 2,700
--------------------------------------------------
Total personnel compensation........................... 590 1,500 2,700
==================================================
Civilian personnel benefits.................................. 137 375 725
Travel and transportation of persons......................... 97 100 200
Transportation of things..................................... 8 25 5
Rent, communications and utilities:
Rental payments to GSA................................... ............... 340 45O
Rental payments to other agencies........................ 163 100 ...............
Communications, utilities and miscellaneous charges...... ............... 80 60
Printing and reproduction.................................... 71 80 100
Other services............................................... 1,336 975 900
Supplies..................................................... 48 75 80
Equipment.................................................... 346 350 280
Grants, subsidies and contributions.......................... 46,701 71,000 119,500
--------------------------------------------------
Total obligations...................................... 49,497 75,000 125,000
==================================================
Unobligated balance available, SOY........................... (49,878) (45,000) (20,000)
Unobligated balance available, EOY........................... 45,000 20,000 20,000
Unobligated balance expiring................................. 381 ............... ...............
--------------------------------------------------
Total enacted appropriations and budget estimate....... 45,000 50,000 125,000
----------------------------------------------------------------------------------------------------------------
ANALYSIS OF FISCAL YEAR 1997 APPROPRIATED LEVEL
[Dollars in thousands]
------------------------------------------------------------------------
FTE Amount
------------------------------------------------------------------------
Fiscal year 1997 Proposed Operating
Level.................................. 23 $75,000
Fiscal year 1998 Estimate............... 35 125,000
------------------------------------------------------------------------
DIGEST OF FISCAL YEAR 1998 BUDGET ESTIMATES BY ACTIVITY
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year Fiscal year Fiscal year
1996 actual 1997 proposed 1998 budget
Budget activity ----------------- operating level estimate
---------------------------------
FTE Amount FTE Amount FTE Amount
----------------------------------------------------------------------------------------------------------------
Management and administration:
Administrative services.................................. ... $2,760 ... $3,650 ... $4,500
Administrative expenses for Direct Loan Program \1\...... ... 35 ... 350 ... 1,000
--------------------------------------------------
Total management and administrative expenses......... ... 2,795 ... 4,000 ... 5,500
Assistance to CDFI's (other than direct loans)............... ... 30,560 ... 43,150 ... 59,500
Direct loan subsidy.......................................... ... 3,003 ... 12,850 ... 20,000
Incentives for depository institutions....................... ... 13,139 ... 15,000 ... 40,000
--------------------------------------------------
Subtotal, operating level.............................. ... 49,497 ... 75,000 ... 125,000
Unobligated balance available, SOY........................... ... (49,878) ... (45,000) ... (20,000)
Unobligated balance available, EOY........................... ... 45,000 ... 20,000 ... 20,000
Unobligated balance expiring................................. ... 381 ... .......... ... ..........
==================================================
Total enacted appropriations and budget estimate...... 10 45,000 23 50,000 35 125,000
----------------------------------------------------------------------------------------------------------------
\1\ The amount for fiscal year 1998 is a ``not to exceed'' amount that may be used for administrative expenses
for the Direct Loan Program.
______
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS FUND
Summary Justification of Fiscal Year 1998 Budget Estimates
GENERAL STATEMENT
The CDFI Fund represents a new direction for community development
initiatives, by using limited public resources to invest in and build
the capacity of the private sector to address the community development
financing needs of distressed urban and rural communities. The CDFI
Fund's initiatives are designed to unleash large amounts of private
capital, emphasize private sector market discipline, and take full
advantage of private sector human talent, energy and creativity.
Decisions about which specific projects and businesses to finance are
left to the private sector. The effect of these efforts will be to
address market inefficiencies which exist in distressed communities,
restore healthy private market activity, promote entrepreneurship,
revitalize neighborhoods, generate tax revenues, and empower local
residents.
Through the CDFI Program, the CDFI Fund stimulates the creation and
expansion of a diverse set of specialized, private, for profit and
nonprofit financial institutions known as community development
financial institutions (CDFI's). These specialized institutions
complement the role of traditional financial institutions by filling
niches in the market which traditional financial institutions are not
well positioned to serve. CDFI's cover a broad range of institution
types, such as community development banks, community development
credit unions, community development loan funds, community development
venture capital funds, and microenterprise loan funds. They provide a
wide range of financial products and services to distressed urban and
rural communities and to low income populations, such as commercial
loans and investments to start or expand small businesses, loans for
first time home buyers, loans to rehabilitate rental housing, and loans
for community facilities. The CDFI Fund will: (1) invest directly in
CDFI's that satisfy high quality standards and raise private matching
funds; (2) provide training and technical assistance to improve the
capacity of CDFI's; and (3) implement secondary market initiatives
which draw in new sources of private institutional capital to support
the activities of CDFI's.
In its first round under the CDFI Program, the CDFI Fund selected
32 organizations to receive a total of $37.2 million in equity
investments, loans, capital grants and technical assistance. But this
barely scratches the surface of what needs to be done to achieve the
full potential of CDFI's.
Interest and demand for the CDFI program has dramatically exceeded
expectations, with requests for assistance last year exceeding $300
million. The interest demonstrated by the initial pool of applicants,
plus continued growth and interest in new CDFI formation, indicate the
dramatic potential for future investment for the CDFI Fund to stimulate
expansion of the diverse CDFI industry.
In addition to making increased direct investments in CDFI's, the
CDFI Fund is planning to take full advantage of the potential of the
diverse and growing CDFI field by implementing new initiatives to
expand the Fund's tools for assisting CDFI's, and keeping the Fund on
the cutting edge of innovation. An important new training initiative
will significantly enhance the capacity of private sector organizations
to provide a full range of training and technical assistance services
to CDFI's at affordable prices. This initiative will emphasize quality
and market discipline in the training and technical assistance services
delivered by private sector providers. By using its resources to
enhance capacity in this way, the CDFI Fund will build on the existing
marketplace for these services, which will be a much more effective
approach than if the Fund were to provide these services directly. In
the long term, this initiative will also help ensure the maximum
effectiveness of the CDFI Fund's future investments in an increasing
number of CDFI's.
While supporting the creation and expansion of new types of
specialized private financial institutions, the CDFI Fund's programs
also recognize the key role being played by traditional financial
institutions--banks and thrifts--in community development lending and
investing. In recent years, many such traditional financial
institutions have increased their efforts to lend and invest in
distressed communities. By offering incentives to such traditional
financial institutions through its Bank Enterprise Awards (BEA)
Program, the CDFI Fund builds on these trends and assists traditional
financial institutions in enhancing their direct community development
lending, as well as in investing in CDFI's.
In the first round of the BEA Program, the CDFI Fund made a total
of $13.1 million in incentive awards to 38 insured depository
institutions. These awards supported more than $120 million in total
community development investments by banks and thrifts. By making
improvements in the program and by engaging in increased outreach to
the banking and thrift industries, use of the program can be
dramatically enhanced.
As a new organization, in addition to refining its programs and
developing new initiatives, the CDFI Fund is working to develop a full
set of performance goals, measures and numerical targets in time for
the fiscal year 1999 budget presentation. Included in this year's
presentation is some initial thinking on possible performance measures.
______
activity: 1. management and administration
Functions: Provides management, staff and other services which
enable the Fund to develop and implement policies and programs, monitor
investments, and provide support functions for these activities.
Mission Statement: Management and Administration is intended to
develop and implement the initiatives of the CDFI Fund with the highest
possible quality and professionalism to maximize the capacity of the
Fund to achieve its objectives.
[In thousands of dollars]
------------------------------------------------------------------------
Fiscal year
-----------------------------------
1996 1997 1998
actual estimate estimate
------------------------------------------------------------------------
Budget Authority \1\................ 2,795 4,000 5,500
------------------------------------------------------------------------
\1\ These amounts include administrative expenses for the Direct Loan
Program.
Performance Goal: To build a strong staff with skills and
experience appropriate to the fund's unique activities.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
Emphasize quality, relevant Number of staff hired to fill targeted positions that Output.
experience and record of have the desired skills and professional experience.
achievement in hiring.
Contribution of staff in meeting overall performance Outcome.
goals of CDFI Fund through meeting of goals in
individual performance plans.
Build a staff reflecting Number of staff sorted by diversity characteristics...... Output.
appropriate diversity that can
serve as a model for other
organizations.
Ongoing training and skills Number of CDFI Fund staff members that attend training Output.
development of existing staff. sessions or other educational and developmental
opportunities.
Design and implement system to Implement internal data collection and retrieval system Output.
evaluate impact of Funds' programs. on participating CDFI's.
Design CDFI performance evaluation process and complete Output.
paper setting forth approach to long term impact
evaluation.
----------------------------------------------------------------------------------------------------------------
activities: 2 and 3. assistance to cdfi's (including direct loans)
Functions: The Fund makes investments in quality CDFI's, by
providing assistance in the form of equity investments, loans, capital
grants, and deposits or shares. The form of financial assistance
depends on the individualized needs of a CDFI as reflected in a
realistic business plan, consistent with its ability to raise private
matching funds in a comparable form. The Fund will also assist CDFI's
through training and technical assistance initiatives, and by providing
assistance to organizations that enhance the liquidity of CDFI's.
Mission Statement: Assistance to CDFI's is intended to spur the
creation and expansion of these specialized private financial
institutions and to enhance both immediate private sector capacity to
address community development financing needs in distressed
communities, as well as to strengthen the long term capacity of these
institutions to serve such needs and help restore healthy private
market activity in distressed communities.
[Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------
1996 actual 1997 estimate 1998 estimate
----------------------------------------------------------------------------------------------------------------
Budget Authority (Other than Direct Loans)...................... $30,560 $43,150 $59,500
Budget Authority (Direct Loan Subsidy) \1\...................... $3,003 $12,850 $20,000
Direct Loan Level \2\........................................... $6,660 $33,316 $52,521
Direct Loan Subsidy Rates \3\ (Percentage)...................... 45.09 38.57 38.08
----------------------------------------------------------------------------------------------------------------
\1\ For fiscal year 1997 and fiscal year 1998 these are upper limits. The actual mix between loans and other
forms of financial assistance will depend on the individualized needs of CDFI's as reflected in realistic
business plans, consistent with their ability to raise private matching funds in a comparable form.
\2\ For fiscal year 1997 and fiscal year 1998 these are upper limits, based on the assumed direct loan subsidy
rate.
\3\ The 45.5 percent subsidy rate for fiscal year 1996 that appears in the President's fiscal year 1998 Budget
should actually be 45.09 percent.
Performance Goal: To strengthen and expand the network of private
financial institutions to address the community development financing
needs of distressed urban and rural communities and underserved
populations.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
To increase the cumulative number Number of CDFI's which receive financial assistance from Output.
of CDFI's to which the Fund the CDFI Fund which have not previously received such
provides financial assistance assistance.
while maintaining high quality
standards and promoting diversity.
Cumulative number and percent of participating CDFI's by Output.
geographic region, institution type, urban v. rural
focus.
To implement a secondary market Issuance of regulations and Notification of Funding Output.
initiative to bring increased Availability (NOFA).
liquidity for CDFI's.
To implement effective training Number of participants in training and technical Output.
and technical assistance assistance programs.
initiatives which enhance the
capacity of CDFI's now and in the
future.
Number of CDFI's which report improved capacity as a Output and
result of participating in training and technical outcome.
assistance programs.
----------------------------------------------------------------------------------------------------------------
activity: 4. incentives for depository institutions
Functions: Through the Bank Enterprise Awards (BEA) Program, the
Fund makes cash awards to banks and thrifts that increase their
community development lending, investment, and provision of financial
services. The Fund will use up to one-third of program funds for BEA.
All insured banks and thrifts are eligible to participate.
Mission Statement: The BEA Program is intended to provide
incentives and rewards which assist traditional financial institutions
in prudently enhancing their activities in distressed urban and rural
communities, by direct lending and investing and also by investing in
CDFI's.
[In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------
1996 actual 1997 estimate 1998 estimate
----------------------------------------------------------------------------------------------------------------
Budget Authority................................................ 13,139 15,000 40,000
----------------------------------------------------------------------------------------------------------------
Performance Goal: To increase the general effectiveness and
community development impact of the Bank Enterprise Award (BEA)
Program.
----------------------------------------------------------------------------------------------------------------
Objective Performance measure (indicator) Type of measure
----------------------------------------------------------------------------------------------------------------
Simplify and reform regulation to Incremental and cumulative number of awards.............. Output.
improve program participation.
Reforms proposed......................................... Output.
Incremental and cumulative dollars awarded............... Output.
Develop and propose legislative Legislative improvements proposed........................ Output.
improvements to the program.
Expand the awareness of the BEA Implementation of effective outreach program to Outcome.
program by working with the appropriate regulatory entities, trade associations and
appropriate regulators and trade others as appropriate.
associations.
Number of applicants in program.......................... Output.
----------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions Fund Programs
federal funds
General and Special Funds:
For grants, loans and technical assistance to qualifying community
development lenders, and administrative expenses of the Fund,
$125,000,000, to remain available until September 30, 1999, of which
$20,000,000 may be used for the cost of direct loans, and up to
$1,000,000 may be used for administrative expenses to carry out the
direct loan program: Provided, That the cost of direct loans, including
the cost of modifying such loans, shall be defined as in section 502 of
the Congressional Budget Act of 1974: Provided further, That these
funds are available to subsidize gross obligations for the principal
amount of direct loans not to exceed $53,000,000: Provided further,
That not more than $40,000,000 of the funds made available under this
heading may be used for programs and activities authorized in section
114 of the Community Development Banking and Financial Institutions Act
of 1994.
Additional committee questions
Senator Bond. Thank you very much, Ms. Moy and Mr. Hawke.
[The following questions were not asked at the hearing, but
were submitted to the Institutions for response subsequent to
the hearing:]
Questions Submitted by Senator Bond
no track record and rushing the product
Question. The President's Budget is requesting a substantial
increase (150 percent in the funding for the CDFI Fund including the
CDFI program and the Bank Enterprise Act) from $50 million in fiscal
year 1997 to $125 million in fiscal year 1998, with an overall target
of $1 billion by fiscal year 2002. This is a substantial increase for a
new program, especially a new program without a proven track record or
any experience. How do you justify this large increase?
Answer. The requested increase in funding is justified by the great
demand and need for the types of assistance provided by the CDFI Fund.
The dramatic response to the CDFI Program during its first funding
round provides an illustration--and good proxy--of the demand and unmet
needs for the Fund's products. The Fund received 268 applications for
the CDFI Program from organizations in need of investment capital and
technical assistance. The requests for funding exceeded $300 million--
approximately 10 times the amount of resources initially made
available. The applicants that submitted requests represented only a
portion of the universe that are likely to be eligible for assistance.
Moreover, the Fund has received inquiries from a substantial number of
groups expressing interest in the formation of new CDFI's. Finally, it
should be noted that because of limited resources available to the
Fund, those applicants that received funding received, on average, only
60 percent of the amount requested.
CURRENTLY AVAILABLE FUNDING
Question. I understand that the CDFI Fund actually obligated
approximately $37.2 million for the CDFI program and approximately
$13.1 million for the Bank Enterprise Act (BEA) program. How much
additional funding does the CDFI Fund currently have available for
funding new awards during fiscal year 1997 and when does the CDFI Fund
plan to make this funding available?
Answer. For funding new awards during fiscal year 1997, the Fund
currently has available $95 million in appropriated funds. The Fund
recently published notices in the Federal Register for its second
funding rounds of the CDFI Program and the BEA Program (see Attachments
1a and 1b). The CDFI Program notices indicate that the Fund intends to
make available up to $40 million for this program which is expected to
be fully obligated by September 30, 1997.
By the summer, the Fund plans to issue funds availability notices
for funding rounds for training (authorized pursuant to Section 103 of
the Riegle Community Development and Regulatory Improvement Act of 1994
(Public Law 103-325)) and for a secondary market initiative (authorized
pursuant to Section 119 of the Riegle Community Development and
Regulatory Improvement Act of 1994) totaling approximately $20 million.
The Fund anticipates obligating the funds for these two new initiatives
by the end of calendar year 1997.
As required by the Fund's authorizing statute, one-third of all
appropriated program monies must be made available under the BEA
Program. Thus, the Fund must make available $30 million for the BEA
Program. On March 7, 1997, the Fund published a notice in the Federal
Register announcing the availability of $16.25 million for the second
funding round of the BEA Program. However, if requests exceed $16.25
million during the second funding round, the Fund intends to obligate
as much of the $30 million as possible by September 30, 1997. The
balance of the unobligated BEA monies will be rolled over into next
funding round which is expected to be announced in the Federal Register
in October 1997.
Question. In addition, the testimony seems clear that not a single
dollar of the $37.2 million in CDFI program funds have actually been
obligated or leveraged on a single project or activity. If this is
true, how do you measure the success of the CDFI program for which
there is not data?
Answer. The Fund has obligated $37.2 million in equity investments,
grants and loans under the CDFI Program and disbursed or initiated
disbursements of $13.6 million--or 37 percent--of such obligated funds.
The Fund expects to disburse nearly all of its fiscal year 1995 monies
by September 30, 1997. The Fund is working diligently to disburse the
remaining awards as expeditiously as possible after the Fund and each
awardee enters into a formal agreement that requires the institution to
comply with performance goals that are rigorous and tailored to the
unique elements of the institutions and the needs of the communities
they serve and abide by other terms and conditions pertinent to the
award. The requirements for the formal agreement are set forth in
Section 108(f)(2) of the Riegle Community Development and Regulatory
Improvement Act of 1994. As discussed the Fund recently published
notices in the Federal Register for the CDFI Program and the BEA
Program announcing the availability of funding rounds for fiscal year
1996 and fiscal year 1997 appropriated dollars most of which it expects
to obligate by September 30, 1997.
Some data currently exists that allows the Fund to measure the
success of the CDFI Program. For example, the CDFI Program has already
demonstrated a significant ability to leverage funds from non-Federal
sources. More than $50 million of such matching money has already been
raised and received by the 32 organizations selected for funding in the
first funding round of the Program. This money has, in turn, leveraged
additional funds and resulted in a total of over $100 million raised
and made available to finance community development activities. In
several cases, actual development transactions have already occurred.
For example, one of our awardees reports that the Fund's $3 million
grant has already enabled it to effectuate $24 million in home mortgage
and commercial lending transactions. Over the next two to three years,
the $37.2 million in CDFI Program awards are expected to leverage three
to four times that amount in total capital raised for these
institutions.
Question. In addition, how many grant agreements have actually been
signed or entered into under the CDFI program? Please provide a list
that describes each grant, each grant agreement, and the date on which
the grant agreement was signed or executed, and the date and amount of
the disbursement of any funds. Please list each BEA award by award,
date of award and by activity.
Answer. The Fund enters into an Assistance Agreement with each
awardee prior to providing any assistance to such awardee. The Fund may
provide assistance in the form of an equity investment, deposit, loan,
grant, technical assistance, or some combination of these instruments.
To date, the Fund has entered into ten Assistance Agreements with
awardees under the CDFI Program. Under the BEA Program, the Fund must
enter into an Award Agreement with each awardee prior to providing an
award to such awardee. All awards are in the form of a grant under the
BEA Program. To date, the Fund has entered into Award Agreements with
all of the 38 institutions selected to receive assistance under the BEA
Program. Please see Attachments 2a and 2b which describe each form of
assistance provided under the CDFI Program, the date on which each
Assistance Agreement was executed, the amount of disbursement of each
CDFI Program award and each Bank Enterprise Award, the date on which
each Bank Enterprise Awardee Agreement was executed, the amount of
disbursement of each Bank Enterprise Award, and the activities for
which such award was granted.
SUCCESS OR FAILURE OF THE CDFI PROGRAM
Question. When will there be enough data and program experience to
analyze the strengths and weaknesses and the successes and failures of
the CDFI program? What benchmarks have you established for analyzing
the use of CDFI program funds? What steps have you taken for program
integrity to prevent fraud and abuse by CDFI program grantees? Has the
CDFI Fund established post-award audit review requirements for each
CDFI grant? If not, why not?
Answer. The Fund will collect financial and performance data from
CDFI Program awardees on a quarterly and annual basis. This information
will be compiled and reported to Congress as part of the Fund's annual
report. The Fund is taking great care to design and implement the
systems and procedures necessary to effectively monitor and evaluate
the use of its assistance, impact of its investments, and the financial
and managerial soundness of the organizations it funds. To this end,
the Fund requires awardees to report at least annually on the manner in
which Fund assistance has been used. The Fund negotiates with each
award winner specific performance goals and financial soundness
covenants for non-regulated financial institutions. In this manner, the
Fund attempts to ensure program integrity and prevent fraud and abuse
by awardees.
In addition, the Fund has worked closely with the Treasury
Department's Office of Inspector General and has sought the assistance
of consultants in developing its internal quality control systems and
procedures.
The Fund's Assistance Agreements with each unregulated CDFI awardee
requires such awardees to submit audited financial statements to the
Fund each year. In the case of regulated institutions, the Fund
requirements seek to conform, to the greatest extent possible, with the
financial reporting requirements of each awardee's Federal regulatory
agency.
LEVERAGING OF FUNDS
Question. What are the yardsticks used to determine whether a CDFI
grant applicant can leverage other funds successfully? What do you look
for in a CDFI grant applicant in assessing the ability of the grant
applicant to meet the needs of a distressed community successfully
(i.e. Do you look for roots in a community? Do you look for a track
record of community development experience? Do you look for a firm
commitment of funds?)
Answer. CDFI Program awardees are required to raise a one-to-one
match for each dollar of funds requested. Applicants must submit
evidence of their ability to leverage such matching monies as part of
their application for assistance. Firm commitments are the best
evidence of such ability, but other factors such as strength of the
applicant's fund raising strategy and track record are also considered.
However, the Fund will not disburse any assistance until the requisite
matching funds are raised. The selection criteria provide that the Fund
give additional consideration to applicants that have firm commitments.
The CDFI Program Regulations, at 12 C.F.R. Sec. 1805.902, state that
``at a minimum, a firm commitment must consist of a binding written
agreement between an Awardee and the source of the matching funds that
is conditioned only upon availability of the Fund's assistance and
other such conditions as the Fund, in its sole discretion, may deem
appropriate. Such agreement must provide for disbursal of the matching
funds prior to, or simultaneous with, receipt by the Awardee of the
Federal funds.''
The matching funds represent only the initial leverage resulting
from a CDFI Program award. Applications are evaluated, in part, by
evaluating the potential for ongoing sources of funds that will be
leveraged by the Fund investment. Potential sources of leverage include
any excess match over the minimum required match, leverage of net worth
infusion through borrowing and recycling of loan funds, and attraction
of additional investment into specific deals to be financed by the
CDFI.
The Program's evaluation criteria are designed to ensure that
Federal resources are invested prudently and in a manner that maximizes
the potential of investing in organizations with long-term viability
that will serve their communities on a long-term self-sustaining basis.
CDFI awardees are selected based on track record, management capacity,
skills and experience, quality of the business plan, ability to raise
matching funds, and community development impact.
REVIEW PROCESS AND REVIEWERS
Question. What is the review process for applications for CDFI
program funding? What is the specific criteria used for assessing
applications? Describe the scoring/ranking system used for reviewing
the applications. Was the criteria applied consistently and uniformly
for all applications?
What was the review process for the CDFI program applications?
Answer. The review process used to select CDFI award recipients in
the first funding round was described in the regulations and applicable
notice of funds availability notice (see Attachment 3), published in
the Federal Register on October 19, 1995. The regulations and notice
did not prescribe a scoring/ranking system for evaluating applications;
instead those documents set forth a process similar to an investment
analysis methodology utilized by private sector investors. CDFI award
recipients were chosen on the basis of a wide range of factors
including track record, management capacity, skills and experience,
quality of the business plan, ability to raise matching funds, and
community development impact. These criteria were applied fairly and
consistently to all applicants.
Winners were chosen as a result of a tiered review process. In an
effort to conduct the review in an efficient manner, the Fund conducted
different ``tiers'' of the process simultaneously. Tier 1 of the review
process was intended to ensure that each applicant met the eligibility
requirements and submitted complete application materials. Tier 2 of
the review process was intended to ensure that each applicant meeting
the Tier 1 requirements possessed the financial and organizational
capacity to be a successful CDFI. The Fund actually performed each Tier
2 review as part of a Tier 3 review since each factor under Tier 2 was
thoroughly examined under Tier 3. Tier 3 of the review process
considered additional factors and ultimately resulted in the selection
of award winners.
The selection criteria listed in the regulations were also
reflected on the guidance sheet given to contractors and Fund staff
that performed the qualitative reviews of applications (see Attachment
4). The evaluation process and criteria aimed to ensure that the Fund
invested prudently in a manner that maximized the potential of
investing in organizations that could continue to provide capital in
their communities on a long-term self-sustaining basis. As part of the
Tier 3 review, 59 organizations were determined to be sufficiently
competitive to be invited by the Fund for an interview with the final
review panel. Of those interviewed, 32 were selected to receive an
award. In conducting the reviews, the Fund used permanent staff, as
well as outside experts, to supplement and complement internal staff.
On April 4, 1997, the Fund published revisions to its interim
regulations in the Federal Register that made modest changes to the
review process (see Attachment 5). Sections 1805.800 through 1805.802
of those regulations outline the evaluation and selection process.
Without eliminating any of the evaluation factors, the revised interim
rule restructures the process of evaluating applications described to
expedite the process and improve efficiency.
The current revised interim rule consolidates what had been Tier 2
(financial and organizational capacity) and Tier 3 (other qualitative
criteria) reviews into one set of substantive review criteria. However,
the selection criteria originally set forth on October 19, 1995, are
retained. The current regulations clarify that the criteria to be
considered include the quality of the applicant's business plan and the
extent and nature of the applicant's potential community development
impact that will be catalyzed relative to the amount of assistance to
be provided by the Fund. While ensuring fairness and consistency, the
Fund will seek to implement the evaluation and selection process in a
manner that takes into consideration the unique characteristics of
applicants that vary by organizational type, total asset size, and
stage of organizational development.
UNBIASED AWARD STRUCTURE
Question. What safeguards have the CDFI Fund implemented to ensure
an unbiased grant award system? For example, have any of the reviewers
or panel reviewers for the CDFI program ever been employed by any of
the applicant organizations or their affiliates or ever sought or
maintained client relationships with such organizations? If yes, please
provide details including the names of individuals, organizations and
the dates of the affiliation or the employment.
Answer. The CDFI Fund established a selection process with respect
to all CDFI Program applications that was unbiased, fair, thorough and
rigorous and included safeguards to ensure that no one person possessed
a dispositive influence over which entities were chosen as winners. All
Awardees under the CDFI Program were chosen by a unanimous decision of
a panel composed of five people. The CDFI Fund evaluated factors
including track record and financial strength; capacity, skills and
experience of the management team; quality of the applicant's business
plan; ability to raise non-federal matching funds; and community
development impact.
The CDFI Fund staff and outside contractors were used in the
initial review stage, with each contractor reviewing one or two groups
of applications, with groups defined on the basis of type of
organization (and in some cases, further defined by region of the
country). The tasks for these reviewers during the initial review stage
was to review each application carefully in order to make
recommendations about those applications that were potentially
competitive and therefore should be given further consideration by the
second-stage review panel.
The second-stage review panel reached all of its decisions
unanimously. This review panel made evaluations, performed due
diligence, and unanimously determined which applicants would receive
assistance. The decisions of the second-stage review panel were subject
to the approval of the CDFI Fund Director.
The Fund's Deputy Director, Steve Rohde, was an employee of the
Local Initiatives Support Corporation (LISC), an award recipient, prior
to joining the Fund. Mr. Rohde has not had any financial interest in
LISC since leaving his position with the organization. Like all other
CDFI Program winners, LISC was chosen as a result of a rigorous
selection process in which no one person had dispositive influence. The
review panel that ultimately selected LISC as a winner made a unanimous
decision with respect to LISC and all other winners.
Prior to joining the CDFI Fund, the CDFI Fund Director Kirsten Moy
served as a member of an advisory committee in connection with the New
York activities of the Low Income Housing Fund, a CDFI Program winner.
As a volunteer advisor, Ms. Moy was not compensated for her service on
the committee.
The Deputy Director of the CDFI Fund, in consultation with
individual reviewers, identified actual and potential conflicts of
interest that reviewers had with respect to any applications, and the
Deputy Director made the determination that a particular set of facts
could lead to a conflict and, therefore, prevented an expert from
reviewing a particular application, as follows:
(a) Dan Lopez was a member of the Board of Directors of the Low
Income Housing Fund and was not assigned that application.
(b) James Paquet was on a detail from the State of Michigan to the
CDFI Fund under the Intergovernmental Personnel Act. Mr. Paquet was not
assigned any applications from Michigan. Instead, he was assigned a
group of applications consisting of business loan funds in the
Northeast region.
(c) In the early to mid 1980's, Laura Henze Russell had been
Executive Director of an organization now known as the Local Enterprise
Assistance Fund, based in Boston. Ms. Russell was not assigned the
application of Local Enterprise Assistance Fund. She was assigned a
group of applications consisting of business loan funds from the
Midwest and West regions.
(d) Fredric Cooper formerly worked for The Enterprise Foundation,
which had a relationship with the San Antonio Housing Trust Foundation,
an applicant. Enterprise Foundation was not an applicant. Mr. Cooper
was assigned a group of housing loan funds from the Northeast and
Midwest.
(e) Alan Okagaki had been an employee and subcontractor of
Shorebank Advisory Services and a consultant to Southern Development
Bancorporation. After an initial look at the Albina Community Bancorp
application Mr. Okagaki informed the CDFI Fund that there was
significant material in that application that Mr. Okagaki recognized as
having been previously prepared by Shorebank Advisory Services. He was
excluded from reviewing the applications of Shorebank Corporation,
Douglass Bancorp, Louisville Development Bancorporation, Southern
Development Bancorporation, and Albina because Shorebank Advisory
Services had had a consulting relationship with these institutions.
(f) In the second stage review panel, Paul Pryde, who did not
participate in the initial stage review, recused himself from two
applications, McAuley Institute and Community Bank of the Bay, because
of an appearance of a conflict.
GRANT REVIEWS
Question. Did the CDFI Fund accept revisions to applications from
certain applicants? What rules did the CDFI Fund establish with regard
to revisions to ensure a fair process for all CDFI applicants? If
revisions were permitted for any grant application, please provide the
details of each revision, including all dates and contacts between the
CDFI fund and the applicant?
Answer. The Fund does not accept revisions to applications from any
applicants. The Fund's regulations, at 12 C.F.R. Sec. Sec. 1805.700 and
1806.206, provide that the Fund ``may request clarifying or technical
information'' with respect to any application submitted to the CDFI or
BEA Program, respectively. Consequently, when the Fund determines that
it is appropriate and necessary for its decision making, it requests
clarifying or technical information from applicants.
In addition, the Fund accepts from all applicants supplemental
information that updates previous submitted material or otherwise
informs the Fund of changes in information previously submitted.
Question. Did any reviewer or panel reviewer provide assistance to
any of the applicants or their representatives with respect to the
preparation or revision of any part of an application or for
supplemental information provided to or requested by the CDFI Fund? If
yes, please provide the date and details of each occurrence.
Answer. The Fund or its reviewers did not provide assistance to any
of the applicants or their representatives with respect to the
preparation or revision of any part of an application or for
supplemental information provided to or requested by the Fund. Section
105(c) of the Riegle Community Development and Regulatory Improvement
Act of 1994 (Public Law 103-325) states that
[t]he Fund shall provide an outreach program to identify and
provide information to potential applicants and may provide
technical assistance to potential applicants, but shall not
assist in the preparation of any application.
Accordingly, the Fund provided an outreach program to applicants.
Such outreach was accomplished through workshops, publications and
other means and included general information about the Fund's programs
and their requirements. The Fund provided outreach services to all
interested parties on an equal basis.
FEDERAL REGISTER
Question. On March 18, 1996, the CDFI Fund published in the Federal
Register a waiver of the deadline for receipt of an application under
the CDFI and BEA programs for certain applications. What was the nature
and reason for this waiver? Please provide a detailed list describing
all application materials and information which were received by the
CDFI Fund between the original deadline of January 29, 1996 at 4:00
p.m. and March 13, 1996.
Answer. On March 18, 1996, the Fund published a waiver in the
Federal Register of its January 29, 1996, 4 p.m., application deadline
for the CDFI and BEA Programs. The Fund determined it would accept an
application if: (1) the application was actually received by the Fund
on January 29, 1996; (2) the application was mailed with a postmark
date on or before January 29, 1996; or (3) the application was
delivered to a professional courier service on or before January 29,
1996. This waiver was based on the determination that such waiver
promoted the achievement of the purposes of the CDFI Program and the
BEA Program and their underlying statutes. Several factors contributed
to the Fund's determination to grant this waiver. First, in the first
year of implementation of these programs, it was determined to be in
the Fund's interest to seek the broadest possible participation.
Second, preparing an application required an extensive amount of work
which, without the waiver, might have gone to waste merely because of a
technical failure in the mail or delivery process. Third, given the
fact that these programs are new, and some of the applicants had never
previously applied to the Federal government for funding, there
appeared to have been some confusion about the precise requirements for
delivery of an application in a timely fashion. Finally, the effect of
the requirement that the Fund be in receipt of an application by a
specified time appeared to have had a disproportionate effect on
applications from geographically remote places. Thus, strict
enforcement of the deadline could have hindered the Fund in achieving
its geographic diversity objectives. See Attachment 6 for a list of
items accepted between January 29, 1996, 4 p.m., and March 13, 1996.
FUTURE FUNDING
Question. When will the CDFI Fund announce the next round of
funding? You appear to be 4 to 5 months behind the schedule of your
first round.
Answer. On March 7, 1997, the Fund published a Notice of Funds
Availability for the second round of the BEA Program (see Attachment
1b). On April 4, 1997, the Fund published Notices of Funds Availability
in connection with the CDFI Program (see Attachments 1a).
financial safety and soundness requirements
Question. How will CDFI entities be regulated to ensure that CDFI
funds are being used appropriately and that these entities will not
pose a financial risk to the American taxpayer. What happens to a
financially troubled CDFI?
Answer. CDFI Program awardees are required to comply with numerous
federal requirements and reporting mandates that are intended to
protect the taxpayers' interest. In the event that an awardee does not
comply with the aforementioned requirements, the CDFI Fund has a range
of remedies that it may employ. These mandates or requirements include:
(1) Compliance with government requirements including all Federal,
state and local laws, regulations, ordinances, applicable Office of
Management and Budget Circulars, and applicable Executive Orders;
(2) Mandatory reporting to the U.S. Department of the Treasury
Inspector General of the existence or apparent existence of fraud,
waste or abuse of Federal assistance;
(3) Provision of financial and activity reports, records,
statements, and documents as may be requested to ensure compliance with
the assistance agreement. An Awardee is required to provide full and
free access to its officers and facilities and all books, documents,
records, and financial statements relating to the use of assistance;
(4) Compliance with all record retention requirements set forth on
OMB Circular A-110 and, pursuant to such Circular, retention of all
financial records, supporting documents, and statistical records
pertinent to the assistance;
(5) Maintenance of records necessary to disclose the manner in
which assistance provided is used and demonstrate compliance with the
requirements of the CDFI Program regulations and the assistance
agreement;
(6) Submission of quarterly reports after the end of each fiscal
quarter in a form that is prescribed by the CDFI Fund in the assistance
agreement;
(7) Submission of an annual report that includes, among other
things, information regarding the manner in which assistance or
matching funds were used, financial condition and financial
performance, activities and initiatives engaged in which enhance the
awardee's ability to promote community development, the awardee's
strategy for achieving its performance goals or enhancing its financial
performance, and the ethnic, racial or gender composition of its
borrowers or investees;
(8) Compliance with the Equal Credit Opportunity Act, where
applicable; and
(9) Compliance with restrictions on certain insider activities.
DISPLACING BANKS
Question. There has been some concern that CDFI's could indirectly
discourage more traditional financial institutions may not feel welcome
or may conclude that their presence is not needed. Couldn't this result
in isolating distressed communities even more from access to mainstream
financial resources and opportunities for economic revitalization? How
are you monitoring this concern?
Answer. The roles of CDFI's and traditional financial institutions
are mutually reinforcing. CDFI's are not a substitute--and should not
be considered a replacement--for traditional financial institutions.
CDFI's complement the strong and active role that banks and thrifts
should play in providing credit within distressed communities. CDFI's
are specialized, private financial institutions that fill niches that
traditional financial institutions cannot fill--or will not fill on
their own. The credit needs in distressed communities are often unique
and require innovative solutions. CDFI's are distinct from traditional
financial institutions because they have developed specialized
expertise in delivering certain types of credit--such as micro loans,
financing day care or public health care facilities, or financing
housing for people with AIDS or other special needs. In many
communities, CDFI's have pioneered innovative new products that were
later adopted by local banks or developed partnerships with banks to
address unique local needs. For example, many microenterprise programs
work with low income entrepreneurs that have credit problems or that
don't meet standardized underwriting criteria. In these cases, the
micro enterprise programs work with these individuals to build their
business skills and history as credit-worthy business borrowers. After
the borrowers have developed a track record, they are often
``graduated'' to become borrowers of traditional financial
institutions. Many traditional financial institutions see their
partnerships with CDFI's as a vehicle to reach into markets that they
could not otherwise reach. In fact, the CDFI Fund's Bank Enterprise
Award Program recognizes the importance of these relationships and is
designed to foster partnerships between CDFI's, as well as promote
increasing lending and service provision within very distressed
neighborhoods. (Attachment 7 describes the impact and activities
generated by the BEA Program.) In summary, CDFI's help to integrate--
not isolate--distressed communities into the economic mainstream.
draining of existing economic development resources
Question. There is often a concern that there is only so many
dollars in the private market available for economic development and
affordable housing resource. Since there are such expectations for the
CDFI program to leverage significant non-federal funds, has there been
any review of where this capital is coming from, and whether it is
likely to be drained from other funding sources traditionally used for
community development and housing projects?
Answer. The vast majority of matching funds received by assisted
CDFI's are from private sector sources of capital. Of the 31
organizations selected to receive CDFI assistance, 72 percent derived
all of their matching funds from private sources (e.g. banks,
corporations, foundations, individuals) and 19 percent derived between
99 percent and 70 percent of their matching funds from private sources.
Only three awardees raised less than 70 percent of their matching
monies from private sources.
BANK ENTERPRISE ACT
Question. The Bank Enterprise Act (BEA) has been implemented as a
separate account under the CDFI Fund. Under BEA, traditional financial
institutions are encouraged through BEA awards to invest, lend and
provide other financial services in distressed communities. Isn't it
better to encourage through the BEA the availability of traditional
financial services and credit in distressed communities than to
establish a new and separate banking system for these communities?
Answer. CDFI's and traditional financial institutions both play
complementary and important roles in serving the credit and financial
service needs of distressed communities. In fact, the CDFI Program and
BEA Program were crafted by Congress to work together. Specifically,
the CDFI Program requires award recipients to obtain matching funds
from non-Federal sources and permits monies committed by banks and
thrifts under the BEA Program to assist in meeting that match. In
addition, under the BEA Program, banks and thrifts that provide support
to CDFI's are given priority consideration for BEA funding. Hence, the
CDFI Program and the BEA Program are both critically important to
improving access to credit and promoting revitalization and deserve
support. Please also see answer to Question 12.
STAFFING NEEDS
Question. Please describe your staffing needs for administering the
CDFI program. Since there are so many types of entities and activities
involved, how will you ensure program integrity?
Answer. The CDFI Fund is in the process of adding staff in certain
critical areas to ensure that key functions are and/or will be
adequately covered. Among these critical areas are program operations,
finance and administration, and awards management. The CDFI Fund is
seeking to hire an individual to oversee these areas as its Deputy
Director for Operations/Chief Financial Officer. In addition, the CDFI
Fund plans to hire, among other professional and technical staff, the
following in each of these areas: program operations--a program manager
who will focus exclusively on the CDFI Program and possibly someone to
manage the CDFI Fund's training and technical assistance initiatives;
finance and administration--a comptroller as well as a staff
accountant; awards management--an award administrator and possibly a
portfolio analyst.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Question. What are you doing to comply with the Government
Performance and Results Act? What is your timetable to develop your
goals, strategic plan, performance measures and outcomes?
Answer. In the implementation of GPRA, the CDFI Fund is ahead of
schedule for compliance. Although the first annual performance plan is
not due until fiscal year 1999, the CDFI Fund submitted its first plan
as part of the fiscal year 1998 budget justification which included
performance goals, measures and outcomes--a year ahead of schedule. It
is the policy of the Department of the Treasury to integrate the annual
performance plan with the annual budget justification.
In regards to the 5-year strategic plan, the CDFI Fund intends to
have a final draft of the 5-year strategic plan in the coming weeks and
looks forward to consultations with Congress and other stakeholders in
developing a final plan. The CDFI Fund plans to submit its 5-year
strategic plan to the Department and OMB in the near future. The CDFI
Fund looks forward to utilizing this important tool to measure the
impact and effectiveness of its programs.
CRITERIA FOR SELECTING CDFI'S
Question. The testimony indicates that a wide variety of CDFI's--
new, old, rural, urban--have been awarded assistance under this
program. What were the most critical criteria used for selecting CDFI's
for assistance? What is the most common weakness in an application for
denying CDFI assistance?
Answer. The key evaluation criteria used for selecting CDFI's for
assistance include track record and financial strength; capacity,
skills, and experience of the management team; quality of the
applicant's business plan; ability to raise non-Federal matching funds;
and community development impact. Attachment 8 discusses factors that
tend to separate successful from unsuccessful applicants in the first
funding round. Through the review process, the CDFI Fund found a wide
variety of institutions working to serve the community development
finance needs of their communities. These institutions are diverse in
type (banks, credit unions, non-profit loan funds, microenterprise loan
funds, venture capital organizations, lending consortia, and others),
the types of communities they serve (urban, rural, Native American),
the types of products and services they provide (small business loans
and equity investments, housing loans, community facility loans,
training and technical assistance, and others), and, finally, their
strategies for promoting economic opportunity and revitalization.
What these organizations have in common, however, is a deep
commitment to serve their communities by building stronger local
markets and catalyzing new economic activity; leveraging resources of
private, public and non-profit sectors; building linkages with the
financial services industry; and developing viable, self-sustaining
financial institutions.
Common problems shared by these institutions include: (1)
difficulties in raising investment capital to support their activities
because, in part, their returns may not be as high as some other
private sector investment opportunities; and (2) the need to develop
further their institutional capacity to expand their activities within
the needy communities they serve. In evaluating applicants that were
best poised to make the greatest community impact, the CDFI Fund
observed several critical factors, including good management; the
importance of strategic assessment and planning in charting an
institution's activities; having sufficient net worth and a capital
structure appropriate to the nature of the activities the institution
is engaged in; the existence of well-functioning internal financial
systems; and a solid portfolio review system for managing risk.
______
Attachment 7
profiles of the first round awardees under the bank enterprise award
program
community impact of the bank enterprise award program
The Bank Enterprise Award Program (the ``BEA Program'') was
designed to provide incentives to insured depository institutions
(banks and thrifts) to invest in community development financial
institutions (CDFI's) and to increase their lending and provision of
financial services in economically distressed communities throughout
the nation.
Awards are determined based on the increase of eligible activities
between two designated six-month evaluation periods. To ensure
appropriate use of limited Federal resources, awards are disbursed only
after the activities proposed by the institutions have been completed.
Collectively, the bank and thrift awardees have provided nearly $66
million in support to CDFI's and $60 million in new lending and
financial services in economically distressed communities. The
activities for which each of the institutions received an award are
described in the following profiles.
There are no statutory or regulatory restrictions or requirements
on institutions with respect to the use of their BEA award dollars
after the completion of proposed activities. The CDFI Fund is happy to
report that the vast majority of the institutions receiving awards in
the first round have indicated that they plan to use their awards to
expand their existing community development work. These activities
would enhance the impact of the BEA Program and are described in the
profiles.
Bank of America Community Development Bank, Walnut Creek, California
Award: $1,585,510
Rewarded activities.--Bank of America Community Development Bank
was awarded $1,585,510 for increasing its commercial real estate,
multi-family housing, and business lending in distressed communities
across California. The bank made nearly $25 million in loans in
targeted neighborhoods. Bank of America Community Development Bank
projects that its activities will generate more than 185 units of
affordable housing and 300 jobs.
Post award activity.--Bank of America Community Development Bank,
together with Bank of America, F.S.B., has pledged to invest its entire
combined award back into the community. $1.1 million of their award
money has been used to establish the Bank of America Leadership
Academy, a nine-month program that provides training for senior
management of community development organizations. The Leadership
Academy is funded jointly by Bank of America Community Development
Bank, Bank of America, F.S.B., and the Local Initiatives Support
Corporation (a certified CDFI and a 1996 CDFI Program awardee); it is
conducted by the Development Training Institute. The Academy is
expected to run for three years and train 105 leaders of community
organizations across the nation. An additional 20 percent of the
combined awards will go to the Low Income Housing Fund, a certified
CDFI and a 1996 CDFI Program awardee which provides loans for very low-
income housing development across the country. Bank of America
Community Development Bank is currently considering the designation of
the balance of its award.
Bank of America, F.S.B. Portland, Oregon
Award: $521,735
Rewarded activities.--Bank of America, F.S.B. was awarded $521,735
for increasing its commercial real estate and business lending in
targeted neighborhoods in Denver, Las Vegas, and San Antonio. The Bank
made nearly $6.2 million in loans in needy communities. Bank of
America, F.S.B. projects that this activity will create or retain more
than 150 jobs.
Post award activity.--Bank of America, F.S.B., together with Bank
of America Community Development Bank, has pledged to invest its entire
combined award back into the community. $1.1 million of their award
money has been used to establish the Bank of America Leadership
Academy, a nine-month program that provides training for senior
management of community development organizations. The Leadership
Academy is funded jointly by Bank of America Community Development
Bank, Bank of America, F.S.B., and the Local Initiatives Support
Corporation, a certified CDFI and a 1996 CDFI Program awardee; it is
conducted by the Development Training Institute. The Academy is
expected to run for three years and train 105 leaders of community
organizations across the nation. An additional 20 percent of the
combined awards will go to the Low Income Housing Fund, a certified
CDFI and a 1996 CDFI Program awardee which provides loans for very low-
income housing development across the country. Bank of America, F.S.B.
is currently considering the designation of the balance of its award.
Bank of America, Illinois, Chicago, Illinois
Award: $514,815
Rewarded activities.--Bank of America, Illinois was awarded
$514,815 for increasing its affordable housing and small business
lending activity in distressed communities on the near north, west and
south sides of Chicago. The bank also made loans of nearly $3.7 million
to Neighborhood Housing Services (NHS) of Chicago, Community Investment
Corporation (CIC), and the Illinois Facilities Fund (IFF), all
certified CDFI's. The bank's loan to NHS will be used to finance home
improvement loans to low- and moderate-income homeowners in distressed
neighborhoods. The loan to CIC will be used to finance multi-family
apartment buildings in low- to moderate-income communities. The bank's
loan to IFF will be used to support mortgages to non-profit social
service agencies.
Post award activity.--Bank of America, Illinois is using $150,000
of its award to make grants to low- and moderate-income home-buyers for
downpayment assistance. In addition, the bank made $155,000 in grants
to NHS, CIC, and IFF, and the Southland Community Development
Corporation, a new loan fund in the Chicago area. The bank has also
made available a total of $75,000 in grants to smaller community
organizations--in particular, those focused on affordable housing,
economic development, and education of disadvantaged youth. The bank
will also make available grants up to $500 to community organizations
nominated by bank employees.
Bank of Louisville, Louisville, Kentucky
Award: $15,000
Rewarded activities.--Bank of Louisville was awarded $15,000 for
making an equity investment of $100,000 in the Louisville Development
Bancorp. The Louisville Development Bancorp is a newly-established
community development bank corporation and a certified CDFI that seeks
to revitalize the Louisville Enterprise Community and surrounding
neighborhoods.
Post award activity.--Bank of Louisville plans to use its award to
benefit the Louisville Development Bancorp in the form of a grant to
its non-profit subsidiary.
Central Bank of Kansas City, Kansas City, Missouri
Award: $99,869
Rewarded activities.--Central Bank of Kansas City was awarded
$99,869 for increasing its deposit-taking activities and consumer and
commercial real estate, housing, and business loans in distressed
neighborhoods. During the first six months of 1996, this bank provided
more than $8.3 million in loans and services. In addition to
facilitating neighborhood redevelopment through its single- and multi-
family housing activities, the bank made a significant loan to help a
major manufacturer and employer remain in the community.
Post award activity.--Central Bank of Kansas City is using its
award to finance revitalization efforts in its neighborhood, which
includes the distressed community designated in its BEA application.
These efforts are focused on home improvement and rehabilitation
lending. The award is, in part, being used to finance the
rehabilitation of a former drug house in the neighborhood. The bank's
$70,000 loan to a non-profit group at a concessionary interest rate
accounts for 70 percent of the financing for this project. The bank
expects to use the returns from this loan for other community
development activities.
The Chase Manhattan Bank, New York, New York
Award: $2,699,625
Rewarded activities.--The Chase Manhattan Bank was awarded
$2,699,625 for making nearly $18 million in investments in 14
organizations that finance community development. The organizations
receiving assistance are Low-lncome Housing Fund, Greater Jamaica Local
Development Company, Community Loan Fund of New Jersey, Capital
District Community Loan Fund, Nonprofit Facilities Fund, Leviticus
25:23 Alternative Fund, Bethex Federal Credit Union, Lower East Side
People's Federal Credit Union, New Community Federal Credit Union,
Homesteaders Federal Credit Union, BHA Residents Community Development
Federal Credit Union, Central Brooklyn Federal Credit Union, Parodneck
Foundation, and Enterprise Social Investment Corporation.
Post award activity.--The Chase Manhattan Bank is using its award
to make grants to CDFI's in its service area through its CDFI Support
Program. These grants can be used for capital and operating expenses
and to serve as matching funds for CDFI's applying to the CDFI Program.
Citibank F.S.B. California Marketplace, San Francisco, California
Award: $412,270
Rewarded activities.--Citibank F.S.B. California Marketplace was
awarded $412,270 for increasing its multi-family housing lending in a
distressed neighborhood by more than $5.1 million. Citibank's efforts
focused on financing two multi-family projects in Los Angeles developed
by FAME Housing Development Corporation, a non-profit affiliate of the
First African Methodist Church. Citibank also provided technical
assistance to FAME Housing in structuring these transactions.
Post award activity.--Citibank F.S.B. has established a loan pool
with its award. This pool will loan funds at concessionary terms to
community organizations for initiatives such as affordable housing and
childcare centers in low-income communities.
Citibank N.A., New York, New York
Award: $227,250
Rewarded activities.--Citibank N.A. was awarded $227,250 for
providing investments totaling $1,515,000 to 13 organizations serving
distressed communities throughout the United States. The organizations
receiving investments are ACCION New York, ACCION Texas, Chicago
Community Loan Fund, FINCA, Florida Community Loan Fund, Illinois
Facilities Fund, Institute for Community Economics, Leviticus 25:23
Alternative Fund, Low-Income Housing Fund, McAuley Institute, New
Jersey Community Loan Fund, Nonprofit Facilities Fund, Northern
California Community Loan Fund, Washington Area Community Investment
Fund, and the National Federation of Community Development Credit
Unions.
Post award activity.--Citibank N.A. is using its award for
activities that help build the capacity and skills of CDFI's. Among
these activities is a grant to the National Association of Community
Development Loan Funds to launch a series of courses for CDFI staff and
board members.
City National Bank of New Jersey, Newark, New Jersey
Award: $162,065
Rewarded activities.--City National Bank of New Jersey was awarded
$162,065 for increasing its lending commitments in distressed
neighborhoods by nearly $2 million. In the first six months of 1996,
the bank committed loans totaling $3,367,000 to consumers and for
commercial real estate, single-family housing, multi-family housing,
and small businesses. City National Bank of New Jersey is a minority-
owned national bank.
Post award activity.--City National Bank of New Jersey has not yet
determined the use of its award. Currently, City National Bank of New
Jersey is applying in the second round of the BEA Program for its
increased loans for the purchase and renovation of one- to four-family
homes.
Coast Federal Bank, West Hills, California
Award: $149,709
Rewarded activities.--Coast Federal Bank was awarded $149,709 for
providing loans, grants, and technical assistance to the Clearinghouse
CDFI and Los Angeles Neighborhood Housing Services. These CDFI's both
promote the development of affordable housing in distressed
neighborhoods throughout Southern California.
Post award activity.--Coast Federal Bank is using its award as a
reserve fund for affordable housing loans and is further supporting
affordable housing in Southern California through its close
relationships with the Clearinghouse CDFI and Los Angeles Neighborhood
Housing Services. Bank officials serve on the governing board of each
of the CDFI's; the bank has helped in fundraising and has made
operating grants and in-kind contributions to each. Additionally, the
bank is encouraging other financial institutions to support CDFI's by
disseminating information about the BEA Program.
Cole Taylor Bank, Wheeling, Illinois
Award: $115,500
Rewarded activities.--Cole Taylor Bank was awarded $115,500 for
making $1,050,000 in loans to the Illinois Facilities Fund (IFF) and
Chicago Community Loan Fund (CCLF), both certified CDFI's. IFF makes
real estate loans to non-profit social service agencies. The proceeds
from Cole Taylor Bank's loan to IFF will be used to finance projects in
Chicago's near west and lower west sides and Humbolt Park. CCLF
finances affordable housing and economic development projects.
Post award activity.--Cole Taylor Bank's award has acted as an
encouragement of further community development activities. The bank is
currently contributing toward Neighborhood Housing Services of
Chicago's goal of opening 20 new offices in the city. Specifically,
Cole Taylor Bank is supporting the office in the Back of the Yards
neighborhood by providing operational support, participating in a
revolving loan fund for flexible and low-cost home improvement
financing, and developing a new affordable homes construction project.
Community Capital Bank, Brooklyn, New York
Award: $215,461
Rewarded activities.--Community Capital Bank provides business,
housing, and commercial loans to projects in distressed communities
throughout New York City. In the first six months of 1996, Community
Capital Bank provided nearly $2.6 million in loans for small business
development and affordable housing construction and support for
entrepreneurial development initiatives among public housing residents.
Community Capital Bank was awarded $215,461 for increasing its lending
activities during this period.
Post award activity.--Community Capital Bank, a certified CDFI, is
using its award to increase its capacity to make loans in distressed
communities. Activities toward this end include increasing loan staff
and improving accounting controls with the assistance of an outside
consultant. In addition, the award has helped the bank maintain its
preferential interest rates on loans made to non-profit organizations.
First National Bank of Chicago, Chicago, Illinois
Award: $322,230
Rewarded activities.--First National Bank of Chicago was awarded
$322,230 for making a $1,998,200 investment in The Shorebank
Corporation (Shorebank) and a $150,000 capital grant to Neighborhood
Housing Services (NHS) of Chicago, both certified CDFI's. Shorebank,
based in Chicago's south side, is a bank holding company that serves
numerous distressed communities. First National's investment enabled
Shorebank to acquire Indecorp and expand its service area to nine new
neighborhoods in the south and mid-south sides of Chicago. The grant to
NHS of Chicago will serve as a capital infusion for its revolving loan
fund to support home improvement and rehabilitation loans and loans to
people unable to obtain traditional mortgage financing.
Post award activity.--First National Bank of Chicago will use
$150,000 of its award to make ``equity-equivalent'' investments in the
Chicago Community Loan Fund and the Chicago Association of Neighborhood
Development Organizations' Self-Employment Loan Fund, both certified
CDFI's. The bank expects that these investments will leverage an
additional $300,000 for the community groups.
First Union National Bank of D.C., Washington, District of Columbia
Award: $274,550
Rewarded activities.--First Union National Bank of D.C. (First
Union) was awarded $274,550 for increasing its multi-family housing
lending in several distressed neighborhoods. In partnership with local
community development corporations, the bank made loans totaling more
than $5.6 million, including financing a 177-unit apartment building.
Post award activity.--First Union plans to use a portion of its
award to make a loan to a local CDFI. This loan will be unusual for
First Union but, because of the availability of the BEA award, will be
feasible at an interest rate favorable to the CDFI. Through the CDFI,
loan funds will be made available to other community groups for
predevelopment costs.
Fullerton Savings and Loan Association, Fullerton, California
Award: $39,600
Rewarded activities.--Fullerton Savings and Loan Association
(Fullerton) was awarded $39,600 for increasing its single-family and
multi-family housing lending in three distressed communities. Fullerton
made a total of $520,000 in loans to neighborhoods located in Santa Ana
and elsewhere in Orange County.
Post award activity.--Fullerton used its award to make a grant to a
local housing development non-profit organization. The grant will be
used for the operating costs of developing affordable single-family
infill housing in Anaheim. It will also be used, if needed, to provide
second mortgages for the new housing.
Gateway National Bank of St. Louis, St. Louis, Missouri
Award: $26,038
Rewarded activities.--Gateway National Bank, the only minority-
owned bank to be incorporated and operated in the state of Missouri,
was awarded $78,116 for increasing its deposit-taking and lending
activities during the first six months of 1996. Gateway National Bank
is located and serves neighborhoods in the northern portion of St.
Louis.
Post award activity.--Gateway National Bank has used its award to
expand its capital base to meet community needs, including business and
housing lending.
Great Financial Bank, Louisville, Kentucky
Award: $22,500
Rewarded activities.--Great Financial Bank was awarded $22,500 for
making an equity investment of $150,000 in the Louisville Development
Bancorp. The Louisville Development Bancorp is a newly established
community development bank corporation that seeks to revitalize the
Louisville Enterprise Community and surrounding neighborhoods.
Post award activity.--Great Financial Bank has used its award to
benefit the Louisville Development Bancorp in the form of a grant to
its non-profit subsidiary.
Hibernia National Bank, New Orleans, Louisiana
Award: $5,875
Rewarded activities.--In late 1995, Hibernia National Bank
(Hibernia) adopted two neighborhoods as part of the City of New
Orleans' Impact Neighborhood Program. Hibernia was awarded $5,875 for
increasing its small business lending, loans to non-profit
organizations engaging in affordable housing activities, and technical
assistance activities in these neighborhoods during the first six
months of 1996. As part of this effort, Hibernia provided financial
support to three non-profit organizations that conduct home-buyer
training programs for residents of these targeted neighborhoods.
Post award activity.--Hibernia has made its award available to five
community development corporations to use as matching funds for a grant
program sponsored by the Federal Home Loan Bank of Dallas. The $500 to
$2,200 grants made by Hibernia will be leveraged up to a total of
$29,900 for non-profit organizations in Baton Rouge, New Orleans, and
Shreveport focused on affordable housing and homebuyer training.
Household Bank, f.s.b., Wood Dale, Illinois
Award: $88,090
Rewarded activities.--Household Bank, f.s.b. was awarded $88,090
for making a $588,000 investment in Sable Bancshares, a certified CDFI.
The investment enabled Sable Bancshares to acquire the Community Bank
of Lawndale, an African American-owned bank which serves distressed
neighborhoods in Chicago, for the purpose of converting it into a
community development bank. Sable Bancshares has also established a
subsidiary, REG Community Development Corporation, to promote housing
and business development.
Post award activity.--Household Bank, f.s.b. plans to use its award
for community development purposes. The use of the award is currently
being determined through a strategic planning process.
Key Bank of Maine, Portland, Maine
Award: $37,500
Rewarded activities.--Key Bank of Maine (Key Bank) was awarded
$37,500 for making a $250,000 investment in Coastal Ventures Limited
Partnership (CVLP), a subsidiary of Coastal Enterprises, Inc., a
certified CDFI. The bank's investment will create jobs by providing
venture capital to small businesses for start-up and expansion.
Post award activity.--Key Bank plans to use its entire award for
community development purposes. Part of the award is being used to
support a Small Business Information Center in Lewiston, Maine in
partnership with the U.S. Small Business Administration. An additional
part is being used to capitalize an affordable housing loan pool in
conjunction with other lenders.
National City Bank of Columbus, Columbus, Ohio
Award: $275,000
Rewarded activities.--National City Bank of Columbus (National
City) was awarded $275,000 for providing a $2.5 million line of credit
to the Columbus Growth Fund, a certified CDFI, to be used to provide
gap financing for businesses. This financing will enable businesses to
expand and create jobs for residents of targeted neighborhoods.
National City was the lead bank in a partnership with four other
financial institutions to establish the Columbus Growth Fund. The City
of Columbus is also supporting the effort by capitalizing a loan loss
reserve for the Columbus Growth Fund.
Post award activity.--National City has used its award to make a
grant to the Columbus Growth Fund. The grant serves as additional
equity for the Columbus Growth Fund, allowing it to leverage additional
funds in the form of bank loans.
National City Bank of Kentucky, Louisville, Kentucky
Award: $37,500
Rewarded activities.--National City Bank of Kentucky was awarded
$37,500 for making an equity investment of $250,000 in the Louisville
Development Bancorp, a certified CDFI. The Louisville Development
Bancorp is a newly established community development bank corporation
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--National City Bank of Kentucky has used its
award to benefit the Louisville Development Bancorp in the form of a
grant to its non-profit subsidiary.
Nationsbank, N.A., Charlotte, North Carolina
Award: $1,614,690
Rewarded activities.--Nationsbank, N.A. was awarded $1,614,690 for
making nearly $10.5 million in investments in the National Community
Investment Fund (NCIF) and the Enterprise Social Investment Corporation
(ESIC) and a $420,000 loan to the Low-income Housing Fund (LIHF). NCIF
will use its support to invest in community development banks. The ESIC
investment will expand and improve employment opportunities by
encouraging investments in businesses that employ residents of the
Baltimore Empowerment Zone. LIHF, a certified CDFI funded in the first
round of the CDFI Program, will use its loan proceeds to finance non-
profit sponsors of affordable housing.
Post award activity.--Nationsbank, N.A. is using its award to
expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
Nationsbank, N.A. (South), Atlanta, Georgia
Award: $1,199,275
Rewarded activities.--Nationsbank, N.A. (South) was awarded
$1,199,275 for making $7.8 million in investments in the National
Community Investment Fund (NCIF) and the Enterprise Social Investment
Corporation (ESIC) and a $312,000 loan to the Low-Income Housing Fund
(LIHF). NCIF will use its support to invest in community development
banks. The ESIC investment will expand and improve employment
opportunities through encouraging investments in businesses that employ
residents of the Baltimore Empowerment Zone. LIHF, a certified CDFI
funded in the first round of the CDFI Program, will use its loan
proceeds to finance non-profit sponsors of affordable housing.
Post award activity.--Nationsbank, N.A. (South) is using its award
to expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
Nationsbank of Texas, N.A., Dallas, Texas
Award: $1,036,035
Rewarded activities.--Nationsbank of Texas, N.A. was awarded
$1,036,035 for making $6.7 million in investments to the National
Community Investment Fund (NCIF) and the Enterprise Social Investment
Corporation (ESIC) and a $270,000 loan to the Low-Income Housing Fund
(LIHF). NCIF will use its support to invest in community development
banks. The ESIC investment will expand and improve employment
opportunities through encouraging investments in businesses that employ
residents of the Baltimore Empowerment Zone. LIHF, a certified CDFI
funded in the first round of the CDFI Program, will use its loan
proceeds to finance non-profit sponsors of affordable housing.
Post award activity.--Nationsbank of Texas, N.A. is using its award
to expand its existing community development programs throughout the
franchise in 16 states and the District of Columbia. These activities
include using funds to purchase and demolish a low-rise apartment
building in Atlanta's Martin Luther King Historic District so that
affordable, single-family homes can be constructed to complete the
revitalization of the block. It will also be used to establish
community development activities in new markets including St. Louis,
Missouri and Tampa/St. Petersburg, Florida and to subsidize below-
market rate lending to CDFI's.
North Shore Bank, Brookfield, Wisconsin
Award: $6,036
Rewarded activities.--North Shore Bank was awarded $6,036 for
increasing its single-family housing acquisition and rehabilitation
loans in distressed neighborhoods in central Milwaukee. During the
first six months of 1996, the bank made a total of $373,000 in loans
for activities undertaken as part of the Milwaukee Affordable Housing
Initiative.
Post award activity.--North Shore Bank plans to use its award to
assist low-income first-time home-buyers in its distressed community.
It will do this through grants to help with downpayments and closing
costs or by helping new homeowners purchase needed equipment to
maintain their homes. Additionally, the bank has continued its support
of the Milwaukee Affordable Housing Initiative and has shown further
commitment to the central city through the completion of a new, full-
service office on King Drive.
Northern Trust Company, Chicago, Illinois
Award: $88,090
Rewarded activities.--Northern Trust Company was awarded $93,713
for making a $624,750 investment in Sable Bancshares. The investment by
Northern Trust Company enabled Sable Bancshares to acquire the
Community Bank of Lawndale, an African American-owned bank which serves
distressed neighborhoods in Chicago, for the purpose of converting it
into a community development bank. Sable Bancshares has also
established a subsidiary, REG Community Development Corporation, to
promote housing and business development.
Post award activity.--Northern Trust Company has committed its
award as part of a package of support to Neighborhood Housing Services
of Chicago, a certified CDFI, to open a new office in the Auburn-
Gresham neighborhood. Northern Trust Company's support includes a $3.5
million loan, $1.5 million in subordinated debt, and a three-year
$150,000 grant to help meet the operating costs of the office. The new
office will focus on renovating single-family homes in this
neighborhood in transition.
Northwest Bank, Oklahoma City, Oklahoma
Award: $3,918
Rewarded activities.--Northwest Bank was awarded $3,918 for
providing operating grants totaling $35,618 to Neighborhood Housing
Services (NHS) of Oklahoma City. NHS of Oklahoma City, a certified
CDFI, promotes homeownership in targeted neighborhoods through
assistance with downpayments, closing costs, and other administrative
expenses.
Post award activity.--Northwest Bank is using its award to fund
community development activities through its Near Northwest Community
Development Corporation. The bank participates in community development
activities in Oklahoma City through partnerships with the city and
local organizations. The bank is also lending in the Paseo area, a
historic district with a large number of small multi-family housing
units.
Norwest Bank, New Mexico, Albuquerque, New Mexico
Award: $5,750
Rewarded activities.--Norwest Bank, New Mexico was awarded $5,750
for making a $50,000 loan and a $5,000 capital grant to the New Mexico
Community Development Loan Fund (NMCDLF). Through its partnership with
the bank, NMCDLF will make loans to small businesses and
microentrepreneurs.
Post award activity.--Norwest Bank has provided its award dollars
as a grant to NMCDLF for small and micro-business lending.
PNC Bank, Kentucky, Inc., Louisville, Kentucky
Award: $75,000
Rewarded activities.--PNC Bank, Kentucky, Inc. was awarded $75,000
for making an equity investment of $500,000 in the Louisville
Development Bancorp. The Louisville Development Bancorp, a certified
CDFI, is a newly established community development bank corporation
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--PNC Bank, Kentucky, Inc. donated its award to
the LCDB Enterprise Group, a non-profit affiliate of the Louisville
Community Development Bancorp. The grant will help fund a business
center to assist new and emerging small businesses in western
Louisville.
Regency Savings Bank, F.S.B., Naperville, Illinois
Award: $77,250
Rewarded activities.--Regency Savings Bank, F.S.B. was awarded
$77,250 for making a $515,000 equity investment in The Shorebank
Corporation (Shorebank). Shorebank is a bank holding company, a
certified CDFI, that serves numerous distressed communities and is
based on the south side of Chicago. The bank's investment enabled
Shorebank to acquire Indecorp and expand its service area to nine new
neighborhoods in the south and mid-south sides of Chicago.
Post award activity.--Regency Savings Bank, F.S.B. has used its
award to partially offset its equity investment in Shorebank.
Republic National Bank of New York, New York, New York
Award: $519,659
Rewarded activities.--Republic National Bank of New York (Republic)
was awarded $519,659 for providing loans and operating grants totaling
$5,196,592 to 21 community development organizations. The institutions
assisted include Bethex Federal Credit Union, Central Brooklyn Federal
Credit Union, Corporation for Supportive Housing, Greater Jamaica Local
Development Company, Homesteaders Federal Credit Union, Leviticus 25:23
Alternative Fund, Local Initiatives Support Corporation, Lower East
Side Peoples Federal Credit Union, Nonprofit Facilities Fund, Parodneck
Foundation, Union Settlement Federal Credit Union, Washington Heights
Inwood Development Corporation, Enterprise Foundation, and Upper
Manhattan Community Development Credit Union.
Post award activity.--Republic will use its award to leverage an
additional $5 million in economic development and small business
lending in low- and moderate-income communities. In this way, its BEA
award will be leveraged nearly 10 times over in the form of new
lending. The award dollars will be used to provide below market rates
or act as a loan loss reserve for loans Republic will make to non-
profit economic development organizations over the next few years.
St. Francis Bank, F.S.B., Milwaukee, Wisconsin
Award: $11,498
Rewarded activities.--St. Francis Bank, F.S.B. was awarded $11,498
for increasing its single-family housing acquisition and rehabilitation
loans in distressed neighborhoods of central city Milwaukee. During the
first six months of 1996, the bank made a total of $675,000 in loans
for activities undertaken as part of the Milwaukee Affordable Housing
Initiative.
Post award activity.--St. Francis Bank, F.S.B. has used its award
to expand its community lending efforts, including outreach to the
Milwaukee area's Spanish-speaking residents. These efforts include
developing new programs, marketing, and offering home-buyer seminars.
Stock Yards Bank & Trust Company, Louisville, Kentucky
Award: $3,750
Rewarded activities.--Stock Yards Bank & Trust Company was awarded
$3,750 for making an equity investment of $25,000 in the Louisville
Development Bancorp. The Louisville Development Bancorp is a newly
established community development bank corporation, a certified CDFI,
that seeks to revitalize the Louisville Enterprise Community and
surrounding neighborhoods.
Post award activity.--Stock Yards Bank & Trust Company donated its
award to the LCDB Enterprise Group, the non-profit affiliate of the
Louisville Community Development Bancorp. The grant will help fund a
business center to assist new and emerging small businesses in western
Louisville.
Troy Savings Bank, Troy, New York
Award: $389,859
Rewarded activities.--The Troy Savings Bank was awarded $389,859
for increasing its lending within distressed neighborhoods of Troy,
Albany, and Schenectady by $4.8 million. In the first six months of
1996, the bank made over $8 million in loans for housing, small
businesses, and consumer products. The bank's efforts also included
grants and technical assistance to support first-time home-buyers in
the region.
Post award activity.--Troy Savings Bank has created a Small
Business Investment Company (SBIC), whose license is currently pending
with the U.S. Small Business Administration, to foster the growth of
small businesses in the capital region. Through the SBIC, the bank will
set aside $500,000, capitalized in part with its BEA award, for
investment in businesses that agree to locate in the distressed
communities designated in the bank's BEA application. Additionally, the
bank is active in promoting affordable housing in its service area; it
is one of the first institutions to participate in the Federal Home
Loan Bank of New York's First Home Club Program, which provides funds
to match the savings of low-income prospective home-buyers.
Vine Street Trust Company, Lexington, Kentucky
Award: $55,000
Rewarded activities.--Vine Street Trust Company was awarded $55,000
for making a $500,000 loan to Community Ventures Corporation (CVC) to
serve Lexington's highest poverty area. Vine Street Trust Company and
CVC will serve this area by focusing on helping low-income people
access financing for affordable housing.
Post award activity.--Vine Street Trust Company has decided to pass
the award on to CVC to serve as a loan loss reserve and to cover a
portion of CVC's operating overhead expenses.
Wells Fargo Bank of Texas, N.A. (formerly First Interstate Bank of
Texas), Houston, Texas
Award: $97,500
Rewarded activities.--Wells Fargo Bank of Texas, N.A. was awarded
$97,500 for making investments totaling $650,000 in the Southern Dallas
Development Corporation and the Greater Houston Small Business Equity
Fund, Inc. Both of these certified CDFI's provide financing and
technical assistance to small and minority-owned businesses.
Post award activity.--Wells Fargo Bank of Texas, N.A. has not yet
determined how it will use its award. The bank's community development
activities include support to organizations in communities in which
they do business, including Alliance Capital of Houston, Austin
Community Development Corporation, Dallas Inner City Development
Corporation, and Fort Worth Community Development Corporation. The bank
has also supported the Local Initiatives Support Corporation's National
Equity Fund.
______
Attachment 8
first round experience--issues that often separated competitive from
non-competitive applications
Track Record, Financial Strength and Current Operations
Is there a pattern of positive net operating income?
Is net worth as percentage of assets reasonable in context of
institution's activities?
Are delinquency rates under control, in the context of type of
lending?
Are loss rates under control, in the context of type of lending?
What is the fund raising track record?
Does the organization have a good process for strategic assessment
and planning?
Is there a periodic portfolio review, with risk rating?
Does organization consistently generate monthly internal
financials?
Are audit opinions clean, or are they qualified?
Is there demonstrable track record of development impacts?
Is there a track record of innovation in the marketplace?
Capacity, Skills and Experience of Management Team
What is the track record of accomplishment of individual management
team members?
What is the relationship of skills and experience to tasks of
business plan?
Is appropriate staff identified for new activities?
Is there an appropriate mix of skills?
How well do management team members work with each other?
Is staff adequate or is it stretched too thin?
Is there an appropriate compensation structure for attracting and
retaining needed staff?
What is the level of personal commitments of management team
members?
What is the contribution of Board?
Are relationships between staff end Board effective?
What is the track record and capacity of management team members to
adapt to change?
Quality of Business plan
Is the business plan clear, well developed and internally
consistent?
What is the quality of market analysis?
Is there clarity about future products and services?
Is development strategy well thought out?
Are there appropriate links between products/services, market
analysis, and development strategy?
Are future staffing plans adequate, with respect to number and
skill level?
Is there appropriate meshing between lending and technical
assistance?
Is pricing strategy well thought out?
Is process and criteria for evaluating deals appropriate?
Is risk appropriately included in evaluation?
Is there a reasonable balance between financial and social
objectives?
Are projections reasonable or too aggressive?
Are assumptions for projections clearly delineated?
Are loss assumptions reasonable?
Are future staffing needs appropriately reflected in projections?
Do financial projections reconcile?
Are projections consistent with business plan narrative?
Do realistic projections show ongoing viability?
Is plan viable if performance varies from projections?
Is proposed capital structure appropriate?
If consultant is used, is use appropriate?
Matching Funds
Are commitments in hand, or if not, is there a viable fund raising
strategy?
Are matching funds comparable in form and value to financial
assistance requested?
Is business plan dependent on unrealistic match?
Does prior fund raising track record provide confidence about
prospects for securing match?
Community Development Impact as Return on CDFI Fund Investment
Are community development objectives well defined and clearly
focused?
Is there clarity on how CDFI Fund can enhance impact?
Is there a realistic plan to sustain impact of CDFI Fund
investment?
What is the prospective leverage of other resources?
What is the scale of activity?
What are prospects for innovation?
What is the level of distress of target market, and are products
suitable to address needs?
Is institution well connected to community?
What does track record, management, business plan quality suggest
about development impact?
What is the ``bang for the buck?''
NATIONAL CREDIT UNION ADMINISTRATION
STATEMENTS OF NORMAN E. D'AMOURS, CHAIRMAN
NEIGHBORHOOD REINVESTMENT CORPORATION
STATEMENT OF GEORGE KNIGHT, EXECUTIVE DIRECTOR
ACCOMPANIED BY MARY LEE WIDENER, PRESIDENT, NEIGHBORHOOD HOUSING
SERVICES OF AMERICA, INC.
OPENING REMARKS
Senator Bond. Our third panel, Mr. Norm D'Amours, Chairman
of the National Credit Union Administration, and Mr. George
Knight, Executive Director of the Neighborhood Reinvestment
Corporation. As we all know, NCUA is responsible for chartering
and regulating Federal credit unions, itself funded through an
operating fee. Second, Mr. Knight will testify on the
administration's budget request for Neighborhood Reinvestment
Corporation for a flat funding of $50 million, these funding
not-for-profits known as NeighborWorks' Network.
They have a long track record and have become a good model of
how the Federal Government can spend a small amount of money
and reap tremendous benefits. As the written testimony so well
demonstrates, $38.7 million in fiscal year 1996 allowed the
Neighborhood Reinvestment and NeighborWorks' to
leverage $420 million in affordable housing investments.
I look forward to the testimony. Mr. D'Amours.
STATEMENT OF NORMAN E. D'AMOURS
Mr. D'Amours. Thank you, Chairman Bond and Senator
Mikulski. Thanks for the opportunity to present our request
today for funding limits on the NCUA's central liquidity
facility, called the CLF, at current levels. As you know, the
CLF is a liquidity source for credit unions. It is funded by
its members, and can borrow from the Federal financing bank,
even though no such borrowing has occurred in the last year.
For fiscal year 1998 we request a $600 million limit on new
loans, and a $203,000 limit on administrative expenditures. The
requested loan limit has remained constant for 17 years. It
should be noted that NCUA is not requesting an appropriation
for the CLF, merely a limit on its borrowings.
I am pleased to report to the subcommittee that we continue
to streamline the CLF. The result is cost savings for Federal
credit unions.
Our expenses in fiscal year 1996 of $346,000 were
significantly less than our budget limitation of $546,000. The
fiscal year 1996 expenses are more than 50 percent below the
CLF expenses of $767,000 for fiscal year 1993. All of CLF's net
income in 1996 was returned to member credit unions in the form
of capital stock dividends.
In our estimation, the $600 million loan limit we are
requesting is adequate to address unexpected liquidity needs in
what is a very healthy and viable credit union system today.
The request is less than 3.55 percent of the limit set by
statute, which is 12 times paid in oncall capital or an amount
of approximately $17 billion. The borrowing authority is not
used to build up loan volumes, because by statute the proceeds
from CLF cannot be used to expand credit union loan portfolios.
Rather, these funds are advanced strictly to support the
purposes stated in the Federal Credit Union Act, and in
response to circumstances dictated by market events.
Loan demand over the years has resulted in wide variances
in the amount of outstanding CLF loan balances and individual
advances. The relatively low utilization of our total authority
can be viewed as a positive sign of credit unions' present
financial condition. By the end of 1996, all loans were repaid
and no direct loans were outstanding. However, because of a
liquidity shortage involving one of the corporate credit
unions, the CLF became an active liquidity center from December
1994 through February 1995. In that time, we made 601 loans
totaling $389 million. The majority, 509 of them, were
overnight loans.
As intended by Congress, the CLF acted successfully to
provide liquidity and to maintain financial stability during a
temporary liquidity shortage.
Mr. Chairman, Senator Mikulski, we respectfully request
that you support our authorization request in order to continue
the NCUA's and CLF's ability to respond to such adverse
liquidity situations. And that completes my oral statement. I
would ask that my full statement be included in the record.
Senator Bond. Without objection, it will be made part of
the record.
[The statement follows:]
Prepared Statement of Norman E. D'Amours
Mr. Chairman and Subcommittee Members. I want to thank you for the
opportunity to present our request for funding limits on the NCUA
Central Liquidity Facility (CLF) at current levels. Appearing with me
today are Herbert S. Yolles, President, Central Liquidity Facility;
Robert M. Fenner, General Counsel; David Marquis, Director of our
Office of Examination and Insurance; and William C. Poling, our Budget
Officer. Mr. Chairman, as you know, the CLF is a liquidity source for
credit unions. It is funded by its members and can borrow from the
Federal Financing Bank, even though no such borrowing has occurred in
the past year.
For fiscal year 1998, we request a $600 million limit on new loans
and a $203,000 limit on administrative expenditures. The requested loan
limit has remained constant for the last 17 years. It should be noted
that NCUA is not requesting an appropriation for the CLF, merely
limits.
I am pleased to report to the subcommittee that we continue to
streamline the CLF. The result is cost savings for credit unions. Our
expenses in fiscal year 1996 of $346,000 were significantly less than
our budget limitation of $546,000. The fiscal year 1996 expenses are
more than 50 percent below the CLF expenses of $767,000 for fiscal year
1993. All of CLF's net income in 1996 was returned to member credit
unions in the form of capital stock dividends.
In our estimation, the $600 million loan limit is adequate to
address unexpected liquidity needs in credit unions. The request is
less than 3.55 percent of the limit set by statute--12 times paid-in
and on-call capital or $17 billion. The borrowing authority is not used
to build up loan volumes because by statute the proceeds from CLF loans
cannot be used to expand credit union loan portfolios. Rather, the
funds are advanced strictly to support the purposes stated in the
Federal Credit Union Act and in response to circumstances dictated by
market events.
Loan demand over the years has resulted in wide variances in the
amount of outstanding CLF loan balances and individual advances. The
relatively low utilization of our total authority can be viewed as a
positive sign of credit unions' present financial condition. By the end
of 1996, all loans were repaid and no direct loans were outstanding.
However, because of a liquidity shortage involving one of the corporate
credit unions, the CLF became an active liquidity lender from December
1994 through February 1995. The CLF made 601 loans totaling $389.8
million; the majority (509) were overnight loans.
As intended by Congress, the CLF acted successfully to provide
liquidity and maintain financial stability during a temporary liquidity
shortage. Mr. Chairman, we respectively request that you support our
authorization request in order to continue the NCUA's and CLF's ability
to respond to such adverse liquidity situations.
Mr. Chairman and members of the subcommittee, the credit union
movement continues to focus on its mission of involving more people in
America's free enterprise economy. By instilling habits of thrift and
teaching the value and workings of financial discipline, credit unions
are still fulfilling the mandate Congress gave them over 60 years ago.
At NCUA, our strong commitment to the future of credit unions serving
people of limited means remains as resolute as when I last reported to
the subcommittee.
For fiscal year 1997, the subcommittee approved a $1 million
appropriation to be utilized by the Community Development Revolving
Loan Program (CDRLP), which NCUA has administered since 1987. By any
objective standard, the CDRLP has been an overwhelming success and
deserving of continued Congressional support. A $2 million
authorization, the last of a four year $10 million authorization
(Public Law 103-325), remains for fiscal year 1998.
Since NCUA began making loans from an original $6 million
appropriation (now a $7 million total), we have revolved $14.4 million
in 113 separate loans to 79 low-income credit unions. In 1996 alone we
approved $2.9 million in loans and currently we have 6 loan
applications for $1.4 million in funding.
The credit unions use these loans for a variety of different
purposes from housing rehabilitation and consumer loans to micro-
enterprise lending. We expect loan demand to increase smartly as the
year proceeds. We have had one loss in the Revolving Loan Program for
$35,000.
At mid-year 1996 we recognized 298 low-income credit unions, which
translated to a 27 percent annualized growth rate. I am proud to say
that 13 newly state and federally chartered credit unions in 1996
gained the low-income designation. Total assets in these financial
cooperatives are $1.8 billion at mid-year 1996 and loan growth was 13.2
percent. The capital ratio is a strong 11.1 percent and loan
delinquencies (loans 60 days and more overdue) are within reasonable
bounds at 2 percent.
In May 1994, the NCUA adopted a new chartering and field of
membership manual for credit unions replacing our previous version.
These changes are set forth in Interpretive Ruling and Policy Statement
(IRPS) 94-1 that became effective in July 1994. Changes contained in
IRPS 94-1 allow greater flexibility for credit unions wishing to expand
into low-income areas and make it easier for low-income credit unions
(LICU's) to expand their fields of membership and associate themselves
with other credit unions.
This initiative has been one of the more important actions taken by
the Board to encourage larger, healthy credit unions to directly reach
out into low-income communities to give residents a non-profit
alternative to pawn shops, check cashing outlets and the like. In this
way people are brought into the mainstream of the U.S. economy in a
self empowering and responsible manner.
From July 1994 until October 1996 NCUA had granted 73 federal
credit unions permission to open branches in these distressed
neighborhoods and make their services available to a potential of 1.4
million low-income residents. However, following a decision from the
U.S. Court of Appeals for the District of Columbia and then an
injunction from the District Court, NCUA has had to halt this
innovative approach for providing low cost financial services to those
who need it the most.
The ability of credit unions to add low-income groups to their
field of membership arises from an interpretation of the Federal Credit
Union Act NCUA made in 1982 to allow more than one group with each
group having a common bond be part of a credit union. The banks have
successfully challenged this interpretation of the Act and we are
currently waiting to see if the Supreme Court will take up an appeal.
As I will testify before the Financial Institutions Subcommittee of
the House Banking Committee tomorrow, NCUA believes Congress should not
wait for the Supreme Court to rule, but change the Federal Credit Union
Act to allow initiatives, like the one described above, to move
forward. In doing so, Congress will also codify two essential purposes,
or rather benefits, of the 1982 policy change: (1) by permitting
diversity within the membership of federal credit unions, the policy
provides a strong measure of protection against difficult economic
conditions that affect particular groups, industries or the reality of
military downsizing with the abatement of the cold war; and (2) it
makes credit union service available to individuals who otherwise do
not have access to it, such as members of groups too small to run and
support a viable credit union on their own.
The NCUA Board continues to explore ways to bolster low-income
credit unions. Early last year, the Board voted unanimously to adopt a
new interim rule permitting LICU's to immediately accept secondary
capital funds from institutional investors. The additional capital will
be used to support increased lending and services and provide
additional ``matching funds'' for credit unions applying for assistance
from the Community Development Financial Institutions Fund (Public Law
103-325).
The rule includes safety and soundness measures to ensure that
depositors and participating credit unions are aware of the nature and
risk associated with these accounts. For instance, the secondary
capital is not insured by the federal government and this fact must be
disclosed to investors.
In September 1996, the NCUA Board adopted a change to our Rules and
Regulations that removed the current cap of $120,000 for technical
assistance, which is drawn from the earnings of the Revolving Loan Fund
to aid LICU's. The Board believes that technical assistance is a vital
component of the Revolving Loan Program and since 1992 we have
disbursed 216 technical assistance grants totaling some $500,000.
I am particularly proud of the credit union movement coming
together for a conference held last August in Chicago. The gathering,
known among credit unions as the ``Serving the Underserved''
conference, was dedicated to bringing together credit unions of all
sizes to learn how to break down the barriers keeping people from
becoming a part of the American, free enterprise system. The conference
was a tremendous success.
Mr. Chairman, I want to briefly update you on the overall condition
of our nation's credit unions and their federal insurance fund.
Overall, the credit union industry continues to be in excellent health.
The National Credit Union Share Insurance Fund (NCUSIF) had its
best operating year in its 26-year history during 1996. For the second
consecutive year (and the third year in its history), the Fund paid
credit unions a dividend on their 1 percent deposit into the Fund. The
equity level at October 1996 exceeded the statutory ceiling of 1.3
percent or $1.30 per $100 in insured shares (deposits), so NCUA
returned a dividend totaling $102.8 million to federally insured credit
unions. We returned a $103.9 million dividend during 1995.
Meanwhile, the number of problem credit unions (CAMEL supervisory
rating 4 or 5) has continued to decline each year from 1,022 in 1988 to
a record low 286 at yearend 1996. Deposits in these problem credit
unions represented just 0.67 percent of total insured deposits in 1996,
compared to 6 percent of the total in 1988.
The number of credit union failures during 1996 fell to a record
low for the third consecutive year, dropping to 19, and requiring the
Fund to payout $2.3 million, also a record low. The previous lows were
22 failures in 1995, requiring $11 million in member payouts.
Since Congress established federal share insurance for credit
unions, the insurance fund has never had a losing year. Moreover, since
credit unions voluntarily recapitalized their insurance fund in 1985,
its equity level has ranged between 1.25 to 1.30 percent. The current
level is 1.28 percent, and we are projecting that it will again climb
to 1.30 percent by yearend 1997.
During 1996, federally insured credit unions performed admirably by
all objective standards. The yearend 1996 call report data have just
arrived at the agency and the preliminary data show that total industry
assets at the 11,429 federally insured credit unions rose 6.9 percent
to $327 billion. Capital accumulated at the rate of 11.1 percent during
1996, the tenth consecutive year of strong capital growth. The ratio of
capital to assets of federally-insured credit unions, now averaging
11.4 percent of assets, is at a record-high level; net capital is 10.8
percent--the former minus allowance for loan losses.
Loan delinquency and net charge-offs remain very low, actually at
or near historic lows. The delinquency rate is 1 percent of total
loans, while net charge-offs are 0.5 percent. Profitability, as
evaluated by the return on average assets ratio, was a healthy 1.1
percent for last year. This gauge of profitability has remained
unchanged over the last year; and the loan-to-share ratio now stands at
74.6 percent compared to 71.1 percent at yearend 1995.
In general, corporate credit unions (which act as bankers' banks to
the 12,000 natural-person credit unions) are also in good health. The
risk in their investment portfolios that concerned us two years ago
when I last appeared before this panel has been reduced significantly.
Between September 30, 1994, and September 30, 1996, corporate credit
unions' total holdings of Collateralized Mortgage Obligations declined
from $10.2 billion to $4.7 billion.
There are currently 41 corporate credit unions, of which 36 are
federally insured. While capital in corporate credit unions remains low
compared to that in natural person credit unions, there has been an
increasing trend toward capital accumulation, perhaps in anticipation
of new proposed standards the NCUA Board plans to finalize in the near
future. The ratio of reserves and undivided earnings to assets grew
from 2.1 percent as of December 31, 1994, to 2.65 percent as of
December 31, 1996. During that same period, total capital to assets
rose from 4.9 percent to 7.38 percent.
Meanwhile, our ``conflict of interest'' regulation took effect in
January 1996. This rule eliminated any real or perceived
inappropriateness in the relationship between the boards of directors
at corporate credit unions and their state and national trade
associations. I believe that significant progress has been made in the
condition of corporate credit unions, and that proposed revisions to
the corporate credit union regulation will provide additional
improvements.
Mr. Chairman, thank you again, for the opportunity to appear before
this subcommittee and present our requests for the Central Liquidity
Facility. I would be pleased to answer any questions.
STATEMENT OF GEORGE KNIGHT
Senator Bond. We thank you for the good news request, the
success and the no need for appropriations.
Let me turn to another good news story: Mr. Knight.
Mr. Knight. Thank you.
Mr. Chairman and members of the committee, I want to
especially thank you for last year's appropriation. As you
noted in 1996, the $38.7 million that you appropriated was
leveraged, in part, into $420 million, directly impacting the
lives of 16,000 families. Of those, 4,400 were new homeowners,
having the opportunity to start an equity stake not only in
their homes, but also in their families' lives, their
neighborhoods, and their cities.
In the past I have talked a great deal about the
neighborhood revitalization work of the
NeighborWorks' network. During the past year we have
focused on looking at who else benefits, and we looked
particularly beyond the resident-borrower to the block on which
they live, the lender, the insurer, and the city government,
with a real focus on the local tax base impact. I am pleased to
report we also found that the city treasurer benefits as well.
As property values rise, the tax base strengthens, and so do
tax revenues.
LESSONS LEARNED
Looking at what we have learned in the past 20 years, I
wanted to summarize it for you in several quick points. First,
raising the amounts of social investment capital currently
needed by our secondary market, Neighborhood Housing Services
of America--and I am delighted to have Mary Lee Widener, the
president of that unique institution here with me--is
challenging. We are now operating at volumes of $20 million to
$30 million a year. We need social investments that are low-
market rate, but perceived as high risk--even though we have
never missed a payment in 20 years. The effort to raise that
capital is indeed prodigious.
Second, after only 4 years of the NeighborWorks'
Campaign for Home Ownership we have reached the 5-year goal of
10,000 new homeowners. But I think more importantly, we have
shown that lower-income families not only can, but want to be
homeowners. While the portfolio is still early on those first
8,300 owners for which we have delinquency records, the
delinquency reports are coming in looking quite normal, if you
will.
Third, NeighborWorks' organizations do extend
credit. It is an essential strategy in revitalizing a
neighborhood. But they also are involved in a wide ranging
number of social-service activities. And those activities are
equally important to revitalizing a neighborhood.
Fourth, training is terribly important, and the demand is
tremendous. In 1993, the total of participants at the four
neighborhood reinvestment training institutes totaled
approximately 1,300 participants. In 1996, we had almost 2,600
participants. Last week in Atlanta we had 750 participants
alone.
EFFICIENCY MEASURES
Fifth and finally, my board, Neighborhood Reinvestment's
board, recently asked if we were being efficient with the
Federal resources we are given. We looked at three issues. The
first was were we continuing to meet the mission between 1990
and 1996? We could have become more efficient by serving higher
income people. However, we held the income level of the people
served by NeighborWorks' organizations about the
same. So we met the mission test.
Senator Mikulski. What is that income level?
Mr. Knight. It ranged from around 56 percent to 66 percent
of median family income. That translates into the low $20,000
for a family. Since many of the families we serve are single
heads of household, that really represents a very considerable
strain if you have a poor educational background to make
$20,000 to $22,000 a year. That requires a $10 or $11 or $12
an-hour job.
Second, we looked at the leverage of the appropriation over
the past 6 years, and indeed the private dollars leveraged have
increased. I am pleased to report it has almost doubled from
1990 to 1996.
Third, we inquired into the secondary market: Were they
able to handle and manage more aggregate assets for each dollar
that we gave them in 1996 than in 1990? And again, the answer
was yes, and I think a great deal of credit goes to Mary Lee,
and to her marvelous board of trustees and the day-to-day
operating board for that achievement.
With that, I look forward to your questions.
[The statement follows:]
Prepared Statement of George Knight
Mr. Chairman and Members of the Committee, thank you for the
support you have given the NeighborWorks' network and the
Neighborhood Reinvestment Corporation. I am pleased to present the
Corporation's request for fiscal year 1998 for $50 million. We are
especially grateful for the fiscal year 1997 appropriation of $49.9
million.
In fiscal year 1996, the $38.7 million you granted Neighborhood
Reinvestment and the NeighborWorks' network leveraged $420
million in investment. This is a 17 percent increase over the previous
year. The network produced almost 16,000 total units of housing, in
addition to owning 11,000 units of affordable Mutual and rental
housing. Of the 16,000 families, more than 4,400 families became new
homeowners, earning an equity stake in their neighborhoods. The
security of owning a well-insured home and the pride in paying back the
loan creates a sense of ownership and control over the quality of the
community. This frequently leads to action in solving the ``front-
door'' issues of crime, cleanup, education and other quality-of-life
concerns.
A national system for community revitalization that focuses on
addressing the disinvestment and decline in the nation's urban,
suburban and rural communities has been built over the last 20 years.
Currently, we are serving more than 420 communities. The heart of this
system is the 172 local partnerships of residents, members of the
private sector, and public officials that constitute the
NeighborWorks' network.
These NeighborWorks' organizations utilize the full
range of community development tools to positively engage the social,
economic and real-estate dynamics of their communities. Their mission
is focused on turning communities once shunned into neighborhoods of
choice for the benefit of current residents. This isn't about
demographic change; this is about engaging lower-income families in the
mainstream economy and engaging the mainstream financial mechanisms--of
lenders, insurance firms and Wall Street--in lower-income communities.
NeighborWorks' organizations serve communities
characterized by low household income--61 percent of median for African
Americans, 66 percent for Hispanics. NeighborWorks'
communities are also characterized by low rates of home ownership--only
44 percent compared to the national rate of 67 percent.
Who else beyond families and lenders and insurance firms benefit
from this reinvestment activity? Local taxpayers benefit as
neighborhood real-estate markets and, thus, tax bases strengthen. In
Savannah, Georgia's Dixon Park neighborhood, the
NeighborWorks' organization tackled a block with 23
properties, seven of which were severely dilapidated and unoccupied.
After purchase, rehabilitation and sale to new homeowners, the 16
occupied properties now show tax assessment increases of over 65
percent. Needless to say, the seven previously dilapidated properties
show a dramatically higher increase, with tax assessment increases
averaging 337 percent. As a whole, tax assessments for all 23
properties on the block increased by 109 percent--from $777,000 to $1.6
million. Everyone benefitted. More dramatically, in declining markets
such as New Haven, Connecticut, the NeighborWorks'
neighborhood held its own in property values between 1990 and 1995,
even as the city's fell 25 percent.
Beyond the resident owner, the city treasurer and lenders, the next
generation of families in NeighborWorks' communities also
benefits. The assets built by lower-income families who invest in home
ownership are a key ingredient for their future success. Children who
grow up with a stable place to live have improved educational
achievement,\1\ and when the time comes for college, the inter-
generational asset transfer mechanism of a home equity loan is
available for tuition.
---------------------------------------------------------------------------
\1\ Richard Green and Michael White, Measuring the Benefits of
Homeowning: Effects on Children, cited in ``Housing Policy Debate,''
Volume 7, 1996.
---------------------------------------------------------------------------
Does this always happen? No. It can easily be derailed by local
organizational failure, local economic collapse and a host of other
external macro reasons. Our experience, however, is that a difference
can be made and measured.
How do we sustain and increase this? Neighborhood Reinvestment's
role is four-fold:
(1) To work with organizations that meet basic programmatic and
financial health thresholds to expand their capacity;
(2) To offer intense nuts-and-bolts training to the housing and
community development field;
(3) To support Neighborhood Housing Services of America, Inc.
(NHSA) with low-cost capital so that it remains a strong financial
backstop to the NeighborWorks' system. This enables every
responsible homeowner or would-be homeowner--no matter how poor--to
borrow the necessary resources to maintain or secure a safe home; and,
(4) To monitor each local NeighborWorks' organization
for continued responsible financial and programmatic results.
What hampers vastly greater impact?
For local NeighborWorks' organizations, the main
impediment is insufficient amounts of: (1) Flexible, low-cost, equity
capital; and, (2) Funds to put loan counselors, rehab specialists and
community intervention specialists on the streets.
For Neighborhood Housing Services of America, the ongoing struggle
is to create and extend multi-year social-investor incentives and
mechanisms that will assure vastly greater sums of low-market-priced
capital.
What have we learned?
(1) First, that raising social-investment capital for NHSA--
especially in the volumes now needed--is difficult. The low market
financial return combined with a perceived high risk, even though NHSA
has never missed a payment, results in laborious capital-raising
strategies. I'd be remiss to not thank the Trustee and Board leadership
of NHSA for their incredible success in raising more than $250 million
in investment funds.
(2) Lower-income families want to be homeowners--and can be. Four
years ago I informed you that a group of NeighborWorks'
organizations were setting out to create 10,000 new homeowners,
resulting in investment of $650 million in the subsequent five years.
But when the tally is finalized at the end of four years, the five-year
goal already will have been met: 10,100 new homeowners backed by at
least $625 million invested in their homes and neighborhoods. More
importantly, the 30-60-90 day delinquency rate is 4.70 percent,
compared to about 3 percent for the conventional markets and 6-to-7
percent for government loans.
(3) Social service activities--reducing crime, providing
alternative recreation and learning opportunities, cleaning up streets
and vacant lots, enforcing building and health codes--all help to
create confidence in the neighborhood as a place of choice. These
``front-door'' issues, when addressed, lead to spontaneous sociability
so that the ill neighbor is cared for and not ignored, so that doors
are knocked on for block celebrations, so that the local school is
supported.
(4) Training works and is in tremendous demand. Three years ago the
four Training Institutes attracted 1,268 participants for 31,696
contact hours. In fiscal year 1996 that had increased approximately 105
percent for participants (2,595) and 85 percent for contact hours
(58,606).
(5) Financially and most importantly, this work is being done
efficiently with federal resources. Our board of directors requested a
report on multi-year efficiency. Balancing many factors, three measures
were utilized (charts follow):
--The first is the mission test: Over five years, has the
NeighborWorks' system continued to serve lower-
income families? The answer is yes: median incomes were 58
percent in 1990 and rose slightly to 66 percent by 1996,
primarily because of an increased emphasis on recruiting new
homeowners into these distressed communities.
--The second efficiency test measured the total investments by
NeighborWorks' organizations against the
Congressional appropriation. That grew from a 5:1 ratio in 1990
to a 9:1 ratio in 1995. And the investment ratio measures only
the real-estate-related parts of a NeighborWorks'
organization's efforts: it ignores local social-service
activities and does not directly capture our training efforts.
Overall, the amount of private-sector investment leveraged by
public-sector investment has increased steadily since 1993.
--The third efficiency test looked at NHSA in terms of total assets
managed compared to operating costs. That also nearly doubled
from 1990 to 1995.
We are grateful for your support and energetically look forward to
a successful completion of 1997 and continued opportunities in 1998. I
look forward to your questions.
NHSA's Total Assets vs. Neighborhood Reinvestments's Administrative
Grant to NHSA
Dollars:Ratio
1990..............................................................27.7:1
1991..............................................................26.4:1
1992..............................................................29.9:1
1993..............................................................35.8:1
1994..............................................................33.3:1
1995..............................................................45.9:1
1996..............................................................48.6:1
NeighborWorks Organizations Total Investment vs. Neighborhood
Reinvestment's Appropriation
Dollars:Ratio
1990.............................................................. 5.3:1
1991.............................................................. 5.8:1
1992.............................................................. 6.4:1
1993.............................................................. 7.4:1
1994.............................................................. 8.5:1
1995.............................................................. 9.2:1
1996..............................................................10.8:1
========================================================
__________________________________________________
[GRAPHIC] [TIFF OMITTED] T05FE25.000
NHSA's Clients Median Household Income--As a Percentage of National
Median Household Income
[1996 National Median=$35,200]
Percentage
1990.............................................................. 58
1991.............................................................. 59
1992.............................................................. 60
1993.............................................................. 62
1994.............................................................. 61
1995.............................................................. 65
1996.............................................................. 66
Senator Bond. Thank you very much, Mr. Knight.
I will turn to my ranking member, Senator Mikulski, for her
questions.
Senator Mikulski. Senator Bond is being very generous to
let me go first. I have to leave for a leadership meeting, and
I really will have some written questions for you, Mr.
D'Amours, and again, welcome. We were colleagues on merchant
marine and fisheries and oceanography in another life.
Mr. D'Amours. Thank you, Senator. It is good to see you.
Senator Mikulski. I would like to go directly to the
Neighborhood Reinvestment Corporation. Mr. Knight and your
staff, you know I have been a big fan of Neighborhood
Reinvestment, and in my stewardship worked to see it move
ahead. As it moved ahead, I became concerned about a couple of
things. One, could your institution keep its entrepreneurial
approach in place to meet the needs of communities, and then
second, could you avoid becoming a comfort or complacency zone
because you were successful.
Now, what I would like to do is use southeast Baltimore as
an example. Tell me how Neighborhood Reinvestment continues to
follow the same mission, of entrepreneurship in working with
local community leaders? Could you tell me what are the three
goals for your involvement in the southeast Baltimore project?
What measures are you using to determine whether you are
successful or not?
GOALS FOR SOUTHERN BALTIMORE
Mr. Knight. Our three goals are somewhat simpler to state
than they are to achieve in a short period of time. The first
is to strengthen home ownership; that is, to increase the
percentage of home ownership in southeast Baltimore. We can
look at two kinds of measures, process and absolute change. We
can look at the process measures of how many new homeowners,
such as the 50 new homeowners since last June, as well as what
kind of funds we have available. USAA has put forward funds, in
addition to many, many local institutions in Baltimore at a
rate of about 6.5 percent. The long-term measurement, however,
will come over time, and we have a database in place to start
tracking the absolute change in ownership.
Second, stabilize the community. This includes a wide range
of activities to increase the confidence of individuals in the
neighborhood. Among the actions to date has been to create a
large coalition of organizations tackling a wide range of
things. For example, encouraging local institutions to help
finance their employees to purchase homes in the neighborhood,
rewarding homeowners for purchasing in a neighborhood by
providing scholarships to the local school, working with
realtors to promote the neighborhoods and to cleanup and fix-up
kinds of things. Again, the measurement over time will be the
absolute change in market value.
Third, to decrease, significantly decrease, the number of
specific eyesore properties. At this point there are almost 100
properties individually identified. We have, through one of our
partners there, begun to prioritize legal action. A number of
individual buildings have been purchased and are under
construction. We are seeking funds to purchase more buildings.
The absolute measurement will be the decrease in the number of
eyesores.
I think on all three measures, frankly, from my perspective
we will know first from the residents whether they think it is
going well or not.
HOPE VI IN BALTIMORE
Senator Mikulski. Well, Mr. Knight, I am interested in what
was the Neighborhood Reinvestment Corporation or the
Neighborhood Housing Services of Baltimore's intervention. Just
for the committee, southeast Baltimore is a wonderful
community. I represented it as a city councilwoman, and it
faced two converging influences, one by problems created by
sheer demography, meaning a population aging in place, and also
undergoing both an economic and ethnic change. But, second, it
was steadily and gradually moving from primarily a European
ethnic community to a multiethnic, multiracial community, and
very nicely.
Then, along came a HOPE VI project in Baltimore called
Lafayette, and when the public housing came down, the Public
Housing Authority did not stand sentry. They simply dumped
everybody from public housing into this area with no screening
for section 8 assistance, and, therefore, the very role of
Government became a significant and forceful aspect of
destabilization. Section 8, because of its inappropriate use,
was also a tool for destabilization. And you had neighborhood
organizations going through heartbreak, and also deinvesting
and also leaving the community.
Am I right in summarizing that?
Mr. Knight. Absolutely correct.
Senator Mikulski. And the city took no action to correct
itself, yet the community organizations were being quite
gallant in trying to fortify the neighborhood.
Now, it was our suggestion that Neighborhood Reinvestment
Corporation come in to deal with this. Could you just very
briefly say how you have stopped the destabilization? What
organizations from Neighborhood Reinvestment stopped the
destabilization, and what community organizations have you
worked with, and what were your methods?
This was a very melancholy situation in Baltimore, Mr.
Chairman, when the very program that I helped create called
HOPE VI had become a destabilizing tool for one of the
neighborhoods that I had represented--a neighborhood that had
moved very gracefully and effectively toward racial
integration.
Mr. Knight. The organizations including the
NeighborWorks' organization, the Baltimore
Neighborhood Housing Services, to the Able Foundation, Johns
Hopkins, a series of community based CDC's, such as east
Fayette, SDI, a whole series of smaller property-owning or
would-be property-owning organizations, have formed a loose
coalition in which each continues their activity but becomes
identified under a unifying visual umbrella, if you will,
called Southeast Partners at Work. Working together has really
helped to focus broader attention on this southeast
revitalization initiative.
Senator Mikulski. Did you create that?
Mr. Knight. It certainly was an idea that came up in the
meetings in southeast Baltimore that we convened, yes. We
really see our role as the catalyst to get those kinds of
activities moving forward.
Mary Lee has managed to raise several million dollars in
low-market rate interest money that has enabled a number of
stalled construction projects to plunge forward with rapidity.
We have also succeeded in raising some first mortgage money,
again through the secondary market, at a rate of 6.5 percent,
that is enabling a very attractive incentive, if you will, to
those who would move into the neighborhood as homeowners.
Senator Mikulski. Well, I know my time is up.
I also understand you have been working with local realtors
in the private sector. But as I understand it, then the major
force from Neighborhood Reinvestment to pull together different
groups and help these groups empower themselves by being a
loose federation or coalition, was Neighborhood Housing
Services. Is that not the major tool?
Mr. Knight. Neighborhood Housing Services of Baltimore,
yes, is the major point, around which local organizations were
convened to take the action. Neighborhood Reinvestment staff's
role is to convene groups, just as we did on the Navajo
Reservation to start a new organization on the Navajo Nation.
Senator Mikulski. Well, we could elaborate. I want you to
know I continue to be a great supporter of Neighborhood
Reinvestment Corporation. Going through this hopefully was
informative for the chair, because it really shows how
Government itself is both a tool and also a problem. And
Neighborhood Reinvestment Corporation came in and worked with
what was already there, and organized it in a way that began to
stabilize it. There are lots of interesting stories, including
men organizing midnight barbecues. You know, we had drug
dealers, so instead of midnight basketball, the men of the
community just would go out on weekends and barbecue. They
would have friendship and fellowship and push those drug
dealers off the streets.
Mr. Knight. Thank you for your support.
Senator Bond. Thank you, Madam Chair. I would be far more
interested in a midnight barbecue than midnight basketball. I
have gotten past the age when basketball is that appealing to
me.
THE HOME PROGRAM
Senator Bond. Mr. Knight, would you not say that your model
really is one that should be a model for every community in
administering the HOME Program? Is this not a test case for
what we would hope that local governments would be doing with
the flexibility we are giving them. It seems to me you are
bringing it all together.
Mr. Knight. We would hope so, and that is why we spend so
much effort training others to share these techniques, with
people from a wide variety of backgrounds. Our training events
bring together representatives of the public sector, private
sector, community based groups, and church groups to learn from
each other. We think this approach is far more effective than
vastly larger sums of money that would be spent.
Senator Bond. Do not worry about the vastly larger sums of
money. To the extent that we get any money, it has already been
claimed.
Have you worked with communities? Are there people from
local housing authorities or appropriate community development
people from areas which do not have a NeighborWorks'
Program coming in to see what you are doing?
Mr. Knight. Yes; absolutely.
Senator Bond. Are you able to train these people and show
them what you are doing works?
NAVAJO PARTNERSHIP FOR HOUSING
Mr. Knight. Yes; we have just completed a little more than
\1/2\ year's work with the Navajo Nation, creating the Navajo
Partnership for Housing. It will, we hope, over the next
several years lead to the production of 10,000 units of
moderate housing on tribal lands, which is desperately needed.
It is a partnership composed of many local financial
institutions, several national institutions, including Fannie
Mae Federal Home Loan Bank of Seattle, Zion National Bank,
Northwest, and many local institutions and the nation, itself.
Residents of several of their subgroupings--chapters, as they
refer to it inside the nation--created an environment in which
people could talk, work, and come to local solutions
themselves.
rural housing concerns
Senator Bond. Outside of the native American Nation, I am
very much concerned about some of the problems we have in rural
areas, and Missouri has a lot of these. I do not know if you
have the same problems in Maryland.
Senator Mikulski. Yes.
Senator Bond. But rural housing needs are very challenging
in many parts of Missouri. What is Neighborhood Reinvestment's
experience in rural areas? Do you see the problems and the
solutions differing, and any special approaches for addressing
unique needs of affordable housing and community development?
The chicken and egg problem, do you need the jobs first or the
housing? Can you get the jobs without the housing, can you get
the housing without the jobs? That is something that community
and the town I live in is facing, and it has been a tough one.
Mr. Knight. Sometimes it's a chicken and egg problem--and
some of our responsibility, I believe--is to step forward and
take the risk. In Colorado, in the intermountain area, we are
affiliated with an organization called Colorado Rural Housing
Development Corp., that works in smaller towns to basically
create subdivisions.
Now, that may be a glorified term for a group of 10 houses
that are built, but someone has to assemble the land, get the
infrastructure in, and at that point, with either local or
statewide is financial backing, a contractor will come in and
build those 10 homes, particularly if that organization is
working with individuals who will purchase the homes. Once this
process starts it gives confidence to smaller industries and/or
employers to say now that there is housing, we will invest in
this community.
I just returned from Dimmit County, TX, which is about as
rural as one can get. It is one of the poorest counties in the
Nation, and they are doing exactly this and meeting with great
success. Frankly, it may help one of their last private
employers there, because now they will be able to purchase--
this is not a giveaway--purchase a home that would meet the
contemporary living standards of Eagle Pass, the next nearest
town.
Senator Bond. We will be interested to find out about that
experience.
CDFI
I will address a question to you and Mr. D'Amours. Just
before you testified, we heard about a new idea, the CDFI, and
based on your experience, what kind of direction, guidance
would you give to CDFI? What kind of pitfalls do you think they
ought to be aware of?
Mr. Knight. Our experience is in working with
NeighborWorks' organizations which make basically
the nonconventional, uneconomic loan. Our tandem lending
approach and small rehabilitation loans allow the private-
sector loan to work. The NeighborWorks' loan gets
paid back, but its small size and low return makes it not
feasible for a financial institution.
We think there is a great need for these niche kinds of
lending efforts. There is really at this point insufficient
capital to do them. We do as much as we can.
I think the ability of a secondary market like NHSA is
frankly part of the genius in helping a local rural area. Rural
organizations may be able to raise a pot of money once, but it
is awfully hard the second time. If they can make loans and
sell those loans, then they have funds to keep lending and
reselling. Frankly, the innovation of the secondary market, has
made a great deal of our success possible.
Senator Bond. Thank you, Mr. Knight.
Mr. D'Amours, I know that the NCUA administers a $7 million
community development revolving loan program not unlike the
CDFI. I wonder if you have any words of wisdom or suggestions
on how the CDFI can be achieved, and how is the program working
in your area?
Mr. D'Amours. Thank you, Senator. As a matter of fact, the
community development revolving loan program was passed in
1979. I was on the House Banking Committee when we approved
that.
The CDFI bill, or the Riegle bill, so-called at the time,
when he was chair of the Senate Banking Committee----
Senator Bond. And that is a good way to get your name on a
bill.
Mr. D'Amours [continuing]. Passed in 1994. Right. That is a
good way to become internalized.
The recommendations I would have, frankly, without having
any real authority to make them, but since you have asked,
would be to simplify the application procedure. We know, for
instance, out of the 268, I believe Mr. Hawke testified,
transactions last year, 50 of them were credit unions and only
a small handful received anything.
At NCUA, we operate the community development revolving
loan program very simply. The application is simple. It is only
available to the low-income credit unions. These are credit
unions 60 percent of which are below $10 million, a near
majority of which are below $2 million.
Our administrative costs at NCUA are nil. We administer
this program as an agency program. We absorb whatever
administrative costs, which are not very high, are connected
with it. In the credit union situation the money gets right
down to the people who need it most. It is done as a loan, not
as a grant. Money of the CDFI programs are grants for credit
unions rather than loans. Our money is repaid. We use the
interest of that money for technical assistance aid to credit
unions.
I think probably in my experience, I know that a lot of the
credit unions which could really make use, small, low-income
credit unions which are in the inner city or in that isolated
rural area that you are concerned about, Senator, are not
applying for CDFI moneys because the application process is a
little too complex, a little too complicated for their very,
very limited resources.
SUPREME COURT DECISION ON CREDIT UNIONS
Senator Bond. I appreciate your views on that.
As I indicated, we congratulate you on the situation you
find yourself in, that the insurance fund had its best
operating year in its 26-year history, and the number of
problem credit unions has continued to decline, and they show
strong capital growth.
As we noted, the Supreme Court granted certiorari yesterday
on the U.S. Court of Appeals decision. What do you see the
impact on credit unions being should the Supreme Court uphold
the court of appeals decision?
Mr. D'Amours. The impact over the long term would be very,
very serious, if not devastating, depending upon how the
district court ultimately would implement the court's decision.
There is a partial stay in existence as to the district
courts, Judge Jackson's injunction, which allows credit unions
to continue serving those members they now have even though
those members may share a single common bond.
That injunction could conceivably and logically under the
original court decision of the U.S. Circuit Court of Appeals be
expanded so that they cannot serve even extant members. That
would be absolutely devastating.
But even if that does not occur, Senator, over the long
period of time, what I think most people forget when they look
at credit unions is that whatever their size, whatever their
location, there are people in that credit union serving
disconnected groups, perhaps, in terms of common bond, each of
these groups being unable on their own to form sufficient mass
to operate a separate and distinct credit union.
These can be very low-income people, minimum-wage people,
janitors, secretaries, part-time workers and the like, who
would be deprived of credit union services, which are the only
alternative these people have to the loan shark, the pawn shop,
the rent-to-own store, and in some cases check-cashing
operations.
So we are very hopeful that we will prevail in the Supreme
Court, and if we do not, or even while we are in that process,
that both the House and Senate would look very seriously at the
financial empowerment that credit unions provide that will be
lost unless this challenge to the credit union common bond
system is handled properly.
Senator Bond. So you are saying the justification is that
this is a necessary service that can be provided, this ability
to go beyond what has traditionally been called a common
association. I am a little sensitive of the term, common bond.
[Laughter.]
But a common association is for low-income, disadvantaged
individuals. This is a strong justification for that.
Mr. D'Amours. Absolutely. Common bond is nothing endemic to
the definition of credit unions. It is something that happened
topsy-ish as credit unions developed. It is not a part of the
credit union definition. It is not necessary to achieve their
purposes.
It is being used by some, trying to be used by some as a
limiting factor. It was never intended in our view to be a
limiting factor, and if this effort succeeds, the effort of
credit unions and their ability to bring people into the
American economic free enterprise system would be lost, because
the banks are not going to do it unless they are required to
under CRA, and only to the extent they are required to under
CRA.
It would be shameful. It would be sad for America if this
ability of the credit union financial system to reach out and
empower people in isolated rural areas or in the inner city
were lost.
MODERNIZATION OF FINANCIAL SERVICES
Senator Bond. As Congress and the banking leaders work
toward a modernization of financial services, and they are
going to address the Glass-Stiegle fire walls that is going to
be in for revision, what do you see as the future role of
credit unions?
Mr. D'Amours. I do not think the two are related
whatsoever.
Senator Bond. There will not be any impact on the members
you serve?
Mr. D'Amours. No, sir.
Senator Bond. If there are broadening and consolidating
financial services through permitting securities firms to own
banks and banks to own securities firms, if that comes about,
there will not be any area in which the credit unions would
wish to participate?
Mr. D'Amours. No, sir; credit unions are prohibited from
investment in these kinds of areas from commercial investments,
for the most part, from securities investments. Credit unions
operate in an investment perspective within a narrow niche.
Their job is to make loans, and we have been stressing that at
NCUA.
Senator Bond. So you would not, from a credit union
standpoint, if a larger financial institution wanted to set up
a credit union to serve a target area of need, you would not
see any justification for expanding existing authority to make
that service available?
Mr. D'Amours. We would not want credit unions to start to
get into the banking business, if that is what the question
implies. Absolutely. Credit unions have their niche. They have
filled that niche. They have been doing the job they were
supposed to do very, very well. We do not want to be banks.
We would welcome banks if they wanted a credit union
charter to do what credit unions do, but we have no ambition to
take over their work.
Additional committee questions
Senator Bond. Thank you very much, Mr. D'Amours.
Mr. Knight, we appreciate your testimony. We will leave the
record open in case there are additional questions that members
of the committee want to ask. Your full statements will be made
a matter of record.
[The following questions were not asked at the hearing, but
were submitted to the Administration for response subsequent to
the hearing:]
Questions Submitted by Senator Mikulski
Question. What is the status of the Baltimore Progressive Federal
Credit Union situation?
Answer. Baltimore Progressive Federal Credit Union was liquidated
on January 30, 1997. Its members are now eligible to receive services
from Citadel Federal Credit Union, which offers services less than one
mile from Baltimore Progressive's location.
Question. What is the National Credit Union Administration doing in
low income communities today?
Answer. I enclose our 1996 Yearend Report on Low-Income Credit
Unions, which describes our efforts to expand financial services to
low-income Americans, and respectfully request its inclusion in the
hearing record.
Question.What is the potential impact of the pending case between
the NCUA and the banking industry?
Answer. As you know, the Supreme Court is hearing arguments on
October 6, 1997, on the case challenging NCUA's interpretation of the
Federal Credit Union Act's field of membership provision. After the
banks suffered a number of losses at various U.S. District Courts, the
U.S. Court of Appeals for the District of Columbia, in July, 1996,
reversed the District Court and determined that all members of an
occupational credit union must share a single common bond. The Appeals
Court remanded the case for implementation to the District Court. That
Court enjoined NCUA and all federally chartered credit unions in the
U.S. from enrolling new groups and new members from existing groups
that did not share a common bond with the credit union's core
(original) membership.
In December, the Appeals Court stayed an important part of the
District Court's injunction. Federal credit unions, for now, can
continue enrolling new members from existing membership groups with
differing common bonds so long as those groups were affiliated prior to
the District Court's October 25, 1996, injunction. However, federal
credit unions remain barred from adding to their charters any new
groups which do not share a common bond with their core group.
This (in our opinion) erroneous interpretation of the common bond
provisions of the Federal Credit Union Act could severely limit the
viability of a federal credit union whose membership includes the
employees of one sponsor organization, if that organization downsizes,
relocates or goes out of business. The limitation places these credit
unions at an unnecessary risk occasioned by a downturn in a single
industry or sector of the economy. The NCUA Board believes that
Congress should act now to clarify the Federal Credit Union Act on the
question of common bond and to obviate the negative safety and
soundness implications of court actions crippling the ability of credit
unions to serve different groups that each have a common bond.
Should the courts ultimately decide to force a complete roll-back
of our 1982 policy by ordering credit unions to divest existing members
from unrelated groups, the potential for substantial losses would be
significant and immediate for some 3,586 federally insured credit
unions serving 157,000 groups.
Many of these groups have fewer than the 500 potential members
needed, as a minimum, to organize and maintain a viable credit union.
Thus, millions of Americans would lose or be deprived of the financial
services they have chosen or desire, financial services Congress has
for 63 years directed NCUA and its predecessors to make available to
them.
There are limited regulatory steps NCUA may be able to take in
order to alleviate the problem for some credit unions. However, if the
court's decision stands, only Congress can completely fix the problem.
Since small businesses, which are usually defined as having fewer
than 500 employees (the critical mass needed for credit union
viability), represent the largest and fastest growing segment of the
United States economy, a significant portion of the workforce could be
denied access to credit union services if the Court of Appeals decision
is not reversed. Prohibiting small business employees from joining
existing credit unions would hamper credit unions' efforts to meet
their statutory mandate to provide financial services to low- and
moderate-income workers.
According to Commerce Department data, the 6.18 million businesses
in 1990 employed 93.48 million people. Of these 6.18 million
businesses, 99 percent employed fewer than 500 employees (a total of 75
million people).
As we enter the 21st century, the changing nature of our national
and world economies make it reasonable to expect continuous
downsizings, mergers, and the complete elimination of companies and
whole industries. Occupational credit unions remain extremely
susceptible to these economic changes.
Federal credit unions have remained healthy and have grown because
they invested substantial capital in achieving economic strength and
diversity through the addition of select groups. Deprived of this
option, even without the draconian order to divest existing groups,
many credit unions over time will suffer unbearable losses and their
members will lose needed services. Their liquidation or merger would
significantly affect the federal insurance fund and the health of the
entire industry.
The assets, shares and loans of the 3,586 multiple-group federal
credit unions at year-end 1995 comprised a substantial portion of the
industry's total:
Assets.--$150 billion (approximately 78 percent of $190 billion in
total assets held by federal credit unions.)
Loans.--$94.6 billion (approximately 78 percent of $120.5 billion
in total loans held by federal credit unions.)
Shares.--$132.8 billion (approximately 79 percent of $170.3 billion
in total shares held by federal credit unions.)
These statistics illustrate the potentially devastating impact of
preventing federal credit unions from continuing to add new groups or
new members from existing select groups. As the remaining employees of
existing select groups become older, they borrow less and save more.
Therefore, the inability of a credit union to add sufficient numbers of
new members will dry up the pool of younger members who tend to borrow.
The higher rates of income generated from loans will be reduced, making
it difficult to maintain existing rates paid on savings. The result is
an ultimately fatal asset-liability mismatch.
Moreover, in reliance on NCUA's 15-year multi-group field of
membership policy, many federal credit unions have invested substantial
sums to create an infrastructure to support select group expansion.
Credit unions have spent millions of dollars on branch offices, data
processing, personnel and other enhancements allowing credit unions to
service the additional members of these groups. As people change jobs,
move away, retire and die, and the credit union is prevented from
adding additional members or groups, it will lose its ability to
sustain the cost of these enhancements, adding yet more costs to an
already deteriorating income stream.
We expect to win the Supreme Court case, but if the case comes out
against us, we will continue to work for a legislative solution.
SUBCOMMITTEE RECESS
Senator Bond. We appreciate your patience in waiting for
us, and with that the hearing is recessed. Thank you.
[Whereupon, at 11:50 a.m., Thursday, February 25, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 4, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:37 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Stevens, Shelby, Campbell,
Mikulski, and Boxer.
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
STATEMENT OF HARRIS WOFFORD, CHIEF EXECUTIVE OFFICER
ACCOMPANIED BY DONNA CUNNINGHAME, CHIEF FINANCIAL OFFICER
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The VA, HUD, and Independent
Agencies Subcommittee will come to order. This is the
subcommittee's second hearing on the fiscal year 1998 budget
and I welcome our witnesses and guests this morning. The
Appropriations Committee and the VA-HUD Appropriations
Subcommittee in particular will face another year of very, very
difficult budget decisions as Congress continues to refocus its
priorities and seeks to balance the budget of the Federal
Government by the year 2002.
I emphasize our continuing need to stay focused on
balancing the Federal budget, including the need to continue to
be proactive in consolidating and reforming our many Federal
programs, including many under this subcommittee's
jurisdiction. We have done much over the last several years,
but there is still much to be done.
The President's fiscal year 1998 budget in my view has not
yet set forth a blueprint for fiscal responsibility, and
without meaningful policy changes now the deficit will
skyrocket by the year 2010, when many of the baby boomers begin
to retire.
As it applies to the current year, the President's budget
optimistically proposes some $92 billion in budget authority
for the departments and agencies in the VA, HUD, and
Independent Agencies Subcommittee, of which $72 billion is
discretionary spending. The amount proposed represents an
increase of approximately $8 billion over the current year's
level, and certainly we could spend all of that and more. There
is no question that many of the activities that we have in this
subcommittee are under great pressure.
I would love to have available the kinds of funds the
President proposes. But given the very real problems elsewhere
in the budget, the significant problems faced in the defense
budget with the costs of our ongoing activities and Bosnia,
Kuwait, and elsewhere, the fact that the deficit in the
President's request actually goes up for the coming year, the
fact that our FEMA moneys are proposed to be off budget when we
fought so hard in the past couple of years to be responsible
and include the emergency spending authority and outlays in the
budget and account for them, I would say that it is very, very
optimistic to think that we would have anything like the budget
authority that the President has proposed under the
congressional resolution.
I would say, therefore, absent some compelling reasons, it
is going to be very difficult for this subcommittee as a
practical matter to provide any increases over our 1997 budget
levels. We will work to obtain as much authority as we can
find, but I would have to say that this does not appear
optimistic and does not appear promising at this point.
This morning we take testimony from five of the independent
agencies under the subcommittee's jurisdiction: The Corporation
for National and Community Service, the Court of Veterans
Appeals, the American Battle Monuments Commission, the
cemeterial expenses for the Army, and the Selective Service
System. These are important programs and activities and I look
forward to their testimony.
We will call as our first witness Mr. Harris Wofford, our
former colleague, now Chief Executive Officer of the
Corporation for National and Community Service. The
administration's budget request for the Corporation for fiscal
year 1998 totals some $546.5 million, an increase of $146
million or 36 percent from the Corporation's enacted
appropriation for fiscal year 1997 of $400 million.
As we all know, the Corporation was established by the
National and Community Service Trust Act of 1993 to provide
opportunities for national and community service and to provide
national service education awards. The Corporation makes grants
by formula, competitive, and national direct, to States,
institutions of higher education, public and private nonprofits
and others to create service opportunities for a wide variety
of individuals, such as students, out of school youth, and
adults, through a variety of full time and part time national
and community service programs.
National service participants may receive educational
payment awards for higher education, vocational education, job
training, or school to work programs.
The Corporation has many laudable and important goals, and
certainly no one has been a stronger champion of these goals
than my colleague, friend, and ranking member, the
distinguished Senator from Maryland, Senator Mikulski.
Nevertheless, there remain significant issues concerning the
implementation of the program and the financial management of
the controls that are being exercised.
First, funding of what is essentially still a new and
unproven program at $546 plus million in fiscal year 1998 is
problematic, especially when the Congress, as I said, is
confronting the budget deficit, especially when the
subcommittee may be short of adequate funds for a number of
longstanding funding priorities, such as veterans medical care
and the renewal of section 8 contracts for low-income families,
including the elderly and the disabled.
In addition, there are some significant financial and
management issues facing the Corporation. For example, the
Corporation has submitted only one annual report, including one
financial statement, and that report covered activities for
fiscal year 1994. Moreover, as I understand it, the Corporation
is currently unable to reconcile its financial accounts for
fiscal years 1994, 1995, and 1996, to the degree that as of
December 1996 some $38 million in AmeriCorps funding could not
be accounted for.
If I am wrong in that supposition, I would be pleased to be
corrected.
Finally, I have concerns about the mission of the
Corporation and how it is being carried out. While the
AmeriCorps Program has been touted as a program designed to
help young people who perform public service pay for college,
the program continues to have problems with the dropout rate in
the program, the educational usage, and, most important, the
final cost to the taxpayer of an educational award under the
AmeriCorps Program.
For example, a recent February 1997 GAO study on the role
of State commissions in implementing the AmeriCorps Program has
raised several significant concerns for me. First, the overall
rate for the programs reviewed under the GAO study indicates
that the median dropout rate for the program participants was
39 percent. In other words, almost two out of every five
participants in the program did not complete the program.
In addition, the GAO report identified a number of concerns
in each of the individual programs reviewed. For example, in
the Casa Verde Builders Program in Texas, at a cost of $2.5
million, 38 of the 64 participants, or 59 percent, ended the
program early, with less than one-third of the participants
earning an award and only 4 participants using an award. This
means the program paid over $600,000 per education award.
Using these funds for Pell grants or some other kind of
education assistance obviously could serve a far greater number
of families and young people in paying for education. Moreover,
in the Casa Verde Builders Program, even if all eligible
participants used their educational award, it would still cost
over $106,000 per person plus $4,725 for the educational award,
for a total cost of over $110,000. This means, excluding
private sector contributions, the taxpayer still would end up
paying approximately $102,000 per educational award.
The bottom line is I am very much concerned the AmeriCorps
Program is turning into another expensive jobs program, in
which we are not getting any bang for our buck.
Finally, I know that the Corporation can tell some
impressive success stories, heartwarming stories that are
obviously worthwhile and show laudable achievements.
Nevertheless, there are open issues and concerns that need to
be addressed, and unfortunately the Corporation does not have
the tracking or accounting systems to demonstrate the successes
and the failures of the Corporation.
Without these systems in place to assure the controls and
to assure that there will be successes and that there will be
accountability for taxpayers' dollars, I would find it
difficult to support the increase in the investment requested.
I look forward to hearing the testimony of Mr. Wofford and
I am optimistic that he can allay our concerns in many areas as
we begin to address these questions.
Now it is my pleasure to turn to my ranking member for her
comments. Senator Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman. Good
morning to both you and also to two members of this
subcommittee, dear colleagues from the House, Senator Ben
Nighthorse Campbell and Senator Barbara Boxer. We welcome them
and their participation.
I want to extend my welcome to our former colleague Senator
Wofford, the Chief Executive of the Corporation for National
Service, and welcome the other witnesses who will be testifying
today.
I know this morning we are going to have three panels to
deal with five agencies, and I will address the agencies
related to the Department of Defense later during their
questioning. But we do want to give a most cordial welcome to
General Herrling of the Battle Monuments Commission, Steve Dola
representing DOD and the cemetery issues, and Gil Coronado, the
Director of Selective Service, and, of course, the Chief Judge
of the Court of Veterans Appeals.
I would like to begin my opening statement, very briefly,
to talk about our first panel. I believe that the chairman has
outlined some yellow flashing lights about national service,
but I would hope that it would not be a red light to the
program. Yellow flashing lights are a metaphor that I use where
we say we have to pause, proceed with caution, and analyze the
risk as we look over the intersection and where we find
ourselves.
I think that national service, like any new program that
focuses primarily in a decentralized approach, State and local,
will have a lot of bumps on the road in terms of management.
What we want to talk about is get back to the mission of the
program, which was to deal with two issues: one, to rekindle a
sense of the civic virtues that we needed around duty,
obligation, and sense of community. But the other was to deal
with the fact that for many young people the American dream was
no longer available and that there was not a real opportunity
ladder to afford higher education.
For those of us who helped create national service, we did
not want another program; we really wanted to launch a social
movement. We did not want another giveaway, but we wanted to
say for every opportunity there was an obligation. We did not
want to talk about an entitlement society; we wanted to talk
and function on an empowerment society.
The whole role of national service is that by performing
community service you earn a voucher to reduce your student
debt, a voucher to pay for higher education. So it was based on
essentially opportunity and obligation linked.
The work that the volunteers do is not glamorous. It does
involve cleanup and it focuses on public safety, the
environment, helping with education, and focusing on many
areas. I know that not only are heartwarming stories told, but
that there are other issues around it.
What I want to be sure is that we have a national service
program. The President has talked about stimulating
voluntarism, and later on in April there will be a bipartisan
and I hope a nonpartisan summit on voluntarism in Philadelphia.
Who will be there? Not only President Clinton, but President
George Bush, who founded the Points of Light concept that our
subcommittee under both stewardships have funded. It will have
Colin Powell, who certainly knows what duty, obligation, a call
to service meant, and how we can translate that into civilian
society.
But I believe we need to have a mechanism to operationalize
good intentions and where there is a Federal role, but not a
federally restrictive set of mandates. So we look forward to
that summit and how we can continue to stimulate voluntarism,
not only through this program but through others.
The GAO report does raise some issues and concerns, but
what they talk about is, though the State commissions vary,
they are meant to vary. What we wanted to have is that each
Governor could decide how to run this program according to
local need. It was to be Federal resources and a State and
locally run program, tailored to local community needs and not
a cookie cutter approach.
So I think that we have gotten off to an uneven start, and
we thank Senator Wofford for ironing out a lot of the wrinkles
that we had: No. 1, acknowledging the validity of the concerns
that the Congress had; No. 2, taking corrective action; No. 3,
to try to put this program on track where it is not a program
only for today, but a program for tomorrow, that the values
learned by participating in the program carry on long after
someone leaves the program.
Last, but not at all least, when we talk about the
attrition rate we are talking about two things. One, that you
have to be fit for duty to stay in this program, and we wanted
the restrictions to be tough, so that if anyone had reasons for
cause to be dismissed for, say, drug abuse, then so be it.
The other is that we are recruiting not only yuppie college
kids to pay off their student debt--a very worthwhile endeavor,
I might add--by creating a sense of obligation, but we were
also recruiting among the poor. In many instances, deep
compelling personal reasons meant that people had to leave the
program. So, therefore, the attrition rate is in many ways to
be expected.
Well, I sound like I am giving the testimony that maybe
Senator Wofford is going to give, but I do think we really need
to, and through this appropriations cycle, to look at where
national service has been and correct the problem and look at
where national service could go, and really in a bipartisan,
nonpartisan way focusing on some clear objectives and strong
management controls.
So with that, I will conclude my statement.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Campbell.
STATEMENT OF BEN NIGHTHORSE CAMPBELL
Senator Campbell. Thank you, Mr. Chairman.
I am pleased to see our former Senate colleague, Senator
Wofford, here, the Chief Executive Officer of the Corporation
for National Service.
In my home State of Colorado I visited the location at our
former Lowry AFB on a couple of occasions and I believe it has
a great deal of potential. I know that there has been some
growing pains with it and I know it has come into some
criticism, but generally this group in our State has helped
low-income communities. It has tutored at-risk youth, for
instance, and it has monitored students, helped with antigang
initiatives, and a number of things. Similarly, I think it has
helped homeless veterans on many occasions and I certainly
support that.
I guess that I have got some concerns that some of the
other committee people have, too, that I guess could be best
described as Senator Mikulski has. There are some yellow lights
going off about how the budget is being handled. But I think
generally it is a new program and generally doing very good.
I just wanted to tell our former Senator that I am
certainly supportive of it and hope we can iron out those
problems and get on with it.
Senator Bond. Thank you very much, Senator Campbell.
Senator Boxer.
STATEMENT OF BARBARA BOXER
Senator Boxer. Thank you so much, Mr. Chairman. It is
certainly a pleasure for me to be here today. As a new member
of this committee and this subcommittee, I am very honored.
I wanted to mention, if I have to get up and leave in the
middle of something, I have got a conflicting hearing on
Superfund sites going on elsewhere in the building. So forgive
me.
But I really wanted to come by to extend a special welcome
to Harris Wofford, our former colleague, who is now CEO of the
Corporation of National Service. He is a hero of mine and his
interest in this goes way back. I remember when I was a junior
at college President Kennedy urged our Nation's young people to
ask not what your country can do for you, but what you can do
for your country, and I remember that resonating with me, and
here we are so many years later with those same words having
tremendous meaning.
Once again, this challenge has been made to our Nation's
young people through this program, and once again I am happy as
well to see young people responding. I hope that we will not
take away this opportunity. I believe that we can get to the
bottom of whatever the problems are and have some strong
bipartisan support for it.
The Corporation for National Service plays a key role in
helping our country and our communities address unmet needs,
while ushering in a renewed commitment to civic responsibility.
In my State we have over 2,300 AmeriCorps members in 48
different sites. Members tutor children K through 12, they
mentor teens at risk of dropping out or becoming teen parents,
they assist local community organizations in reducing juvenile
crime. They support local residents in identifying and
addressing the most critical needs.
Like Senator Campbell, I have had the privilege of visiting
some of these programs and seeing our young people at work.
They have become heroes in many communities, and it is just a
joy to see that. Then they get the opportunity to go to
college.
So I think it is a program that has a vision, and if we are
careful and if we do it right I think it should meet everyone's
expectations.
As a former local elected official, I appreciate the fact
that there is not a cookie cutter approach to this program,
because every community has different needs, and that is what I
like about this program.
So I am pleased to be here today and I look forward to
hearing about the future plans.
Thank you very much, Mr. Chairman, for this time.
Senator Bond. Thank you very much, Senator Boxer.
Senator Burns.
STATEMENT OF CONRAD BURNS
Senator Burns. Move on.
Senator Bond. Thank you very much, Senator Burns. That is
one of your best statements yet. [Laughter.]
Senator Burns. Coming from you, I will accept that as a
compliment.
Senator Bond. That is how it was meant, Senator.
Senator Wofford, we are delighted to have you with us
today. As you will understand, we will make your full statement
a part of the record and would welcome your highlighting those
items which you think ought to be called to special attention
for this subcommittee.
Please begin.
statement of harris wofford
Mr. Wofford. Mr. Chairman, Senator Bond, Senator Mikulski,
Senator Boxer, Senator Campbell, Senator Shelby, Senator Burns:
I look forward to reading Senator Shelby's remarks and anything
Senator Burns has to say now or in the future.
I appreciate this opportunity to discuss the progress and
the plans of the Corporation for the coming year. Our budget
request is for $548 million for the programs authorized under
the National and Community Service Trust Act, and these funds
would support approximately 29,500 AmeriCorps members through
the grant program and 1,600 members in the National Civilian
Community Corps.
The request includes $53 million to support the Learn and
Service America, K through 12, and higher education programs,
and $6 million for the Points of Light Foundation initiated by
President Bush, which has become a special partner of ours both
in the summit and in many other ways.
By the way, Senator Mikulski, I am delighted to introduce
Marilyn Smith of Maryland, who is just taking over as the
director of the Learn and Serve America Program.
Senator Mikulski. I was going to introduce her when I do my
questions.
Mr. Wofford. She was executive director of the State
Commission in Maryland and a pioneer in service learning.
Now, my testimony does not address the VISTA section of
AmeriCorps or the Senior Corps programs funded under the
Domestic Volunteers Service Act. Mr. Chairman, I appreciate
very much your support over the years for VISTA and its 30-year
track record as the first domestic Peace Corps, of helping
people and communities help themselves.
By the way, I hope the VISTA approach is, in fact, going to
be a larger proportion of the overall AmeriCorps scheme.
I want to make three points: First, that national service
works. It is a proven way to leverage volunteers and help to
solve community problems; especially the critical problems of
children and youth.
Second, that we are committed to achieving the highest
levels of integrity and efficiency. We have already taken
important steps to cut costs, increase efficiency, and develop
a sound financial management system.
Third, I want to outline briefly three initiatives--America
Reads, National Service Scholars, and the Presidents'
Philadelphia Summit, Presidents plural, as Senator Mikulski
pointed out, to be chaired by Gen. Colin Powell. Those
initiatives can help unleash a new wave of voluntary citizen
action aimed at solving some of our country's most serious
problems in a decentralized, nonbureaucratic way.
There are very few programs that have received the same
level of scrutiny as AmeriCorps. The conclusion of the
evaluations and reports and the experience of communities
across America, reflected in so many Governors' support for
Corporation programs, is that national service works, helping
to solve the toughest problems of education, crime, drugs,
illiteracy, homelessness, environmental problems.
As I detail in my written testimony, Aguirre International,
an evaluation firm headed by President Ford's Education
Commissioner, found significant accomplishments in every area
in which AmeriCorps members serve. Nowhere is AmeriCorps having
a more profound effect than in education. More than one-half of
all AmeriCorps members work with children and youth. They
teach, tutor, run after school programs, do drug prevention
work, create safe havens and safe corridors, and organize
secondary, middle school, and university students themselves to
serve.
Thousands of AmeriCorps members serve as mentors or are
recruiting mentors to work one on one to help children do
better in school. AmeriCorps members are also in the front
lines in the fight against crime. They organize crime watch
groups, work to reduce gang violence and help crime victims.
Their efforts have won extraordinary praise from police chiefs
and sheriffs around the country.
A key to understanding AmeriCorps is the degree to which it
leverages unpaid volunteers. Originally there was some concern,
and there is still in some people's minds, that there is a
contradiction between full-time service with living allowances
and traditional unpaid volunteering, when exactly the opposite
is the case.
Very often, in most cases you cannot use large numbers of
unpaid volunteers without a cadre of full-time people to make
it possible. Right now today there are two teams of the NCCC,
National Civilian Community Corps, who have gone right away on
the call of FEMA, as they also do on the call of the Red Cross,
to the disaster area in Arkansas. They help organize unpaid
volunteers. They come quickly. They work night and day. They
stay until the job is over.
Because members serve full time every day, they help the
nonprofits in which they serve to multiply the number and
effectiveness of unpaid volunteers. Habitat for Humanity is a
case in point. At the Habitat site in Miami, 2 dozen AmeriCorps
members helped recruit, and worked alongside, thousands of
community volunteers to build 50 new homes.
Aguirre International found that each AmeriCorps member
recruited, trained, and supervised an average of 12 unpaid
volunteers. The hundred projects in our Learn and Serve America
Higher Education Program have generated the service of an
additional 27,000 volunteers. These numbers will continue to
grow as we put extra emphasis on volunteer generation.
National service is cost effective. Three separate
independent evaluations have examined the costs and benefits
and have concluded that it is a wise investment that returns
from $1.54 to $3.90 for every dollar invested. That is one
reason Massachusetts Gov. Bill Weld has said it is the wisest
investment of taxpayers' money he could think of.
On another front, AmeriCorps is living up to its GI bill
promise of expanding educational opportunity for those who
serve, especially those from America's hardworking middle
class. Last year 55 percent of AmeriCorps members came from
households with incomes of from $10,000 to $50,000. Another 21
percent come from homes with less than $10,000 income. The
National Service Trust has already made more than 26,000
payments totaling $44 million to over 6,000 education and loan-
holding entities.
The Corporation is a lean, decentralized, and responsive
public-private partnership that is locally based. Grants go to
local nonprofit groups--schools, colleges, universities, faith-
based groups--more than 430 such through AmeriCorps alone.
These groups decide what service will be performed and they
select and enroll the members.
Two-thirds of these grants are made by Governor-appointed
State commissions. The other one-third go to national
nonprofits, such as Habitat, the Red Cross, and the Boys and
Girls Clubs.
National service is competitive. States compete for
Corporation resources and local programs compete for AmeriCorps
members. Programs that do not perform get eliminated. Since
AmeriCorps started, 70 programs have not been renewed for
additional funding.
National service uses rigorous evaluation to improve
quality. Right now 14 separate studies related to AmeriCorps
are being conducted or planned, most by outside evaluators. In
addition, we require every AmeriCorps program to design annual
objectives based on measurable outcomes--reading scores raised,
children immunized--and check their progress through the year.
This is a cutting edge initiative in the nonprofit sector.
All the programs of the Corporation are nonpartisan in
spirit and in construction. By law, State commissions are
comprised of a balance of Democrats and Republicans.
Commissions are appointed by Governors, three-fifths of whom
are Republican. Bipartisanship is built in.
Perhaps no other issue has generated so much confusion and
misinformation as the issue of costs. AmeriCorps members who
serve their community full time for a year receive a living
allowance that averages about $150 per week or $7,800 per year,
going up under cost-of-living formulas to a little over $8,000
in the coming year--not $18,000, not $27,000, not $50,000, as
some critics have stated.
After the corpsmember completes a year of full-time
service, he or she earns an educational award of $4,725 to be
used at some point over the next 7 years. There is an
additional allotment for health care. The total base support
for the AmeriCorps member amounts to about $13,000 in living
allowance, health insurance, and education award.
The total average cost from the Corporation's
appropriations per AmeriCorps member has been a little over
$18,000 and it is going down. The steps we have taken to cut
costs include eliminating grants to Federal agencies, planning
grants, and member relocation costs. We have raised the local
match from 25 percent to 33 percent, requiring grantees with
above-average costs to cut costs by 10 percent this last year
and expanding the number of education awards only--a good idea
that Senator Grassley has strongly pressed for.
In this program, the Corporation provides education awards
to nonprofits, religious organizations, colleges, and others
who agree to provide the AmeriCorps member's living allowance.
We have already approved 2,000 of these assignments, including
a new partnership with the Boys and Girls Clubs of America to
support 800 AmeriCorps members. The National Council of
Churches will sponsor more than that number.
Furthermore, last May I announced an ambitious plan for
reducing AmeriCorps costs. We are reducing the average cost per
member to $17,000 in program year 1997--that is including
education award and everything--to $16,000 in 1998 and to
$15,000 in 1999.
This includes all of the items that I have listed above
including recruitment, training, and all our program support.
Senator Bond. Mr. Wofford, we turned off the light and let
you go a little longer than the 5 minutes we had forecast. We
do have four others to do. It has been about 15 minutes and I
hate to do this, but we have a heavy schedule today. If you
could wrap up.
Mr. Wofford. I will try to wrap up fast. Thank you, Mr.
Chairman.
The handling of the Corporation's financial management
problems demonstrates our commitment to change and reform. My
top priority, shared actively by our Corporation's Board of
Directors, is getting our financial house in order. Under the
leadership of our new chief financial officer, Donna
Cunninghame, we are making steady progress toward producing
auditable books and correcting deficiencies. Our goal is to
build a sound financial management system and make the
preparation of auditable financial statements a routine
operation.
The $38 million, Mr. Chairman, that you mentioned a little
earlier, in fact, is money that Ms. Cunninghame, tells me has
been brought down to the neighborhood of $28 million. With some
further adjustments it will come down more.
Last, the three initiatives. The America Reads campaign
launched by President Clinton, endorsed by so many Governors
and mayors, is----
Senator Mikulski. Senator Wofford, just to help you out
here and move along with the chairman, and not to interrupt
your testimony, but I have two questions related to America
Reads and also to the Presidents', the multiple Presidents'
summit, the Colin Powell, and perhaps we could come to those
two issues in my question.
Mr. Wofford. Very good.
Senator Mikulski. And you could brief us on that and
through that question.
Mr. Wofford. I will await your question. That help is
welcome, Senator Mikulski.
I might say that the one other initiative other than the
American Reads and the Presidents' summit is the National
Service Scholars Program for which we are asking $10 million.
In his commencement speech at Penn State, the President called
for service to become part of the ethic of every school in
America. To help make this happen in every high school, he
announced the National Service Scholars Program, which will
reward high school juniors and seniors who do outstanding
service with a $1,000 college scholarship, $500 of which will
come from the Corporation and $500 from local sponsors.
The Corporation has contracted with a private foundation to
administer this program, which will begin making its awards
this spring.
PREPARED STATEMENT
I will conclude by saying that national service fits the
era in which big Government is over because the era of big
citizens is beginning. The other side of reinventing Government
is reinventing and reinvigorating citizenship. National service
reduces our reliance on Government by mobilizing citizen
action. It helps communities solve problems in their own
ingenious ways. It strengthens the building blocks of civil
society. It is a smart and wise investment and there are
compelling reasons why it should be continued, not despite
tight budget times but because of them.
Thank you, Mr. Chairman.
[The statement follows:]
Prepared Statement of Harris Wofford
Mr. Chairman and members of the Subcommittee, I appreciate the
opportunity to appear before you today to review the Corporation's
progress over the last year and to report about our plans for the
future.
The total fiscal year 1998 budget request from this Subcommittee
for programs authorized under the National and Community Service Trust
Act is $546,500,000. In addition to this amount, we are seeking a
separate appropriation of $2,500,000 from this Subcommittee for the
Office of the Inspector General.
These funds will provide for approximately 29,500 AmeriCorps
members through grant programs and approximately 1,600 AmeriCorps
members through the National Civilian Community Corps (NCCC) program.
(Participants in the AmeriCorps*VISTA program, funded through the
Subcommittee on Labor, HHS, Education, and Related Agencies, will bring
the total to 35,000 AmeriCorps members.)
The amounts requested represent an increase of $146,500,000, or 36
percent over the fiscal year 1997 funds appropriated by this
Subcommittee for national service. The increase is targeted to the
America Reads initiative, the challenge to Americans to help all
children read well and independently by the end of the third grade.
National service's role will be specifically outlined in legislation to
be presented to the Congress later this month.
The budget request will cover the costs of making the current
District of Columbia NCCC deployment site a permanent campus, expanding
other campuses, and establishing a new campus in a region of the
country not currently served by the NCCC. In addition, these funds
provide an increase in support to service-learning initiatives in K-12
schools, community organizations, and institutions of higher education
through the Learn and Serve America program.
For three years, national service has had proven, positive results
in improving America's communities. National service programs have been
``getting things done'' and expanding educational opportunities,
improving the environment, enhancing public safety and meeting other
human needs. Outside experts have found that representative programs
have achieved positive cost-benefit ratios that merit and justify your
continued support.
GETTING THINGS DONE
In the three years since the program was created, 70,000 AmeriCorps
members have served in over 1,800 non-profit operating sites.
A 1996 independent evaluation of AmeriCorps programs by Aguirre
International--headed by President Ford's Commissioner of Education--
examined the activities of one out of every ten AmeriCorps members then
serving. Aguirre found that this small-but-representative sample of
individuals:
--Taught, tutored, or mentored almost 64,000 students.
--Collected, organized, and distributed 974,000 pounds of food.
--Helped 2,550 homeless people find shelter.
--Developed and distributed 38,500 sets of information about drug
abuse, HIV/AIDS, street safety, health care, and other issues.
--Ran violence-prevention after school programs for 50,000 youth.
--Performed energy audits for more than 18 million square feet of
buildings.
--Planted more than 210,000 trees.
AmeriCorps members have similar achievements in every state over
the last year.
The 78 AmeriCorps sponsored by the Montana Conservation Corps
repair the homes of elderly and low-income residents, restore and
protect natural resources, improve the habitat of wildlife, and
increase the public's access to natural sites. The AmeriCorps members
also mentor at-risk youth while engaging them in service.
The Fort Belknap Community Council's New Vision Youth Serve is a
program supported by a Learn and Serve America K-12 grant, run by and
for this Montana tribe. The Fort Belknap Tribal Education Department,
College Safe Future Program, Housing Authority, Youth Council, and
Tribal Health Department are developing a network of community service
centers on the tribe's reservation to address public safety, human and
environmental needs.
The Blue Hills AmeriCorps program engages 18 AmeriCorps members in
partnership with the Kansas City, Missouri Police Department to help
close drug houses, reduce crime by reporting drug activity, establish
safety corridors, and train youth and adults in conflict resolution.
This year, Blue Hills AmeriCorps members recruited and trained 734
volunteers to serve as school bus stop guards at 62 school bus stops.
Over the last three years, more than 50 drug houses were closed down,
some of which have been taken over by the city and are being
rehabilitated as affordable single-family housing for low income
families.
In Birmingham, Mobile, and Montgomery, Alabama and 17 other cities
in nine southern states--the Alliance for Catholic Education (ACE)
provides teachers and other resources for under-resourced parochial
school systems through a Learn and Serve America: Higher Education
grant. ACE and the University of Notre Dame are matching every
Corporation dollar with 13 dollars for the 1996-97 program year. ACE
Learn and Serve members are graduates of several top college
institutions of higher education, including Notre Dame, Duke,
Georgetown, and Boston College.
The 28 AmeriCorps members sponsored by the American Youth
Foundation's St. Louis Partners for Service Education tutor and assist
teachers in developing projects related to literacy, the environment,
first aid, and substance abuse prevention. The AmeriCorps members have
recruited more than 100 parents to assist in classrooms and other
educational support activities.
Twenty AmeriCorps members sponsored by the Notre Dame Mission
Volunteer Program and the Sisters of Notre Dame are serving at eight
schools, community centers, and soup kitchens across Baltimore,
Maryland. Sharonne Henderson, a Notre Dame--AmeriCorps member who
tutors children at City Springs Elementary School, recognized that one
of her students had significant trouble seeing. The child was tested,
diagnosed as having a cataract, and fitted with glasses. Ms.
Henderson's presence, attention, and concern led to the early detection
and treatment of this very serious condition. The Notre Dame Mission
Volunteer program also sponsors 48 other AmeriCorps members who serve
in Boston, Massachusetts, Cincinnati, Ohio, and Apopka, Florida.
The 173 AmeriCorps members of the United Youth Corps of Maryland
maintain and restore 15 state forests, parks, and wildlife management
areas. Members rehabilitate abandoned houses and construct community
parks in low-income Baltimore neighborhoods, tutor students with
special needs, and serve as teachers' aids.
In Alaska, AmeriCorps members serve in more than 30 communities to
improve environmental education, recycling, sanitary waste management,
early childhood education and tutoring. Members serve in rural areas
such as Hooper Bay and Nulato.
Students at the Cape May County (New Jersey) Technical High School
in New Jersey are working with Habitat for Humanity in a program
sponsored by Learn and Serve America K-12. The students build houses on
the school property which are then transferred to lots throughout the
area. The program was recently named a Best Practice/Star School in the
category of Public Engagement by the New Jersey Department of
Education--the only one of 1,000 programs under consideration to win
that distinction.
Twenty-four AmeriCorps members sponsored by Vermont's Northeast
Kingdom Initiative Program are serving youth, unemployed or under-
employed adults, and the elderly in a three-county area--one of the
poorest and most rural areas in the nation.
Twenty-two Kern County School District AmeriCorps members in
California's Central Valley are tutoring 600 students in the 1996-97
school year. Over half of the students tutored are now reading at or
above the standard for their grade levels.
Twenty-two AmeriCorps members in the Idaho TRIO AmeriCorps program
have leveraged the assistance of 369 volunteers to tutor 1,997 at-risk
K-12 students. Seventy percent of the students tutored showed
improvement of their school performance by at least one grade. The
AmeriCorps members have also advised 863 students regarding career
choices and assisted 338 Idaho teachers through in-class and other
support. AmeriCorps members were able to encourage AmeriCorps host
agencies to contribute more than 2,169 hours to support the service of
members. One student said of the program, ``I can feel good about
myself. I'm proud of myself. I feel even better about my dream to go to
college.''
Now in its third year of operation, twenty AmeriCorps members in
the Iowa Coalition Against Domestic Violence Program, a statewide
AmeriCorps program, have made 12,464 contacts with victims of domestic
abuse (250 percent of their goal), assisted over 1,000 women in
obtaining pro se protective orders (133 percent of their goal), and
provided 371 educational programs for Iowans ranging from elementary
school children to senior citizens (77 percent of their goal). This
program has been very effective in engaging another 400 non-AmeriCorps
volunteers to provide 160,000 hours of additional services to victims
of domestic violence. AmeriCorps members serve in similarly effective
programs across the country, including the New Hampshire Coalition
Against Domestic and Sexual Violence's AmeriCorps Victim Assistance
Program. This program, and others, in New Hampshire prompted former
Governor Stephen Merrill to state that ``the national service program
has been a great success in the state of New Hampshire and I anticipate
it will continue to be in the future * * *. These motivated individuals
make AmeriCorps work for New Hampshire and I am pleased to be a partner
in this process.''
In addition to environmental and disaster relief work across the
region, AmeriCorps National Civilian Community Corps (NCCC) members
based at Colorado's Lowry Air Force Base have achieved significant
results in Denver schools. Over the last year, the 14 corpsmembers who
served at Denver's Capitol Hill Children's Center helped kindergarten
students improve their language-skills test scores by an average of two
years. Thirteen other corpsmembers served as mentors to the first-
through fifth grade students at the Smith Renaissance Academy.
Together, the students and corpsmembers produced a school newspaper,
which allowed the students to develop reading, writing, and research
skills while preparing stories about their community. An additional 14
AmeriCorps*NCCC members served at the Columbine Elementary School,
where they helped set up a new school building designed to house a
program focusing on the first- and second-grade students' literacy
skills. These NCCC members tutored students who needed special
assistance and designed an after-school program for primary students
and their parents.
These examples quantify the immediate effects of national service.
While we can measure the value of the bridge AmeriCorps members helped
repair or estimate the cost to society had AmeriCorps members not
tutored children in need, some benefits of the Corporation's programs
are not immediately measurable. By instilling a sense of pride in a
community, by establishing community volunteer programs, and helping
prepare children for their first days of school, AmeriCorps members
help to crack the atom of civic indifference creating a chain reaction
whose effects transcend quantification and are felt in a myriad of
ways.
DEMOGRAPHICS
The strongest links in this chain are the AmeriCorps members.
AmeriCorps members mirror the diversity of the communities in which
they serve and look like a cross-section of 21st century American
cities. Preliminary demographic information on current participants in
AmeriCorps grants programs and the NCCC are similar to those of the
first and second years of the program. Approximately one in two
AmeriCorps members are white, slightly less than one in three is
African American, and one in six is Hispanic. Initial data shows
approximately four percent of these current AmeriCorps members are of
Native American, Asian or Pacific Islander heritage.
Data about the levels of education already achieved by AmeriCorps
members suggests an important trend: in each of the three years of
AmeriCorps, the percentage of participants who already earned their
bachelor's degree, spent some time in graduate school, or earned a
graduate degree has increased. In the 1994-95 program year, these three
categories comprised 29 percent of AmeriCorps members. The sum grew to
35 percent in 1995-96, and preliminary data for the 1996-97 program
year indicates another increase, to 36 percent.
AmeriCorps expands opportunity in exchange for responsibility for
the broad middle class. In the 1995-96 program year, 56 percent of the
AmeriCorps members came from households with annual incomes of less
than $30,000. (The Corporation receives no information about the
household family income of AmeriCorps members until the end of the
program year.)
The Subcommittee should note that for the current, 1996-97 program
year, all of these figures may reflect a shift in the balance between
urban and rural communities because the Corporation has eliminated
AmeriCorps grants to other federal agencies. Some rural programs that
utilized AmeriCorps members and worked with local offices of the United
States Department of Agriculture or other agencies no longer exist. The
Corporation is making a concerted effort to restore and increase rural
representation in the AmeriCorps program.
EXPANDED OPPORTUNITY
Over the last three years, AmeriCorps has enabled 70,000 Americans
to serve their communities in exchange for expanded opportunity.
Approximately 45,000 of these individuals were participants over the
first two years of AmeriCorps, and are eligible to earn national
service education awards. The remaining 25,000--who are currently in
the midst of their year as AmeriCorps members--will earn education
awards when they complete their terms of service. Those who have
completed their terms of service have seven years within which to use
their education awards.
The National Service Trust has already made over 26,000 payments
totaling approximately $44 million to over 6,000 education and loan-
holding entities. Currently, the Trust is averaging over $600,000 in
payments weekly. This number will increase as more and more members
avail themselves of their education award.
COST--BENEFIT
Independent evaluators have repeatedly proven that national service
yields a positive return on investment. The authors of each study have
cautioned that their findings probably underestimate the benefits of
national service significantly, because the full value of safer
streets, stronger schools, cleaner rivers, and the like are difficult
to quantify and not seen immediately.
--In the ``Cost-and-Benefit Study of Two AmeriCorps Projects in the
State of Washington,'' the Northwest Regional Educational
Laboratory concluded that every dollar invested in these
Washington State projects yielded a return up to $2.40 in
addition to less-easily measured benefits.
--To analyze their significant investments as AmeriCorps private
sponsors, the Charles A. Dana, IBM International, and James
Irvine Foundations commissioned a team of noted conservative
``Chicago School'' economists to examine more than 70
AmeriCorps sites in Austin, Texas; Columbus, Ohio; Atlanta,
Georgia; Charlotte, North Carolina; New York City; and northern
California. In their report called ``The Benefits and Costs of
National Service,'' Kormendi/Gardner Partners predict that for
every dollar AmeriCorps invests, the public will realize up to
$2.60 or more in direct, measurable benefits.
--The University of Minnesota, in the ``Youthworks-AmeriCorps
Evaluation First Year Report'' on projects across Minnesota,
found benefits up to $3.90 for each dollar invested in these
programs.
A study of the Learn and Serve America: K-12 completed by Brandeis
University and Abt Associates concluded that ``on average, the programs
in the intensive study sites produced about $3 in direct community
benefits for every dollar in program costs.''
When Massachusetts Governor Bill Weld swore in his State's
AmeriCorps members this fall, he explained how ``every taxpayers'
dollar we spend on AmeriCorps comes back threefold, when we add up the
value of your innovative ideas, your physical labor, and all of the
skills you'll bring to the workforce when you finish your education.''
That's why he calls AmeriCorps ``one of the most intelligent uses of
taxpayer dollars ever.''
AMERICA READS
These demonstrated successes led President Clinton to give national
service a major role in the America Reads Challenge. The America Reads
Challenge is a national campaign to ensure that every child can read
well and independently by the end of the third grade. The President has
proposed that money from the Corporation's budget be used so members of
AmeriCorps may play a key role in recruiting, training, and organizing
the new army of 1,000,000 volunteers who will tutor young children.
The increasing complexity of today's jobs and society amplifies the
importance of literacy. Research shows that if students cannot read
well by the end of third grade, their chances for later success are
significantly diminished--including a greater likelihood of dropping
out of school and other delinquent behavior.
Poor literacy skills are one of our nation's most serious problems.
Recent testing by National Assessment of Educational Progress found
that 43 percent of America's fourth grade students in public schools
scored below the basic reading level. Education outside the classroom
is essential to improving reading skills. A U.S. Department of
Education study, ``Reading Literacy in the United States'', found that
fourth-grade average reading scores were 46 points below the national
average where principals judged parental involvement to be low, but 28
points above the national average where parental involvement was high--
a difference of 74 points. Reading is a skill that is developed not
only in the classroom, but also outside of school in the home. To this
end, America's Reading Corps will mobilize tutors to work with reading
teachers, principals, libraries and community-based organizations to
provide individualized after-school, weekend and summer reading
tutoring for more than 3 million K-3 students and their parents.
There are several parts to the America Reads Challenge, including:
the Reading Corps, which will tutor children in grades K-3 who need
extra help; the Parents as First Teachers program, which will assist
parents in helping their children; expansion of Head Start programs;
and a challenge to the private sector to work with schools as they have
with the Department of Education's Partnership for Family Involvement
in Education and the READ*WRITE*NOW! initiative. The Reading Corps is,
the heart of the program that is proposed to be funded at almost $2.5
billion over 5 years, will provide reading specialists and tutor
coordinators to train and supervise the tutors.
The President has asked for national service's participation
because we are well equipped to handle this challenge. Many of our
programs have strong track records helping children improve their
reading skills and assist parents in becoming an essential part of
their children's education.
For example, the Home Instruction Program for Preschool Youngsters
(HIPPY) has had a remarkable record of preparing children for success
in school before their first day of kindergarten. AmeriCorps Members in
16 States and 43 HIPPY Sites serve as resources for parents, especially
single mothers on welfare. They make home visits every two weeks to
help young mothers improve their basic parenting skills and provide
their children with an enriched preschool experience. In doing so,
AmeriCorps Members often instill in parents an interest in their
children's education, and this interest spurs them to be more effective
partners with their children's classroom teachers. Programs like HIPPY
that ensure children have basic learning skills before entering the
classroom make it more likely that the children will be able to read
well by the end of third grade.
In another program, Parents and Children Together in Learning
(PACT), Learn and Serve America members through Harcum College, in Bryn
Mawr, Pennsylvania bring parents back to school to teach them how to
help their child read. Working with School District of Philadelphia,
PACT trains inner-city parents to be volunteer tutors in their
children's classrooms. PACT enrolls parents who participate in the
program in Bryn Mawr classes for two weeks to teach them how to be a
tutor. As a result, nearly 450 parents have improved their own skills
while tutoring more than 4,000 children. The parents earn college
credit for participating in the program.
In Simpson County, Kentucky, 25 AmeriCorps members work directly
with elementary school students to boost reading comprehension and
nurture a love of books. The program is called SLICE (``Service
Learning Impacting Children's Education'') and it gets results. By the
end of the first year of the program more than 100 of the 122 tutored
students in the county had improved their reading scores by at least
two grade levels.
The SLICE program exemplifies some less obvious benefits of
AmeriCorps literacy programs. The program has been successful in
improving the reading ability of students, and has helped develop
community involvement in the process. Small business owners, local
members of the American Association of Retired People (AARP), a retired
teachers group, and even the entire staff of the local city hall have
pitched in on the reading effort. Each SLICE AmeriCorps member recruits
an average of 16 unpaid volunteers.
By fostering community support, SLICE has achieved what we strive
for in every national service program--a sustainability that is not
dependent on any one individual or even a core group of original
volunteers. This is how service can take root and grow to become a
natural part of the life of a community.
NATIONAL SERVICE SCHOLARS PROGRAM
The President announced the National Service Scholars Program in
his June, 1996 commencement address at Pennsylvania State University.
To qualify for the National Service Scholars Program, students must be
juniors or seniors in high school who have performed community service
for at least a year and who have been nominated by their principals.
Recipients will receive a check for at least $1,000 for college costs,
of which $500 will come from the National Service Trust and at least
$500 will come from local scholarship sponsors.
The Administration's 1998 suggested appropriations language sets
aside $10 million for the National Service Scholars program. This is
consistent with the mission of the National Service Trust, which was
established as a repository for education awards for participants in
national service programs.
In accord with our commitment to reinventing government, a private
501(c)(3) foundation, the Citizens' Scholarship Foundation of America,
will administer the National Service Scholars Program. A competitive
announcement was made in the Federal Register for this cooperative
agreement, and the Citizens' Scholarship Foundation of America was
chosen from a pool of seven highly qualified applicants. The Foundation
has a 35-year history of encouraging and rewarding community service by
youth through its Dollars for Scholars and other programs. Last year,
the Citizens' Scholarship Foundation of America distributed close to
$40 million in scholarships. The Corporation for National Service is
pleased to rely on the talents of the Citizens' Scholarship Foundation
of America to administer the National Service Scholars program.
THE PRESIDENTS' SUMMIT FOR AMERICA'S FUTURE
The Presidents' Summit for America's Future will, with the
sponsorship of private foundations, bring together people from all over
the nation who are committed to stimulating service and community
volunteerism to ensure our youth have access to the resources that will
help them lead healthy, fulfilling, and productive lives. It is a
bipartisan endeavor convened by President Clinton and former President
Bush as honorary Co-Chairmen, retired General Colin Powell as Chairman,
and former Secretary of Housing and Urban Development Henry Cisneros as
Vice Chairman.
Summit sponsors include the Robert Wood Johnson Foundation, the
Ewing Marion Kauffman Foundation, the W.K. Kellogg Foundation, the
David and Lucille Packard Foundation, and the Pew Charitable Trusts.
Community delegations from more than 100 cities and rural
communities, state delegations led by the nation's governors, and
leading citizens from the public and private sectors will come to this
summit with concrete commitments to increase young people's access to
one or more of five critical resources: An ongoing relationship with a
caring adult: mentor, tutor, or coach; safe places and structured
activities during non-school hours to learn and grow; a healthy start;
a marketable skill through effective education; and an opportunity to
give back through community service.
Commitments that have already been made include:
--Big Brothers/Big Sisters has committed to doubling their mentoring
relationships, reaching 200,000 matches through the year 2000.
More important, service will become an integral part of the
mentoring relationship and a key activity for current and
future ``Bigs and Littles.''
--LensCrafters will provide one million needy people, especially
children, with free vision care by the year 2003.
--AT&T has committed $150 million to connect the country's 110,000
public and private elementary and secondary schools on the
Information Superhighway by the year 2000.
--The United States Army is taking the lead in encouraging a joint
effort among the military services to expand opportunities for
active-duty, reserve, and retired military personnel to
volunteer their time as mentors and tutors in their local
communities.
--The National Association For Equal Opportunity in Higher Education
(NAFEO) has promised that half of the approximately 140,000
students enrolled in 117 Historically and Predominantly Black
Colleges and Universities will volunteer as tutors and mentors.
--The presidents of 21 colleges and universities, including San
Francisco State University, the Vermont State Colleges System,
the University of Montana, the University of Maryland College
Park, the Community College of Denver, and the California State
University System have committed half or more of their
increases in work-study funds to community service initiatives
focusing on youth literacy.
The Corporation for National Service is working alongside the
Points of Light Foundation in initiating and planning the Summit to
promote the goals of the National and Community Service Trust Act, the
mission of the Corporation, and the vision set forth in the
Corporation's Strategic Plan.
The Presidents' Summit for America's Future has already created a
surge of interest from the media, community service organizations, and
corporate sponsors nationwide. We are looking forward to working
alongside those who will participate in the efforts coordinated at this
Summit to increase youth's access to fundamental resources and real
opportunity.
MANAGEMENT CONCERNS
As Chief Executive Officer, my top priority--shared by the
Corporation's Board of Directors--is putting our financial house in
order. We are making steady progress in doing so. Our new Chief
Financial Officer, Donna Cunninghame, and her staff are in the process
of improving business processes and implementing appropriate management
controls.
Ms. Cunninghame is a Certified Public Accountant. She and her staff
have experience in both public and private sector accounting. Ms.
Cunninghame served as the first full-time Chief Financial Officer of
the Resolution Trust Corporation, and achieved three clean financial
audits from the United States General Accounting Office (GAO) during
that time. As Chief Financial Officer of the University of Maryland
System, Ms. Cunninghame was directly responsible for all of its
treasury, accounting, and financial operations. Ms. Cunninghame's staff
also has expertise developing and implementing the type of corrective
action necessary to resolve the Corporation's problems.
The Corporation's Inspector General, based on the work done by two
independent auditing firms, found our fiscal year 1994 financial
statements to be inauditable. The difficulty stemmed from the unusual
creation of the Corporation, which merged existing service programs
with the new service initiatives. The Corporation inherited
organizations that had never before been required to present their
financial data in the manner now required under the Government
Corporation Control Act. The difficulties we had are common to most
federal entities required to produce auditable financial statements in
a corporate style. Though initial inauditability may be common, it is
unacceptable. We are aggressively working to produce auditable books.
Arthur Andersen, hired by the Corporation's Inspector General,
produced an audibility report which identified 99 problems. Arthur
Andersen reviewed our efforts to implement their recommendations--they
looked at our progress on 62 issues and found 28 to be completed.
By the time the written report of the review was issued in December
of 1996, Ms. Cunninghame, based on her experience producing clean audit
reports, determined that 57 items were then corrected or in the process
of implementation. The remaining 5 of the 62 reviewed items were
related to activities that require substantial time and effort to
complete. We are working on correcting those problems.
By March 1, 1997 we expect to have corrected or be in the process
of implementing an additional 31 of the 99 items. Ms. Cunninghame has
expressed to me her expectation that by May 1 of this year, all but two
of the 99 problems will be corrected or in the process of
implementation. One of those two corrections is the implementation of
the new financial management system which we are preparing to do in
1998. The second is a minor item that is difficult to correct now but
will be easy to correct when the new system is in place: a process by
which the budget obligation to pay for a purchase is entered into the
system before a purchase order is entered. When implemented, this will
be an automatic part of the process.
I can report that the Corporation is making steady progress in
establishing financial order. We are eschewing ``quick fixes'' in favor
of systematically cleaning up data integrity problems while
implementing appropriate managerial controls. By the time we install
our new financial management system in 1998, the goal is that the
underlying data will be scrubbed and reliable, business practices will
be improved and effectively controlled, and fully auditable statements
reflecting the Corporation's financial status should become routine.
CUTTING COSTS AND OTHER CHANGES
When I spoke with you last year, I outlined an early version of the
Corporation's agreement with Senator Grassley to reduce costs and
address other issues of concern to our critics. Working together, we
improved AmeriCorps by reducing expenditures and expanding the number
of individuals who will benefit from the opportunity to serve. The
Corporation has committed itself to lowering its cost-per-member in the
AmeriCorps grants programs by $1,000 in each of the next three years,
starting with the programs set to begin this fall. The AmeriCorps
budgeted average cost for programs supported with fiscal year 1998
funds will be $16,000, including the education award. By the fall of
1999, the cost will be down to $15,000 per member.
This figure includes all Corporation costs, including the
Corporation's share of members' living allowance and benefits, the
grant for program support, and the administration directly attributable
to AmeriCorps grants by the Corporation and our support of the
Governors' Commissions on National Service. (These numbers are indexed
for inflation and assume that there will be funds appropriated to
support no fewer than 25,000 AmeriCorps members each year.)
Over the last year, the Corporation has made many other changes to
improve our efficiency. We have made improvements in our grant review
process and increased the control the Governors' Commissions on
National Service have over program decisions.
The Corporation has also increased our collaborations with national
non-profit organizations, particularly by expanding the AmeriCorps
``education-award-only'' program.
In this program, the Corporation provides education awards to
individuals who are serving in traditional non-profits and whose
service qualifies them for education awards. These non-profits include
religious organizations, colleges and universities, and other
institutions which have applied to the Corporation and shown they are
able to provide living allowances and other resources for these
AmeriCorps members.
For example, the Boys and Girls Clubs of America are now supporting
800 AmeriCorps members in this way, using them to engage the youth in
Boys and Girls Clubs in community service. Currently, 2,000 AmeriCorps
members are sponsored through this program, and the Corporation plans
to announce agreements with non-profits which will sponsor up to 3,000
more AmeriCorps members in coming weeks.
THE CAP ON NATIONAL DIRECTS
Currently, 43 national non-profits sponsor 2,500 AmeriCorps members
through National Direct grants. Millard Fuller, founder and President
of Habitat for Humanity International, explained that ``as AmeriCorps
members gain in construction skill, our Affiliates are able to expand
the number of occasional volunteers through increased capacity to
supervise and manage volunteers.'' Fuller later announced at a
Washington, DC press conference that ``I want you to know that we at
Habitat for Humanity feel privileged and honored to have the AmeriCorps
people with us, and we want more of them, as time goes on. We love to
be partners with you in this work, and I salute all the AmeriCorps
people.''
Under the Corporation's authorizing statute, one third of the
AmeriCorps grants funds are directed to National Direct programs. In
fiscal year 1997, this corresponds to $71.7 million; for the proposed
fiscal year 1998 budget, this corresponds to $98.7 million. If the
fiscal year 1997 $40 million cap on national directs is not removed,
the shortfall of funds will prevent as many as 13 of these non-profits
from sponsoring AmeriCorps members this fall. All current national
direct programs--including Habitat for Humanity, the U.S. Catholic
Conference, the National Council on Aging, the I Have a Dream
Foundation, the Enterprise Foundation, and City Year--will have to
compete against each other for the remaining funds. No new AmeriCorps
national direct grants to national non-profits--such as Big Brothers/
Big Sisters--will be possible.
We are requesting that the fiscal year 1997 cap be eliminated and
that no cap be put in place for fiscal year 1998.
REAUTHORIZATION
The Corporation for National Service's authorization expired on
September 30, 1996. We are now operating under the authority of the
General Education Provisions Act (GEPA) that will expire at the end of
September, 1997. I have met with Chairman Goodling and representatives
of the House Committee on Education and the Workforce to begin the
formal reauthorization process, and am scheduled to meet with Chairman
Jeffords and members of the Senate Committee on Labor and Human
Resources in coming weeks.
Though it is too early to outline specific details about
reauthorization, I expect that any plan to improve national service
through this process will build on the key principles of the current
national service network: flexibility, including the ability to
redirect resources to meet new needs using proven techniques; stream-
lining, including the importance of constantly improving efficiency;
coordination, including maximizing cooperation among programs in a
community; and devolution, including significant state-and local-
control.
I look forward to working with the Congress through both
appropriations and reauthorization to make national service a program
in which all Americans can take pride.
I will be happy to answer your questions.
AMERICORPS MEMBERS BY RACE/ETHNICITY, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Race/Ethnicity --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
African-American....................... 32 27 29
American Indian........................ 2 2 1
Asian/Pacific islander................. 3 3 3
Hispanic............................... 15 18 16
White.................................. 49 48 42
Other.................................. ......... 2 9
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
EDUCATIONAL ATTAINMENT BY AMERICORPS MEMBERS 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Education level --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Less than high school.................. 9 5 8
High school diploma.................... 21 22 20
AA degree/some college................. 41 39 36
Bachelor's degree/some grad school..... 26 30 28
Graduate degree........................ 3 5 8
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
HOUSEHOLD FAMILY INCOME OF AMERICORPS MEMBERS, 1994-1996
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Income range ---------------------
1994-95 1995-96
------------------------------------------------------------------------
$5,000 or less.................................... 8 6
$5,001 to $10,000................................. 12 15
$10,001 to $20,000................................ 16 19
$20,001 to $30,000................................ 18 16
$30,001 to $40,000................................ 12 13
$40,001 to $50,000................................ 11 7
$50,001 to $60,000................................ 7 6
$60,001 to $70,000................................ 5 5
Over $70,000...................................... 11 12
------------------------------------------------------------------------
AMERICORPS MEMBERS BY GENDER, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Gender --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Female................................. 61 65 68
Male................................... 39 35 32
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
AMERICORPS MEMBERS BY AGE, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Age --------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Under 21............................... 38 27 26
22-29.................................. 42 47 53
30-37.................................. 9 10 10
38-45.................................. 7 9 6
Over 45................................ 4 6 5
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
FULL- AND PART-TIME TERMS OF SERVICE, 1994-1997 \1\
[Percent of members]
------------------------------------------------------------------------
Fiscal years
--------------------------------
1994-95 1995-96 1996-97
------------------------------------------------------------------------
Full time.............................. 70 78 78
Part time.............................. 30 23 23
------------------------------------------------------------------------
\1\ 1996-97 enrollment is still underway, therefore, those data are
incomplete.
Chief Financial Officer
Senator Bond. Mr. Wofford, in last year's budget hearings,
you stated you expected to shortly bring on a Chief Financial
Officer and, in fact, you only recently filled the position.
More recently, Arthur Andersen issued a report on December 9,
1996, which raised serious concerns regarding your
Corporation's progress in correcting deficiencies in financial
systems and management controls. The report concluded, better
than 8 months after our hearing last year, that the
Corporation's internal controls were not adequate--I quote from
the report:
The Corporation's internal controls were not adequate for
an independent auditor to perform an effective and efficient
financial statement audit in accordance with generally accepted
auditing standards for fiscal year 1995,
and that
an audit of the Corporation's fiscal year 1996 financial
statements may not be possible because many significant
deficiencies remain uncorrected throughout the year.
At what point do you expect the Corporation to have
established adequate internal controls for the independent
auditor to perform an effective and efficient financial
statement audit of the Corporation's financial statement, and
when do you anticipate having auditable financial statements
for 1995 and 1996?
Mr. Wofford. Ms. Cunninghame came aboard as a consultant in
October.
Ms. Cunninghame. I came on board as a consultant August 5.
Mr. Wofford. And in October you received a----
Ms. Cunninghame. Recess appointment.
Mr. Wofford [continuing]. Recess appointment, because her
nomination did not get through in time, though the Senate
worked hard to try to get her nomination through. She received
a recess appointment in October and has been aggressively
pursuing all 99 items in the Arthur Andersen auditability study
since then.
Her nomination is before the Senate Labor Committee this
very week and we hope very much she will be confirmed very
promptly.
By May 1 we expect to have 97 of the 99 items completed or
in the process of implementation. We expect to have the
remaining two items completed in 1998. One relates to the
implementation of a new financial management system and the
other is an improvement in the procurement process which can
occur simultaneously with the financial management system
implementation.
The inspector general and the Chief Financial Officer have
discussed having an audit performed for the 1997 financial
statements. Statements are going to be prepared for 1996 in
order to provide beginning balances for 1997 and the auditors
will be asked to perform a review of these balances in
connection with their audit.
I am very pleased that the inspector general of our agency
and the Chief Financial Officer have established a professional
working relationship which allows them to work together to
strengthen the Corporation's management controls. I would be
happy to give you a further detailed report.
FINANCIAL STATEMENTS
Senator Bond. My question was when do you anticipate having
auditable financial statements for fiscal year 1995 and 1996.
Given the answer, I gather that you are not expecting one. Do
you have a date when you are expecting to be able to give us
financial statements for those 2 years?
Mr. Wofford. We are hoping to have beginning balances for
1997 that will permit an auditable statement for the 1997 year.
Senator Bond. So you are not going to have one for 1995 and
1996?
Mr. Wofford. We are going to at some point have to have an
agreement on the beginning balance that will permit an
auditable statement.
Senator Bond. Thank you.
Mr. Wofford. We think it will be for 1997.
The problems related to this in our Corporation were like
those of many other Government agencies. They are compounded by
the fact that one of the agencies, the ACTION agency, goes back
over many years. Until very recently, as you know, Government
agencies were not asked to produce auditable financial
statements under the generally accepted accounting principles.
Senator Bond. Mr. Wofford, all I asked was about the 1995
and 1996 statements.
I will submit the rest of my questions for the record.
Senator Mikulski.
Senator Mikulski. Thank you very much here.
Mr. Wofford, could your Chief Financial Officer join you at
the table for a moment, please?
Mr. Wofford. Yes; indeed. Donna Cunninghame.
Senator Mikulski. Ms. Cunninghame, good morning and we
welcome you. We know very much that the Corporation needs a
Chief Financial Officer. What I am going to request is not a
detailed description of the problems that we find ourselves in,
but I think we owe it to the committee and to the taxpayers,
essentially a description of why we have this situation, No. 1;
and No. 2, what is your kind of workout or work plan to resolve
this situation, really, and presenting it to us the way an
accountant would present it.
We know you come from the Resolution Trust. Senator Bond
has had extensive experience in that and we all recall with
great melancholy what a fiasco it was and how much that cost
the taxpayer because the financial institutions, who were
supposed to be financial institutions, were not standing
sentry. So it is a little intense to place the same kind of
criterion on this nonprofit.
Could you then essentially give us a description, not an
excuse, an explanation, a no-fault one, about why this
situation existed? But then, having said that, what is your
work-through or workout plan? Is that possible for you to do?
Ms. Cunninghame. Yes; Senator, it is. And I appreciate
having an opportunity to share it with the committee. The
Corporation, of course, was started October 1----
Senator Mikulski. Remember, I have 5 minutes, so I really
need to move on.
Ms. Cunninghame. The basic problem is taking together a
group of existing companies who had different accounting
records. Whatever financial management systems they had varied.
Senator Mikulski. Ms. Cunninghame, I am not asking you to
describe your plan today. I am asking you to submit your plan
in writing to the committee. I think there was a slight
miscommunication.
Ms. Cunninghame. I am sorry. I misunderstood that. I would
be happy to.
[The information follows:]
Work Plan To Address Auditable Financial Statements
Many concurrent efforts comprise the Corporation for National
Service's plan for producing auditable financial statements. A brief
review of these efforts follows.
1. The auditability survey resulted in 99 recommendations dealing
with five broad categories of concerns: the management control
environment, integrity of financial data, data security, segregation of
duties, and budgetary controls. An aggressive and sustained effort has
been underway at the Corporation to respond to recommendations and to
implement necessary changes that improve the Corporation's
auditability. Arthur Anderson is conducting reviews of the Corporations
efforts. A major phase of that review effort is just being initiated,
and we expect to have positive responses from the auditors.
2. A Management Control Committee has been established at the
Corporation and the first draft of a Management Control Manual has been
prepared and distributed to the Board of Directors for review. Training
has begun for staff including all staff of the CFO's department, and
exposure to the issue of management control is now part of the new
employee orientation program.
3. Cash reconciliation, updated above, proceeds as an important
process for achieving the goal of auditable statements.
4. A recommendation codifying the Corporation's approach to grants
accounting, including issues of advances, expense recording, grant
closeout, and grant liability calculations is being prepared for CFO
review. This work includes a review paper by Price Waterhouse which
offered advice on many of the issues.
5. Information system changes have played a major part in our plan
for auditable statements. With the current efforts to implement a grant
review and award system within the Corporation, we are implementing a
movement away from two separate systems for grant activity. Part of
this effort will be the movement of all Corporation grants to the HHS
Payment Management System (PMS) with which we are also implementing an
electronic interface to our general ledger (GL). This all should
greatly improve the consistency and accuracy of information in the GL
and reduce the reconciliation burdens. At the same time, we have
implemented an electronic interface to the GL for all payment
transactions from the National Trust. We also are improving the process
and the supporting documentation for the calculation of liability in
the National Trust and the subsequent recording of that liability on
the GL.
6. We postponed the effort to implement a new financial management
system, originally intended for implementation with the start of fiscal
year 1998, by one year in order to ensure that we have an opportunity
to improve the underlying business processes which provide a foundation
for what is recorded in the system and because we did not feel the
schedule could be met with the competing demands on the organization's
resources, many of which relate to other issues of auditability and
related system development efforts. In Conference Report H. Report 104-
537 which accompanied H.R. 3019 making appropriations for fiscal year
1996, Congress approved report language suggested by the Senate
committee which ``urges the Corporation to submit a reprogramming
proposal for up to $3,000,000 to carry out financial management system
reforms if the Chief Financial Officer determines such additional
resources are needed.'' We have formally requested the reprogramming of
these funds, and we are planning the implementation of a new financial
system during 1998.
7. We have put a significant effort into improvements of the
process for cost share arrangements that underlie a number of our VISTA
programs. Weaknesses in this area had resulted in understated
receivables in the past. We believe that this will result in
improvement to this important area of the financial statements.
Senator Mikulski. When do you think it would be a
reasonable expectation for you to be able to present this
background brief and work-through plan to the committee?
Ms. Cunninghame. I could do that within 1 week easily,
depending on the necessary requirements.
Senator Mikulski. Well, I think it would be very useful if
we had that as quickly as you could produce it with efficiency
and accuracy for both the chairman and myself, so we can see
this, because part of what is being discussed is not only to
continue the existing program and expand it, but some pretty
new programs. I think the committee will feel that before it
can undertake anything new there has to be confidence on these
workout issues. We thank you for that.
Also, for the record we would need a description also about
why the attrition rate. Again, we are not looking for excuses,
but we are looking for crisp, clear explanations so that we
could have this, because as appropriators we really need to
know is our money being well spent and are we getting the
outcome for which the program was created.
I think if we had those two reports we could among
ourselves discuss next steps. So we thank you and we look
forward to that.
[The information follows:]
Attrition in AmeriCorps
Program Years One, Two, and Three
The rate at which Members complete their term of service, or
conversely, the rate at which they fail to do so, can be a valuable
indicator of program health. The Corporation for National Service is
well aware of the value of attrition rates and systematically analyzes
program attrition and its causes. Low attrition can be indicative of
high Member satisfaction, which in turn, suggests careful recruitment,
good training, meaningful service projects and adequate supervision,
among other strengths. While a high attrition rate does not point to a
specific problem, it may be a symptom of underlying factors that
deserve consideration.
That said, in some cases, Members leave their service program early
for reasons that are not indicative of programmatic problems. In the
data provided here we provide attrition rates adjusted rates to exclude
early exits that are not reflective of program quality.
AmeriCorps programs, at the discretion of the program director, are
permitted to make the determination that a Member is departing early
because he or she faces compelling personal circumstances that make
completing the program an unreasonable hardship.
In addition, some Members leave their program early to take
advantage of significant opportunities for personal development or
growth, for example, educational or professional advancement. Although
AmeriCorps is not a jobs program, persons who leave their service
program to enter school, obtain employment or join the military
constitute a positive outcome for the nation as well as for themselves.
Because individuals in the circumstances described above do not reflect
upon the effectiveness of their programs, we believe it appropriate to
exclude them in determining a meaningful attrition rate.
Overall Attrition in AmeriCorps*State/National
Attrition in Year One (1994-1995).--Attrition in Year One was 20
percent. This rate compares favorably with attrition rates for college
freshmen, the Peace Corps, youth Corps and HUD Youth Apprenticeship
programs.
Attrition in Year Two (1995-1996).--Year Two attrition is currently
about 18 percent, adjusted as described above. Enough Members remain
``on the books'' for 1995-1996 that we cannot yet provide a final
accounting. As the attached chart suggests, the overall pattern of
attrition has remained constant.
Attrition in Year Three (1996-1997).--Year Three attrition is
difficult to estimate because most programs are still in their fourth
quarter and some are in their third. At present, nearly 90 percent of
those who enrolled in Year Three are still serving.
Additional Attrition Issues
The socio-demographic patterns reported last year in our attrition
data remain visible, as demonstrated by the two-year attrition rates by
educational attainment. Beginning in Year Two, we began collecting
Member income data by sample only and cannot make direct comparisons to
the attrition x income data provided last year. However, data from our
sample survey, which included Members who had left early, suggests
strongly that their remains a strong relationship between family income
and attrition, with Members from lower income backgrounds being more
likely to leave early.
ATTRITION RATE BY EDUCATIONAL ATTAINMENT--PROGRAM YEARS ONE AND TWO
[Percent of members]
------------------------------------------------------------------------
Fiscal years
Education attained ---------------------
1994-95 1995-96
------------------------------------------------------------------------
Less than high school............................. 34 36
GED............................................... 31 32
Technical school.................................. 21 19
HS graduate....................................... 18 20
Some college...................................... 18 19
Associate degree.................................. 16 15
College graduate.................................. 9 8
Graduate study.................................... 12 10
Graduate degree................................... 17 12
------------------------------------------------------------------------
Senator Mikulski. Which then takes me, Senator Wofford, to
the America Reads Program and the national summit. Could you
tell me what is the purpose of the national summit and what you
think, what will be the outcomes and what is the purpose and
what role this committee or national service will play in it?
Mr. Wofford. The President's summit was proposed originally
by George Romney as a way to take the idea of national
service--both large scale volunteering and national service of
the AmeriCorps variety--out of the political football field and
move it into a true nonpartisan structure.
The summit is assembling delegations from some 130
communities, cities and rural areas as well as delegations from
all 50 States chosen by their Governors.
Senator Mikulski. What will it do?
Mr. Wofford. The summit is starting a 3-year campaign to
achieve five goals for children and youth in this country that
every parent and every grandparent wants for their children:
one, that there be a caring adult in the life of every child
that needs one, a tutor, a mentor, a coach, including the 1
million tutors needed for the America Reads campaign; two,
structured activities in safe places for every child and young
person in this country in the nonschool hours; third, a healthy
start--immunization and access to health care and incentives
for healthy behaviors; four, effective education, including the
ability to read and marketable skills acquired through school
to work experience; and fifth, that every young person gets
asked and has the opportunities themselves to serve.
The process of the summit is commitments by major
organizations of all the sectors of society and by individuals
and communities for new action--quantum leaps and value added--
toward those five goals.
Senator Mikulski. That is what they are going to do?
Mr. Wofford. Yes.
Senator Mikulski. And then after the summit is over, who
will be in charge or overseeing that all of this happens in
some organized way, so we do not have just volunteer chaos?
Mr. Wofford. We expect the Presidents to continue to work
together. General Powell will be a very active chairman.
Senator Mikulski. What will be the mechanism to
operationalize----
Mr. Wofford. The mechanism will be an organization that
General Powell will lead, with the continuing support, we
trust, of the Presidents. It is an organization that will both
seek to develop large scale resources to apply to local
organizations around the country.
Senator Mikulski. Senator Wofford, will that be an
organization not created by Government?
Mr. Wofford. It will not be created by Government. I am
personally not taking any part in the organization of that
organization.
It will be a new national organization created to be
essentially an umbrella organization to coordinate those
volunteer organizations, and the private sector entities that
are making a substantial commitment.
It will be a campaign based in the private sector, led by
General Powell not trying to compete in offering service but
trying to assemble resources from commitments from corporations
and organizations for local groups. The community delegations
at Philadelphia are coming with a commitment to go back to
their communities to organize local summits to coordinate those
campaigns locally.
Senator Mikulski. Let me just go back to what I was trying
to ask, Mr. Wofford, which is, I have been through good
intention rallies before and we have some of the finest
participants leading this, and so we just do not want it to be
a rally where, I am going to make sure that I deliver 2,000
meals on wheels to the elderly homebound. All of these are good
intentions, and then if we are going to have that, like the
commitment of a Motorola, an IBM, local corporations, scouts,
Boy Scouts, then all I was asking was how that will be followed
up so it is just not a photo op, it is just not a pep rally,
and so on, and that we have a sustained saturation effecting
communities.
So what you are saying is that there will be an
organization created that a very distinguished American,
General Powell, will chair, and this will be an entirely new
entity not created by Government or funded by Government, is
that right?
Mr. Wofford. He is saying that, and he is going to do that.
It requires that same spirit----
Senator Mikulski. But are you not the President's person on
that?
Mr. Wofford [continuing]. Senator Mikulski, that----
Senator Mikulski. Are you not the President's point person
in organizing the summit?
Mr. Wofford. The two organizations that jointly carried the
ball with George Romney's idea are ours, the Corporation and
myself actively, and the Points of Light Foundation.
Senator Mikulski. Excellent.
Mr. Wofford. And the two of us have worked together. Ray
Chambers, founder of the One to One Partnership, is chairman of
our joint board steering committee for this. But General Powell
will be carrying the ball from the summit on.
Senator Mikulski. General Powell is saying that. Are we all
saying that before we go to the summit?
Mr. Wofford. General Powell said it very strongly when he
accepted the chairmanship at the White House. In fact, he now
says it is at least a 5-year campaign, that he will throw a
good part of his life into seeing that we follow through.
Senator Mikulski. And that is his commitment?
Mr. Wofford. That is his commitment.
Senator Mikulski. It is an extraordinary commitment.
Mr. Wofford. And he is driving the commitment process. He
has what he calls the sweat test. When a corporation or
organization makes the commitment required to come to
Philadelphia, he notches it up until he sees sweat on the
forehead of the CEO who has offered for example to adopt 100
schools. He says, well, what about 1,000? And until there is a
little sweat on the forehead of the person, he has not reached
the right notching-up point.
Senator Mikulski. Well, that sounds great. Of course, we
are sweating here about how we are going to fund all the
agencies, and, therefore, we want to then be clear on what is
the role of national service, how we can be a facilitator in
this. I think we are looking forward to this and what will be
the followup.
I see that my time has expired and we will look forward to
other conversation on the America Reads Program. Thank you very
much and this sounds like a very, very exciting opportunity.
Mr. Wofford. Thank you, Senator.
Senator Bond. Thank you, Senator Mikulski.
Senator Boxer.
Senator Boxer. Mr. Chairman, I simply want to highlight
something that Senator Wofford did not get a chance to go into
in detail. As one of the authors of the Violence Against Women
Act, I note that in Iowa 20 AmeriCorps members in the Iowa
Coalition Against Domestic Violence have made 12,464 contacts
with victims of domestic abuse, assisted over 1,000 women in
obtaining protective orders, and provided 371 educational
programs for Iowans ranging from elementary school children to
senior citizens.
I wanted to point out something that Steve Merrill said,
the Governor of New Hampshire, where you took that basic idea
and instituted it there. He said:
The national service program has been a great success in
the State of New Hampshire and I anticipate it will continue to
be in the future. These motivated individuals make AmeriCorps
work for New Hampshire and I am pleased to be a partner in the
process.
I think there are certain issues that just cry out for
attention in our Nation, and with a friend helping you get
through it it means a great deal, because when a woman is
feeling that there is no one to help her through--and it is
usually a woman; sometimes it is a man who is on the other end
of violence, but about 98 percent of the time it is a woman--
and the children are impacted and so on, you do need that
helping hand.
So it sounds to me like you have come up with some idea
here. I was wondering if you had any plans to extend that
program to other States as well.
Mr. Wofford. You can view the whole of national service,
Senator Boxer, as the Corporation's work as a kind of R&D--
research and development program--in which programs are being
tried in all 50 States. One of our jobs is to find what works
and what does not work; to try to spread what works and to
share the state of the art. When there is a pilot program that
really works, such as the 11th and 12th grade kids in
Philadelphia schools being taught to tutor 2d graders three
afternoons a week a couple of hours one on one and it works to
raise the reading level of the second graders and it works to
raise their own reading level, the 11th, 12th graders----
Senator Boxer. Talking about domestic violence, I was just
asking you on that one because my State----
Mr. Wofford. I am with you.
Senator Boxer. There are so many calls from California from
our cities to the hotline, and it seems to me we could really
use this type of program.
Mr. Wofford. New Hampshire is one of the very best
programs. We convened the State executive directors of the
State commissions. We convened, we are about to convene, the
chairmen of those commissions.
We try to spread the programs that work through
publications, E-mail, etc., so that pilots perform the function
of a pilot and you ignite the furnace. The New Hampshire
Program is one of them we would like to spread around the
country.
Senator Boxer. So in our State, so if our State wants to
have this program then they could initiate it?
Mr. Wofford. Indeed. The executive director of your
commission in California, Linda Forsyth, is very aware of that
program. I am sure she has thought about it. She is in town
right today. I know she is very interested in that subject.
California has one of the most inventive and aggressive
commissions, and they are the source of many of the best pilot
programs that we are trying to spread to other parts of the
country.
Senator Boxer. Good, because a couple of our cities had the
most calls to the domestic hot line.
Thank you very much.
Mr. Wofford. It is a major issue, and if we could
contribute more to it, that is good.
Senator Boxer. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Boxer. Thank you
very much, Senator Wofford.
U.S. COURT OF VETERANS APPEALS
STATEMENT OF HON. FRANK NEBEKER, CHIEF JUDGE
opening statement of christopher s. bond
Senator Bond. Next, panel No. 2. I would like to welcome
the Hon. Frank Q. Nebeker, Chief Judge of the U.S. Court of
Veterans Appeals. Chief Judge Nebeker will be testifying on the
administration's fiscal year 1998 budget request for the Court
of Veterans Appeals, which totals $9.4 million, of which
$850,000 is for the pro bono program to provide legal
representation to veterans without counsel.
The overall increase of $150,000 from fiscal year 1997 is
attributable entirely to the pro bono program. The operational
costs of the court would be held at the fiscal year 1997 level
by cutting costs in such areas as travel and security and
maintenance contracts.
I am most interested in hearing the court's assessment of
actions being taken at the VA to address the backlog of
benefits claims and the court's appraisal of the pro bono
program.
Again, Judge, as I said before, we would appreciate your
submitting a full statement for the record. Unfortunately, we
are growing short of time in a busy day and would welcome your
summary and your comments.
Judge Nebeker. I will be very brief.
Senator Bond. Thank you very much, Judge.
Judge Nebeker. You have obviously summarized this budget
situation for the court and the pro bono program and I will not
repeat it.
CASE BACKLOG
Your question was, I think, with respect to the delay or
the backlog caused in the court's processing of cases, and
indeed the problem has surfaced. The delay is in the area of
getting the record on appeal together and in filing the
Secretary's brief after the appellant has filed his or her
brief.
Group VII of the General Counsel's Office is the one that
represents the Secretary before the court. They have been
decimated by vacancies. They have been troubled by other
personnel problems and their morale is low. They have got to
have help. The resources were not given to them by the general
counsel, but that matter has been brought to her attention and
I am assured that the situation will be remedied as rapidly as
is possible.
Senator Bond. Thank you, sir.
BUDGET SUMMARY
Judge Nebeker. As I observed in my written statement, the
court's budget is flat this year, the same as it was last year.
We have to maintain--though we are cutting back on the FTE's,
we have to maintain good service for the many pro se appellants
who appear before the court. That is somewhat of a labor
intensive, if you will, undertaking.
The only other point I would like to make this morning is,
that again we ask that in your minds as you make the
appropriations decision, keep the court's operating budget
separate and apart from the pro bono program, until such time
as the pro bono program, can be authorized and made
independent.
We understand that must be done before the appropriation
process does not run through the court. But the court can act
as a conduit, provided there is not a conflict in its operating
budget over what the program needs.
I will not address the merits of the pro bono program, as
they are capable of doing that themselves.
That would conclude my comments.
[The statement follows:]
Prepared Statement of Frank Q. Nebeker
Mister Chairman and distinguished members of the committee: On
behalf of the Court, I appreciate the opportunity to present for your
consideration the fiscal year 1998 budget of $9,379,804 for the United
States Court of Veterans Appeals.
The Court's total fiscal year 1998 budget request contains the same
dollar amount for personnel and operations as in the Court's fiscal
year 1997 appropriation. It also includes $850,804 requested by the Pro
Bono Representation Program (Program), which is 121.5 percent of the
$700,000 appropriated for fiscal year 1997. The Program has provided
its own supporting statement for its budget request.
Last year I urged that the Pro Bono Representation Program be
authorized and funded outside the Court's appropriation. I outlined the
reasons for the Court's concerns with the continued inclusion of the
Program's funding in the Court's appropriation. The Court continues to
be of the view that such a funding method impermissibly links the Court
to one class of litigants, and thereby exposes the Court to an
appearance of partiality and a consequent erosion in the public's trust
and confidence in the judicial review of veterans' claims. I ask again
that the funding for the Program be separated from the Court's
appropriation, not only in the budget deliberations in Congress, but in
the actual budget enactment. To that end, I urge the authorization of
the Program and legislation permitting its independent budget.
Notwithstanding these reservations, and consistent with Congress'
direction, the Court is forwarding the Program's fiscal year 1998
request for $850,804 as an appendix to the Court's submission and,
consistent with that direction, is including that amount in the Court's
total fiscal year 1998 budget request. The Legal Services Corporation
administers the grants for the Program and, according to its
evaluations, the Program is working the way it should. The Program has
provided its own supporting statement for its budget request, which, as
noted, represents a 21.5 percent increase over the $700,000
appropriated for fiscal year 1997.
The Court has kept a flat budget by continuing a number of cost-
saving measures, including a 25 percent reduction in the budget
allotted for travel, with no funding requested for Court hearings
outside Washington. Also, as I stated in my testimony last year, the
Court now is holding its judicial conference every other year, rather
than annually. This event focuses on continuing education for the
Court's practitioners and is held locally. Of even more significance,
the Court is requesting funding for only 79 full-time equivalent (FTE)
positions in fiscal year 1998 which is a voluntary reduction of 2 FTE
positions from the fiscal year 1997 authorized FTE level, and matches
the fiscal year 1998 FTE target level recommended by the Office of
Management and Budget in its implementation of the National Performance
Review. The requested 79 FTE positions are required to maintain high-
quality service to litigants seeking judicial review, particularly
those who come to the Court unrepresented.
As the Court's budget statement illustrates, in a chart the Clerk
has compiled, after a drop in the number of appeals in fiscal year
1994, the numbers have continued to climb in fiscal year 1995 and
fiscal year 1996, and the upward trend seems to be continuing. The
number of denials by the Board of Veterans' Appeals, from whose
decisions the Court's appeals derive, increased from 6,400 appeals in
fiscal year 1995 to 10,455 appeals in fiscal year 1996. Furthermore, as
noted in the Court's budget submission, the statistics kept by the
Board of Veterans' Appeals (Board) on ``denials'' do not include Board
decisions that deny some, but not all, of the benefits sought. The
denials in such cases are also appealable to the Court. Thus, the
number of pending cases may continue to increase at an even greater
rate than is predictable as a set percentage of the number of full
Board ``denials.'' The percentage of unrepresented appeals has fallen
from 80 percent in fiscal year 1995 to 72 percent in fiscal year 1996.
However, this rate remains much higher than the 46 percent
unrepresented civil appeal rate in U.S. courts of appeals. While the
Court has, voluntarily, kept pace with the recommendations of the
National Performance Review, which propose an 11.5 percent FTE
reduction over six years, further reductions in staff may need to be
re-evaluated based on the likelihood of an increased caseload and a
percentage of pro se appellants that continues to be relatively high.
It is my understanding that the Independent Budget Veterans Service
Organizations (IBVSO's) have reached similar conclusions as to
increasing caseload in the chapter on the U.S. Court of Veterans
Appeals in their Independent Budget for Fiscal Year 1998. The IBVSO's
document a presently rising caseload and oppose downsizing of the Court
for that reason.
On another matter, I am appending to this testimony a copy of my
letter to Chairman Specter emphasizing the importance of passing Title
II of the legislative proposal submitted last year to make the Court's
retirement/survivor program comparable to the systems of other Article
I Courts. As I point out in my letter, the legislative proposal was
initially submitted in response to Congressional inquiries regarding
the Court's caseload relative to the requisite number of judges on the
Court and regarding the comparability of the Court's judicial
retirement/survivor program.
Following last year's transmittal, there was an increase in the
number of notices of appeal filed with the Court, and a consequent
increase in the number of pending cases. Some veterans service
organizations have either opposed enactment of Title I or, more
cautiously, favored a ``wait and see'' approach to it. Based on the
increase in notices of appeal, the ``wait and see'' approach has been
shown to be the wiser course as to Title I, and the Court recognizes
its merit. Accordingly, the Court does not press consideration of Title
I by the Committee.
I am aware of no negative comments with regard to the provisions of
Title II. I ask for your active support in obtaining enactment of Title
II to make the Court's retirement/survivor program more comparable with
other Article I Court programs. Because of Judge Hart Mankin's death in
May 1996, his widow, Ruth Mankin, is now a survivor under the Court's
survivor annuity program. Survivors under the Court's annuity program
are at a considerable disadvantage, over time, in comparison to the
survivors of other deceased Article I judges covered by the Survivors'
Annuity Systems enacted to provide such benefits to them. I ask that
you take expeditious action to enact Title II, which is estimated to
have an actuarially insignificant cost impact.
In conclusion, I appreciate this opportunity to present the Court's
budget request for fiscal year 1998. On behalf of the judges and staff,
I thank you for your past support and request your continued assistance
and favorable report to the Appropriations Committee on our budget
request.
______
The Veterans Consortium Pro Bono Program
revised fiscal year 1998 budget
The Veterans Consortium Advisory Committee has revised the proposed
fiscal year 1998 budget, to reflect the fact that we have found
ourselves able to fill, through personnel donated by one of the
Consortium's constituent veterans service organizations, a position
that we had expected to have to fund out of fiscal year 1998 grant
funds. We have also adjusted the Program budget to reflect the
additional cost of $5,000 for an audit in compliance with OMB Circular
A-133, required for the first time next year by LSC. The result of
these adjustments is that the overall budgeted expenditures for fiscal
year 1998, set in the original budget at $850,804, are reduced by
$57,487, to a total of $793,317.
A spreadsheet setting out the revised budget in detail is attached
hereto as Exhibit A; a summary of significant statistical information
regarding the Program is attached as Exhibit B. This memorandum will
first provide an overview of the budget as revised, and then address in
some detail the increases contemplated over the current fiscal year
1997 budget and the changes from the fiscal year 1998 budget as
originally proposed.
OVERVIEW
The revised budgeted expenditures of $793,317 represent an increase
of 13.3 percent over the $700,000 appropriation for fiscal year 1997;
but only a 6.65 percent increase over the budget on which the Program
is currently operating, which calls for expenditures of $743,838. That
budget figure was the amount of the appropriation we sought for fiscal
year 1997; and although the appropriation was for a lesser amount, we
have been able to operate on the basis of the original budget because
there were unexpended funds from the previous fiscal year, largely the
result of curtailed operations in fiscal year 1996 resulting from
uncertainties as to whether the Program would be able to continue to
operate at all.
It is pertinent to note that the level of expenditures contemplated
by the revised fiscal year 1998 budget happens to correspond quite
closely to the amount of the appropriations for the Program in fiscal
year 1994 and fiscal year 1995, namely, $790,000--and without any
adjustment for inflation for the four-year interval from fiscal year
1994 to fiscal year 1998. Indeed, that figure was the amount that the
Court of Veterans Appeals contemplated would also be provided for the
Program for fiscal year 1996: the Court requested an appropriation for
the Program for that fiscal year of $678,000, but that lesser figure
took into account $112,000 that had been conserved by the Program in
prior years, and that remained available for Program expenditures in
fiscal year 1996. The Court observed, in submitting the fiscal year
1996 request, that ``this is a nonrecurring reduction [in the requested
appropriation] that could not be maintained in future years without
programmatic changes that the Court does not now anticipate would be
desirable.''
By reason of the overall budget reductions in fiscal year 1996,
however, the Program wound up operating on a revised budget, covering
both the ``A'' and ``B'' grants, of $633,931. This revised budget was
$34,278 less than the amount actually expended in the previous fiscal
year, $44,069 less than the $678,000 in new appropriations for the
Program that had been in the Court's budget submission, and $156,069
less than the $790,000 contemplated by the Court's fiscal year 1996
budget submission. As we pointed out in our fiscal year 1997 budget
submission, the amount on which we were operating in fiscal year 1996
was insufficient for the Program to operate as originally envisioned,
and we needed to make up for that year's shortfall if the Program was
to resume operating at full steam. Mindful of budgetary exigencies,
however, we did not then ask that the Program be restored to its full
prior level of appropriated funding. That is, however, what we are
asking now.
detailed explanation of the revised fiscal year 1998 budget
The proposed increase in expenditures from the fiscal year 1997
budget reflects both the need to deal with the backlog of cases in the
Case Evaluation and Placement Component, resulting from a period when
that component was understaffed, and an anticipated continuing increase
in the number of BVA decisions and consequent appeals to the Court and
a corresponding increase in the Program's caseload. Thus, in the first
six months of fiscal year 1997 we received 294 PRF's (Participation
Request Forms), compared to 217 in the comparable period in fiscal year
1996, and placed 120 cases with volunteer lawyers as compared to 93:
increases of 35 percent and 29 percent, respectively.
Since personnel costs--the salary and benefits of some of the
individuals performing services for the Program that are reimbursed out
of grant funds--account for the major part of the Program budget (they
were 70.2 percent in fiscal year 1997, and are 74.5 percent in the
revised fiscal year 1998 budget), they account for most of the increase
as well. These personnel costs relate to a portion of the time of the
personnel who staff the Outreach and the Education Components, and the
entirety of the time of most of the personnel who staff the Case
Evaluation and Placement Component (the services of the other staff
being provided free of charge to the Program). In all instances the
staff are actually employees of one or the other of two of the
Consortium's four constituent organizations--National Veterans Legal
Services Program (NVLSP) or Paralyzed Veterans of American (PVA)--which
are reimbursed from grant funds for the appropriate portion of their
salary and benefits. Table A shows in summary form the number of
persons providing services for each component, and the number of Full-
Time Equivalent (FTE) positions to be paid out of grant funds in fiscal
year 1997 and fiscal year 1998.
TABLE A.--PRO BONO PROGRAM PERSONNEL AND FTE DISTRIBUTION
----------------------------------------------------------------------------------------------------------------
Total No. of
personnel Total FTE Total FTE to be
Component providing some reimbursed by reimbursed by
service to the grant, fiscal grant, fiscal
program year 1997 year 1998
----------------------------------------------------------------------------------------------------------------
Outreach.................................................. 6 0.17 0.21
Education................................................. 10 0.96 1.05
Case evaluation and placement............................. 10 7.5 8.0
-----------------------------------------------------
Total............................................... 26 8.63 9.26
----------------------------------------------------------------------------------------------------------------
A fuller breakdown by component follows.
I. Case Evaluation and Placement Component--$575,383
The revised fiscal year 1998 budget contemplates an increase of
$39,262 over the fiscal year 1997 budget for the Case Evaluation and
Placement Component (referred to in the budget spreadsheet as the
``Screening'' component). This is in place of the $99,249 increase
reflected in the original fiscal year 1998 budget.
A. Personnel.--There are three categories of personnel staffing
this Component: lawyers, non-lawyer veterans law specialists, and
support staff.
Two lawyers, the Director and the Deputy Director, function full
time as such in the Case Evaluation and Placement Component, and the
entirety of their personnel cost is reimbursed by the Program--in one
instance to PVA and the other to NVLSP. Thus, the lawyer FTE for this
Component reimbursed from grant funds, in both fiscal year 1997 and
fiscal year 1998, is 2.0.
Veterans law specialists review the VA claims file and BVA decision
to determine whether or not each case contains an issue that warrants
referral to a lawyer. Veterans law specialists come from the
constituent Veterans Service Organizations and are among the most
experienced non-lawyer service officers these organizations have to
offer.
It was originally contemplated that there would be four full-time
veterans law specialists, plus part-time help equivalent to half the
time of a fifth, in the Case Evaluation and Placement Component in
fiscal year 1997--two of the full time specialists being supplied, on a
reimbursable basis, by PVA, and the other two donated by Disabled
American Veterans (DAV) and The American Legion, respectively. However,
in late fiscal year 1996, The American Legion recalled its specialist
to the organization's national office and could not furnish a
replacement until midway through the fiscal year. As a result of this
and other personnel difficulties, the Component operated with only 3
FTE veterans law specialists for the first five months of the year.
This fact, combined with increased filings, had created a backlog of
some 141 cases as of May, 1997. At the time the fiscal year 1998 budget
was prepared, this Component had a total of 3.5 FTE veterans law
specialists, 2.5 of them reimbursed by the Program and the other
donated by DAV. The original fiscal year 1998 budget contemplated an
increase of 1.5 FTE, to bring the total number of specialists
(including one donated specialist) to five. Since the restoration of
the American Legion's donated specialist, however, the need for one
additional reimbursed specialist has been eliminated, and the budget
has been reduced accordingly.
There are three full-time administrative support staff in the Case
Evaluation and Placement Component, all employees of NVLSP, and all
reimbursed out of Program funds.
The levels of salaries and benefits paid to the personnel who staff
the Program are of necessity governed by the general personnel policies
of the constituent organizations of which they are employees--i.e., PVA
and NVLSP--and to which they may return in the event of termination of
the Program or rotation of personnel by the organizations involved.
Both of those organizations expect to increase their staff salaries
generally by 5 percent, of which 3 percent will be an across-the-board
cost of living increase and 2 percent will be allocated for merit
raises. The increases are reflected in the personnel costs of all three
Components of the Program in the fiscal year 1998 budget.
B. Travel/Continuing Legal Education.--The revised fiscal year 1998
budget, like the original one, includes an increased allocation of
$1,500 for travel/CLE (to $2,500) to be used for continuing legal
education for lawyer staff of this Component. This is largely offset by
a reduction of $1,000 in the amount allocated for travel/CLE for the
Education Component.
C. Audit.--Audit costs have been increased by an additional $2,500
in the revised fiscal year 1998 budget to reflect the Component's share
of the increased cost of the annual audit by reason of the new LSC
requirement, mentioned above.
D. Property Acquisition and Contract Services.--These will decrease
by $10,000 from the amount budgeted for fiscal year 1997. Major
improvements to the databases will be completed in fiscal year 1997.
II. Outreach Component--$25,157
The revised fiscal year 1998 budget calls for a $6,537 increase
over the fiscal year 1997 budget for the Outreach Component: $500 more
than the original fiscal year 1998 budget. As indicated below, all but
$1,776 of the increase is in personnel costs.
A. Personnel.--These costs are budgeted to increase by $5,349
because we anticipate a continued increase in recruiting needs. We
assume a greater need for volunteer lawyers in fiscal year 1998 because
of the known and anticipated increase in the number of BVA decisions;
the budget also assumes that we will continue outreach efforts outside
the Metropolitan Washington area. Personnel costs include an increase
of 5 percent, as discussed previously under Case Evaluation and
Placement.
Three NVLSP lawyers devote a portion of their time to the Outreach
Component; and that portion of their personnel cost is reimbursed by
the Program. The aggregate lawyer FTE for the Outreach Component
reimbursed from grant funds in fiscal year 1997 is 0.07; the FTE
contemplated for fiscal year 1998 remains at 0.07.
Three NVLSP non-lawyers also function for part of their time in the
Outreach Component; and that portion of their personnel cost is
reimbursed by the Program. The aggregate non-lawyer FTE for the
Outreach Component reimbursed from grant funds in fiscal year 1997 is
0.10; the FTE contemplated by the fiscal year 1998 budget is 0.14.
B. Other.--The only change from the original fiscal year 1998
budget to the revised one is an increase of $500 in the audit line to
reflect the Outreach Component's share of the increased cost of the
annual audit. The remainder of the $1,776 difference in non-personnel
expenses between fiscal year 1997 and fiscal year 1998 reflects line
item adjustments based on past experience.
III. Education Component--$126,545
The revised fiscal year 1998 budget calls for an increase of
$12,998 over the fiscal year 1997 budget: $2,000 more than the original
fiscal year 1998 budget.
A. Personnel.--Personnel costs are budgeted to increase by $8,934.
A total of 6 NVLSP lawyers function in the Education Component, and
a portion of their personnel cost is reimbursed by the Program. We
anticipate an increase in mentoring duties, due to the cumulative
effect from previously assigned but still pending cases. We plan to
contain this cost, however, by assigning more mentoring duties to
personnel with lower personnel costs. The aggregate lawyer FTE for the
Education Component reimbursed from grant funds in fiscal year 1997 is
0.51; the FTE contemplated for fiscal year 1998 is 0.54.
Four NVLSP non-lawyers function in the Education Component, and all
four of them have a portion of their personnel cost reimbursed by the
Program. The cost of grant administration has been increased to 25
percent of the time of both the Grant Administrator and the
Administrative Assistant, based on past experience and an anticipated
increase in the Grant Administrator's time required for audit
preparation and contract reporting. The aggregate non-lawyer FTE for
the Education Component reimbursed from grant funds in fiscal year 1997
is 0.45; for fiscal year 1998 it will be 0.51.
B. Other.--As with the Outreach Component, the only change with
respect to the Education Component, from the original fiscal year 1998
budget, is an increase in the audit costs, by $2,000, to reflect the
Education Component's share of the increased cost of the annual audit
pursuant to the new LSC requirement. The remainder of the difference
from the fiscal year 1997 budget reflects various adjustments based on
past experience.
IV. ``B'' Grant--$44,232
This line assumes a total of 24 cases at a cost of $1,843 per case.
This represents a 3 percent per case increase over the fiscal year 1997
budget figure of $1,785 per case; it also reflects a reduction from the
total number of budgeted cases (30) in both fiscal year 1996 and fiscal
year 1997, as we continue to fine-tune this requirement.
V. LSC Oversight--$20,000
DONATED SERVICES
The vast majority of services rendered to the Pro Bono Program are
donated.
The most impressive contribution is the value of the legal services
provided by volunteer lawyers recruited by the Program. For fiscal year
1996, for example, the value of the pro bono representation provided by
volunteer attorneys under the Program was estimated to be $2,255,618--
providing, when combined with the contributions of the participating
organizations, a return of some 3 to 1 on the appropriated federal
funds.
The American Legion and the DAV receive no reimbursement for the
salary or related expenses for the full-time veterans law specialists
they provide to the Program. Those two organizations have not reported
the cost of providing these specialists, but it is obviously comparable
to that of the two specialists whose costs are reimbursed from grant
funds.
Neither DAV nor PVA receives any reimbursement for the time spent
by its lawyers in providing mentoring services for the Education
Component. Together, these contributions can be conservatively
estimated at $20,000 annually.
None of the participating organizations receives any reimbursement
for time spent by their representatives in connection with the
activities of the Consortium's Advisory Committee. (The fiscal year
1996 estimated value of that time was $101,524.)
The total value of contributions by the participating organizations
(with the exception of the unreported value of the contributions by the
American Legion and DAV, mentioned above) in fiscal year 1996 was
estimated at $202,580.
CONTRIBUTIONS OF EAJA FEE AWARDS BY LAW FIRMS
As previously reported, the Program has on seven occasions since
late 1995 received unsolicited donations from law firms (four of the
donations being from one firm), in each case representing part or all
of an Equal Access to Justice (EAJA) fee award recovered by the
donating firm in a case taken under the Program. (We have also received
a $20 contribution from a grateful veteran.) All four of the
contributing firms are large firms; among such firms it is quite
commonly firm policy to give away to one or another pro bono cause fee
awards recovered in pro bono cases--generally to the organization at
whose behest the matter was taken on. The total of such donations
(including the $20 one) to date is $45,054.08.
The Advisory Committee has established a special account to which
all such contributions will be earmarked, to be used for Program
activities for which grant funds have not hitherto been sought or
applied. It is the Committee's view that the uses made of such donated
funds must be ones that the donating firms would deem appropriate, and
that would tend to elicit other donations by participating firms: thus,
it would be counterproductive to treat the donated funds as an offset
for appropriated funds. The Committee has decided that initially the
earmarked funds will be used for three purposes: to fund outreach
activities in other jurisdictions; to fund presentation of the lawyer
training program in other jurisdictions; and, in selected cases, to pay
expenses incurred by solo practitioners who wish to take cases under
the Program and who would find it more feasible to participate if
certain essential costs are defrayed by the Program.
Exhibit A
[GRAPHIC] [TIFF OMITTED] T05MA04.002
Exhibit B
PRO BONO PROGRAM AT THE U.S. COURT OF VETERANS APPEALS
----------------------------------------------------------------------------------------------------------------
Fiscal years
------------------------------------------
1993 1994 1995 1996 1997 \1\ Program
(9/1/ (10/1/ (10/1/ (10/1/ (10/1/96- total
92-9/ 93-9/ 94-9/ 95-9/ 9/30/97)
30/93) 30/94) 30/95) 30/96)
----------------------------------------------------------------------------------------------------------------
Total appeals filed at CVA \2\............................... 1,265 1,148 1,204 1,561 798 5,976
Appeals filed Pro Se \2\..................................... 1,044 918 957 1,141 547 4,607
Pro Bono Program application forms sent...................... 853 648 812 936 565 3,812
Veterans who filed applications for program consideration.... 580 450 609 493 295 2,427
Veterans who received free attorney.......................... 231 187 201 181 120 920
Veterans who received some form of legal assistance (but no
representation due to program ineligibility)................ 343 262 327 287 186 1,405
Percent of program eligible veterans who received
representation (percent).................................... 100 100 100 100 100 100
Program cases completed during fiscal year \3\............... 52 147 199 156 88 642
Program cases in which VA error found \3\.................... 45 112 158 125 64 504
Percent of cases in which veteran prevailed in litigation
through program efforts (percent)........................... 86.5 76.2 79.4 80.1 72.7 78.5
Recruited attorneys who have received training \4\........... 236 100 121 160 93 710
----------------------------------------------------------------------------------------------------------------
\1\ Figures through 2nd quarter fiscal year 1997 only.
\2\ Figures supplied by the Court (through 2/28/97 only).
\3\ Figures do not include cases where representation was declined by the appellant, nor cases where the
appellant died during pendency of appeal.
\4\ Does not include 43 attorneys for whom training was waived.
Note: Figures subject to minor revision.
______
Letter From Frank Q. Nebeker
U.S. Court of Veterans Appeals,
Washington, DC, February 4, 1997.
Hon. Arlen Specter,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: On June 10, 1996, I transmitted to the Chairmen
and Ranking Minority Members of the Senate and House Committees on
Veterans' Affairs a proposal to downsize the number of the Court's
associate judges (Title I of the proposal) and to make the Court's
retirement/survivor program comparable to the systems of other Article
I Courts (Title II of the proposal). The proposal, a duplicate of which
I again transmit with this letter, was submitted in response to
Congressional inquiries regarding the Court's caseload relative to the
requisite number of judges on the Court and regarding the comparability
of the Court's judicial retirement/survivor program. The 104th Congress
took no action on either Title I or Title II.
With respect to Title I, I indicated in my transmittal letter that
case filings during the fiscal year 1990-92 period had averaged 1,942
per year but had dropped in the fiscal year 1993-95 period to an annual
average of 1,224. At the time of my transmittal, case filings for the
first 6 months of fiscal year 1996 were estimated to be 595 which
suggested that fiscal year 1996 filings would be less than average
annual filings for fiscal year 1993-95. During the last 6 months of
fiscal year 1996, filings rose so that total fiscal year 1996 filings
reached 1,620. For the first quarter of fiscal year 1997 the Court
received 457 filings. I further indicated in my transmittal letter that
cases pending at the end of each year of the fiscal year 1990-92 period
had averaged 1,865 but had dropped to an average of 1,182 at the end of
each year of the fiscal year 1993-95 period. At the time of my
transmittal, it is estimated that 1,438 cases were pending. At the end
of the first quarter of fiscal year 1997, 1,707 cases were pending. It
should be further noted that the Board of Veterans Appeals, from which
the Court's appeals derive, denied 6,400 appeals in fiscal year 1995
and 10,455 appeals in fiscal year 1996.
Several veterans service organizations either opposed enactment of
Title I or, more cautiously, favored ``a wait and see'' approach to it.
Enactment of Title I would result in estimated net annual savings of
$660,900.
With respect to Title II, my June 10, 1996, transmittal letter
stated:
In the matter of the retirement/survivor program, I have
received several letters from past chairmen of the Senate
Veteran's Affairs Committee regarding the comparability of the
Court's program with those established for other federal courts
and have twice responded to the invitation to provide comments
on a Congressional Research Service Report (Dennis W. Snook &
Jennifer A. Neisner, ``Congressional Research Service Report
for Congress, Income Protection for Judges of Selected Federal
Courts,'' dated December 29, 1993) (CRS report), that was
prepared on that subject. The Court was asked to continue to
review the matter and to advise the Committee of its findings.
Enclosed also is a copy of the CRS report, annotated so that it
may be used in conjunction with a memorandum dated November 14,
1994 (Memorandum), also enclosed, prepared by the Court's
Committee on Legislative Matters, which addresses certain minor
deficiencies in the CRS report. The Court's review has revealed
that each judicial retirement/survivor program has unique
features and also that the retirement programs of other Article
I federal courts have generally been enhanced over the last 7
years, whereas this Court's program has generally remained
static since its creation in 1989. The Court believes that
certain aspects of this resulting disparity should be addressed
in corrective legislation to make the Court's program more
comparable with other Article I federal court retirement
programs. Accordingly, the Proposal also provides for systemic
reforms in the Court's retirement/survivor system that are
designed to put the Court on a more equal footing with the
systems provided for other Article I courts.
I ask for your active support as Chairman in obtaining enactment of
Title II to make the Court's retirement/survivor program more
comparable with other Article I court programs. Because of the death of
Judge Hart Mankin, on May 28, 1996, his widow, Ruth Mankin, is now a
survivor under the Court's survivor annuity program. Over time, she
will be at considerable disadvantage in comparison to widows of
deceased Article I judges covered by the Joint Survivors' Annuity
System. In this regard, I am hopeful that you will respond with
expeditious action to enact Section 204 of Title II which is estimated
to be without actuarially significant cost impact and without any
appropriations impact. Enactment of all sections of Title II other than
Section 204 is estimated to be without cost or appropriations impact.
I would also ask that you consider enacting legislation that would
change the Court's name to the United States Court of Appeals for
Veterans Claims. Many veterans and attorneys believe that the Court is
an administrative tribunal of the Department of Veterans Affairs rather
than an independent judicial entity. The present name of the Court
appears to add to that belief especially in view of the fact that the
name, ``United States Court of Veterans Appeals'', is often reduced to
the acronym ``CVA'', which is not readily distinguishable from ``BVA,''
the acronym for the Board of Veterans Appeals which is an
administrative tribunal of the Department, or ``DVA,'' the common
acronym for the Department. It is important that the Court be perceived
as both judicial and independent. Adoption of the name ``United States
Court of Appeals for Veterans Claims'' should promote that perception.
Such a change would also be consistent with action in recent years with
respect to the names of other Article I Courts. The United States Court
of Claims became the United States Court of Federal Claims in 1992. The
United States Court of Military Appeals became the United States Court
of Appeals for the Armed Forces in 1994.
Finally, I bring to your attention one additional matter. The Court
was created in 1988 without any antecedent structure and with no judges
in place (Veterans' Judicial Review Act, Public Law No. 100-687, Div.
A., 102 Stat. 4105 (Nov. 18, 1988)). All 6 of the Court's original
associate judges assumed office within a period of approximately 1 year
of each other. Assuming that Title I of the proposal is not enacted,
the 15-year terms of the Court's remaining 5 original associate judges
will expire within a period of approximately 1 year of each other. As a
consequence, and again assuming no downsizing, I recommend that
consideration be given to attempting to eliminate the undesirable
dislocating effect of such a rapid turnover by permitting early
retirement of remaining original associate judges who meet certain age
and service requirements which, in turn, could space the sequencing of
retirements so as to assure continuity of experience in the Court's
judicial component. Implementation may be achievable, pursuant to 38
U.S.C. Sec. 7298(2)(A), within existing appropriations. It should be
noted that several Article I Courts have early retirement programs
applicable to all their judges.
Thank you for your consideration. I am sending the same letter and
enclosures to Chairman Stump, and Ranking Minority Members Rockefeller
and Evans.
Sincerely,
Frank Q. Nebeker,
Chief Judge.
va decision process
Senator Bond. Thank you, Judge.
Senator Mikulski will be rejoining us shortly.
The committee has been concerned for a long time with the
whole process of adjudicating claims at the Department of
Veterans Affairs, both in terms of the time it takes and the
quality of decisions. The VA has undertaken some initiatives to
make improvements, such as business process reengineering.
First, do you see any evidence that the quality of
decisionmaking is improving at the VA?
Judge Nebeker. Not in the cases that come before the court.
The error rate is still approximately 50 percent. That is, 50
percent of the cases that come to issue and are decided by the
judges are remanded because of prejudicial error in the
decision somewhere.
Senator Bond. Well, 2 years ago you said the rate was in
excess of 60 percent, so while 50 percent is not great, I guess
there is progress, going from 60 percent to 50 percent.
What needs to be done?
Judge Nebeker. Well, I wish I knew. Obviously, more
resources at the Board level, but they have got the resources.
They have been augmented tremendously in an austere budget
period. They have cut back to one member panel, that is, single
member decisions, and they are putting out more decisions. As a
matter of fact, the denial rate before the Board has gone from
6,000 last year to 10,000 this year. We can expect that
reverberation to affect the case load of the court in the next
year, 6 months to 1 year.
Senator Bond. In October 1994 at the court's third judicial
conference, you called upon Secretary Brown to make unequivocal
use of the powers invested in his office to ensure that
precedent opinions are followed and the judgments in specific
cases are met with full and prompt compliance.
Has there been any action on that recommendation?
Judge Nebeker. There have been a number of committees
studying it.
Senator Bond. Studying it?
Judge Nebeker. Yes, sir.
Senator Bond. Thanks.
In addition, a commission authorized by Congress, the so-
called Melidosian Commission, recently finalized its report on
improving claims processing. It said the claims adjudication
system was created by the VA to process the benefits legislated
by Congress, but that layer upon layer of changes have been
added to the benefits and, therefore, to the processing system
and that there has never been a wholesale revision to bring all
changes into a harmonious whole. Therefore, the nature of the
product's benefits have helped lead to a system which is
perceived as inefficient, untimely, and inaccurate.
Do you believe Congress needs to legislate an overhaul to
the claims processing system as contemplated, or could it be
achieved by regulation? What is your view on the needed
reforms?
Judge Nebeker. Mr. Chairman, I am not in a position to
offer an opinion respecting the operations of an executive
branch Department, particularly one of the size of the
Department of Veterans Affairs. I note that that Melidosian
report pretty well echoed what I suggested 2 years ago at the
judicial conference, which you just mentioned.
But insofar as a court entering into the political arena of
what ought to be done to make a particular executive branch
program work, I am totally unqualified to do that.
PRO BONO REPRESENTATION PROGRAM
Senator Bond. With respect to the proposed reprogramming of
$950,000 to initiate the pro bono representation program, your
testimony says:
The court's judges continue to believe that this funding
method links the court to one class of litigants and exposes it
to charges of lacking impartiality, thereby degrading the
public's trust and confidence in the judicial review of
veterans' claims.
The court has altered its position on the pro bono
representation program last year after supporting its inclusion
in the budget for several years. Would you explain what the
status is and where this program stands and what the trust and
confidence level may be in the judicial system?
Judge Nebeker. Well, the program is a successful program.
It not only--well, its major purpose is to help the pro se
veterans. To the extent that it thereby helps the court, that
is a windfall and a desirable windfall. We are a conduit for
their funding and as long as we can be assured and the public
can be assured that the court is not funding the program out of
its own operating budget, then I think there is no real
concern.
But if the idea is that the court is funding a particular
side of the litigation that appears before it, it is not unlike
the court funding a public defender service or a prosecutor's
office to the exclusion of the other side. It is that problem
that we think needs to be solved, because there is an
appearance that the court is in a position of being compromised
where it should not be.
CLOSING
Senator Bond. Thank you very much, Judge.
Let me see if Senator Mikulski wants to ask any questions.
In the interest of time, I will submit the remainder of the
questions I have for the record. I think you have covered very
well the things we have discussed and I appreciate your
responsiveness to the questions, as well as to the concerns
that we have expressed.
Senator Mikulski has said that she will submit her
questions for the record. I appreciate very much your
testimony.
Judge Nebeker. Thank you very much, Mr. Chairman. I do try
to be responsive to questions when they are asked.
Senator Bond. It is a very pleasant trait. I certainly
enjoy it.
AMERICAN BATTLE MONUMENTS COMMISSION
STATEMENT OF GEN. JOHN P. HERRLING, U.S. ARMY
(RETIRED), SECRETARY
Senator Bond. I welcome our final panel: Gen. John P.
Herrling, Secretary of the American Battle Monuments
Commission, will be testifying on the administration's budget
request for fiscal year 1998 for the ABMC of $23.9 million, an
increase of $1.6 million over fiscal year 1997's appropriation
of $22.3 million. Mr. Steve Dola, the Deputy Assistant
Secretary for Management and Budget for the Department of the
Army, Cemeterial Expenses, will be testifying on the
administration's budget request for fiscal year 1998 of $11.8
million, a $200,000 increase over to $11.6 million appropriated
for fiscal year 1997. This funding would cover the maintenance,
operation, and improvement of Arlington National Cemetery and
the Soldiers and Airmen's Home National Cemetery. Finally, Mr.
Gil Coronado, Director of the Selective Service System, will
testify on the administration's budget request for fiscal year
1998 of $23.9 million for the Selective Service, an increase of
$1 million over the $22 million appropriated for fiscal year
1997 for the Selective Service.
With that, General Herrling.
General Herrling. Thank you, Mr. Chairman. On behalf of the
Commissioners of the American Battle Monuments Commission, I am
pleased to appear before you today. Let me begin by thanking
you and the members of this committee for the support that you
have provided our Commission over the years.
The special nature of the American Battle Monuments
Commission places it in a unique and highly responsible
position with the American people. The manner in which we care
for our honored war dead is and should remain a reflection of
the high regard in which we as a Nation memorialize their
service and sacrifices.
As you know, the American Battle Monuments Commission was
established by Congress in 1923. It is a small, one-of-a-kind
organization responsible for commemorating the services of the
Armed Forces where they have served since April 6, 1917. We do
this through the construction and maintenance of memorial
shrines, monuments, and military burial grounds on foreign
soil.
The American Battle Monuments Commission operates and
maintains 24 permanent memorial cemeteries and 28 monuments,
memorials, and markers in 15 countries around the world. We
have 8 World War I and 14 World War II cemeteries located in
Europe, the Mediterranean, North Africa, and the Philippines.
All of these cemeteries are closed to burials. In addition, we
are responsible for the American cemeteries in Mexico City and
Panama.
Interred in these cemeteries are approximately 31,000 World
War I dead, 93,000 from World War II, and 750 from the Mexican
war, for a total of 125,000. Also we have approximately 5,000
American veterans and others buried in the cemetery in Panama.
In addition, we have honored another 94,000 service members on
the Walls of the Missing, dedicated to those missing in action
or those lost or buried at sea.
The care of these cemeteries and memorials requires a
significant annual program of maintenance and repair of
facilities, equipment, and grounds. The care and maintenance of
these facilities is labor intensive. Therefore, personnel costs
amount to 72 percent of our budget for fiscal year 1998. The
remaining 28 percent is required to fund our operations which
include engineering maintenance, utilities, horticultural
supplies, equipment, and administrative costs.
Also, because of the permanent nature of our operations, we
do not have the option of closing or consolidating cemeteries
or memorials. In light of this, we have increased our efforts
to achieve greater efficiency and effectiveness through
automation in the operational and financial management areas.
In addition to our overseas mission, we have been mandated
by the Congress to construct two memorials in Washington, DC.
On July 27, 1995, President Clinton and President Kim Young
Sam of the Republic of Korea dedicated the Korean War Veterans
Memorial. Last month, on February 6, we opened the Korean War
Veterans Memorial information kiosk. This kiosk houses the
Korean war veterans honor role, which allows friends and
relatives to query a data base containing the names and
information about those who died during the Korean war. With
the opening of the kiosk, the Korean War Veterans Memorial is
now complete.
In May 1993, Congress authorized the Commission to build a
national World War II memorial. The Rainbow Pool site on The
Mall was dedicated on November 11, 1995, by President Clinton.
Since that time a national design competition for the memorial
was held, with over 400 entries submitted. Six finalists were
selected for the final stage of the competition. On January 17
of this year, President Clinton announced the winner of the
design competition.
As directed by the Congress, the project will be funded
through private contributions. The American Battle Monuments
Commission is currently working with a presidentially appointed
World War II Memorial advisory board to raise the funds for the
memorial.
Our greatest challenge, Mr. Chairman, for fiscal year 1998
will be in dealing with aging facilities and equipment. Our
memorial cemeteries range in age from approximately 50 to 80
years, with the Mexico City cemetery being over 140 years old.
The permanent structures and plantings which make our
facilities among the most beautiful memorials in the world are
aging and require prioritized funding to maintain them at
current standards. Therefore, we are requesting $250,000 more
in fiscal year 1998 for maintenance and minor construction.
In addition, much of our equipment is aging and rapidly
reaching the end of its useful life. In order to resolve this
problem, we are requesting an additional $200,000 to fund our
equipment repair and replacement program. We also have small
increases of $200,000 for supplies, $300,000 to integrate our
financial system in compliance with OMB, GAO, and recent
congressional directions, and $214,000 for rental of office
space previously provided at no cost.
In summary, since 1923 the American Battle Monuments
Commission's cemeteries and memorials have been held to a high
standard in order to reflect America's continuing commitment to
its honored war dead, their families, and the U.S. national
interest.
The Commission intends to continue to fulfill this sacred
trust. Our appropriation request for fiscal year 1998 is
$23,897,000.
PREPARED STATEMENT
Mr. Chairman, this concludes my statement. I will be
pleased to respond to your questions.
[The statement follows:]
Prepared Statement of Gen. John P. Herrling
Mr. Chairman and Members of the Committee: Thank you for the
opportunity to testify on our fiscal year 1998 Appropriation Request.
The special nature of the American Battle Monuments Commission places
it in a unique and highly responsible position with the American
people. The manner in which we care for our Honored War Dead is, and
should remain, a reflection of the high regard in which we, as a
nation, honor their service and sacrifices.
As you know, the American Battle Monuments Commission is a small,
one-of-a-kind organization, that is responsible for commemorating the
services of American Armed Forces where they have served since April 6,
1917 (the date of U.S. entry into World War I) through the erection of
suitable memorial shrines; for designing, constructing, operating, and
maintaining permanent American military burial grounds in foreign
countries; for controlling the design and construction of U.S. military
monuments and markers in foreign countries by other U.S. citizens and
organizations, both public and private; and for encouraging the
maintenance of such monuments and markers by their sponsors. In
performing these functions, the American Battle Monuments Commission
administers, operates, and maintains twenty-four permanent memorial
cemeteries and twenty-eight monuments, memorials, and markers in
fifteen countries around the world.
We have eight World War I and 14 World War II cemeteries located in
Europe, the Mediterranean, North Africa, and the Philippines. All of
these cemeteries are closed to burials except for the remains of the
War Dead who may occasionally be discovered in World War I or World War
II Battlefield areas. In addition, we are responsible for the American
cemeteries in Mexico, established after the Mexican War, and Panama.
Presently 124,914 U.S. War Dead are interred in these cemeteries--
30,921 of World War I, 93,243 of World War II and 750 of the Mexican
War. Additionally, 5,857 American veterans and others are interred in
the Mexico City and Corozal (Panama) American Cemeteries. Commemorated
individually by name on stone tablets at the World War I and II
cemeteries and three memorials on U.S. soil are the 94,120 U.S. service
men and women who were Missing in Action, or lost or buried at sea in
their general regions during the World Wars and the Korean and Vietnam
Wars.
We continue to provide services and information to the public,
friends, and relatives of those interred in, or memorialized, at ABMC
cemeteries and memorials. This includes information about grave and
memorialization sites as well as location, suggested routes, and modes
of travel to the cemeteries or memorials. Immediate family members are
provided letters authorizing fee-free passports for overseas travel to
specifically visit a loved one's grave or memorial site. Photographs of
headstones and sections of the Tablets of the Missing on which the
service person's name is engraved are also available. These photographs
are mounted on large color lithographs of the cemeteries or memorials.
In addition we assist those who wish to purchase floral decorations for
placement at grave or memorial sites in our cemeteries. A photograph of
the in-place floral arrangement is provided to the donor.
The care of these shrines to our War Dead requires a formidable
annual program of maintenance and repair of facilities, equipment, and
grounds. This care includes upkeep of 131,000 graves and headstones; 73
memorial structures; 41 quarters, utilities, and maintenance
facilities; 67 miles of roads and paths; 911 acres of flowering plants,
fine lawns and meadows; nearly 3,000,000 square feet of shrubs and
hedges and over 11,000 ornamental trees. Care and maintenance of these
resources is exceptionally labor intensive, therefore, personnel costs
account for 72 percent of our budget for fiscal year 1998. The
remaining 28 percent is required to fund our operations, including
unprogramed requirements resulting from natural disasters or foreign
currency fluctuations. We do not have the option of closing or
consolidating cemeteries. In light of this, we have increased our
efforts to achieve greater efficiency and effectiveness, through
automation and contracting, in the operational and financial management
areas, where we do have control.
This Commission fully recognizes and supports the efforts of the
President and the Congress to improve efficiency, focus on results, and
streamline the government overall. During fiscal year 1996, we
completed the upgrade to our automation system and offset telephone,
fax, and mail costs while increasing productivity. We have contracted
with the Department of Treasury's Financial Management Services Center
to study our accounting system, provide alternatives and
recommendations, and design a new system, if findings warrant. We
anticipate these recommendations will be implemented during fiscal year
1998. In addition, we have begun development of our Strategic and
Annual Performance Plans in accordance with the Government Performance
and Results Act. We believe, when finalized, our plans will provide a
comprehensive roadmap for accomplishing our mission.
On July 27, 1995, President Clinton and President Kim Young Sam
dedicated the Korean War Veterans Memorial. On February 6, 1997, we
opened the Korean War Memorial Kiosk. This Kiosk houses the Korean War
Veterans Memorial Honor Roll. This Honor Roll allows friends and
relatives to query a data base containing the names and information
about those who died during the Korean War. With the opening of the
Kiosk we are pleased to be able to report to you that the Korean War
Veterans Memorial is now complete.
Our focus for fiscal year 1998 and for the next several years will
be the World War II Memorial. As you know, on May 25, 1993, President
Clinton signed Public Law 103-32 directing the ABMC to build a World
War II Memorial. The World War II Memorial Site at the Rainbow Pool was
dedicated by President Clinton on November 11, 1995. Since that time, a
national design competition was held with over 400 preliminary designs
submitted for evaluation. Six finalists were selected and announced on
August 21, 1996. Final designs were submitted to a design jury on
October 25. Criteria included concept, past performance, specialized
experience and technical competence, professional qualifications and
the capacity to accomplish the work in the required time. The jury
interviewed the finalists and made its recommendation to the Commission
on October 31. The World War II Advisory Board met and provided its
advice to the ABMC on November 18. ABMC Commissioners considered the
advice and recommendations and selected the winning design team/concept
on November 20. On January 17, 1997, at a White House Ceremony,
President Clinton unveiled the winning design by Friedrich St. Florian,
former Dean of the Rhode Island School of Design, and a current
professor at the school. Teaming up with Professor St. Florian are
George E. Hartman, Hartman-Cox Architects, and Oehme van Sweden &
Associates, Inc., both of Washington D.C. Leo Daly will be the
architect--engineer of record.
As directed by the Congress, the $100 Million memorial will be
funded through private donations after expending the $4.7 Million that
Congress authorized from the surcharge proceeds of World War II
Commemorative Coin sales and the $5 Million transferred from Department
of Defense. The American Battle Monuments Commission is working closely
with the World War II Memorial Advisory Board to raise the funds to
meet the planned dedication on Veterans' Day in the year 2000.
While our attention has been focused on management improvements and
the design and construction of the World War II Memorial, we have not
ignored our primary mission of operating and maintaining twenty-four
memorial cemeteries and twenty-eight monuments. The Congress has been
instrumental in our success in maintaining its high standard of
excellence by providing the funds required to accomplish our
objectives, and for that we thank you.
Fiscal year 1998 will present new challenges. For the first time in
nine years we have repriced our foreign currency budget rates. This
repricing, with OMB support, conforms with the Department of Defense's
budget rates for foreign currency. With this repricing, we estimate
that we will require $2,097,000 to satisfy foreign currency fluctuation
requirements. This amount has been included in our budget request. In
addition the fiscal year 1998 request provides for cost of living
increases for our U.S. and foreign national personnel, rental expenses
for space previously provided at no cost, funding to integrate ABMC
financial systems in accordance with OMB, GAO, and recent Congressional
directions, and small increases for maintenance and equipment.
Perhaps our greatest challenge will be in dealing with aging
facilities and equipment. Our cemetery memorials range in age from 50
to 80 years old with Mexico City being over 100 years old. The
permanent structures and plantings which make our facilities among the
most beautiful memorials in the world are aging and require increased
funding to maintain them at the current standards. Our maintenance and
engineering budget is stretched to the limit. Accordingly, we are
prioritizing this spending carefully. In addition, much of our
equipment is aging and rapidly reaching the end of its useful life. We
have requested additional funding for equipment replacement this fiscal
year and will be implementing phased replacement in order to take
advantage of new labor saving technology.
Since 1923, the American Battle Monuments Commission's memorials
and cemeteries have been held to a high standard in order to reflect
America's continuing commitment to its Honored War Dead, their
families, and the U.S. national image. The Commission intends to
continue to fulfill this sacred trust.
The American Battle Monuments Commission appropriation request for
fiscal year 1998 is $23,897,000.
This concludes my prepared statement. I will be pleased to respond
to your questions.
Additional committee questions
Senator Bond. Thank you very much, General.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing:]
Question Submitted by Senator Stevens
abmc special events and services to the public
Question. Provide to each Committee Chairman a schedule of planned
Memorial Day activities and other special events as well as information
on public services provided by American Battle Monuments Commission
(ABMC).
Answer. As of 26 March 1976, ABMC provided the Chairman of each
Senate and House Committee a listing of ABMC Special Events planned for
1997 and a Fact Sheet on ABMC's mission and services which are provided
to the public. These two documents are as follows:
1997 memorial day and other events at abmc cemeteries and memorials
The following is a list of Memorial Day, Veterans Day, D-Day
Ceremonies, and other activities that are planned for 1997.
Memorial Day.--Memorial Day programs are held at each ABMC
Cemetery. Each grave site is decorated with the flag of the United
States and that of the host country. Programs, usually including
participation by the U.S. Ambassador to the host country, includes
reading of the President's Memorial Day Proclamation, speakers, the
presentation of the National Colors, wreath laying ceremonies, and
military bands and units. The 1997 Memorial Day schedule for our
cemeteries in Europe, Tunisia, Mexico City, Panama and Philippines, is
as follows:
------------------------------------------------------------------------
Cemetery Date Time
------------------------------------------------------------------------
AISNE-MARNE (France) \1\.......... SUNDAY 25 MAY....... 10:15 AM
ARDENNES (Belgium) \2\............ SATURDAY 24 MAY..... 10:00 AM
BRITTANY (France) \2\............. SUNDAY 25 MAY....... 4:30 PM
BROOKWOOD (England) \1\........... SUNDAY 18 MAY....... 3:00 PM
CAMBRIDGE (England) \2\........... MONDAY 26 MAY....... 11:30 AM
COROZAL (Panama).................. MONDAY 26 MAY....... 9:00 AM
EPINAL (France) \2\............... SUNDAY 25 MAY....... 3:00 PM
FLANDERS FIELD (Belgium) \1\...... SUNDAY 25 MAY....... 3:00 PM
FLORENCE (Italy) \2\.............. MONDAY 26 MAY....... 11:00 AM
HENRI-CHAPELLE (Belgium) \2\...... SATURDAY 24 MAY..... 4:00 PM
LORRAINE (France) \2\............. SUNDAY 25 MAY....... 11:00 AM
LUXEMBOURG (Luxembourg) \2\....... To Be Announced..... ..............
MANILA (Philippines) \2\.......... MONDAY 26 MAY....... 4:00 PM
MEXICO CITY (Mexico).............. FRlDAY 30 MAY....... 12:00 PM
MEUSE-ARGONNE (France) \1\........ SUNDAY 25 MAY....... 3:00 PM
NETHERLANDS (The Netherlands) \2\. SUNDAY 25 MAY....... 3:00 PM
NORMANDY (France) \2\............. SUNDAY 25 MAY....... 10:30 AM
NORTH AFRICA (Tunisia) \2\........ SATURDAY 24 MAY..... 10:00 AM
OISE-AISNE (France) \1\........... SUNDAY 25 MAY....... 4:00 PM
RHONE (France) \2\................ SUNDAY 25 MAY....... 10:00 AM
ST. MIHIEL (France) \1\........... SUNDAY 25 MAY....... 4:00 PM
SICILY-ROME (Italy) \2\........... MONDAY 26 MAY....... 11:00 AM
SOMME (France) \1\................ SUNDAY 25 MAY....... 3:00 PM
SURESNES (France) \1\............. SUNDAY 25 MAY....... 2:30 PM
------------------------------------------------------------------------
\1\ World War I American Cemeteries and Memorials.
\2\ World War II American Cemeteries and Memorials.
D-Day Landing Ceremonies--6 June 1997.--A commemorative program is
held each year at a site along the Landing Beaches. The program site is
rotated between the British, French, and American Sectors. The 1997
program will be held in the American Sector of operations on 6 June at
the following locations:
Bayeux.................................... 9:30 AM Liberation Monument--
Wreath Laying.
Omaha Beach............................... 10:15 AM American cemetery--
Religious Service.
11:00 AM D-Day Monument--
Wreath Laying.
11:15 AM National Guard
Monument--Wreath Laying.
Point Du Hoc.............................. 11:30 AM Wreath Laying.
Saint-Mere-Eglise......................... 12:15 PM Wreath Laying.
12:45 PM Official Banquet.
Utah Beach................................ 3:00 PM Leclerc Monument--
Wreath Laying.
3:30 PM Monument of 4th
Division Wreath Laying.
National Ceremony-American
Federal Monument: Raising 8
National Colors; Official
Speeches; Wreath Laying
Ceremony; Military Parade.
Veterans Day.--Annual ceremonies are held at some of the cemeteries
on Veterans Day, which coincides with the French holiday commemorating
the end of World War I. Local community programs frequently include
commemorative events at some of our cemeteries. The location and
magnitude of the programs vary in location and size. We will provide
dates and times for Veterans Day celebrations at a later date.
Other Ceremonial Occasions.--Members of Congress, officials of the
Executive Branch, high ranking diplomatic and senior representatives of
the respective host nations and allied powers, personnel from NATO/
SHAPE, as well as, veterans' remembrance, educational and even local
patriotic groups frequently visit our cemeteries and memorials. These
visits include small wreath laying ceremonies and community sponsored
receptions to honor those Americans who fought in and liberated a
particular town or region.
Special Events.--Our Cemetery Superintendents serve as ambassadors
of goodwill in the country where they are stationed. They frequently
represent the United States at ceremonies and other community based
programs. These include ceremonies commemorating the liberation of
towns and villages by U.S. troops, events that honor the survivors of
Nazi concentration camps and visits by American veterans' remembrance
groups.
AMERICAN BATTLE MONUMENTS COMMISSION
Mission
The American Battle Monuments Commission (ABMC) is a small
independent agency of the Executive Branch established by Congress on
March 4, 1923 (36 U.S.C. 121-128c).
The principal mission of the agency is to commemorate the
sacrifices and achievements of the United States Armed Forces, where
they have served, since April 6, 1917, the date of U.S. entry into
World War I. This is accomplished by:
Designing, constructing, administrating, and maintaining cemetery
and memorial structures outside the United States. ABMC currently has
responsibilities for 24 permanent United States memorial cemeteries,
and 27 memorial monuments and markers.
Controlling the design and construction of U.S. Military memorials,
monuments, and markers on foreign soil which are sponsored by U.S.
citizens or U.S. public or private organizations, and encouraging these
organizations to adequately maintain them.
Establishing memorials in the United States, when legislated by the
Congress, and outside the United States, where U.S. forces have served,
as the Commission determines.
--Congress directed ABMC to establish the Korean War Veterans
Memorial on the Mall in Washington, DC. This Memorial was
completed and dedicated in July 1995 and is now administered by
the National Park Service.
--Public Law 103-94, signed by President Clinton on May 25, 1993,
authorizes ABMC to design, erect and conduct fund raising for
the national World War II Memorial that is to be sited on the
Mall in Washington, DC. This national monument will memorialize
the generation of Americans whose spirit, sacrifice, and unity
reflect the values that have made our nation strong. This
Memorial will also pay tribute to the many Americans who served
in the Armed Forces and to all those who joined the war effort
on the home front. The Commission's goal is to dedicate the
Memorial on Veterans Day 2000. Former Senator Robert Dole, a
World War II veteran, is now serving as Co-Chairman of the
World War II Memorial fund raising effort.
Services Available to the Public
General information concerning name and location of cemetery and
memorial sites.
Specific information on grave and memorialization sites of War
Dead.
General information about travel to the military shrines
administered by the Commission, including best routes, modes of travel,
available accommodations, and information about historical events which
took place in the battlefield areas in the region of the cemetery
memorials.
Authorization to immediate family members for issuance of fee free
U.S. passports when visiting burial or memorialization sites of loved
ones.
Escort of family members to appropriate grave and memorialization
sites when visiting cemetery memorials.
Photographs of grave and memorialization sites, along with large
color lithographs of the cemetery memorials.
Assistance in placing floral decorations at grave and
memorialization sites using funds provided by the donor.
Maintenance of the Honor Roll database of the Korean War Veterans
Memorial on the National Mall in Washington, DC. The Honor Roll
commemorates those members of the United States military who died
world-wide during the Korean War. Honor Roll Certificates may be
obtained at the kiosk located at the Memorial or from ABMC's Washington
office.
______
Question Submitted by Senator Mikulski
Question. Provide a plan to work through the current backlog of
engineering projects and identify a schedule which might allow American
Battle Monuments Commission to ``buy out'' of this backlog dilemma.
Answer. A copy of the current Master Priority Listing for all
identified engineering projects follows below.
There are 550 projects with a total estimated cost of slightly over
$10 million. With considerable attention to detail, this master list
has been carefully reviewed, revised, updated, and prioritized over the
course of the past nine months. Accordingly, our fiscal year 1997,
fiscal year 1998, and outyear engineering plans and programs are now
based on this newly developed master priority list.
Presently, ABMC hopes to apply $2M to engineering projects in
fiscal year 1997. At this time, our President's Budget Request has
$2.2M programmed for engineer projects in fiscal year 1998. If we do
not experience unanticipated foreign currency fluctuations, any
significant natural disasters, or unexpected utility or plant failures,
we project our backlog will be reduced to $6M by the end of fiscal year
1998. Additionally, we estimate that $700,000 in new projects must be
added to the master list each year. Consequently, if we are able to
continue to apply $2M annually toward engineer projects every year, it
could still take an additional five years (fiscal year 1999 through
fiscal year 2003) to eliminate the backlog. In order to support the
current high standards of maintenance and repair of our facilities,
plus improve our position with respect to energy conservation,
productivity, and efficiency, the Commission could effectively apply up
to an additional $1M per year above the President's Budget, for
engineer project backlog reductions. This would allow ABMC to make a
major reduction prior to fiscal year 2001.
ABMC ENGINEERING BACKLOG AT START FISCAL YEAR 1997
------------------------------------------------------------------------
Object Estimated
Cemetery Project class cost
------------------------------------------------------------------------
Meuse Argonne.................. Anchor Loose 25 $2,000
Stones at Church
Ruins at
Montfaucon.
North Africa................... Repair of Interior 32 30,000
Court Cornice.
Aisne Marne.................... Install Automatic 25 1,000
Chlorinator for
Potable Water.
Rhone.......................... Install electrical/ 32 3,000
heating System,
Visitor Center.
Aisne Marne.................... Drill New Deep 25 250,000
Well.
Manila......................... Repair Hemicycle 32 100,000
Roof.
Rhone.......................... Replacement of 25 5,800
Fuel Tank
Visitors/Office
Building.
Aisne Marne.................... Install Water 25 1,500
Softener.
Sicily-Rome.................... Drill New Well 30 32 6,800
mt. Install
Pumping System.
Meuse Argonne.................. Replace 3 ea Fuel 25 50,000
Tanks, and 1 ea
gas tank.
Sicily-Rome.................... Raise and expand 25 2,018
irrigation parts
store room.
Normandy....................... Replace 1 ea gas 25 11,000
tank.
Manila......................... Repair Water 32 30,000
Purification
System (Potable).
Sicily-Rome.................... Improve Drainage 32 3,000
to Soutwest
corner of center
mall.
Netherlands.................... Replace One 25 8,000
Gasoline Tank.
North Africa................... Replace curbstones 25 3,000
along Burial area.
Ardennes....................... Install Heavy 25 750
Security Door on
Side of Garage.
Florence....................... Gradual 25 4,000
replacement of
boundary hedges
(North ent).
Oise-Aisne..................... Construct Weir on 25 1,000
Stream.
Mexico City.................... Replace Water 25 1,000
Tanks.
Florence....................... Replace fire thorn 25 4,000
hedge both
entrance drives.
Flanders Field................. Renovate Oudenarde 25 8,000
Monument.
North Africa................... Replacement of 25 5,750
Thuya Hedges.
Ardennes....................... Sandblast, Repair 25 5,000
and Repaint
Compost Shed.
Florence....................... Replace old Tar 25 3,000
Paper, Reservoir
Roof.
Cambridge...................... Repair Stone Steps 25 15,000
at Flag Pole Base.
Corozal........................ Improve Drainage 32 47,000
System.
Florence....................... Install water pump 25 3,000
to increase
pressure.
Oise-Aisne..................... Replace Gutters on 25 8,000
Garage/Storage
Bldg in Service.
Florence....................... Replace 50 old 25 4,500
Model Sprinklers,
Burial Area.
Epinal......................... Install Lightning 25 1,000
Protection for
Sprinkler System.
Sicily-Rome.................... Replace 50 old 25 4,500
Model Sprinklers,
Burial Area.
Epinal......................... Improve Security 25 2,000
Measures of
Service Area.
Mexico City.................... Replace Four Doors 25 2,000
North Africa................... Maintenance of 25 1,000
Flagpole,
Travertine
Drainage Grill.
Cambridge...................... Repoint Steps 25 1,000
around Flagpole.
Florence....................... Install water 25 3,800
filter in both
quarters.
Aisne Marne.................... Repaint Exterior 25 500
Dormer Window
Frame, Visitors
Bldg.
Manila......................... Repair Asst 25 5,700
Superintendent's
Roof.
Henri Chapelle................. Repair Leak Around 25 500
Dormer in Supt's
Qtrs.
Florence....................... Replace walkpaths 25 3,500
cotto tiles, of
both quarters.
Lorraine....................... Refurbish 25 25,000
Biological Filter.
Cambridge...................... Install handrail 25 2,000
on steps plots E-
F.
Sicily-Rome.................... Resurfacing of 25 2,000
Spillway Canal,
Tinozzi Ditch.
Somme.......................... Repair Hinges on 25 5,000
Chapel Doors.
Manila......................... Caulk Joints of 32 15,000
Western Hemicycle.
Brookwood...................... Replace Gutters on 25 1,600
Superintendent's
Quarters.
North Africa................... Replace Deep Well 25 3,000
Pump.
Meuse Argonne.................. Relocate Compost 25 30,000
Shed.
Ardennes....................... Replace Ladder in 25 1,000
Reservoir.
Sicily-Rome.................... Maintain Facings, 25 2,100
roofs of all svc
area buildings.
Meuse Argonne.................. Build External 32 50,000
Water Reservoir
(Lake).
Garches........................ Construct 25 534
Insulating
Skylight.
Lorraine....................... Replace Sewage 25 1,000
Pump Asst Supt
Qtrs.
Lorraine....................... Replace 25 444
Circulation Pump,
New Service Bldg.
Netherlands.................... Repair Roof of 25 1,633
Transformer Bldg.
Normandy....................... Replace Water 25 899
Heater, Supt's
Qtrs.
Ardennes....................... Replace Drainage 25 285
Pipe Asst Supt
Qtrs.
Meuse Argonne.................. Replace Sprinkler 32 350,000
System.
Netherlands.................... Construct Oil- 25 20,000
Water Separator
at Wash Point.
North Africa................... Replacement of 32 25,000
Border Stone
Terrace.
Normandy....................... Modify Low Voltage 25 6,000
Electrical Panel
in Pump House.
Luxembourg..................... Repair Asst Supt's 25 10,000
Driveway.
Florence....................... Renovation of 32 25,000
Memorial Toilets
W/Handicapped Fct.
Brittany....................... Paint Flag Poles.. 25 3,000
Manila......................... Replace 3 32 47,000
Transformers and
Upgrade Sub-
station.
Flanders Field................. Repoint Base of 25 5,000
Chapel Memorial.
Rhone.......................... Enclose section of 32 8,000
Compost Shed.
Brookwood...................... Repair Chapel 25 15,000
Decorative Grills.
Meuse Argonne.................. Renovate Water 25 40,000
Reservoir.
Rhone.......................... Replace heating 32 8,000
system in
Government
quarters.
Aisne Marne.................... Install all 32 30,000
Utilities at
Chateau Thierry
Monument.
Manila......................... Upgrade Electrical 32 30,300
Panel (Pumphouse).
Cambridge...................... Repair Cracks in 25 5,000
Supt's Qtrs.
Sicily-Rome.................... Renovation of 32 24,000
Visitors Toilets
to include
handicap.
Normandy....................... Construct Path Way 25 2,100
to Debris
Disposal Area.
Brookwood...................... Improve Drainage 25 5,000
Around Chapel.
North Africa................... Install Kitchen 25 1,000
Stovetop Exhaust
Vents, Both Qtrs.
Brittany....................... Renovate Public 25 10,000
Toilets.
Manila......................... Install Automatic 32 75,000
Sprinkler System
(Phase I).
Somme.......................... Repair 25 5,000
Inscriptions at
Bellicourt
Monument.
Florence....................... Closing of Compost 32 6,000
Pit For Needed
Storage Area.
Flanders Field................. Replace Flagpole 25 7,000
Terrace.
Florence....................... Replace 50 old 25 5,000
Model Sprinklers,
Burial Area.
Luxembourg..................... Construct Ramp 25 1,750
Between Memorial
& Plots.
Corozal........................ Secure Fence Line. 25 3,600
Aisne Marne.................... Neutralize/Repair 25 7,500
Exposed Rebar at
Chateau Thierry.
Sicily-Rome.................... Closing of Compost 32 6,000
Pit for Needed
Storage Area.
Flanders Field................. Check Lightning 25 1,500
Protection System
on Chapel.
Henri Chapelle................. Renovate & Clean 25 10,000
Colonnades
Ceiling.
Sicily-Rome.................... Replace 50 old 25 5,000
Model Sprinklers,
Burial Area.
Lorraine....................... Reconstruct 25 120,000
Memorial Stairway.
Corozal........................ Replace Roof, 25 5,000
Superintendent's
Qtrs.
Aisne Marne.................... Install Oil-Water 25 2,000
Separator at Svc
Area Washrack.
North Africa................... Renovation of 32 10,000
Visitors Toilets
to include
handicap.
Cambridge...................... Treatment of Wood 25 2,500
and Stone Work in
Chapel.
Henri Chapelle................. Clean and Repair 25 60,000
Mosaic Stars in
Colonnade Ceiling.
Rhone.......................... Handicapped toilet 32 35,000
building (unisex
facility).
Brittany....................... Improve lightning 25 5,000
arrestors at
Brest Monument.
Mexico City.................... Replace Roof on 25 1,500
Service Building.
Somme.......................... Improve 25 500
Ventilation in
Garage Work Shop.
Florence....................... Renovate Toilets, 32 8,000
Visitors/Office
Building.
Oise-Aisne..................... Paint Exterior of 25 3,000
Garage/Storage
Bldg in Svc Area.
Flanders Field................. Install Electric 25 1,500
Heater in Chapel.
Rhone.......................... New Road Signs 32 19,000
Installation.
Oise-Aisne..................... Paint Exterior of 25 5,000
Visitors/Quarters
Building.
Corozal........................ Install Deep Well 32 60,000
& Reservoir.
Aisne Marne.................... Rebuild entrance 25 50,000
area and Walkways
to Bldgs.
Sicily-Rome.................... Refurbish 25 8,900
Ligustrum hedges,
Bare Spots, w/New
Plan.
Cambridge...................... Replace Damaged 25 2,000
Stones on Court
of Honor.
Brittany....................... Install Filters 25 1,500
for Tours
Monument.
Sicily-Rome.................... Renovation 25 8,700
Pittosporum
Hedgerow
Surrounding
Center.
Oise-Aisne..................... Replace Gutters on 25 5,500
Visitors/Quarters
Building.
Mexico City.................... Replace Roof 25 1,000
Garage Area.
Brittany....................... Install 25 5,000
information panel
at Tours Monument.
Rhone.......................... Remodelling of 25 4,000
Service Bldg
Shower/Toilet
Facility.
Meuse Argonne.................. Replace Roofs on 25 90,000
Garage Buildings.
Brittany....................... Install 25 5,000
Information Panel
at Brest Monument.
North Africa................... Repair sinking 25 5,000
curbstone in
front of Office
area.
Brookwood...................... Relevel Walkways & 25 50,000
Headstone beams.
Manila......................... Upgrade Asst 25 5,000
Superintendent's
Master Bath.
Flanders Field................. Repair Walkway at 25 1,000
Oudenarde
Monument at Plane
Tree.
Sicily-Rome.................... Replacement of 25 2,000
office/visitors
building doors.
Garches........................ Replace Carpeting 25 4,000
in Reception Area.
Lorraine....................... Build Handicap 32 15,000
Toilet Facilities.
Sicily-Rome.................... Replace Rain 25 2,500
Gutters & Down
Spouts Garage/Svc
Area.
Lorraine....................... Install New 25 200,000
Filtration System.
Manila......................... Paint Motor Pool 25 4,000
Buildings.
Meuse Argonne.................. Replace Lion's 25 1,500
Head at Pool.
Florence....................... Replace Rain 25 2,000
Gutters & Down
Spouts Garage/Svc
Area.
Netherlands.................... Connect Qtrs to 25 20,000
City Sewer.
Garches........................ Re-waterproof 25 10,000
Director's Office
Roof.
Lorraine....................... Refurbish Memorial 25 35,000
Bronze Window
Frame.
Meuse Argonne.................. Repaint Flagpoles. 25 4,000
Lorraine....................... Clean and Treat 25 100,000
(Water-resistant)
Memorial.
Netherlands.................... Replace Sprinkler 32 300,000
System and
Renovate Pump
Room.
Florence....................... Drilling of a new 32 40,000
artesian deep
well.
Luxembourg..................... Replace sprinkler, 32 220,000
renovate pumproom.
Luxembourg..................... Install Security 25 8,300
Doors on Compost
Shed.
Somme.......................... Replace sprinkler, 32 180,000
renovate pumproom.
Somme.......................... Repair Water 25 1,000
Softener.
Ardennes....................... Replace Sprinkler 32 200,000
System, renovate
pumproom.
Normandy....................... Install 32 5,000
Information Panel
at Pointe du Hoc.
Saint Mihiel................... Replace sprinkler, 32 200,000
renovate pumproom.
Rhone.......................... Install Drainage 25 8,000
line in Lower
Grave Plots area.
Henri Chapelle................. Replace Sprinkler 32 230,000
System and
Renovate Pump
Room.
Henri Chapelle................. Replace Kitchen 25 23,000
Cabinets, Both
Quarters.
Meuse Argonne.................. Construct an Oil- 25 2,000
Water Separator
at Wash Rack.
Oise Aisne..................... Replace Storage 25 40,000
Bldg & Apron.
Manila......................... Water Purification 32 170,000
System
(Irrigation).
Aisne Marne.................... Replace Roof on 25 15,000
Compost Shed.
Aisne Marne.................... Treat Wood Frame 25 5,000
of Compost Shed.
Henri Chapelle................. Repair Roof of 25 1,000
Transformer Bldg.
North Africa................... Renovation of 32 10,000
Visitors Toilets
to include
handicap.
Meuse Argonne.................. Reset Coping 25 3,000
Stones on
Memorial
Retaining Wall.
Aisne Marne.................... Repaint Flagpoles. 25 3,000
Luxembourg..................... Replace Rusted 25 2,500
Stained Glass
Window Hinges,
Chapel.
Sicily-Rome.................... Replace Bedroom/ 25 6,000
living room
ceiling Supt's
Qtrs.
Lorraine....................... Repaint Memorial 25 3,000
Ceiling.
Somme.......................... Repair Dry Rotted 25 7,000
Doors, Mechanical
Shop & Garage.
Saint Mihiel................... Inspect deep well 25 10,000
(100 meters
depth).
Manila......................... Refinish Pea 25 6,000
Gravel Base
Overlay--Cabanatu
an.
Henri Chapelle................. Renovate water 25 70,000
reservoir.
Ardennes....................... Construct Public 32 15,000
Handicapped
Toilet.
Cambridge...................... Install Handicap 32 10,000
Toilets.
North Africa................... Extension of 32 11,500
Sprinkling System
To Semi-Circular
Dr.
Henri Chapelle................. Reconstruct Public 25 45,000
Toilets/install
handicap facil.
Aisne Marne.................... Build Public 25 30,000
Toilets (include
handicap toilets).
Luxembourg..................... Replace Furnace, 25 8,000
Garage Bldg.
Rhone.......................... Repaint Exterior 25 8,000
of Service Area
Bldg & Qtrs.
Luxembourg..................... Replace 2 ea fuel 25 12,000
tanks (both Qtrs).
Oise Aisne..................... Replace 1 ea fuel 25 25,000
tank (VB/Qtrs), 1
ea Gasoline Ta.
Saint Mihiel................... Replace 2 ea Fuel 25 20,000
tanks, 1 ea Gas
Tank.
Manila......................... Construct an Oil 32 4,000
Storage Building.
Aisne Marne.................... Replace 2 ea 25 15,000
(Visitors Bldg/
Qtrs) fuel tanks.
Henri Chapelle................. Replace 4 ea Fuel 25 30,000
Tanks.
Ardennes....................... Replace 4 ea Fuel 25 36,000
Tanks & 1 ea Gas
Tank.
Sicily-Rome.................... Renovation and 32 3,500
modification of
Pump House roof.
Brittany....................... Replace 4 ea Fuel 25 36,000
Tanks & 1 ea Gas
Tank.
Flanders Field................. Replace heating 25 4,000
system--nursery.
Henri Chapelle................. Rewire Buildings 25 30,000
vic Collonades.
Sicily-Rome.................... Install auto 32 2,000
irrigation system
front of
res'vation.
Aisne Marne.................... Check Lightning 25 500
Arrestor System
at Memorial.
Flanders Field................. Insulate Qtrs 25 500
Attic.
Cambridge...................... Renovate Toilets 25 5,000
in Visitors Bldg.
Corozal........................ Upgrade Sprinkler 32 3,000
System.
Epinal......................... Install Road Signs 25 1,000
Normandy....................... Extend Sprinkler 25 2,000
System to Nursery
Area.
Saint Mihiel................... Remove electric 25 1,000
cable and fuel
tank pipes at
Qtrs.
Florence....................... Rent platform to 25 3,000
paint Flagpole &
clean Pylon.
Aisne Marne.................... Replace Heating in 25 15,000
Garage &
Refectory (Svc
Area).
Flanders Field................. Restructure 32 110,000
Service Area.
Oise Aisne..................... Repaint Entrance 25 500
Gates.
Sicily-Rome.................... Extension of 32 2,500
boiler room
entrance Asst
Supt Qtrs.
Suresnes....................... Repair Perimeter 25 12,000
Fence (5th and
6th phases).
Somme.......................... Reset Stone on 25 1,500
South-West Chapel
Gate.
Henri Chapelle................. Replace High Volt. 25 20,000
Transformer and
Change Amperage.
Corozal........................ Replace Roof, 25 5,000
Chapel.
Somme.......................... Paint the 25 1,000
Lettering on
Entrance Wall &
Chapel.
Flanders Field................. Replace 3 ea Fuel 25 20,000
Tanks.
Henri Chapelle................. Inspect deep well 25 10,000
(100 meters
depth).
Sicily-Rome.................... Install Security 25 5,650
Grilles, Supt's
Qtrs.
Suresnes....................... Repaint iron work 25 6,000
on Fence (5th and
6th phases).
Epinal......................... Replace Roof Tiles 25 45,000
on All Service
Bldgs.
Saint Mihiel................... Repoint Stairs and 25 2,000
Walls at Montsec
Monument.
Sicily-Rome.................... Replace entrance 32 5,000
doors both
residences.
Henri Chapelle................. Construct 32 100,000
Visitor's Room
and Office.
Ardennes....................... Replace Window 25 500
(Insulating) in
Workers Refectory.
Netherlands.................... Engrave MIA name 25 6,750
(J. Howell) on
Wall of Missing.
Manila......................... Upgrade Canteen 25 5,000
(Replace Roof &
Ceiling).
Meuse Argonne.................. Improve Crew 25 2,000
Latrines/
Lunchroom in
Service Area.
Epinal......................... Improve Heating in 25 5,000
Service Area.
Luxembourg..................... Restructure Staff 25 4,000
Area in Service
Area.
Sicily-Rome.................... Install Security 25 5,000
Grilles, Asst.
Supt's Qtrs.
Somme.......................... Install 25 500
Thermostatic
Valves on Pump
Room Radiators.
Meuse Argonne.................. Install Chemical 25 10,000
Toilets at
Sommepy Mounument.
Netherlands.................... Replace Calcified 25 6,000
Water Lines in
Qtrs.
Sicily-Rome.................... Extension of the 32 12,000
Cemetery Office,
renovation of WC.
Meuse Argonne.................. Install all 32 50,000
utilities at
Sommepy Monument.
Somme.......................... Repaint Map at 25 500
Bellicourt
Monument.
Epinal......................... Resurface Roof of 25 15,000
Pump House.
Manila......................... Upgrade 25 5,000
Superintendent's
Guest Bath.
Brittany....................... Clean Tours 25 250
Monument.
Brittany....................... Reset Stones at 25 50,000
Entrance Gate.
Brookwood...................... Construct Toilet 32 40,000
Facilities/
Enlarge Office &
Break.
Sicily-Rome.................... Convert two doors 25 1,700
into windows,
Asst Supt Qtrs.
Ardennes....................... Replace Furnace in 25 5,000
Service Bldg.
Ardennes....................... Modify Fire 25 10,000
Hydrant System/
Sep From
Sprinkler Sys.
Normandy....................... Install Heating 32 9,000
System in #2 Work
Shop.
Rhone.......................... Enclosing of 32 1,000
Garage Annex.
Suresnes....................... Extend Office..... 32 75,000
Suresnes....................... Install Curtain 32 3,000
Rods & Curtains
in Qtrs.
Suresnes....................... Replace Curtains 32 2,000
and Drapes in
Visitors Bldg.
Manila......................... Repave Roads 32 120,000
(Phase I).
Suresnes....................... Repair/Repaint 25 50,000
West Perimeter
Fence (Behind
Cem.).
Normandy....................... Replace Expansion 25 1,000
Joints in
Reflecting Pool.
Saint Mihiel................... Replace Roof of 25 1,500
Green House.
Florence....................... Replace Roses, 25 4,000
Office/Visitors
Bldg/Flagpole
Area.
Cambridge...................... Insulate Attic in 25 3,000
Both Quarters.
Aisne Marne.................... Repaint Reservoir 25 500
Roof.
Flanders Field................. Replace Zinc 25 500
Flashing on Edge
Visitor's Bldg
Roof.
North Africa................... Replace Air 25 6,000
Conditioner
Units, Dual
System (7 ea).
Aisne Marne.................... Repair Leaks in 25 5,000
Structure
Drainage System,
Chapel.
Lorraine....................... Repair Gutters on 25 1,000
Compost Shed.
Henri Chapelle................. Replace roof tiles 25 3,000
on Service
Building.
Corozal........................ Replace Roof, 25 4,000
Public Rest Rooms.
Lorraine....................... Replace Gutters, 25 15,000
Downspouts and
Zinc Flashing.
Oise Aisne..................... Install Wall 25 500
Insulation In
Attic Next to
Master BR.
Oise Aisne..................... Refinish Entrance 25 500
Floors in
Quarters.
Rhone.......................... Replace of Five 32 3,000
Window Shutters,
Supt's Qtrs.
Epinal......................... Repaint Interior 25 1,500
of Supt's Qtrs.
Brittany....................... Install Burglar 25 5,000
Alarms in Both
Qtrs.
Somme.......................... Install Security 25 1,500
Railing in Qtrs
Attic.
Florence....................... Replace Cemetery 25 1,600
Wooden Benches.
Meuse Argonne.................. Modify Lightning 25 9,000
Arrestors at
Sommepy Monument.
Henri Chapelle................. Repaint Reservoir 25 2,000
Domes.
Ardennes....................... Install Security 32 8,000
Alarms.
Corozal........................ Replace Electrical 25 15,000
System, Chapel.
Ardennes....................... Water Proof Pump 32 2,000
House Ceiling.
Normandy....................... Install Security 32 6,500
System in Service
Area.
Oise-Aisne..................... Repair Memorial 25 5,000
Roof to Stop
Water
Infiltration.
Sicily-Rome.................... Put Aggregate 32 11,000
Stone Tiles North
Garden.
Normandy....................... Install Window 25 2,000
Security Bars in
Service Area.
Normandy....................... Replace 25 8,000
Orientation Table
Security Railing.
Brittany....................... Install Rolling 25 11,000
Shutters and
Screens at Both
Qtrs.
Florence....................... Lower, & Level 25 37,000
Turf Below Height
of Cross 1st Pha.
Aisne Marne.................... Renovate 25 2,800
Electrical Wiring
in Compost Shed.
Henri Chapelle................. Insulate Storage 25 7,000
Room/Install
Radiator (Svc.
Area).
Ardennes....................... Replace Two 25 15,000
Rolling Doors and
Enclose Staircase.
Manila......................... Replace Handrails 32 12,300
to Memorial
Public Restrooms.
Suresnes....................... Replace Service 25 500
Building Locking
System.
Cambridge...................... Transform Long- 25 15,000
Step Stairway.
Saint Mihiel................... Replace Heating 25 1,500
Pipes in Boiler
Room.
Sicily-Rome.................... Place Aggregate 32 2,000
Stone Tiles
Memorial Toilet.
Normandy....................... Reforest 32 10,000
Peripheral Areas
(Replace Black
Pines).
Brittany....................... Construct Handicap 32 15,000
Access Ramp for
Chapel.
Oise-Aisne..................... Construct 32 15,000
Handicapped
Facilities
(Modify Toilet).
Florence....................... Motorize 3 Roll-up 25 4,000
Doors, Service
Group Area.
Epinal......................... Replace Fuel 25 500
Gauges (3 ea).
Epinal......................... Replace 110v 25 500
Transformer &
Distribution Box.
Suresnes....................... Relocate Gasoline 25 10,000
Pump/Storage Tank
to Svc. Area.
Manila......................... Replace 32 20,000
Underground Fuel
Storage Tanks.
Suresnes....................... Upgrade Electrical 25 10,000
Power in North
Service Area.
Garches........................ Construct Handicap 25 2,000
Access Ramp.
Garches........................ Modify Toilet for 25 2,000
Handicapped
Access.
Sicily-Rome.................... Renovation and 32 5,000
modification of
Generator Room.
Meuse Argonne.................. Install Water 25 2,000
Softener in
Visitors Building.
Netherlands.................... Replace Stone 25 2,000
Steps Around
Flagpole.
Netherlands.................... Replace Venetian 25 4,000
Blinds in
Visitors Bldg
Office.
Sicily-Rome.................... Build Concrete Bed 25 3,000
for Canal Running
into Reservoi.
Netherlands.................... Replace Roll-up 25 3,500
Door in Mower
Bldg.
Netherlands.................... Paint Floor in 25 1,000
Service Area.
Flanders Field................. Sand/Seal Wooden 25 1,000
Floor in
Visitor's Bldg.
Manila......................... Renovate Guard 25 5,000
House.
Meuse Argonne.................. Rebronze Doors of 25 1,500
Montfaucon
Monument.
Oise Aisne..................... Repoint Rear Wall 25 500
of Memorial (3rd
phase/3.
Aisne Marne.................... Clean and treat 25 1,000
chimneys &
windows
(limestone).
Florence....................... Replace Pebble 32 36,000
Mall Paths with
Pebble Tiles.
Aisne Marne.................... Repair Cracked 25 1,000
Stones on
Flagpole Base.
Aisne Marne.................... Repair South-Side 25 10,000
Bronze Door Frame.
Saint Mihiel................... Repair and Paint 25 1,000
Perimeter Fence.
Sicily-Rome.................... Renovation of 25 8,000
Lathhouse
Building.
Somme.......................... Repaint Perimeter 25 1,000
Fence at Cantigny
Monument.
Somme.......................... Reset or Grind 25 1,000
Stone in Flagpole
Base.
Suresnes....................... Clean the Cornice 25 10,000
of Memorial.
Manila......................... Install Automatic 32 45,000
Sprinklers (Phase
II).
Suresnes....................... Replace 25 1,000
information board.
Ardennes....................... Replace Damaged 25 10,000
Bricks, Exterior
Wall of Vis. Ctr.
Henri Chapelle................. Replace 3 stones 25 2,000
in Wall of
Missing.
Florence....................... Build Retaining 32 90,000
Wall in Front of
Dam.
Lorraine....................... Repair Path to 25 2,000
Overlook.
Henri Chapelle................. Repaint Pump Room. 25 2,500
Saint Mihiel................... Repaint exterior 25 3,000
walls of Qtrs.
Florence....................... Install Alarm 25 2,400
System On
Entrance Cemetery
Bridge.
Somme.......................... Repair stone 25 4,500
damage in
Perimeter Wall.
Aisne Marne.................... Repair and Paint 25 6,000
Perimeter Fence.
Netherlands.................... Retile Floor in 25 2,000
Visitors Bldg
Office.
Manila......................... Drill New Well.... 32 90,000
Lorraine....................... Repair and Paint 25 15,000
Chain-link
Perimeter Fence.
Epinal......................... Repair Perimeter 25 1,000
Fence.
Somme.......................... Repaint 25 750
Transformer
Building.
Florence....................... Install Floor 32 1,500
Tiles Service
Group Building.
Aisne Marne.................... Repair Retaining 25 1,500
Wall of Memorial.
Ardennes....................... Repair Concrete 25 2,000
Pavement Next to
Compost Shed.
Flanders Field................. Repoint Perimeter 25 2,000
Wall.
Sicily-Rome.................... Replace Capstone 25 2,000
on Boundary Walls.
Meuse Argonne.................. Repair and Repoint 25 2,000
Perimeter Wall.
Oise Aisne..................... Repoint and Repair 25 2,000
Perimeter Wall.
Saint Mihiel................... Repoint and Repair 25 7,000
Perimeter Wall.
Manila......................... Repave Roads 32 125,000
(Phase II).
Suresnes....................... Relevel Headstone 25 45,000
Beams.
Saint Mihiel................... Install 32 5,000
information panel
at Montsec
Monument.
Meuse Argonne.................. Construct garage 32 10,000
at Asst Supt Qtrs.
Rhone.......................... Resurface 32 40,000
Visitors' Parking
Lot.
Aisne Marne.................... Repair/Repaint 25 4,000
Basement Windows,
Chateau Thierry.
Henri Chapelle................. Repair Stone Wall 25 3,000
and Gate Near
North Parking
Area.
Brookwood...................... Spread Additional 25 5,000
Gravel on
Walkways.
Manila......................... Install Automatic 32 4,000
Gate Opener (Main
Entrance).
Meuse Argonne.................. Relevel 2 steps at 25 500
Montfaucon
Monument.
Netherlands.................... Clean Copper 25 500
Sulfate Stains
from Statue Stone
Base.
Flanders Field................. Regild Door of 25 1,000
Chapel.
Rhone.......................... Resurface of 32 16,000
Service Road.
Epinal......................... Repair Cemetery 25 10,000
Roads.
Henri Chapelle................. Repair Roads and 25 3,000
Walkways.
Meuse Argonne.................. Repair Chapel 25 20,000
Service Road.
Manila......................... Replace/Install 32 30,000
Electric Aluminum
Garage Bay Door.
Netherlands.................... Resurface 25 35,000
Perimeter Road.
Suresnes....................... Reconstruct 25 100,000
Memorial Terrace/
cracked retain.
wall.
Somme.......................... Install Stone Road 25 500
Sign at
Bellicourt
Monument.
Rhone.......................... Replacement of 32 7,500
Fence from NE to
SW Side of
Cemeter.
Somme.......................... Install Stone Road 25 500
Sign at Cantigny
Monument.
Meuse Argonne.................. Resurface Roads 32 60,000
and Walkways with
Asphalt.
Henri Chapelle................. Replace Remaining 25 1,000
Single-Pane
Window in Attic.
Manila......................... Construct 32 25,000
Perimeter Road.
Luxembourg..................... Replace rug in 25 500
Visitors Bldg.
Brittany....................... Replace Wooden 25 10,000
Gates w/Aluminum.
Meuse Argonne.................. Resurface 25 15,000
Esplanade at
Montfaucon
Monument.
Manila......................... Construct Road to 32 25,000
Compost Area.
Somme.......................... Resurface all 25 70,000
Walkways.
Somme.......................... Resurface Parking 25 100,000
Area at
Bellicourt
Monument.
Lorraine....................... Resurface Roads 25 75,000
and Walkways.
Luxembourg..................... Resurface Cemetery 25 90,000
Walkways.
Aisne Marne.................... Rebuild other 25 40,000
roads (Water
Res'v'r & Compost
Shed).
Epinal......................... Resurface Cemetery 32 150,000
Walkways.
Meuse Argonne.................. Extend Roof of 32 25,000
Memorial to
Eliminate Water
Seepage.
Aisne Marne.................... Resurface Parking 25 50,000
Area/Walkways at
Chateau Thierry.
Aisne Marne.................... Rebuild road in 25 60,000
Belleau Wood.
Netherlands.................... Replace Curtains/ 25 5,000
Reupholster
Furniture in Vis
Ctr.
Aisne Marne.................... Repair Drainage 25 5,000
Problem and
Repoint Memorial
Steps.
Somme.......................... Refinish Floor in 25 2,000
Visitors Center
(Entrance Foyer).
Saint Mihiel................... Clean Montsec 25 150,000
Monument.
Meuse Argonne.................. Repair Terrace in 25 30,000
Front of
Montfaucon
Monument.
Epinal......................... Replace Gravel in 25 500
Front of Chaumont
Tablet.
Epinal......................... Reasphalt Entrance 25 75,000
Road.
Brittany....................... Replace Asphalt 25 6,000
Pavement at Tours
Monument.
Brittany....................... Replace Sidewalk 25 2,000
to Public Toilets.
Oise-Aisne..................... Reasphalt Interior 25 40,000
Walkways.
Ardennes....................... Repoint Memorial 25 40,000
Podium and Steps.
Oise-Aisne..................... Replace Outside 25 1,000
Entrance Lights--
VB & Qtrs.
Netherlands.................... Renovate Pump 25 8,000
System for
Reflecting Pool.
Ardennes....................... Repair and 25 20,000
Maintain Asphalt
Service Roads.
Ardennes....................... Repair Back Wall 25 5,000
of Compost Shed.
Ardennes....................... Rebuild Wash Rack 25 5,000
w/Oil-Water
Separator.
Normandy....................... Resurface 4 25 60,000
Cemetery Walkways.
Normandy....................... Repair Beach Path. 25 25,000
Normandy....................... Replace Cubicle 25 10,000
Partitions in
Public Toilets.
Normandy....................... Engrave 2 Stone 32 1,500
Pillars at Garden
of the Missing.
Normandy....................... Repair Employee 25 2,000
Parking Lot
(Service Area).
Normandy....................... Repair Cemetery 25 12,000
Access Road
Surface.
Normandy....................... Repair 300m of 25 1,000
Access Road's
Shoulders.
Normandy....................... Replace 2 Water 25 6,000
Softeners.
Normandy....................... Repair Roads/ 25 14,000
Parking Lot/
Walkways at Pt du
Hoc.
Netherlands.................... Replace Museum 25 5,000
Glass Shields
with Safety Glass.
Cambridge...................... Replace Curb 25 2,000
Stones at Parking
Lot.
Oise-Aisne..................... Resurface East- 25 10,000
West Axis
Walkways.
Oise-Aisne..................... Repaint Basement 25 1,500
of Visitor's/Qtrs
Bldg.
Oise-Aisne..................... Paint Interior of 25 1,000
Visitors
Reception Room.
Oise-Aisne..................... Renovate Toilets 25 1,500
of Visitors Bldg.
Oise-Aisne..................... Repair Service 25 3,000
Access Road.
Oise-Aisne..................... Install Cabinets 32 2,000
and Sink in
Refectory.
Suresnes....................... Refurbish Bronze 25 1,500
Base of Flagpoles.
Meuse Argonne.................. Paint Interior of 25 1,000
Service Area
Garage.
Meuse Argonne.................. Replace Water 25 750
Softener in
Supt's Qtrs.
Normandy....................... Resurface Gravel 25 1,000
Walkways, Garden
of the Missing.
Cambridge...................... Resurface Cemetery 25 30,000
Roads.
Brittany....................... Paint Exterior of 25 16,000
Five Buildings.
Brittany....................... Install False 25 3,500
Ceiling and
Radiators in
Garage Bay.
Brittany....................... Replace Toilets in 25 6,500
Visitors Bldg.
Brookwood...................... Replace Driveway 25 5,000
at Qtrs.
Cambridge...................... Resurface Parking 25 10,000
Lot Road Near
Visitors Bldg.
Luxembourg..................... Refinish Pews and 25 1,000
Kneelers in
Chapel.
Garches........................ Replace Worn 25 5,000
Carpeting (Phase
2).
Aisne Marne.................... Clean & treat 25 2,000
Stone on Qtrs and
Visitors Bldg.
Normandy....................... Repair Perimeter 25 3,000
Fence.
Luxembourg..................... Replace Visitors 25 8,000
Building Furnace.
Saint Mihiel................... Improve water 25 40,000
supply, clean
deep well.
Somme.......................... Improve Water 25 300,000
Supply (Drill New
Well).
Aisne Marne.................... Replace Gutters on 25 500
Compost Shed.
Ardennes....................... Replace Gutters on 25 1,000
Compost Shed.
Lorraine....................... Repaint Roof of 25 750
Public Toilet
Facility.
Henri Chapelle................. Replace gutters of 25 1,000
Service Building.
Lorraine....................... Repaint Roof of 25 1,000
Visitors Building.
Saint Mihiel................... Seal Asphalt 25 4,000
Parking Area at
Montsec Monument.
Ardennes....................... Replace Memorial 25 50,000
Furnace.
Lorraine....................... Seal Parking Lot 25 1,000
in Service Area.
Netherlands.................... Repair Rain Water 25 2,000
Drains.
Netherlands.................... Inspect and Repair 25 8,000
Service Area
Roofs.
Normandy....................... Replace Roofs Both 25 25,000
Quarters.
Normandy....................... Replace Annex 25 1,000
Building Roof
Gutters.
Lorraine....................... Replace Gutters on 25 10,000
Visitors Bldg and
Public Toilet.
Suresnes....................... Treat Chapel 25 12,000
Ceiling with
Preservative.
Cambridge...................... Improve 25 2,000
Maintenance Shop
in Service Area.
Suresnes....................... Install urinal and 25 2,000
sink in Service
Area.
Aisne Marne.................... Replace gas tank 25 20,000
and pump, Service
Area.
Oise Aisne..................... Extend Roof of 25 3,000
Garage to Create
a Lean-to Storage.
Henri Chapelle................. Improve water 25 40,000
supply, clean
deep well.
Saint Mihiel................... Install Paving 25 2,000
Stones at
Memorial.
Somme.......................... Renovate Perimeter 25 2,000
Fence w/ Post
Lead Anchors.
Netherlands.................... Enclose Compost 32 10,000
Shed.
Cambridge...................... Enclose Compost 32 10,000
Shed.
Epinal......................... Construct Interior 32 5,000
Dividing Walls in
Compost Shed.
Epinal......................... Install 32 15,000
Recirculation
System for Both
Pools.
Normandy....................... Install curbstones 32 45,000
access road.
Oise Aisne..................... Install heating in 32 250
Visitors Bldg
Attic.
Epinal......................... Construct staff 32 50,000
facility area.
Ardennes....................... Paint Mechanic 25 500
Workshop in
Service Bldg.
Epinal......................... Paint Floor in 25 1,000
Workshop.
Normandy....................... Improve Shed 25 15,000
Service Area #2.
Aisne Marne.................... Install New 25 50,000
Service Building.
Cambridge...................... Resurface Walkways 32 150,000
to Eliminate
Gravel.
Aisne Marne.................... Emplace Concrete 32 2,000
Borders Around
Traffic Island.
Somme.......................... Install Fence 32 30,000
Around Grassy
Area at
Bellicourt Mon.
Ardennes....................... Install Thermostat 25 2,000
Valves in Qtrs.
Lorraine....................... Install Hand 32 1,000
Dryers in
Visitor's Toilets.
Aisne Marne.................... Renovate Basement 25 35,000
Rooms for
Caretaker's
Office.
Normandy....................... Improve toilets 32 100,000
facilities,
Pointe du Hoc.
Suresnes....................... Widen and 25 60,000
Resurface
Cemetery Walkways.
Lorraine....................... Repair, Resurface 25 55,000
Memorial Area
Walkways.
Normandy....................... Repair & Install 32 15,000
Automatic Gate
Main Entrance.
Garches........................ Enlarge Parking 25 1,000
Area.
Aisne Marne.................... Relocate Offices 25 3,000
in Visitors
Building.
Saint Mihiel................... Relocate Entrance 25 1,000
Gate at Qtrs.
Saint Mihiel................... Install Gate on 25 3,000
Access Road to
Montsec Monument.
Lorraine....................... Replace Ceiling in 32 1,500
Supt's Office in
Visitors Bldg.
Lorraine....................... Install Sprinkler 32 10,000
System for Meadow
Area.
Epinal......................... Construct Heated 32 5,000
Chemical Storage
Shed.
Normandy....................... Construct 32 50,000
Replacement
Storage Building.
Netherlands.................... Construct 32 30,000
Permanent Stone
Handicapped Ramps.
Ardennes....................... Install 1.5m Chain 32 30,000
Link Fence Around
Perimeter.
Ardennes....................... Construct Truck 32 5,000
Loading Ramp in
Compost Area.
Ardennes....................... Construct 32 10,000
Retaining Wall in
Compost Area.
Normandy....................... Tile Wood Working 32 3,000
and Mechanic Shop
Floors.
Normandy....................... Install 4 Metal 32 5,000
Gates in Overflow
Parking Area.
Suresnes....................... Install Air- 32 3,000
compressor in
North Service
Area.
Ardennes....................... Relocate Youth 25 10,000
Statue.
Meuse Argonne.................. Replace Perimeter 25 5,000
Fence.
Netherlands.................... Install Upstairs 25 1,000
Toilet in Supt's
Qtrs.
Epinal......................... Install second 32 2,500
toilet in Both
Qtrs.
Epinal......................... Renovate Kitchens 25 15,000
in Qtrs.
Netherlands.................... Paint Garage 25 500
Floors in Both
Qtrs.
Normandy....................... Paint Basement 25 500
Walls and Floor
of Memorial.
Aisne Marne.................... Repaint Basement 25 1,000
and Garage Floor,
Visitors Bldg.
Ardennes....................... Replace Sidewalk 25 5,000
in Front of Supt
Qtrs.
Saint Mihiel................... Repaint basement 25 1,000
in Qtrs.
Normandy....................... Replace kitchen 25 20,000
cabinets, both
Quarters.
Meuse Argonne.................. Install 2 Bedrooms 32 10,000
in Asst Supt Qtrs.
Henri Chapelle................. Construct Veranda 32 50,000
both Qrts.
Cambridge...................... Install a Veranda 32 13,000
at Supt's Qtrs.
Brookwood...................... Enlarge and 32 50,000
improve Supt's
Qtrs.
Netherlands.................... Install Rolling 32 1,250
Shutter in Supt
Qtrs vic Veranda.
Epinal......................... Install Two Hand 25 500
Dryers in
Visitors Bldg.
Netherlands.................... Install Hand 25 750
Dryers in Public
Toilets.
Henri Chapelle................. Install Hand 25 500
Dryers in Public
Toilets.
Cambridge...................... Replace carpeting 25 2,000
in Asst Supt Qtrs.
Aisne Marne.................... Sand and Varnish 25 5,000
Floors in Qtrs.
Ardennes....................... Replace Wall to 25 5,000
Wall Carpeting in
Both Qtrs.
Ardennes....................... Renovate bathroom 25 1,000
in Supt Qtrs.
Netherlands.................... Install New 25 3,000
Carpeting in
Asst. Supt's Qtrs.
Brittany....................... Renovate bathrooms 25 5,000
in Qtrs (Bathtub
& Sink).
Netherlands.................... Renovate upstairs 25 1,500
bathroom in
Supt's Qtrs.
Normandy....................... Renovate bathroom 25 1,000
in Asst Supt's
Qtrs.
Aisne Marne.................... Renovate Kitchen 25 2,000
in Qtrs (Tile &
Paint).
Epinal......................... Renovate Bathrooms 25 10,000
in Both Qtrs.
Normandy....................... Install Dormer 25 10,000
Windows, Asst
Supt's Qtrs.
Epinal......................... Construct Veranda 32 50,000
in both Qtrs.
Epinal......................... Construct Front 32 5,000
Porch Overhang
for Supt's Qtrs.
Ardennes....................... Construct Veranda 32 50,000
Both Qtrs.
Ardennes....................... Renovate Attic in 32 35,000
Asst Qtrs &
Construct
Staircase.
Ardennes....................... Tile Basement 32 5,000
Floor in Both
Qtrs.
Ardennes....................... Replace Kitchen 25 1,000
Floor Tiles in
Asst Supt's Qtrs.
Normandy....................... Renovate Attic in 32 15,000
Asst Supt Qtrs.
Normandy....................... Construct Garage 32 15,000
in Supt Qtrs.
Normandy....................... Tile Storage Area 32 3,000
Floors Both Qtrs.
Normandy....................... Extend Garage-- 32 5,000
Asst Supt Qtrs.
Oise-Aisne..................... Renovate Bathrooms 25 4,000
in Supt's Qtrs.
Ardennes....................... Repaint Interior 25 2,000
of Asst Supt Qtrs.
Suresnes....................... Renovate Supt's 25 5,000
Qtrs Bathroom.
Brookwood...................... Construct 32 20,000
Extension of
Entrance to
Supt's Qtrs.
Cambridge...................... Sandblast Chimney 25 152
on Visitors
Building.
Lorraine....................... Repair Furnace in 25 306
Service Area.
Garches........................ Construct Fire 25 2,500
Escape.
Aisne Marne.................... Resurface Road, 25 100,000
Belleau Wood
Towards Lucy (1.1
km).
Aisne Marne.................... Construct 25 5,000
Handicapped Ramp
to Visitors Bldg.
Flanders Field................. Replace Well Head 25 1,500
Hatch.
Flanders Field................. Renovate Oudenarde 25 1,000
Monument Bunker.
Flanders Field................. Improve Drainage 25 2,000
vic Visitors Bldg
Walkway.
Netherlands.................... Replace Damaged 25 12,000
Stones Around
Memorial.
Netherlands.................... Replace Sidewalk 25 1,500
at Supt's Qtrs.
Netherlands.................... Improve Attic 25 3,000
Insulation Both
Qtrs.
Normandy....................... Install Handrail 32 3,000
Utah Beach Fed
Monument
Staircase.
Oise Aisne..................... Sand & Varnish 25 1,500
Hardwood Floors
in Visitors Bldg.
Oise Aisne..................... Paint Small Metal 25 2,000
Storage Bldg,
Pump Rm,
Reservoir.
Somme.......................... Construct Water 32 50,000
Reservoir & Pump
House.
Suresnes....................... Repaint Boulevard 25 3,000
Fence Near Qtrs.
Suresnes....................... Improve Drainage 25 15,000
System (4 Blocked
Drains).
Brittany....................... Install New 25 10,000
Drainage Field
Asst Supt Qtrs.
Normandy....................... Replace Electric 25 1,000
Hand Dryers in
Public Toilets.
Netherlands.................... Clean Back Side of 25 9,000
Wall of Missing.
Brookwood...................... Replace Gas 25 2,500
Furnace, Supt
Qtrs.
Normandy....................... Paint Garage Floor 25 2,000
in Service Bldg.
----------------------------------------
Grand Total.............. .................. ...... 10,191,671
------------------------------------------------------------------------
DEPARTMENT OF DEFENSE--CIVIL
Cemeterial Expenses, Army
STATEMENT OF STEVEN DOLA, DEPUTY ASSISTANT SECRETARY
FOR MANAGEMENT AND BUDGET, OFFICE OF THE
ASSISTANT SECRETARY OF THE ARMY FOR CIVIL
WORKS
Senator Bond. We will now go to Mr. Steve Dola.
Mr. Dola. Thank you very much, Mr. Chairman. I appreciate
the opportunity to appear before the subcommittee today and
testify, as you pointed out, in support of the fiscal year 1998
Cemeterial Expenses, Department of the Army budget request.
Senator Bond. Let me say we have a letter from Secretary
Lancaster, a good friend, who points out that we have managed
to schedule a conflict for him, and we appreciate the fact that
you are able to attend and sorry that we conflicted with a
hearing on the House side. So thank you very much for being
here.
Mr. Dola. Mr. Chairman, Secretary Lancaster very much
wanted to be here in person. As you know, he is defending the
water resources program over in the House this morning.
As you indicated, our budget request is $11,815,000 and it
will finance operations at both Arlington and Soldiers' and
Airmen's Home National Cemeteries. The full-time permanent
positions in 1998 will be 117, down from a total of 121 in 1997
and 128 authorized in 1996. We have three programs: operation
and maintenance, administration, and construction.
The operation and maintenance program, $8,779,000, will
provide for the cost of daily operations necessary to support
an average of 20 services daily and for maintenance of
approximately 630 acres. This program supports 111 of the 117
full-time permanent positions in 1998. We plan to perform the
same amount of work contractually that previously was performed
by civil servants and direct the contractors to take on
additional tasks that need to be accomplished. Grounds
maintenance, tree and shrub maintenance, custodial services,
guide service, and information receptionists and headstone
setting, realignment and cleaning are major functions performed
by contract personnel.
The administration program, $599,000, provides for
essential management and administrative functions, to include
staff supervision of Arlington and Soldiers' and Airmen's Home
National Cemetery.
The construction program funded--requested at $2,437,000,
provides $1,175,000 to replace the Custis Walk, $810,000 to
construct Columbarium access roads, and $350,000 to continue
the graveliner program and other minor items.
Finally, with regard to the Columbarium, the 11,286 niche
capacity of Columbarium phase 3, currently under construction,
will bring the total niches in the Columbarium complex to
31,286. Phase 1, completed in 1984, phase 2, completed in 1991,
each provided 10,000 niches. The North Court will be completed
in October 1997 and the South Court will be completed in June
1998.
At this time there remain only about 2,000 niches in phase
2, so we are right on time with the additional capacity.
For that, Mr. Chairman, and for the subcommittee's support
of past appropriations for the Columbarium, Arlington National
Cemetery and the Army are very grateful. We have a sound budget
request for 1998 and we again ask for your support and
approval.
PREPARED STATEMENT
That completes my summary, Mr. Chairman.
Senator Bond. Thank you very much Mr. Dola.
[The statement follows:]
Prepared Statement of Steven Dola
INTRODUCTION
Mr. Chairman and members of the subcommittee: I appreciate the
opportunity to appear before the subcommittee in support of the fiscal
year 1998 appropriation request for Cemeterial Expenses, Department of
the Army. With me today are Mr. John C. Metzler, Jr., Superintendent of
Arlington National Cemetery, and Mr. Rory D. Smith, Budget Officer,
also from Arlington National Cemetery. We are appearing on behalf of
the Secretary of the Army, who is responsible for the operation and
maintenance of Arlington and Soldiers' and Airmen's Home National
Cemeteries.
FISCAL YEAR 1998 BUDGET OVERVIEW
The request for fiscal year 1998 is $11,815,000; $215,000 more than
the fiscal year 1997 appropriation. The funds requested are sufficient
to support the work force, to assure adequate maintenance of the
buildings, to acquire necessary supplies and equipment, and to provide
maintenance standards expected at Arlington and Soldiers' and Airmen's
Home National Cemeteries and include:
--$1,175,000 for replacement of the historic Custis Walk;
--$810,000 for construction of access roads associated with
Columbarium Phase III; and
--$200,000 to further expand contracts for enhancing the appearance
of the cemetery while implementing government-wide streamlining
plans.
The first item is a significant commitment to complete a capital
improvement project, which, when completed, will eliminate the heaving
and cracks which affect 75 percent of the walkway.
The second item will allow the cemetery to make full utilization of
Columbarium Phase III.
The third item continues the initiative begun in fiscal year 1996.
In fiscal year 1996 these contractual services were increased by
$230,000, in fiscal year 1997 they were increased by an additional
$165,000, and in fiscal year 1998 they will be increased by $200,000.
Additional work will be performed by these contractors that was not
done before and total personnel are being reduced from 128, to 121 and
117, respectively.
The funds requested are divided into three programs, Operation and
Maintenance, Administration, and Construction. The principal items in
each program are as follows:
The Operation and Maintenance Program, $8,779,000, will provide for
the cost of daily operations necessary to support an average of 20
interments and inurnments daily and for maintenance of approximately
630 acres. This program supports 111 of the cemetery's total 117 FTE's.
Contractual services, including estimated costs associated with the
million dollar grounds maintenance contract, the $775,000 information
and guide service contract, $410,000 of contract tree and shrub
maintenance, and a $210,000 custodial contract, are estimated to cost
$2,947,000.
The Administration Program, $599,000, provides for essential
management and administrative functions to include staff supervision of
Arlington and Soldiers' and Airmen's Home National Cemeteries. Funds
requested will provide for personnel compensation, benefits and the
reimbursable administrative support costs of the cemeteries.
The Construction Program, $2,437,000, provides funds as follows:
$1,175,000 to replace the historic Custis Walk, $810,000 to construct
roads that originally were included as part of Phase III of the
Columbarium, $50,000 of minor road repair, $350,000 for the graveliner
program, and $45,000 to prepare the final design for the Wash Stand/
Fuel Island project.
FUNERALS
In fiscal year 1996, there were 3,325 interments and 1,733
inurnments; 3,500 interments and 1,900 inurnments are estimated in
fiscal year 1997; and 3,500 interments and 1,900 inurnments are
estimated in fiscal year 1998.
CEREMONIES
Arlington National Cemetery is this Nation's principal shrine to
honor the men and women who served in the Armed Forces. It is a visible
reflection of America's appreciation for those who have made the
ultimate sacrifice to maintain our freedom. In addition to the
thousands of funerals, with military honors, held there each year,
hundreds of other ceremonies are conducted to honor those who rest in
the cemetery. Thousands of visitors, both foreign and American, visit
Arlington to participate in these events. During fiscal year 1996,
about 2,700 ceremonies were conducted and the President of the United
States attended the ceremony on Veterans Day and Memorial Day.
During fiscal year 1996, Arlington National Cemetery accommodated
approximately 4 million visitors, making Arlington one of the most
visited historic sites in the National Capital Region. This budget
includes $35,000 for a study to develop an estimating procedure and
reliable estimates of the kinds of visitors that Arlington National
Cemetery serves. This increased orientation to our ``customers'' is
consistent with the Government and Performance Results Act and the
National Performance Review.
CONSTRUCTION PROJECTS
New projects in fiscal year 1998
Custis Walk.--The Custis Walkway was constructed in 1879 and is
2,500 feet long. Approximately 75 percent of the walkway is affected by
heaving and cracks, requiring visitors to exercise additional care
while using the walkway. The design for restoration/replacement has now
been completed using fiscal year 1995 appropriations in the amount of
$250,000. Construction funding of $1,175,000 is included in the fiscal
year 1998 budget submission.
Columbarium.--Columbarium roads associated with the Phase III
increment are planned in fiscal year 1998 costing an estimated
$810,000.
Construction project underway
Columbarium Phase III.--On July 1, 1996, construction of one of two
courts comprising Phase III of the Columbarium began, the contract for
construction of the second court was awarded on February 7, 1997, and
the construction cost is estimated to be $3,227,100. Construction funds
were appropriated in fiscal year 1996 and 1997, respectively. The
11,286 niche combined capacity of the Phase III increment will bring
the total niches in the Columbarium Complex to 31,286. Phase I,
completed in 1984, and Phase II, completed in 1991, each provided
10,000 niches. The additional 1,286 niche capacity of Phase III was
achieved by increasing the square footage or ``foot print'' of each of
the Phase III courts by 10 percent. In addition to providing more
niches, the larger ``foot print'' permits inclusion of a needed rest
room and mechanical/storage area into the North court of Phase III, and
makes more efficient use of the site.
RECENTLY COMPLETED CONSTRUCTION PROJECTS
Amphitheater.--The repair of damage done by rainwater leaks at the
Amphitheater and restoration of deteriorated marble there which were
begun in July 1994 are now complete. The work included replacing
waterproofing membranes; cleaning, patching and repointing stonework;
replacing deteriorated marble and balusters; replacing benches,
railings, drinking fountains, trash receptacles, signage and flagstone
paving. The Memorial Amphitheater Restoration Project now provides a
fitting place for ceremonies where public honor and recognition are
accorded national heros.
Facility Maintenance Complex.--A new facility maintenance complex
was constructed to replace buildings constructed in the 1930's. The
facility maintenance complex consists of work and storage areas for
three divisions (Facility Maintenance, Horticulture, and Field
Operations), in three separate buildings. There is another building for
warehouse operations and a building for the administrative functions
associated with all of these operations.
McClellan Gate.--The work associated with restoration of the
McClellan Gate has been recently completed. Work included removal and
resetting of stone including some stone replacement, structural
repairs, repointing, patching and cleaning of the entire arch, a new
concrete ring foundation, new copper roofing and flashing, repair and
painting of the iron gate, and new granite cobblestone paving around
the arch.
CLAIMS AND SETTLEMENTS
The status and disposition of claims associated with projects and
contracts at Arlington National Cemetery is summarized in the following
paragraphs.
In our letter of December 5, 1996, we informed the Subcommittee of
our plan to make final payment to the construction contractor on the
Facility Maintenance Complex under the terms of a settlement agreement
reached with the contractor and final payment to the contractor was
made on January 14, 1997.
Last year, we reported that a claim for differing site conditions,
submitted by the construction contractor for the demolition of the old
temporary Visitors Center and development of that land (Sections 54 and
55) into gravesites, was formally denied. The contractor appealed the
decision to the U.S. Court of Federal Claims on December 19, 1996.
Two claims from a previous grounds maintenance contractor have been
received. Settlement of a claim related to a defective contract option
in a previous grounds maintenance contract was reached in the amount of
$98,000. A claim alleging defective specifications in an interim
grounds maintenance contract is expected to be litigated in June or
July 1997.
MASTER PLAN
The new Master Plan, which currently is undergoing review within
the Army Secretariat, will identify projects and policies to respond to
the challenges confronting Arlington National Cemetery. These
challenges include an aging infrastructure, declining availability of
space for initial interment, and the need to preserve the dignity of
the cemetery while accommodating substantial public visitation. The
future projects envisioned in the Master Plan will not begin to be
implemented until we are into the next century. Projects and policies
must be measured against funding to be made available in the budget and
appropriations processes. Detailed planning and engineering studies
necessary to establish the cost, feasibility, and responsiveness of
individual capital projects to the Master Plan challenges would be
programmed and proposed to Congress, after review and consideration by
the Administration, at the appropriate times.
ARMY--INTERIOR LAND TRANSFERS
Public Law 104-201, the National Defense Authorization Act for
Fiscal Year 1997 (``1997 Authorization Act''), which was enacted on
September 23, 1996, includes two land transfer provisions in Section
2821 relating to Arlington National Cemetery.
Section 29 Land Transfer.--The first part of Section 2821 of the
1997 Authorization Act instructs the Secretary of the Interior to
transfer to the Secretary of the Army certain lands found in Section 29
of Arlington National Cemetery. The land found in Section 29 is
currently divided into two zones: the 12 acre Arlington National
Cemetery Interment Zone and 12.5 acre Robert E. Lee Memorial
Preservation Zone. The transfer encompasses the Arlington National
Cemetery Interment Zone and the portions of the Robert E. Lee Memorial
Preservation Zone that do not have historical significance and are not
needed for the maintenance of nearby lands and facilities.
The Secretary of the Interior is to base his or her determination
of which portion of the Preservation Zone will be transferred primarily
on a cultural resources study that will consider whether archeological
resources are likely to be located on the land, whether portions of the
property are eligible for inclusion in the National Register of
Historic Places, and whether property has forest cover that contributes
to the setting of the Preservation Zone. The cost of the study,
estimated at $85,000, will be split evenly between the Department of
Interior and Department of the Army. In addition, the Secretary of the
Interior will provide the Committee on Armed Services of the Senate and
the Committee on National Security of the House of Representatives with
environmental and cultural resource information and analysis.
The transfer, which is to be carried out under the Interagency
Agreement Between the Department of the Interior, the National Park
Service, and the Department of the Army, dated February 22, 1995, is to
occur not sooner than 60 days after the Secretary of the Interior has
submitted the information and analysis to the Committees. The Secretary
of the Interior must provide the information and analysis to the
Committees no later than October 31, 1997.
Visitors Center/Old Administration Building.--The second part of
Section 2821 of the 1997 Authorization Act instructs the Secretary of
the Interior to transfer to the Secretary of the Army 2.43 acres of
land and the Visitors Center, which is constructed on the land. In
return, the Secretary of the Army will transfer to the Secretary of the
Interior .17 acres of land and the Old Administration Building, which
is constructed on the site. Section 2821 provides the authority by
which this agreed-upon exchange of lands may take place.
CONCLUSION
The funds included in the fiscal year 1998 budget are necessary to
permit the Department of the Army to continue the high standards of
maintenance Arlington National Cemetery deserves. I urge the
Subcommittee to approve this request.
Mr. Chairman, this concludes my remarks. We will be pleased to
respond to questions from the Subcommittee.
SELECTIVE SERVICE SYSTEM
STATEMENT OF GIL CORONADO, DIRECTOR
Senator Bond. Mr. Coronado, we know you had some conflicts
in your schedule today, we congratulate you on your sense of
timing. It reminds me of the trapeze artist who lets go without
seeing the other bar and it arrives right on time. That
demonstrates excellent planning, and we are delighted to
welcome you today.
Mr. Coronado. Thank you, Mr. Chairman.
Senator Bond. Please proceed.
OPENING REMARKS
Mr. Coronado. Mr. Chairman, I am delighted to appear before
you and the other distinguished members of this subcommittee. I
have a written statement that I would like to submit for the
record.
Senator Bond. We will accept the statement in full, it will
go into the record, and we would invite you to summarize what
you think are the most important parts.
Mr. Coronado. Yes, sir; we are grateful to the subcommittee
and the Congress for continuing to provide us with the funds
necessary to carry out our mission. As you know, in November
1994 the Department of Defense revised its mobilization
timetables and we are now in the process of adjusting to that.
At the same time, we are moving forward with modernization of
our data processing capabilities and we are trying to enhance
service in every area.
SERVICE TO AMERICA INITIATIVE
As you consider our fiscal year 1998 appropriation, I know
that to function in an era of Government downsizing, the
Selective Service System cannot merely dwell on its proud past,
nor depend exclusively on the threat of future crisis. This
agency must demonstrate that America benefits from its work
each and every day. So in the spirit of the national
performance review, we are broadening our agency's direction.
We have enthusiastically embarked upon a new initiative that we
call Service to America, while continuing to meet our statutory
responsibilities.
We have reached out in close cooperation with the
Department of Defense and the Corporation for National Service.
We are informing young men about service opportunities today in
the Armed Forces and in our Nation's communities. With Service
to America, we proudly continue our time-honored purpose in a
new way.
We want to fully implement Service to America, and our
fiscal year 1998 request of $23.9 million is a slight increase
for the very first time in 4 years. Slightly over one-half of
the increase is for the printing, mailing, processing, and
staffing of the Service to America initiative, and the balance
is, of course, to offset pay raise costs.
Service to America, Mr. Chairman, is a solid example of
Federal agencies working together to achieve common goals and
provide better, more efficient service to the public. It is
also relevant to our Nation's new bipartisan emphasis on
voluntarism. We have been in touch with Gen. Colin Powell as he
spearheads with former President Bush the Presidents' Summit
for America's Future. We have suggested ways that our agency's
capabilities can be adapted to support programs and initiatives
sparked by the upcoming Philadelphia summit.
The General responded recently. He was happy to receive our
suggestions and his staff is now considering our proposals.
I strongly urge that you fund this innovative, modest
adjustment to our acknowledgment program, a program that was
born from an original concept in 1993, suggested by Senator
Mikulski. With your support and this 4-percent increase in our
agency's budget, we can move forward with an endeavor that has
great benefits for America and coincides with our Nation's new
bipartisan emphasis on voluntarism.
Mr. Chairman, members of this committee, I am proud of what
Selective Service does for America. I hope you share in this
pride as I answer your questions about our fiscal year 1998
budget request.
Thank you.
[The statement follows:]
Prepared Statement of Gil Coronado
I am delighted to appear before you and the other distinguished
members of this Subcommittee, and to update you on the good things
happening at the Selective Service System (SSS).
The President's Budget requests this Agency be funded at a level of
$23.9 million in fiscal year 1998. This amount represents a slight
increase in Selective Service funding for the first time in four years.
Why the increase? In part, it is related directly to the
Administration's support of our new ``Service to America'' initiative,
an endeavor I hope the members of this Subcommittee will support.
SELECTIVE SERVICE SYSTEM FISCAL HISTORY
[In millions of dollars]
------------------------------------------------------------------------
Obligations/year
---------------------
Fiscal year 1982 Actual
dollars dollars
------------------------------------------------------------------------
1982.............................................. 19.6 19.6
1983.............................................. 22.0 22.8
1984.............................................. 23.0 24.8
1985.............................................. 24.5 27.4
1986.............................................. 22.7 26.0
1987.............................................. 22.2 26.1
1988.............................................. 21.0 25.4
1989.............................................. 20.9 26.2
1990.............................................. 19.6 25.6
1991.............................................. 19.5 26.6
1992.............................................. 19.3 27.4
1993.............................................. 19.4 28.5
1994.............................................. 16.6 24.8
1995.............................................. 14.9 22.8
1996.............................................. 14.4 22.9
Estimated:
1997.......................................... 13.7 22.9
1998.......................................... 13.9 23.9
------------------------------------------------------------------------
In the past year, more than a million-and-a-half men followed the
example of young Jerry Lewis, Jr., of Rankin, Texas. In February 1996,
Jerry was the 35 millionth man to register with Selective Service since
the requirement was reinstated in 1980. As America's young men comply
with the law, they demonstrate to the men and women who serve in the
all-volunteer military that the U.S. population stands behind them,
committed to serve, should the preservation of our national security so
require.
AGENCY CONTINUES TO BE EXAMINED
Much Congressional and media interest has focused on the SSS since
the early 1990's because of: (1) the end of the Cold War; (2)
Department of Defense (DOD) analyses that addressed many intangible
elements associated with maintaining a standby system of conscription;
(3) the Administration's reviews and policy decisions by the President;
and, (4) a 1994 change in DOD's forecast for manpower requirements. DOD
now anticipates that the first draftees will be needed six months after
a crisis begins. In light of this, the SSS adjusted its programs and
streamlined its staffing. The resulting changes enable SSS to work
better and more efficiently, and conform with Administration guidelines
promulgated by the National Performance Review. Simultaneously, the SSS
has had several examinations of its mission and structure. Currently
(since January 1997), the General Accounting Office (GAO) is studying
possible alternative methods of registration at the request of three
Members of Congress who believe that personal registration is no longer
necessary. GAO's review will summarize the merits of the current
program and present the pros and cons of alternatives.
IMPACT OF NEW INDUCTION TIMETABLES
In February 1995, the President forwarded to Congress the
Administration's position emphasizing the need to maintain the SSS and
peacetime registration. It also reaffirmed the Department of Defense's
position to keep the SSS in its present configuration. The DOD revised
its mobilization timetables to reflect post-Cold War scenarios, with
first inductees now required 193 days after mobilization for a national
emergency. We had anticipated the new timetables, and began right-
sizing a few years ago. We reduced several programs and streamlined the
organization. On the other hand, the shift to new mobilization
timetables for inductees increased our operational workload by adding
new planning and training requirements. To conduct a more deliberate
build-up to a draft during a future national emergency, extensive new
plans are being developed and training on them must be accomplished.
Additionally, we must revise our procedures, regulations, and
documentation to reflect a new, graduated or ``time-phased response''
to deliver preexamined draftees for induction 193 days after
Mobilization Day. This work is progressing smoothly.
PLANNING AND PERFORMANCE MEASURES
Working closely with the Office of Management and Budget and
following National Performance Review mandates, the SSS has tailored
its goals and objectives to produce result-oriented performance
measures and improve service to America. This is described in our six-
year draft Strategic Plan.
For example, we continue in our commitment to reinvent the SSS to
improve operations, enhance customer service, and increase efficiency.
Our measures of performance effectiveness are: qualitative improvements
within specific time frames, more accurate and faster turnaround of
data, solid levels of personnel staffing, and total customer
satisfaction. Each of these issues is also outlined in our draft fiscal
year 1997-2002 Strategic Plan, which represents our road map to the
21st Century. Part of the Agency's strategy is to form partnerships
with other Federal government agencies, to work together to achieve
common goals and provide better, more efficient service to the public.
Selective Service provides essential administrative support services,
such as computer matching and automation, especially where there is a
requirement to have access to a data base of more than 36 million young
men. Currently we provide automation services to the Department of
Defense, the Department of Health and Human Services, the Census
Bureau, the Department of Justice, and the Corporation for National
Service. Similarly, at SSS, we obtain some administrative services from
other agencies. As an example, we out source for accounting, employee
assistance, health, payroll and personnel support programs as a means
to enhance internal productivity and limit costs.
In sum, we are committed to reshaping SSS to meet the demands of
the 21st Century. We are actively embracing other creative alternatives
to accomplish our statutory missions, and we continue to investigate
new and better ways to do business.
REGISTRATION IMPROVEMENT
Since public awareness of the requirement that men register
influences registration, and because a high rate of compliance fosters
fairness and equity in any future draft, the SSS has initiated several
programs:
--Radio and television public service announcements (PSA's) in
English and Spanish were developed and distributed to stations
nationally. These high-quality PSA's have received laudatory
comments from viewers around the country.
--Many governors and local officials issued proclamations supporting
SSS registration. Eighteen states have laws which parallel
Federal laws and require men to register with SSS as a
prerequisite for receiving state loans, educational assistance,
or employment. Several other states have similar legislation
pending.
HEALTH CARE PERSONNEL DELIVERY SYSTEM (HCPDS)
HCPDS is the Agency's standby system to conscript health care
personnel during a national emergency. The plans and procedures for the
registration and classification of health care personnel are complete
and have been placed on the shelf as Congress directed. Conscription of
health care personnel can be implemented, should the Congress
authorize, and the President so direct. In 1994, the Department of
Defense extended the time-line for delivery of health care personnel by
six months. Development of plans to comply with this extension will be
complete this fiscal year.
AUTOMATED DATA PROCESSING (ADP) INITIATIVES
Increasing demands for speedy services dictate the need to improve
productivity through advanced ADP technologies. A number of initiatives
were started last year and are making a difference in fiscal year 1997.
A new I-CASE Tools software package, which automates computer program
development, is aiding us in our business process improvement work.
Also, we are making good use of enhanced scanning equipment and an
Intelligent Character Recognition System, which have enabled the Agency
to file registration data faster and without loss of accuracy. In
addition to improving business processes and registration compliance
statistics, the Agency is moving to a more modern computer technology,
new reengineering projects, and revised methods of registrations. For
example, SSS will be looking at shifting from mainframe technology to
small computer technology to reduce operating and maintenance costs.
After an internal cost-benefit analysis, we will validate findings with
the General Service Administration, and work with a contractor to
implement the necessary changes.
SERVICE TO AMERICA INITIATIVE
While continuing to meet our statutory responsibilities, and with
strong Administration support, we have enthusiastically embarked on a
new initiative which we call ``Service to America.'' President Clinton
recently acknowledged it as ``a noble and worthwhile effort sure to
increase civic mindedness and opportunities in our country.'' The idea
is simple. With your support, the SSS registration process will serve
dual functions in American society. In our routine communication with
all new registrants in America, we encourage them to serve America
today. In close cooperation with the Department of Defense and the
Corporation for National Service, we are informing young men about
opportunities today in the U.S. Armed Forces and about community
service through the Corporation for National Service. On the
acknowledgment card they receive from us in the mail, we encourage them
to explore options for voluntary service to the Nation.
This ancillary service is meaningful, appropriate, reinvigorating
and exciting. With ``Service to America,'' this Agency proudly
continues to fulfill its time-honored purpose in a creative way. We
historically focused the attention of America's young men on meeting
national wartime needs, and now we also remind them to volunteer for
other civic opportunities in peacetime. Thus, the Selective Service
System is and will remain ready for tomorrow's national emergency, as
it serves America's needs today.
We want to implement fully the ``Service to America'' initiative.
Our fiscal year 1998 budget submission requests $23.9 million. This is
a slight increase for the first time since fiscal year 1993. About half
of this $1 million increase would fund five additional full-time
equivalents and offset the increased costs of printing, mailing, and
processing a larger acknowledgment card. It would also allow a portion
of the new card to be a detachable mail-back postcard. On it, new
registrants would indicate their interest in military or community
service. In turn, we would process the returning information into
timely, accurate, high quality recruiter leads for the U.S. Armed
Forces and the Corporation for National Service. The balance of the
funding increase would offset 1998 pay raise costs.
The ``Service to America'' initiative is another good example of
interagency cooperation that benefits the public. It is also relevant
to our Nation's new bipartisan emphasis on volunteerism. We have been
in touch with General Colin Powell as he spearheads, with former
President Bush, the President's Summit for America's Future.'' We
suggested ways that this Agency's capabilities can be adapted to
support programs and initiatives sparked by the upcoming Philadelphia
Summit. The General responded recently. He was happy to receive our
suggestions and his staff is now considering our proposals.
The four percent budget increase for Selective Service, requested
by the President for fiscal year 1998, demonstrates the Administration
is in agreement with the ``Service to America'' initiative. I strongly
urge that you fund this innovative and modest adjustment to our
acknowledgment program. With your support, we can move forward with
this endeavor that has great benefits for America, and parallels our
Nation's new, bipartisan emphasis on volunteerism.
Mr. Chairman and members of the Subcommittee, I am proud of what
Selective Service does for America. I hope you share in this pride.
ABMC INFRASTRUCTURE
Senator Bond. Thank you very much, Mr. Coronado.
Let me start with General Herrling. What do you estimate
the future infrastructure needs and costs to be for the AMBC?
General Herrling. Sir, today I estimate our infrastructure
costs as far as repair and maintenance and the backlog thereof
to be in the area of about $10 million. If we do not receive
some help to try to defray some of that cost, I can only see
that growing in future years.
Senator Bond. So this is a one-time cost, or what is the
annual cost? Are we talking about a one-time cost?
General Herrling. Sir, it would average somewhere around
$2.0 million a year for construction, repair and maintenance.
We have tried to make inroads into the backlog. In fact, in
fiscal year 1993 and 1994 Senator Mikulski added $1 million and
$250,000 to our budget and we were able to make serious inroads
into that backlog.
Now, over the last 4 or 5 years it has built up again.
Senator Bond. I know that one of the problems we face in
dealing with overseas responsibilities is the fluctuation in
foreign currency. What is the best approach for meeting the
foreign currency market fluctuations? What are you doing to
deal with that?
General Herrling. Sir, in this, the fiscal year 1998
appropriation, we have asked for $2.1 million to cover foreign
currency fluctuation costs. That seems consistent with the
past. The 1 year that it was not provided for in the budget, in
1996, we got into a deficit position, and were short $700,000.
So I had to go into my operational account to make up the
difference for the foreign currency fluctuation.
We have used our best judgment on what current fluctuation
needs will be for both this year and in 1998.
RESPONSIBILITIES
Senator Bond. Thank you, sir.
Turning to Mr. Dola, what are your primary responsibilities
with regard to the Arlington National Cemetery and the
Soldiers' and Airmen's Home National Cemetery?
Mr. Dola. As Secretary Lancaster's Deputy, my primary
responsibilities with regard to Arlington and Soldiers' and
Airmen's Home National Cemeteries are program formulation and
budget oversight. The budget request is to operate and maintain
both of those cemeteries, the entire works: scheduling,
orchestrating and supporting, the funerals there, operating and
maintaining the grounds, and providing for infrastructure needs
that may occur, such as the Columbarium, the restoration of the
Memorial Amphitheater, and other projects that are coming down
the road.
Senator Bond. The Columbarium. What are the other
infrastructure needs with respect to those? What kind of
funding do you expect to be requiring in the future?
Mr. Dola. As you know from our budget, Mr. Chairman, we are
asking for $2.4 million for construction, and in the next 5
years we would be expecting on the order of $2.5 million per
year. The larger issue will occur after that period, where we
would anticipate that the construction needs could perhaps
double that amount on an annual basis to take care of things
that we see in our master plan down the road.
COSTS OF SERVICE TO AMERICA INITIATIVE
Senator Bond. Mr. Coronado, what costs are you envisioning
in the Selective Service on the Service to America initiative?
Mr. Coronado. For Service to America, Mr. Chairman, it is
$506,000.
FUTURE OF SELECTIVE SERVICE
Senator Bond. There are questions being addressed by the
GAO on the need to maintain the Selective Service in view of
the success of the Volunteer Army. What do you see as the
future of Selective Service, and if you had to forecast the
outcome of this review what would you forecast? What do you
think it should be?
Mr. Coronado. It is my understanding that the GAO is at our
agency, according to them, at the request of three Members of
Congress to look at alternative methods of registration. So I
do not believe the future of this agency is in jeopardy. I
believe that this has been discussed and rediscussed by the
Congress, studied by the National Security Council, the
Department of Defense, and the administration. The majority of
the people involved in these studies and discussions have
decided SSS must remain ready and voted for maintaining a
strong third tier of our Nation's defense. I am optimistic
about the future of this agency inasmuch as it represents
something very important to all of us.
Senator Bond. Thank you very much, Mr. Coronado.
Let me turn to Senator Mikulski for her questions.
Senator Mikulski. Thank you.
Gentlemen, each one of you plays a very important role, one
in registering young people should we need to mobilize; and
then after service a way to pay tribute to that. General
Herrling--I am going to have a question for each one. First of
all, we have been very blessed that the head of the American
Battle Monuments Commission has always been a very
distinguished American, and we thank you for taking on that
responsibility.
ABMC INFRASTRUCTURE AND BACKLOG
I just want to follow upon what Senator Bond raised, which
is I am very concerned about the backlog in terms of
maintenance, and I think we would welcome either a plan or kind
of a work-through schedule. I do not want to call it a workout,
but a work-through schedule, where in an organized and
systematic way, dealing with those that are most at risk, then
through, and how we could bring ourselves up to date so that we
actually are not only funding current operating expenses, but
essentially really having an organized, systematic way of
working this down.
Do you think that is a possibility, to be able to give that
to us?
General Herrling. Yes; I do, Senator. In fact, I am
prepared to provide for the record a priority list of our
maintenance, which includes some 550 projects at this point. As
I mentioned earlier, it totals about $10 million.
Now, through this fiscal year and hopefully if funded at
the requested level for 1998, I will be able to work that
backlog down somewhere in the range of $6 million. We will use
our priority list, which includes some 550 projects, and start
working down it. As you know, each year other projects are
added to it.
But I think with a modest increase each year, over maybe
the next 5 years, I could whittle that down to something that
is very manageable.
Senator Mikulski. Well, this Senator is certainly not going
to suggest a management plan to a U.S. Army General. But we
might want to go to those that are most severely distressed,
like a barbell approach, and then those that are beginning to
be telltale, frayed and tattered, so that by beginning to
intervene now they are not on that cascading slope. Some of
those expenditures are quite low.
So we look forward to working with you on this, and thank
you.
A question then for Mr. Coronado. You spoke about the
Service to America and what I had asked. Do you want to just
very quickly say what that is?
Mr. Coronado. Absolutely. Senator, I want to thank you
personally for having brought this up in 1993. The
opportunities to interface with other agencies. How can we do
something to better serve the American public? Very basically,
we are in contact with 1.9 million young men each year. What we
have done is to redesign the registration acknowledgment card
and are asking men to serve America today as volunteers, either
through the Armed Forces--or through AmeriCorps--and the card
shows 1-800 numbers--for DOD and AmeriCorps. We are promoting
Service to America in close cooperation with these agencies,
who have voiced a very, very strong and very positive reception
to this adjunct effort. We communicate this simple message to
America's youth, at no additional cost, Mr. Chairman.
However, for fiscal year 1998, we are asking for a slight
increase in funding to redesign the whole process.
Senator Mikulski. So what you are saying is that Selective
Service does three things: one, it registers young men for the
draft should they need to be mobilized; but simultaneously, you
alert them to two opportunities for service now. One, if they
are ready to sign up for the U.S. military, here is the number
to call and go for it. The other is if you choose to begin to
manifest a patriotic feeling, you can also do it in your local
community by being a scout leader or big brother, and then that
is the other 800 number that you call.
But it is a way of reaching out to young men to say, we do
have an obligation, but you also have a great opportunity for
immediate service, either in the military or by being a good
citizen in your neighborhood.
Is that what we are talking about?
Mr. Coronado. That is exactly correct, Senator Mikulski. In
my travels throughout the country, we find that there is a lack
of communication with our young people. This is one effort to
get them to think about service to America, either in the
military or in their local communities.
RESULTS OF SERVICE TO AMERICA INITIATIVE
Senator Mikulski. I know my time has expired, but can you
tell, have there been any concrete results that you can talk
about that, because of this methodology, x number of young men
have said military, x number have said local volunteerism?
Mr. Coronado. This new methodology was implemented 2 days
ago, so we have no direct results yet. And, it is doubtful that
with a 1-800 number we would really be able to measure it. It
is our hope, it is our desire, that we will get the additional
funds for fiscal year 1998, and then we could include the
business reply card that would come back to us. It would give
us an accurate listing of the men who volunteered for the
military versus the ones who want to serve in the local
community. At a later date we would be very, very happy to
share that with you.
Senator Mikulski. OK.
Well, Mr. Chairman, I know my time has expired. I want to
thank Mr. Dola. Four million people visit Arlington. Four
million people come to Arlington to, of course, visit the
Kennedy grave and pay our respects to America's heros. I think
that is an extraordinary, just an extraordinary number of
visitors. We do not want to call it tourism. They are not
coming to tour. They are coming to express a feeling, and that
is an exceptional feeling.
We look forward to running this place because, in addition
to providing proper interment and burial services, you have
this other management responsibility which I think is
significant. You probably are visited--and please do not
confuse my vocabulary in any way with demeaning the special
nature, but you are visited more than a national park, many of
the national parks.
I would just hope that we really provide some type of
understanding of the support that you need, so that you do that
and at the same time meet the mission, the very honorable and
sacred mission for which you were established.
Mr. Dola. Senator Mikulski, we appreciate the understanding
of this subcommittee for the sacred trust that we try so very
hard to discharge in a way the subcommittee and Congress and
the American people will be proud of. We thank you for the
support that we have had in the past and hope that we will
merit it in the future.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
We are very pleased to be joined by the chairman of the
full committee, Senator Stevens.
STATEMENT OF TED STEVENS
Senator Stevens. Thank you. I just dropped by to say hello,
to see what was occurring in terms of this area of your
jurisdiction, Mr. Chairman.
ABMC INFORMATIONAL SERVICES
I am concerned about the Battle Monuments Commission
activities. What kind of really informational services do you
have to let people know where these monuments and memorials and
cemeteries are overseas?
General Herrling. Senator Stevens, we have quite an
extensive program to keep next of kin, friends, and interested
people informed on just those subjects. Anybody can call or
write to our office and we will provide them with a letter that
gives them information concerning their request. We will also
provide them with general information pamphlets on the
cemetery. We will tell them how to get there from an airport or
railroad station. We will have the superintendent, in some
cases, go to the railroad station or airport to pick up and
bring the next-of-kin to the cemetery.
So we provide all that information through correspondence
daily. We receive probably hundreds of letters every week on
just that sort of request.
ABMC MEMORIAL DAY AND OTHER CEREMONIES
Senator Stevens. And what do you do to organize the various
ceremonies on our national days, like Memorial Day or Veterans
Day, over there?
General Herrling. Sir, each one of our cemeteries has a
ceremony on Memorial Day and also on Veterans' Day. It will
usually involve the U.S. Ambassador to that country as well as
distinguished military and civilians who live and work in that
country. They are formal ceremonies. The military, who are
still stationed throughout Europe, will provide the color
guards, firing squads, the buglers, to make it truly a
remembrance type of a ceremony.
I believe we do this very well and we pretty much mirror
what is done here in the States for those national holidays.
Senator Stevens. Many of us travel abroad about that time.
I remember I was asked to speak in The Netherlands at
Margraten.
General Herrling. Margraten.
Senator Stevens. But I do not remember ever--I have been
here quite a while, but I do not remember ever anyone sending
me a notice of where there would be events. I want to ask that
you undertake the task of sending, at least to the chairman of
the committees of both the House and the Senate, notice of what
type of ceremony is going to take place at the monuments and
memorials under your jurisdiction during the year. I think we
ought to have a little more attention to paying our respects at
those areas when we do go overseas.
I am not asking you for it any more than just once a year,
to say these are the events that will take place and to offer
opportunity to our people to visit these sites. I find them
very rewarding when I visit them, but I do not know how many
people do that.
Would you do that for us?
General Herrling. Senator, we would be delighted. We would
be delighted to provide that information to members of
Congress.
Senator Stevens. Good. Thank you very much. I appreciate
it.
Senator Bond. Thank you very much, Senator Stevens.
Thank you, gentlemen, for joining us today. We will keep
the record open for questions that other members of the
committee may have. We do appreciate the opportunity to work
with you. Our staff will be in contact with you on any further
questions that may arise and we urge you, as always, to feel
free to contact the staff. John Kamarck is our new head of the
staff for this committee and I hope that you will feel free to
call on him and other members of the staff if you have
additional views or comments that may be necessary.
SUBCOMMITTEE RECESS
Thank you, and the hearing is recessed.
[Whereupon, at 11:15 a.m., Tuesday, March 4, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 11, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:38 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond and Mikulski.
CONSUMER PRODUCT SAFETY COMMISSION
STATEMENT OF ANN BROWN, CHAIRMAN
ACCOMPANIED BY:
MARY SHEILA GALL, COMMISSIONER
THOMAS H. MOORE, VICE CHAIRMAN
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. The subcommittee will come to order.
This morning we are very pleased to be able to take
testimony from three agencies with responsibilities to the
American consumer, including protecting citizens from injury
and death associated with consumer products and providing them
with important information on subjects as diverse as preparing
a will and eating healthfully.
The Consumer Product Safety Commission, represented by
Chairman Ann Brown, is requesting an appropriation of $45
million, an increase of $2.5 million over the current year. The
Consumer Information Center, represented by Director Teresa
Nasif, is requesting $2.1 million. And the Office of Consumer
Affairs, represented by Director Leslie Byrne, is requesting
$1.8 million.
For the most part, these budget requests would fund current
services without major enhancements in agency operations.
However, even funding marginal increases necessary for normal
inflationary adjustments will be tough in the budgetary
environment in which we are operating.
If you have had representatives at previous hearings, you
will know that this committee is blessed with some very
difficult problems, particularly with respect to the costs of
HUD and the section 8 contracts.
Moreover, it will come as no surprise to some of you that I
continue to have very strong concerns about the redundant role
of the Office of Consumer Affairs and question why the office
should be continued. We tried, unsuccessfully, to fulfill the
President's commitment to streamlining Government activities
and reducing duplication in the last two appropriations cycles
by eliminating the Office of Consumer Affairs. And, while I
received no calls or letters from constituents or consumer
groups in opposition, the administration insisted on funding
the organization in fiscal years 1995 and 1996. This was
disappointing to me.
In my view, OCA's role has become obsolete as most Federal
agencies have consumer affairs officers or individuals
responsible for consumer issues.
In addition, I have been concerned that in attempting to
create a role for itself in the last 2 years, OCA has succeeded
in creating yet another duplicative activity through the
consumer HelpLine.
OCA was without a director for several years. Ms. Byrne,
you are the newly installed director and you will be given the
opportunity to defend your agency. I have worked with you in
the past and have great respect for your abilities. It is the
agency, not the people, that I am concerned about. I will
require a lot of convincing.
Now let me turn to my ranking member, Senator Mikulski.
Good morning, Senator.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you, Mr. Chairman and good morning
to you and to all members of the panel.
Each and every one of you have worked closely with me in a
variety of capacities, of course, with both Ms. Brown and Ms.
Nasif in the committee and with Ms. Byrne when she was a
Congresswoman, a cousin from the other side of the Potomac who
knows about the bridges.
PREPARED STATEMENT
Mr. Chairman, in the interest of moving ahead and hearing
the witnesses, I ask unanimous consent that my statement be
placed in the record and I look forward to hearing the
testimony and their answers to our questions.
Senator Bond. Without objection. Thank you.
[The statement follows:]
Prepared Statement of Senator Barbara Mikulski
Thank you, Mr. Chairman. I know that we have a lot to go through
this morning so I will be brief.
We will be hearing testimony from six of the independent agencies
within the jurisdiction of the VA-HUD Subcommittee: The American Battle
Monuments Commission, Cemeterial Expenses of the Army, the Consumer
Information Center, the Consumer Product Safety Commission, the Office
of Consumer Affairs, and the U.S. Court of Veterans Appeals.
Collectively, these agencies are requesting $92,091,000 for fiscal
year 1996 which is an increase of $3.7 million or 4.2 percent above the
fiscal year 1995 enacted level. The fiscal year 1996 budget request for
these agencies represents a mere fraction of the $91.2 billion in total
funding requested by the President for all agencies within this
Subcommittee's jurisdiction. The relative size of their budget
requests, however, should in no way diminish the importance of the
services that these agencies perform.
The witnesses before us are responsible for commemorating the
achievements and sacrifices of United States Armed Forces, operating
and maintaining that sacred area that is Arlington Cemetery, protecting
and informing America's consumers, and helping to ensure that veterans'
benefit claims are appropriately and adequately reviewed. This is
important work, Mr. Chairman.
My time here this morning is limited, so I will not be able to hear
all of the witnesses. Let me welcome all of you before the Subcommittee
as we begin our review of the President's fiscal year 1996 budget
request. Let me also echo what Senator Bond has said regarding our
budgetary situation. A freeze at current levels is probably the best
this Subcommittee can hope for.
One final thought before we turn to the witnesses. You know, Mr.
Chairman, the new majority in Congress seems determined to visit some
version of regulatory reform upon the American people. You are directly
involved in this effort as the co-Chairman of the regulatory Reform
Task Force appointed by the Majority Leader here in the Senate.
I hope that you and many of our colleagues will pay close attention
to the leadership that Ann Brown has brought to the Consumer Product
Safety Commission. As Chairman of the CPSC, Ann Brown has streamlined
and revitalized what had become a dormant agency under previous
administrations. She has made consumer protection more effective--not
by making the Federal government more invasive--but instead, working
cooperatively with consumers and businesses to minimize the risk of
death and injury from consumer products. Under Ann Brown's leadership,
the CPSC seeks voluntary compliance if it is at all possible and takes
mandatory action only when necessary.
As we consider the issue of regulatory reform here in the Congress,
Mr. Chairman, we should be looking to the CPSC to see just how the
Federal government can be made more effective at protecting our
citizens by ensuring that they are better informed and encouraging
businesses to pay more attention to safety in their products.
Thank you, Mr. Chairman. And now, let's here from the witnesses.
STATEMENT OF ANN BROWN
Senator Bond. Now we will turn to the chairman, Ann Brown.
Ms. Brown. Thank you. Mr. Chairman and members of the
subcommittee, I am Ann Brown, Chairman of the Consumer Product
Safety Commission, known as CPSC.
With me today are Commissioner Mary Sheila Gall and Vice
Chairman Thomas H. Moore and members of the commission staff.
I am pleased to have this opportunity to testify in support
of our fiscal year 1998 appropriation request.
For the information of any new members, I want to explain
very briefly who we are and what we do. The Commission was
established in 1973 by Congress as a five, now a three member
independent agency with the mission to protect the public
against unreasonable risks, injury and death from consumer
products.
We enforce five Federal statues--the Consumer Product
Safety Act, the Flammable Fabrics Act, the Poison Prevention
Packaging Act, the Hazardous Substances Act, and the
Refrigerator Safety Act. All told, we have jurisdiction over
15,000 different kinds of consumer products which are found in
and around the home.
These products are involved in more than 21,000 deaths and
over 29 million injuries with a total cost in excess of $200
billion annually to the Nation.
At the outset, I want to express our appreciation for our
fiscal year 1997 appropriation of $42.5 million, the full
amount requested in the President's budget. These funds are
being used effectively to protect the American people against
unreasonable risk of injury or death from dangerous or
defective consumer products.
I am especially proud of our Baby Safety Shower Program and
I want to show a very short tape about it.
[A videotape was shown.]
Senator Mikulski. Ms. Brown, how long is this tape?
Ms. Brown. It goes on for 1 more minute.
Senator Mikulski. This is a busy day and we do have three
witnesses.
Senator Bond. That's all right. It came out of her time.
[Laughter.]
Ms. Brown. Then please let me continue.
In fiscal year 1998, we are requesting an appropriation
increase to $45 million, an increase of $2.5 million to
continue and expand our vital work. In preparing our budget, we
carefully reviewed the needs and contributions of all our three
operating divisions.
As a result, we are proposing important investments above
current service levels in most of these areas. These
investments total $1.1 million. They include funding of a
larger number of product incident investigations, support for
hazard reduction initiatives, including a major effort on fire
hazards, an innovative compliance investigation program, and
certain information technology efforts critical to efficient
agency operations.
These modest programs requested for 1998 are more than
justified by our record of accomplishment.
PREPARED STATEMENTS
CPSC has made vital contributions to the 20-percent decline
in annual deaths and injuries. Past agency work in
electrocutions, children's poisonings, children's cribs, power
mowers, and fire safety helps save the Nation almost $7 billion
annually in health care, property damage, and other societal
costs--more than 100 times CPSC's annual budget, or about $155
million in savings for each $1 million of the agency's 1998
request.
[The statements follow:]
Prepared Statement of Ann Brown
Mr. Chairman, and members of the Subcommittee, I am Ann Brown,
Chairman of the Consumer Product Safety Commission (CPSC). With me
today are Commissioner Mary Sheila Gall, Vice Chairman Thomas H. Moore
and members of the Commission staff.
I am pleased to have this opportunity to testify in support of our
fiscal year 1998 appropriation request.
For the information of the new members of the Subcommittee, I want
to explain briefly who we are and what we do. The Commission was
established in 1973, by Congress as a five, now three, member
independent agency with a mission to protect the public against
unreasonable risk of injury or death from consumer products. We enforce
five federal statutes, the Consumer Product Safety Act, the Flammable
Fabrics Act, the Poison Prevention Packaging Act, the Hazardous
Substances Act and the Refrigerator Safety Act. All told, we have
jurisdiction over 15,000 different kinds of consumer products which are
found in and around the home. These products are involved in more than
21,000 deaths, and over 29 million injuries with a total cost in excess
of $200 billion annually to the nation.
RECENT ACCOMPLISHMENTS
At the outset, I want to express our appreciation for our fiscal
year 1997 appropriation of $42.5 million, the full amount requested in
the President's budget. These funds are being used effectively to
protect the American people against unreasonable risk of injury or
death from dangerous or defective consumer products.
I want to tell you just a few of the ways in which we have used the
taxpayers' hard earned dollars to safeguard their health and safety.
--In fiscal year 1997 we have negotiated 106 voluntary corrective
actions involving 17.2 million consumer product units that
violated mandatory safety standards or presented a substantial
risk of injury to the public.
--Also in fiscal year 1997, in partnership with the Customs Service,
we stopped 2.8 million dangerous product units from reaching
store shelves.
--We recently issued a rule to alleviate the tip-over hazard of
large, multiple tube fireworks. Spectators have been killed
when these devices fell over and fired horizontally. The new
rule becomes effective this month, well before the fireworks
season.
--In fiscal year 1996 we tested several brands of imported, non-
glossy vinyl miniblinds and found they contained amounts of
lead which would be harmful to young children. When we
presented these results to the miniblind industry, the
manufacturers voluntarily agreed to change the composition of
these products to eliminate the lead.
--In cooperation with the Gerber Products Company, we continued our
campaign this year to promote baby safety events across the
country. To demonstrate this program I want to show you a brief
excerpt from the CBS Morning News, which broadcast a segment on
the kickoff of our program.
Mr. Chairman, these are just a few of the ways we have used our
resources to advance consumer product safety in fiscal year 1996 and
97.
FISCAL YEAR 1998 PROGRAMS
In fiscal year 1998, we are requesting an appropriation increase to
$45 million, an increase of $2.5 million, to continue and expand our
vital work. In preparing our budget, we carefully reviewed the needs
and contributions of our three operating divisions, hazard
identification and reduction, compliance, and information and
education. As a result we are proposing important investments above
current service levels in most of these areas to enhance our ability to
prevent and reduce the deaths and injuries related to consumer
products.
These investments total $1.1 million. They include funding of a
larger number of product incident investigations, support for hazard
reduction initiatives (including a major effort on fire hazards), an
innovative compliance investigation program, increased consumer
information outreach, and certain information technology efforts
critical to efficient agency operations.
In the hazard assessment and reduction area, funding would increase
by $443,000, with one-third required to maintain current hazard
reduction activities. The remainder of the increase, $325,000, funds
critical enhancements in two areas: a partial update of the agency's
child anthropometric measurements (measurements of children's physical
dimensions, which are critical to analysis of their injuries); and
several initiatives to address the nation's high fire death rate.
Nationally, there were 470,000 residential structure fires in 1993.
Fire is a leading cause of accidental home deaths among children
younger than five years old.
Even though efforts by the agency and the nation's fire prevention
community have resulted in a steady decline in residential fires, this
nation's fire death rate remains one of the highest among
industrialized nations. Past CPSC actions in this area involving, for
example, cigarette-resistant mattresses and upholstered furniture,
heating equipment, flame resistant children's sleepwear, and smoke
detectors have contributed to the general decline in fires and fire
deaths, and show that the agency can be effective in reducing fire
hazards.
The fire-related hazards project continues our 1997 work on
upholstered furniture, mattresses and bedding, revisions to the apparel
flammability standard, and fire/gas codes and standards. New activities
will be undertaken to evaluate the effectiveness of the Commission's
safety standard on cigarette lighters and to address an emerging
hazard, fires started by children using multi-purpose lighters. Fire
investigation training for certain CPSC staff in our field offices is
also recommended.
In the Compliance program, we are requesting an increase of about
$600,000 to enhance the Special Investigations Unit initiative. This
recently established unit serves to identify and remedy previously
unidentified and/or technically complex hazards. We believe that much
of the agency's future work and effectiveness will involve addressing
more technically complex hazards. The requested funds begin to develop
the necessary tools to address such hazards. This includes a critically
important effort to link and integrate agency and non-agency databases
and the application of rapid product testing and evaluation techniques.
Advances in this effort will benefit safety work throughout the agency.
For fiscal year 1998, the information and education program's
dollars increase by $196,000, with most of the funds necessary to
maintain the current consumer information efforts in support of agency
hazard reduction and compliance efforts. An increase of $22,000 will
allow greater use of cost-effective video news releases to reach the
public with product recall and other safety information.
We know the Subcommittee has been especially concerned about the
level of management expense at the CPSC. Accordingly, I want to inform
you about a change I instituted in all CPSC programs. I have made it a
policy that managers must be working supervisors, sharing the
substantive work with our staff. Recognizing the Subcommittee's desire
to reduce administrative expenses, we have worked to do so, and have
achieved a 21 percent decrease since 1989. Only 19 percent of our
fiscal year 1998 budget funds administrative needs, down from 24
percent in 1989.
The modest program increases requested for fiscal year 1998 are
more than justified by our record of accomplishment. CPSC has made
vital contributions to the 20 percent decline in annual deaths and
injuries related to consumer products that occurred between 1980 and
1993. Past agency work in electrocutions, children's poisonings,
children's cribs, power mowers, and fire safety helps save the nation
almost $7 billion annually in health care, property damage, and other
societal costs--more than 100 times CPSC's annual budget or about $155
million in savings for each $1 million of the agency's 1998 request.
The agency expects its 1993 standard to make cigarette lighters child
resistant to save over $400 million in societal costs and prevent up to
100 deaths annually. Similarly, the agency expects its work in curbing
carbon monoxide (CO) poisoning to reduce societal costs by one billion
dollars annually. CPSC removal of dangerous fireworks from the
marketplace prevents about 14,000 injuries each year.
As you know, Mr. Chairman, I stress a cooperative, non-adversarial
approach to business whenever possible. My first priority is to achieve
voluntary compliance with our laws and rules. For this reason, I am
particularly proud of our record of working cooperatively with
industry. Since I became Chairman in 1994, the CPSC has developed 27
voluntary standards with manufacturers, while issuing only 10 mandatory
regulations, a ratio of almost 3-1 voluntary to mandatory standards.
I have also emphasized my belief in the product safety triangle,
where business, consumers and government each have an equal role to
play. The Commission should not become overly invasive. We cannot and
should not attempt to protect consumers from every possible risk of
injury from consumer products. There are limits to what government can
achieve.
In this connection, Mr. Chairman, I want to tell you what we have
done to implement your bill, S. 942 (Public Law 104-121), the Small
Business Regulatory Enforcement Fairness Act.
First, on October 9, 1996, the Commission adopted a regulation
establishing a CPSC Small Business Ombudsman and a Small Business
Enforcement Policy. The Ombudsman, Clarence Bishop, who is also Deputy
Executive Director, has answered more than 700 calls on a special toll-
free hotline from small businesses seeking product safety information.
Over 80 percent of the callers received a personal response to their
inquiry from our staff within 3 business days. This service helps small
businesses get important information quickly, and, at the same time,
furthers public safety.
Second, we have scrupulously followed the Congressional review
procedures set forth in the law. We have issued four rules since the
Act's effective date--none of which were ``major'' rules. In each
instance, we submitted the required reports to Congress and the General
Accounting Office on a timely basis.
Third, we are near completion of a compliance guide for our
February, 1997, revisions to the fireworks fuse burn time regulation,
which were unanimously supported by industry and safety groups. Our
Economics staff concluded in its regulatory flexibility analysis that
these changes will benefit small businesses by making it easier for
them to comply with the fuse burn time standard.
Finally, consistent with the purpose of your legislation, in June
1996, we co-sponsored a Small Business Conference with the
International Consumer Product Health and Safety Organization. More
than 130 representatives of small businesses participated in panels
designed to assist them in complying with our laws and regulations.
reduced funding limits commission programs
As you know, in a concurrent submission to this Subcommittee and
the OMB in September 1996, the Commission requested a budget of $49.7
million for fiscal year 1998. The OMB reduced our budget request to $45
million. Although this reduction of $4.7 million seems small, it will
have a negative impact on our efforts to protect the health and safety
of American children and families.
For example, we proposed to invest $800,000 to update the
Commission's 20 year old child anthropometry data. This information is
essential for effectively addressing product hazards to children. Due
to the rejection of this request, our effort in this area will have to
be spread over several years, thereby hampering our efforts to protect
one of our most vulnerable populations, children.
Earlier in my testimony I mentioned our program to reduce deaths
and injuries from household fires. We requested $500,000 for this
project, but due to the budget reduction, we will be able to invest
only half that amount in fiscal year 1998. The continuing high cost of
fires justifies a greater investment and more innovative activities.
The increased funds would have provided a mix of research and action
items to address the many complex aspects of the fire problem. These
items could include a cost-benefit evaluation of fire suppression
devices, research to refine our knowledge of the causes of fire deaths
to help identify appropriate prevention strategies, and the
investigation of new product-specific hazards. These efforts would have
provided a broader, more inclusive attack on the nation's fire
problems. Since we were denied these funds, we will not be able to
protect the public as well as we could from death and injury due to
fire hazards.
investment in information technology is needed
In the past, agency funds invested in information technology have
saved many thousands of hours of staff time for the Commission,
improving our effectiveness and efficiency enormously. We have used
these funds to develop discrete databases, to network the agency's
computer system, and to move our data systems from a mainframe computer
located at another federal agency to our own local network.
Unfortunately, our fiscal year 1998 budget request would barely
maintain our capabilities in this area. The proposed funding level
leaves no resources to implement further technological advances, and
only permits minimal investment to meet the new requirements of the
recent Freedom of Information Act amendments (which require that most
requested material be in electronic format and available over the
Internet).
An additional investment of $1,000,000 would allow us to respond
faster and better to product hazards, saving more lives and preventing
more injuries, and would help us implement the new FOIA law. As you
know, CPSC is a data-driven agency that carries out its mission with a
sense of urgency, since quick action by the agency saves lives. To
provide even greater benefits to American consumers, we would like to
establish an integrated information system at the agency that would
give staff access to a much larger universe of product safety data and
would improve the speed with which staff could gain access to that
data.
This system would integrate the agency's databases, and other data
and documents not included in our current databases, allowing CPSC
employees to get all the information the agency has on a particular
product hazard using one quick and easy information request. Currently,
gathering all such information can take weeks.
Let me give you an example. Last year, CPSC's Compliance Office
became aware of the suffocation death of a toddler who had been trapped
in a cedar chest. To discover whether similar incidents had occurred in
the past, the compliance officer searched each database in the agency
individually, which took approximately two hours of staff time. Without
recent improvements in information technology, she would have conducted
these searches manually, which could have taken days, if not weeks.
However, our system only allowed her to search for information that
was available in certain discrete databases, which includes less than
50 percent of all the information that has been developed by the agency
since its establishment. If we had an integrated database, this same
search could have been conducted in a matter of minutes, instead of
hours, and would have represented a complete review of all information
developed by the Commission, not just what is in currently available
databases.
In this particular case, the compliance officer did identify
additional deaths of children who had become entrapped in a cedar chest
manufactured by the same company. This data enabled us to reach
agreement with the company to repair 12 million cedar chests currently
in the hands of consumers. However, if it had been necessary for the
staff to obtain more information before action could be taken, such as
staff reports on toy chest entrapments or product safety assessments
conducted by staff years ago on similar products, it would have taken
weeks or months to locate the information through a manual search of
Commission files and archives. Meanwhile, unrepaired chests would
remain with consumers, threatening the safety of millions of children.
This demonstrates that the benefits of an additional investment in
CPSC information technology will far outweigh the slight increase in
our appropriation.
CONCLUSION
In conclusion, Mr. Chairman, the CPSC is a great value to the
American people. By every rational cost-benefit measure we save the
taxpayer many times our budget in deaths, injuries and property damage
prevented. Accordingly, we urge you to appropriate not only the full
amount requested, we also hope you can find an additional $1 million,
within the Subcommittee's budget allocation, and within the framework
of the President's balanced budget for necessary enhancement of our
information technology.
______
Prepared Statement of Mary Sheila Gall
I support the request of the Commission for $45 million for fiscal
year 1998. Since my vote was against the original request to the Office
of Management and Budget and Congress, I want to explain to the
Subcommittee why I now support the budget request.
In July 1996 I opposed the staff-proposed fiscal year 1998 budget
of $49.9 million. I did so with reluctance, since many of the proposals
to increase funding lay in areas such as additional laboratory
equipment and other infrastructure expenditures that I have
traditionally supported. My opposition to this budget proposal stemmed
mainly from the fact that it proposed to spend 17 percent more in
fiscal year 1998 than the request made by the Commission for fiscal
year 1997. I recognize the importance of the mission and the operations
of the Commission, but that importance must be balanced by the
necessity to keep planning for future expenditures closer to probable
increases.
I supported certain portions of the staff-proposed budget. Current
services needed to be funded and the cuts of fiscal year 1996 had to be
restored. The Commission's accounting system needs modernizing and
additional money for training is essential. But I did not agree that
all of the proposed expenditures were as worthy as others. For example,
I support increased expenditures to reduce fire deaths and injuries,
but did not believe that several of the projects contained in the staff
proposal represented a wise use of Commission resources. Similarly, the
$40,000 proposed project to evaluate recall effectiveness struck me as
less than crucial. Finally, many of the staff-proposed spending
increases could be deferred to subsequent fiscal years.
I am pleased to support the Commission's budget request contained
within the President's budget request. This Commission performs a
valuable public service by seeking to prevent injuries and death
associated with the use of consumer products. I think that this
Committee should note that, while many agencies within its jurisdiction
seek benefits that will accrue in the distant future, the Commission's
activities prevent deaths and injuries in the near term. This
observation does not mean that the activities of those agencies are
unimportant, but the immediacy of the benefits that this Commission's
activities confer upon the American public ought to be a factor when
this Subcommittee considers the appropriation request of this
Commission along with the appropriations requests made by other
agencies.
The details of the Commission's fiscal year 1998 Budget Request
have been set forth in the Chairman's Statement and I have nothing to
add to that portion of her Statement.
Additional committee questions
Senator Bond. Thank you very much, Chairman Brown.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
cpsc fte's
Question. CPSC currently has on-board approximately 455 staff; your
FTE ceiling is 487 FTE, and your fiscal year 1998 request would fund
480 FTE. How much could we save if you did no hiring, and maintained
staff at the current level of 455?
Answer. First, the agency is no longer at the 455 employee level.
Current employment is 460 and climbing. We have announcements
outstanding to bring us up to 480 employees very shortly. We are
aggressively hiring new employees because our product safety work has
been hurt by staff vacancies caused by 1996 budget uncertainties and
funding delays. Staff has been doing a tremendous job of covering for
the vacant positions but productivity will soon suffer without
additional staff support.
Second, CPSC is already about half the size it was in 1980, and we
have worked very hard to keep productivity up despite reduced staff
resources. Since our specialized and highly skilled workforce is our
chief asset (comprising 75 percent of our entire budget), cutting staff
time further would reduce our product safety work now and for many
years to come. While an FTE cut of 5 percent to 455 would reduce salary
costs by about $1 million, this savings would be more than offset by a
significant erosion in our life-saving safety work. Past work by the
agency shows savings to society of at least $155 million each year for
every $1 million spent on the agency.
Finally, CPSC has already cut down on agency administrative support
as much as we can. Since 1994, due to budget and FTE reductions, we cut
support staff and contracted out such administrative functions as
copier, mail and library services. Any further reductions in
administrative staff would not be prudent given the size of our agency
and our management needs. Therefore, most additional staff cuts would
come from our programmatic work. In short, staff reductions would
translate into fewer investigations, fewer product recalls, and fewer
interceptions of hazardous products entering the country.
1998 PRIORITIES
Question. What would you list as your top three priorities for
fiscal year 1998?
Answer. All of CPSC's efforts make a vital contribution to reducing
the nation's $200 billion annual cost associated with product hazards.
Our top priorities for 1998 are:
1. Maintaining our current safety program in 1998. This requires
funding of approximately $2 million ($1.2 million for salary and space
costs, $300,000 for a Year 2000 compliant accounting system, $300,000
for increased retirement costs and $200,000 to implement new FOIA
requirements).
2. Pursuing new safety initiatives to reduce fires, update the
nation's child measurement database, and expand the Special
Investigations Unit initiative. These initiatives are critical to our
efforts to further reduce the nation's high fire death rate, increase
protections for children from product hazards, and improve our ability
to identify and remedy technically-complex product hazards. These
programs require funding of approximately $1 million.
3. Information technology investment. The agency has increased its
product safety productivity in part by using information technology.
Without further investment, aging information systems jeopardize our
ability to pursue current activities and dim the possibilities of
future gains in productivity. We would need about $1 million to
properly upgrade and improve current systems to meet future workload
and to make greater reductions in deaths and injuries.
MULTI-PURPOSE LIGHTERS
Question. Your budget request proposes several new program
initiatives, including $283,000 to address the nation's high death and
injury rate from fire. Your budget justification indicates in 1998 CPSC
will undertake activities to address fires started by children using
multi-purpose lighters. How did this particular issue emerge as a top
priority for fiscal year 1998? What specifically do you propose to do
with the requested funds, and what particular activities do you
anticipate in fiscal year 1998 to address the issue (such as
regulations or working with industry on a voluntary basis)?
Answer. Multi-purpose lighters are lighters with long nozzles that
are most commonly used to light charcoal or gas grills, fireplaces and
pilot lights on gas appliances. In 1997, the Commission considered a
petition requesting that multi-purpose lighters be child-resistant. The
Commission granted that petition and initiated a new rulemaking
activity by issuing an Advance Notice of Proposed Rulemaking to require
these lighters to be child-resistant. The Commission noted that a
standard may be needed to reduce the fire hazard to children under 5
years of age starting fires while playing with this product.
The Commission is aware of 67 incidents since 1988 involving fires
started by children under age 5 using multi-purpose lighters. These
fires resulted in 10 deaths and 26 injuries. Children under age 5
typically are incapable of dealing with a fire once started. This puts
them and their families at special risk of injury. Almost all of the 10
fatalities were the children who started the fires. For example, a 4-
year-old girl died last September when she set her day bed on fire
while playing with a multi-purpose lighter.
Multi-purpose lighters are relatively new products which were
introduced to the U.S. market in 1985. Since then sales have increased
steadily. One million units were sold in 1985; in 1996, 20 million
units were sold. With increasing sales and the attractiveness of these
lighters to young children, the Commission is acting to address the
fire hazard before the deaths and injuries increase.
In 1998, the Commission will continue working with a contractor to
build surrogate lighters and to test several different multi-purpose
lighters to determine how child-resistant they are for children under
age 5. These results will be used to prepare a cost/benefit analysis
for the proposed regulation.
The Commission will decide whether to issue a proposed standard in
1998 and will participate in the development of a voluntary standard if
the industry decides to initiate action to address this problem
voluntarily.
CIGARETTE LIGHTERS/COST BENEFIT ANALYSIS
Question. I'd like to understand better how the agency does cost-
benefit analyses. In your statement, you say that CPSC's 1993 standard
to make cigarette lighters child resistant saves over $400 million in
societal costs. Please explain the basis for this estimate, and more
generally the process for conducting cost-benefit studies.
Answer.
Cigarette Lighter Standard
Prior to this standard, fires started by children under 5 years of
age playing with cigarette lighters resulted in 150 deaths, 1,200
injuries, and $70 million in property damage annually, for a total
societal cost of about $900 million (about $750 million in fatality
costs, over $60 million in injury costs, and about $70 million in
property damage).
The child resistant features of lighters are expected to reduce
incidents by up to 70 percent, resulting in $500 million dollars of
benefits. Taking into account the estimated $90 million in added costs
to comply with the standard, the estimated net benefits to society are
about $400 million per year.
Cost-Benefit Analysis at CPSC
Under several of the Acts enforced by CPSC, prior to promulgation
of a new regulation, the Commission must find that the benefits
expected from a rule bear a reasonable relationship to the costs. In
developing a safety regulation, CPSC examines the benefits and costs of
alternative ways of addressing consumer product hazards. The process
involves identifying the extent to which specific remedies will reduce
product-related injuries and deaths. It also includes identification
and estimation of the full range of costs to society of each potential
remedial action.
The benefits of a regulation include preventing injuries, deaths,
and (sometimes) property damage from hazardous products. CPSC's Injury
Cost Model estimates direct costs (e.g., medical, foregone earnings)
and indirect costs (e.g., pain and suffering) of injuries reported
through the National Electronic Injury Surveillance System and other
injury data sources.
The costs to society of addressing a product hazard include the
cost of modifying a product design to make it safer or sometimes simply
modifying the product labeling or packaging. Also the Agency takes into
account estimated effects of increased consumer prices and product
utility. In developing a rule, the estimated benefits are compared to
the estimated costs; other economic factors that are not readily
quantifiable are also considered (e.g., small business effects, effects
on competition).
GENERAL SERVICES ADMINISTRATION
Consumer Information Center
STATEMENT OF TERESA NASIF, DIRECTOR
Senator Bond. Now we will hear from Director Nasif.
I apologize if I have mispronounced your name. If you
would, tell us the proper pronunciation and present your
testimony. Thank you.
Ms. Nasif. It's Nasif, yes, as you said it.
Mr. Chairman and members of the subcommittee, thank you for
the opportunity to present the fiscal year 1998 budget request
for the Consumer Information Center.
With me today is Bill Early, Director of Budget of the
General Services Administration.
Established more than a quarter century ago, CIC continues
to successfully carry out its vital mission mandate of helping
Federal departments and agencies inform the public about health
and safety issues, developments in Federal programs, and the
impact and effects of Federal research and regulatory actions.
Today, many elements of the CIC program remain the same: an
essential mission mandate; a commitment to serve the American
public; and the firm support of the administration and this
committee.
However, the CIC Program is going through a time of change
that reflects a new environment in Government and in customer
behavior. Overall, Federal agencies have reduced the scope of
their publishing activities due to budget constraints, and the
American public is placing fewer orders for merchandise,
including information, by mail.
CIC is meeting these challenges in two ways. First, we have
redoubled efforts to identify private sector partners who share
Federal information goals and can provide resources to stretch
limited Federal dollars. Second, CIC has set up telephone
ordering systems for both the consumer information catalog and
its listed publications.
CIC has implemented a toll free number--1-888-8PUEBLO--for
citizens to call to receive a copy of the catalog. Also, I am
pleased to report that, beginning with the spring 1997 edition,
all copies of the catalog will include a telephone number for
placing publication orders at the Pueblo facility.
Citizens pay for these calls, thereby sharing in the
expense of the program. Making access easier and quicker will
encourage more Americans to take advantage of the wealth of
information available from the Federal Government.
CIC remains in the forefront of Federal electronic
dissemination. The public will access the CIC Internet web site
more than 3 million times in fiscal year 1997. This is a
threefold increase since its inception in fiscal year 1995.
While Americans can now access CIC either electronically or
by phone, our address, Pueblo, CO, 81009, remains one of the
best known addresses in the country where Americans order
millions of publications published by more than 40 Federal
departments and agencies.
The Government Printing Office facility in Pueblo provides
order fulfillment services for tens of thousands of orders
received weekly as a result of the promotion that we do. During
fiscal year 1996, consumers ordered 7 million publications from
CIC, and in the years ahead we will continue our efforts to
make helpful information available to all citizens, whether
they are seeking it by computer or by mail.
We are very committed to maintaining a vigorous publication
distribution program in recognition of the fact that most
Americans still continue to receive their information primarily
through traditional print channels.
Our ongoing efforts to identify and obtain valuable Federal
information, our media and marketing programs, our centralized
distribution system, and our widely acclaimed electronic
information activities all combine to make CIC an essential
source for citizens needing vital consumer information from
their Federal Government.
Mr. Chairman, we trust that the committee will agree that
CIC is a valuable Federal program and that you will look
favorably upon our request.
Thank you.
Senator Bond. Thank you very much, Director Nasif.
[The statement follows:]
Prepared Statement of Teresa Nasif
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to present the fiscal year 1998 budget request of the
Consumer Information Center (CIC).
Established more than a quarter of a century ago, the Consumer
Information Center continues to successfully carry out its vital
mission mandate: Help federal departments and agencies inform the
public about health and safety issues, developments in federal
programs, and the impact and effects of federal research and regulatory
actions. To ensure that the public is made aware of and has easy access
to this information, CIC promotes the information through a dynamic
media and marketing program and disseminates it through print and
electronic outlets.
Today, many elements of the CIC program remain the same: An
essential mission mandate; a commitment to serve the American public;
and the firm support of the Administration and this Committee. However,
the CIC program is going through a time of change that reflects a new
environment in government and in customer behavior. Overall, federal
agencies have reduced the scope of their publishing activities due to
budget constraints. And the American public is placing fewer and fewer
orders for merchandise, including information, by mail.
CIC is meeting these challenges in two ways: First, we have
redoubled efforts to identify private sector partners who share federal
information goals and can provide resources to stretch limited federal
dollars. For example, CIC has forged an alliance with the Metropolitan
Life Insurance Company's Consumer Education Center to help educate
consumers by developing publications on such diverse topics as starting
a business, planning for college, making a will, and doing your taxes.
And second, CIC has set up telephone ordering systems for both the
Consumer Information Catalog and its listed publications. In
partnership with GSA's Federal Information Center Program, CIC has
implemented a toll-free number (1-888-8 PUEBLO) for citizens to call to
receive a copy of the Catalog. IRS will place the number in a message
on the back of one million tax refund check envelopes and CIC will use
the number in our new television public service ads to be released in
May 1997.
Also, I am pleased to report that, beginning with the spring 1997
edition, all copies of the Catalog will include instructions for
placing publication orders by telephoning the Pueblo facility at 719-
948-4000. Citizens pay for these toll calls, thereby sharing in the
expense of the program. Making access easier and quicker will encourage
more Americans to take advantage of the wealth of information available
from the federal government.
And CIC remains in the forefront of federal electronic
dissemination as more and more schools, libraries, and families are
accessing information through the Internet. The public will access the
CIC website more than 3 million times in fiscal year 1998, a threefold
increase since its inception in fiscal year 1995. In recognition of the
value of CIC's website, plans are underway to display CIC's Home Page
address at the top of the newly revised ``Blue Pages'' listing of
government agencies that will be in thousands of local telephone
directories nationwide. This is part of the Administration's effort to
make government more easily accessible to citizens.
While Americans can now access CIC information electronically and
order publications by phone, ``Pueblo, Colorado 81009'' remains one of
the best known addresses in the country where Americans order millions
of publications published by more than 40 federal departments and
agencies. The Government Printing Office facility in Pueblo provides
warehousing and order fulfillment services for tens of thousands of
orders received weekly as a result of the Catalog, media mentions, and
marketing promotions done by CIC. During fiscal year 1996, consumers
ordered seven million copies of federal publications from CIC. In the
years ahead, CIC will continue its efforts to ensure delivery of
services to all citizens and to make helpful information available to
all citizens whether they are seeking information by computer or mail.
We are very committed to maintaining a vigorous publication
distribution program in recognition of the fact that most Americans
still continue to receive their information through traditional print
channels.
CIC's ongoing efforts to identify and obtain valuable federal
information, its media and marketing programs, its centralized
distribution system based in Pueblo, Colorado, and its widely acclaimed
electronic information activities--all complement each other and
combine to make CIC an essential source for citizens desiring unbiased
and vital consumer information from their federal government. CIC
remains uniquely positioned among federal agencies to perform the
services it has so effectively delivered to the American public since
1970.
Mr. Chairman, again I thank you for the privilege of being here
today on behalf of the Consumer Information Center to present its
budget request for fiscal year 1998. We trust that the Committee will
agree that CIC is a valuable federal program and that it will look
favorably upon our request. At this time, I would be pleased to answer
any questions you may have.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Consumer Affairs
STATEMENT OF LESLIE L. BYRNE, DIRECTOR AND SPECIAL
ASSISTANT TO THE PRESIDENT
Senator Bond. Now we will hear from Director Byrne.
Ms. Byrne. Thank you, Chairman Bond and Senator Mikulski.
Thank you for giving us this opportunity. We have submitted our
formal statement for the record, but I would like to make some
brief comments.
Senator Bond. Thank you. All of your statements will be
made a part of the record in full. I should have mentioned that
earlier.
Ms. Byrne. Thank you, Mr. Chairman.
Because we have received a generous offer from a group who
purport to be Nigerian Government officials, we will not need
an appropriation for fiscal year 1998 and we will turn money
back to the Treasury. [Laughter.]
They say they find themselves with a somewhat embarrassing
surplus of 28.6 million U.S. dollars as a result of an
intentionally overinvoiced contract. They have graciously
offered us 30 percent if we will bank the entire sum for them
in the United States and supply them with several items of
personal information, including our bank account numbers.
Their letter closes with, ``Let honesty and trust be our
watchwords,'' so it must be legitimate. [Laughter.]
Although this scam is almost laughably transparent, Mr.
Chairman, it is a prime example of the type of fraud based on
illegal use of personal information that we have focused much
of our consumer education, policy development, and coordination
efforts on at OCA in the last year.
We are the only agency with White House responsibility to
coordinate and monitor Federal consumer programs, identify
consumer needs, and educate and advocate for consumers.
Because we are nonregulatory, we have no mixed mission or
restrictions on our role to represent consumers.
Mr. Chairman, you have our budget request before you. It
shows that we understood what this committee was saying last
year about cutting the cost of Government, reducing its size
and making it more efficient. We are reorganizing, using
technology to make us more productive, helping consumers in a
faster, cheaper, and better way, including our HelpLine with
the new database that allows us to track consumer complaints
and developing web links with the Federal Trade Commission and
other agencies.
Our emphasis is on providing consumers the tools to help
themselves because it is far cheaper and more efficient than
fixing problems after the fact.
For every one of these Nigerian frauds or other frauds like
them, even if the authorities can catch the perpetrators, the
likelihood is that they will only retrieve 10 cents on every
dollar lost. So education and information are the key to
protecting consumers and they are the ones who can protect
themselves the best.
Because of the shift in our economy, we are looking at a
White House conference on consumer issues. We have gone from an
industrial based economy to a service and information economy.
Our consumer laws really are there for tangible things, for
products. We have yet to wrestle with the greater questions of
how to protect somebody from a European travel scam as opposed
to a product that is faulty.
So we want a national focus on this new paradigm through
this White House conference.
Our long-term goals are very simple--to create a fair shake
marketplace through disclosure of information, choice, access,
and redress. These are the principles of good consumerism.
We plan to recognize organizations that adopt these
principles.
Finally, Mr. Chairman, we plan to continue working with
members of Congress, this committee, and other agencies on
specific consumer information and education issues, in town
meetings, in joint seminar formats on topics such as privacy,
fraud, financial management--a growing concern--and a new
concern, military families, with these being targeted for
fraudulent efforts.
Thank you, Mr. Chairman for your attention.
[The statement follows:]
Prepared Statement of Leslie L. Byrne
Mr. Chairman and distinguished members of the Subcommittee, I am
pleased to come before you today to present our fiscal year 1998
budget, to review the progress USOCA has made toward addressing the
concerns expressed by this committee, and to share our plans for the
coming year.
Our fiscal year 1998 budget request is for $1,800,000 and 13 Full-
Time Equivalent staff positions.
Our Agency's Mission remains unique. Our charge is to be the
consumer advocate within the Executive Branch, both domestically and in
the international marketplace. Because USOCA is non-regulatory, it is
our singular conviction that we can better protect consumers by giving
them the tools they need to protect themselves, through education and
information. This becomes an even more important concept in an era of
deregulation.
This Committee has rightly expressed its concern about government's
role, outdated and costly regulations, duplication of efforts, and the
need for a smaller but more effective government. We at USOCA have
heard your message loud and clear. In listening to the concerns of the
American people, we have also heard loud and clear that they want
consumer education and protection that must be strengthened, not
endangered.
To meet this committee's and the public's concerns, we continue to
re-tool USOCA's organizational structure. I am in the process of
reorganizing staff and functions to be more responsive. We are
currently developing our performance measurement standards and
indicators to meet GPRA's September 1997 deadline. Through these
initiatives, we are becoming a more results oriented agency whose
progress towards the goal of consumer education and information will be
accurately measured. To further fulfill our mission, USOCA is
reenergizing the Consumer Affairs Council (as mandated by Executive
Orders 11583 and 12160). This will allow government agencies to reduce
duplication and avoid redundancies in consumer policy.
PRIORITIES
USOCA continues to focus its efforts in three primary areas of
consumer concern: privacy; fraud; and the integrity of the marketplace.
We addressed these areas through information and education with special
emphasis on underserved populations. We are also working to improve
responsiveness by both government and industry to consumer complaints
and inquires. Based on these three areas, real accomplishments were
gained during fiscal year 1997 and specific initiatives are identified
for fiscal year 1998.
PRIVACY PROTECTION
The public's desire for protection from intrusiveness grows and
touches every institution. Government agencies, multimillion-dollar
corporations, ``mom and pop'' operations, are being more vigorously
challenged in their information gathering. Consumers want to be told,
in language they can understand, why information is being collected,
what will be done with it, and who will have access to it. People want
to be sure the information they give is pertinent to transactions, and
will not be used or sold for other purposes without their prior
approval. All of us want to be able to see what is being collected
about us and to have an uncomplicated way to correct errors and/or
include explanations.
Because of increased data collection and technology, we are seeing
a national increase in identity theft. USOCA continues its cyber-fraud
prevention efforts by informing the public on ways to protect
themselves from identity theft and securing personal information on the
Internet. Using traditional media such as print articles, press
releases, T.V., speeches, brochures, etc., we have reached hundreds of
thousands of Americans with information they can use to protect their
personal information. We want to expand these efforts in fiscal year
1998 by establishing and maintaining a web-site with this information.
On the international front, the absence of a U.S. privacy policy is
at odds with our European trading partners stance on the issue of
privacy. American companies may face self-imposed trade barriers if
USOCA cannot continue its work in harmonizing global marketplace
privacy protection guidelines.
A major illustration of USOCA's work in this area was as a catalyst
in alerting the nation to the fact that personal information about
consumers was being gathered and often used for purposes other than
those for which the information was volunteered. Our work with industry
improved communication between providers and consumers on this issue.
We have persuaded many corporations to give the public a choice about
how their personal information is used--by permitting consumers to
determine whether or not the information they give a company will be
shared with other companies, (for example, information on credit
applications). At the same time, USOCA organized a working group of
Federal agency representatives to examine the issues and privacy policy
options. During our National Consumers Week Kickoff Conference in
October 1995 at the White House, this group, called the Privacy Task
Force, released the Federal Privacy Principles--guidance for industry,
government, and individuals about how to protect personal privacy.
In 1997-98, USOCA and the Privacy Task Force will continue working
with government agencies and the private sector (both domestic and
international) to refine and adapt the Privacy Principles, for
implementation, particularly by users of the information superhighway.
Increasingly, the World Wide Web and other electronic tools are being
used for consumer purchases of products and services and interactions
with government. The success of electronic commerce and the Internet
depends on consumers belief in the security and integrity of this new
medium. To achieve the full potential of the electronic marketplace,
consumers want to be protected from a loss of control of personal
information and, in the worst case, fraud. With personal, financial,
health and other sensitive information going directly into computer
data bases for storage, retrieval and manipulation, the need for
consumer confidence in the security and control of that information is
critical.
It is USOCA's belief that the need for information by government
and industry can be balanced with consumers' desire to preserve their
privacy and control the use of personal data. Our goal is to protect
consumers while encouraging growth and innovation in the use of
telecommunications and information management technology. We find that
industry shares our belief that a balance can be struck without
unnecessary and burdensome regulation.
We will continue to work with industry, government and consumers to
achieve this goal. To lead by example we are developing a program to
publicly recognize those who contribute to the protection of consumer
privacy. This honor would be an award presented annually to various
business, non-profit, government, and consumer organizations for
outstanding efforts in privacy protection, particularly in areas where
technological advancements encroach on personal privacy.
CONSUMER FRAUD PREVENTION
USOCA continues its efforts to raise consumer awareness about
fraud. Scams and fraud cost consumers over $100 billion annually in
America. A new and growing target of fraud is military families. USOCA
is working with the military personnel and their spouses to reduce the
number of families harmed by these scams.
Additionally, the growing use of credit and debit cards, of
telephone and of Internet for purchasing goods and services, multiplies
opportunities for fraud and increases the need for consumer education.
USOCA is working closely with major credit card companies, media, trade
associations, and consumer organizations to promote extensive consumer
education campaigns. In addition, USOCA will continue to work with the
Department of Treasury and other agencies overseeing electronic
commerce to ensure that consumers know how to protect themselves from
fraud. Again our proposed web site will allow the public to
electronically access USOCA publications and information directly.
Because the problems of consumer fraud require constant attention, we
will publish an updated version of our popular pamphlet, ``Too Good To
Be True.'' This newest edition of the publication will be the
centerpiece of an anti-fraud campaign in 1998.
TELECOMMUNICATIONS AND TELEMARKETING FRAUD
Currently, USOCA's policy development efforts focus primarily on
the profound changes that technological advances in telecommunications
and information management have wrought in the marketplace. These
changes acutely affect consumers, with potential for both good and ill,
and create a need for government and industry to find means to balance
the consumer/provider interests and promote probity and fairness in the
marketplace.
For example, as a result of consumer complaints to USOCA's toll-
free National Consumer HelpLine, our office, in cooperation with the
Federal Trade Commission (FTC) and the Federal Communications
Commission (FCC), convened a series of industry/consumer/government
meeting on abuses in the telephone information services industry. The
initial meeting, held early in fiscal year 1996, alerted the industry
and Federal regulatory agencies to significant problems with ``pay-per-
call'' information services, despite recent legislation. Subsequently,
a second USOCA-convened meeting was held to develop proposals for
voluntary action on these problems. A third meeting produced major
changes in the industries ethical guidelines. With the passage of The
Communications Act of 1996 and the proposed legislation,
``Telemarketing Fraud Punishment and Prevention Act of 1996'', Congress
may further authorize regulatory action that will resolve some of the
problems consumers are experiencing. Prevention still remains the best
antidote to fraud.
outreach and serving the underserved populations
Outreach is a critical element in the success of USOCA's mission,
especially to consumers who have traditionally been underserved: the
disabled, frail, elderly, geographically isolated, ethnically diverse.
Through consumer dialogues we have worked with neighborhood leaders to
discuss the concerns and problems of consumers in their communities.
Most importantly, community leaders have given us their recommendations
on how government and the private sector can improve the delivery of
consumer information to diverse communities.
USOCA is successfully recruiting leaders from ethnic communities to
advise this office on consumer issues that affect diverse communities.
Our goal is to build an ``early warning system'' with these groups to
keep consumer problems from becoming larger, which leads to regulations
or legislation that could be avoided if people can find redress early
on.
USOCA has provided consumer education materials and conducted
workshops at a variety of conferences and seminars sponsored by
organizations representing the elderly and citizens with disabilities.
In the first quarter of fiscal year 1997, USOCA developed a working
group to discuss and formulate an agenda regarding consumer issues of
particular concerns to the 49 million Americans with disabilities.
USOCA is committed to encouraging marketers and employers to recognize
consumers with disabilities as deserving of consumer rights as fully
abled people.
Town meetings and seminars are being planned around the theme,
``Real People--Real Challenges.'' The aim of these fora is to provide
an opportunity for traditionally underserved communities to discuss
their consumer concerns. USOCA also plans to convene consumer education
opportunities for youth in major cities throughout the country .
Outreach to youth will include educational programs and projects to
raise public awareness and to generate support for personal financial
literacy for our children and young adults. By working with
organizations such as the JumpStart Coalition for Personal Financial
Literacy, which includes the National Institute for Consumer Education
of Eastern Michigan University and the American Financial Services
Association, USOCA will expand its mission by encouraging ``responsible
use of credit'' and ``planning for savings, spending and investing to
meet current and future needs'' among America's consumers under the age
of 18.
National Consumers Week (NCW) observed annually during the last
week in October, is a signature event of the United States Office of
Consumer Affairs and the nation. It is a major promotional event that
highlights consumer education by informing consumers about their rights
and responsibilities in the marketplace.
Representatives from business, all levels of government,
educational institutions, consumer organizations and media use this
unique opportunity to encourage dialogue with consumers about a variety
of important issues. With coast-to-coast involvement, planning and
execution of NCW activities is a year-round undertaking. Recruitment of
NCW public/private partnerships, follow-up activities, coordination
with the Executive Branch and the White House, preparation of written
materials and the development of various reports and documents are
crucial to the success of NCW. This year's NCW theme is `` A Fair Shake
Marketplace.''
A White House Conference on Consumer Issues is being planned for
October 1998. Our economy has changed from industrial based to service
and information based. The nation's response to the new challenges this
creates for consumers, has been slow. USOCA is proposing a new look at
consumerism brought about by this profound shift in the economy. The
consumer rights associated with tangible products are more difficult to
ascribe to non-tangibles like services and information. We are using
our resources for a national focus on this new paradigm.
Communications.--USOCA has maintained a moderate communications
operation. Due to the current budget shortfall USOCA has ceased to
publish its newsletter. The newsletter circulation included hundreds of
consumer groups, professional associations and media outlets. Within
the fiscal year 1998 request, we plan to restore the newsletter to
semi-annual publication.
Another trademark event for USOCA has been the Constituent Resource
Exposition (EXPO). Traditionally held for each new Congress, EXPO has
served as an educational event for congressional staff where they meet
representatives of Federal Agencies, discuss agency programs, and
obtain pertinent information which enabled them to better respond to
constituent requests in the Member's districts. This event helped
eliminate Federal waste and red tape caused by misdirection of
constituent complaints and queries.
Again because of budget issues, USOCA has decided to take a
different approach to reaching congressional staff members to
disseminate information--a method which may prove to be more efficient
and cost-effective. USOCA is working to conduct workshops in
partnership with the Congressional Research Service (CRS) for Senators,
Members of Congress and their staffs. At these workshops, USOCA's much
requested publication, the Congressional Liaison Handbook (CLH) will be
distributed. The CLH directs staff to appropriate agency consumer and
congressional liaison officials.
The primary tool with which USOCA has traditionally used to reach a
broad cross-section of the population is the Consumer's Resource
Handbook. This award winning resource is one of the most popular
publications produced by the Federal government. It is filled with
valuable information and ``Buying Smart'' tips for consumers to assist
them in making informed choices and avoiding pitfalls such as fraud in
the marketplace. Just as important are its listings of both private and
public sector resources for consumer information and problem
resolution. Keeping this information relevant to consumer problems in
the marketplace, as well as complete and accurate requires more than
checking addresses and telephone numbers.
USOCA has in place the staff, expertise, knowledge, skills and
interaction with industry, government agencies, consumer organizations
and individual consumers needed to produce this Handbook. Any other
agency handling this would assume research, training, and production
costs well above the costs incurred by this office.
There is a significant amount of work that could be done in 1997 on
the 1998 edition of the Handbook. For example, the inclusion of E-mail
addresses and web sites available for complaint handling. Currently, we
are working with the FTC on a single Web-link to Federal web sites, at
the address, consumer.gov, for which the Handbook's index would serve
to guide consumers through the maze of Federal, state and local
agencies with jurisdiction over consumer problems. To do this
effectively there is considerable work to do to make the index more
user-friendly in the Internet environment.
Funding for the Handbook, as well as other consumer education
publications have been accomplished through public and private
contributions. Gift acceptance authority is extremely important to
ensure that adequate numbers of these publication are updated and
available to consumers. In addition to the Handbook, four significant
publications/studies scheduled for fiscal year 1998, such as,
``Protecting Your Privacy,'' ``Too Good To Be True 2000--A Consumer
Guide to Avoiding Fraud in the New Century,'' and ``Improving Customer
Service'' will require research, editing, design, printing, and
distribution.
RAPID RESPONSE FOR CONSUMER COMPLAINTS
The National Consumer HelpLine is a toll free number available in
every state and U.S. territory offering a rapid response to consumer
complaints through referrals and consumer information. It is staffed
four hours a day by USOCA's professional staff, including its director,
who refer or answer questions on the spot. We call back anyone who
leaves a message during non-staffed hours. HelpLine is serving as the
central federal clearinghouse for consumer complaint handling. Through
the HelpLine, we make our decades of experience with consumer issues
available to all Americans.
Calls are logged into a database to help USOCA keep abreast of new
trends such as fraudulent schemes in telemarketing, sweepstakes, and
pay-per-call and long distance telephone billing. It tracks consumer
complaints on automobile repair, home maintenance, warranties, stock
fraud and returned merchandise. Other areas generating frequent calls
are credit reporting and credit harassment, direct marketing and mail
order complaints, insurance, mobile homes, Social Security and
Medicare, student loans, and airlines.
It provides a window on the public's reaction to developments in
the marketplace long before the media or researchers can identify them.
Dialogues with companies, trade associations, consumers and regulatory
agencies have followed. In some cases, due to the industry being made
aware of consumer problems, action has been taken to eliminate the need
for new regulations. This is in keeping with the President's initiative
to eliminate unnecessary regulations.
DOMESTIC POLICY
USOCA has no regulatory authority but it directly impacts proposed
legislation and regulations being considered by Congress and the
Administration. USOCA is regularly solicited for input or comments on
proposed legislation, regulations and reports. While the demand for
USOCA review has increased over the last decade the number of employees
has dramatically decreased. USOCA has been involved with such complex
issues as privacy, emerging technology, the global marketplace, anti-
terrorism, debt and credit, and fraud.
USOCA is the sounding board on consumer issues for buyers, sellers,
all levels of government, neighborhood groups, and consumer
organizations. We are the consumer's voice in the decisions of
government and the impact of proposed legislation and regulations on
their lives.
INTERNATIONAL POLICY
Representing the interests of U.S. consumers in international
forums, USOCA provides support to the President's consumer advisor as
head of the U.S. delegation to the Committee on Consumer Policy of the
Organization for Economic Cooperation and Development (OECD). The U.S.
has taken a leading role in the areas of product safety, lowering
tariff barriers for services and consumer redress in the international
marketplace. The U.S. has encouraged OECD to adopt the use of new
technology on global warning systems for product safety and consumer
fraud.
The world stands at the doorstep of a great expansion of cross-
border consumer transactions. Interest in the changing global
marketplace and how it affects consumers is widespread among
businesses, consumer advocacy groups, educators and world leaders. As
consumer policy issues are increasingly internationalized, the need for
effective mechanisms for the exchange of critically important consumer
information, product safety, and efforts to counteract fraud and
deception in the marketplace becomes more urgent.
USOCA's role is vital as head of the U.S. Delegation to the
Committee on Consumer Policy of OECD in order to fully represent
America's consumer interests. It is viewed by our OECD partners as a
beacon of leadership particularly for countries just becoming free
market economies. Newly emerging nations from the former Soviet
Republics want to study our governmental and nongovernmental structures
as they seek to develop national consumer policy in a free market
setting. USOCA also assists visiting delegations from other nations
that wish to study our consumer protection system and our unique
network of citizen run consumer organizations.
interagency coordination
USOCA chairs and coordinates the Consumer Affairs Council and
provides staffing. The Consumer Affairs Council was established as a
body of senior consumer policy officials designated by the heads of
Federal departments and agencies to provide leadership, coordination
and effective management to consumer protection and policy initiatives.
It has been used effectively in recent years to coordinate cross-
cutting initiatives, such as National Consumers Week, The Constituent
Resource Exposition (EXPO), and the Consumer Resource Handbook
publications and distribution. We intend to also use the Council as a
means to raise standards of customer service and achieve greater
consistency in consumer policy implementation government-wide.
CONCLUSION
Mr. Chairman, this is a conservative budget. With the support of
this committee, USOCA can fulfill its mission to empower every American
to make the best choices in the marketplace. With our emphasis on
education and information we arm the public with the tools they need to
avoid the frauds, scams, charlatans and con-artists. We can give them
the peace of mind and security to enter into new marketplaces, whether
cross borders or in cyberspace and most importantly assure families
redress if things go wrong. The subcommittee's choice is clear: help
us, help your constituents or rely on after-the-fact remedies like more
laws, more regulation, and more police trying to catch the crooks. Even
when law enforcement is successful, it only recoups a small fraction of
the money lost to our citizens and honest and ethical businesses. Mr.
Chairman, we can do better.
I would like to thank the Subcommittee for allowing me to express
these views and I would be glad to answer any questions you have for
me.
SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT [SBREFA]
Senator Bond. Thank you very much, Director Byrne.
Let me turn to some questions. Let me begin, Chairman
Brown, with a question that is near and dear to my heart as
author of the Small Business Red Tape Relief Act, also known by
the mind-numbing, eye-glazing acronym of SBREFA. I appreciate
your attention to that legislation. The law requires agencies
to establish a policy or program to provide for penalty
reductions or waivers where appropriate to accommodate the good
faith efforts of small businesses to comply with agency
regulations.
What steps has your agency taken toward instituting such a
program? When do you see it up and running?
Ms. Brown. We have it up and running now because we have
long been sensitive to the needs of small business. In fact, in
June 1996, the agency sponsored, with the Small Business
Administration, a very well attended conference on small
business and consumer product safety. At that conference, we
announced the designation of a CPSC small business ombudsman,
who will help direct calls from small business operators and
insure appropriate followup.
So far, through direct contact with CPSC staff, we have
helped more than 700 small business persons comply more easily
with our product safety guidelines. We, therefore, helped them
to manufacture safe products.
Requests to our ombudsman for assistance average about 90
calls per month and represent 35 States and foreign countries.
Our goal is to provide expert assistance to every small
business within 48 to 72 hours of when they call CPSC for help.
To date we have been about 80 percent successful in meeting our
goal.
Senator Bond. I appreciate that good work.
Is there a waiver program in place? Do you impose fines for
violations of your regulations?
Ms. Brown. Yes; Clarence Bishop is the small business
ombudsman and perhaps you would like him to answer that.
Mr. Bishop. Good morning, Mr. Chairman.
Senator Bond. Good morning.
Mr. Bishop. Good morning, Senator Mikulski.
Senator Mikulski. Good morning.
Mr. Bishop. Yes, sir; we do have a waiver program in place
through our compliance department, although we have not had to
use it to date.
Senator Bond. What would be the normal range of fines that
you would impose?
Ms. Brown. We are going to pass your question one more
time. This will be David Schmeltzer, head of our Department of
Compliance.
Mr. Schmeltzer. Good morning.
Our statute provides for civil penalties of up to $1.5
million. We are directed to consider the size of the business
when levying the fines, and we always do. We have about 15
fines per year, and when we deal with small businesses, first
we try to explain to them how to meet the regulations. If there
are violations, then we take into consideration the size of the
company and the appropriate figure. All of these cases are
resolved through settlement procedures.
Senator Bond. Rather than carry on the discussion further,
we would appreciate having a report on the fines, what you are
doing and how, and particularly if there are small businesses
involved.
Thank you very much.
[The information follows:]
Penalties for Small Businesses
The Commission staff has authority to pursue civil penalties
against firms who fail to report a product hazard to the Commission
under section 15(b) of the CPSA, 15 U.S.C. Sec. 2064(b). Since 1990, it
may also pursue penalties against firms who knowingly violate the
safety standards of the FHSA, FFA and PPPA.
The Commission has always placed an emphasis on seeking voluntary
compliance with our laws first. When product hazards exist, our first
effort is to obtain corrective action. Some of these violations are
committed out of ignorance, others because the firms choose not to put
time and money into complying with the law. Civil penalties are used
sparingly and generally only pursued against repeat violators.
The purposes of a civil penalty are to deter the firm from future
violations of our safety standards and to deter others from such
violations. Under our laws, the Commission must consider a number of
factors in deciding whether to pursue civil penalties. In determining
whether a civil penalty is appropriate and the amount of the penalty,
the Commission's laws require the agency to consider the risk of injury
presented by the product and ``the size of the business of the person
charged'' along with other factors. (See, section 20(b) of the CPSA, 15
U.S.C. 2069(b)). The staff also examines the level of sophistication
and knowledge of the firm involved and the gravity of the violation.
Reporting Violations
The staff received 239 section 15(b) reports in fiscal year 1996
and investigated many other products. The staff's primary focus was on
corrective action and the vast majority of the cases were resolved by
voluntary corrective action plans with no penalty. In fiscal year 1996,
the agency obtained penalties from 5 firms who failed to report under
section 15(b) of the CPSA. None of these 5 firms were small businesses.
In addition, an agreement was reached with one firm which did not
result in a civil penalty.
Regulated Products
In fiscal year 1996, the staff discovered hundreds of violations of
the Commission's safety standards. When the staff learned of a
violation of a regulation, it advised the firm of the violation,
addressed the hazard, and sought to bring the firm's products into
conformance by working with that firm.
Out of the hundreds of violations found, the staff obtained only 4
(3 were small businesses) penalties and initiated two federal court
actions for penalties against firms for regulated product violations in
fiscal year 1996. (The Commission reduced one of those penalties to
$5,000 from a negotiated penalty of $10,000 because of the small size
of the firm involved.)
The two Federal Court actions initiated in fiscal year 1996 were
against a fireworks importer and a children's products importer. Each
had more than ten violations and had not taken reasonable steps to
correct the violations. U.S. v. Big Save International Corp. (C.D.
Cal., No. 96-5318), and U.S. v. Shelton Fireworks, (W.D. Mo., No. 96-
6131-CV-SJ-1) (23 violations). Both firms are small businesses.
During the last several years, the staff has worked with many small
businesses who are repeat violators to bring them into future
compliance without civil penalties. Toward that end, the staff has used
meetings, inspections, and compliance agreements. It has also put civil
penalty cases ``into abeyance.'' (This means the firm is informed that
we could seek penalties, but do not plan to do so if the firm does not
commit future violations.)
Ability to Pay
Although the Commission's laws refer to the size of the business
charged, as the factor to consider, the staff also takes into account
the firm's ability to pay in determining the appropriate amount of any
civil penalty and the payment terms. In three cases involving smaller
firms, the staff has structured the payment of penalties so the penalty
amount will send a strong message, but the payments are spread over
time to allow the firm to continue as a viable concern.
Civil Penalty Report
[Final orders]
Fiscal Year 1996
Burlington Coat Factory (FFA)........................... $250,000
Cosco, Inc. (Sec. 15(b), CPSA).......................... \1\ 725,000
JBI, Inc. (Sec. 15(b), CPSA)............................ 225,000
National Media (Sec. 15(b), CPSA)....................... 150,000
Premier \2\ (FHSA)...................................... \1\ 75,000
Shrdlu, d.b.a.\2\ (FFA)................................. 5,000
Singer Sewing Co. (Sec. 15(b), CPSA).................... 120,000
SKR Resources, Inc.\2\ (FHSA)........................... \1\ 40,000
Taito America Corp. (Sec. 15(b), CPSA).................. 50,000
--------------------------------------------------------
____________________________________________________
Total............................................. 1,640,000
========================================================
____________________________________________________
Other remedies: McDonalds, Inc. Sec. 15(b), CPSA........ \3\ 5,000,000
Referred to Department of Justice:
Big Save International Corporation \2\
Shelton Fireworks \2\
\1\ Structured Payment Schedule.
\2\ Small Business--CPSC follows 15 U.S.C. 632 which states that the
business must meet the criteria of being independently owned and
operated and not dominant in its field of operation. In addition, the
Small Business Administration sets size standards for various industries
which are published in 13 CFR Part 121. Industries are identified by
their Standard Industrial Classification (SIC) Code and their maximum
size to be considered small is determined by either annual receipts or
number of employees. If the industry is not listed in the CFR, the
default size standard is $5 million in annual receipts.
\3\ Program.
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CPSC BUDGET
Senator Bond. Chairman Brown, you have indicated that the
budget request is modest. But even a 6-percent increase, to $45
million, over the current year when overall funding is likely
to be held flat is difficult. What lower priority items would
you eliminate or reduce if we had to hold you at a level
funding.
Ms. Brown. Level funding meaning the $42.5 million?
Senator Bond. Yes.
Ms. Brown. That would be extremely difficult for us, of
course, because there would be a reduced level of safety, I
think, to the American people. We would have a problem even in
holding level. That does not mean that we would be holding
level. Many of our information technologies, which is very
important, much of that would not be able to be done.
Senator Bond. In the budget process, sometimes you have to
make hard choices. Rather than strangling every program,
sometimes it is better to cut the lower priority program.
Is there a lower priority program?
Ms. Brown. At this point, I will have to get back to you
and think about that because we are on such a bare bones budget
now, as we are, that I just cannot think of any. We have
already reduced. We have put our two laboratories together. I
am thinking that there are so many things we have done. We have
cut down on training of our personnel.
I am not trying to be evasive, Mr. Chairman.
Senator Bond. I understand, but that is something we would
like for you to think about in case the worst happens.
[The information follows:]
Effect of Budget Request Cut
Any cuts to CPSC's budget would simply not be cost-beneficial. CPSC
delivers more than $155 million in savings to the American public for
every $1 million invested in the agency. Furthermore, the work of the
agency has been a major factor in the 20 percent decline in annual
deaths and injuries related to consumer products that occurred between
1980 and 1993. Any cuts to CPSC's budget at this point would reduce
this tremendous return on investment for consumers and would place more
families at risk from dangerous products.
Limiting CPSC's 1998 funding to the 1997 level of $42.5 million is
approximately equivalent to a $2 million budget cut.\1\ But CPSC is
already half the size it was in 1980, while our mission has grown
substantially.\2\ To accommodate these reductions, we cut staff and
trimmed away spending. We are now a lean and efficient operation.
Therefore, any further budget reduction would cut directly into our
safety programs.
---------------------------------------------------------------------------
\1\ The agency needs a minimum of $2 million over 1997 funding if
it is to fund non-discretionary cost increases occurring in 1998. This
includes $1.2 million for increased salary and space costs, $300,000 to
make its accounting system Year 2000 compliant, and $500,000 to fund
proposed increased retirement contributions and carrying out of Freedom
of Information Act amendments.
\2\ CPSC's budget has fared worse than most other health and safety
agencies. For example, from 1981 to 1996, EPA's budget increased 25
percent and FDA's budget increased 56 percent while CPSC's budget
decreased 45 percent.
---------------------------------------------------------------------------
A $2 million budget reduction would force cutbacks in new safety
initiatives planned for 1998 and in current safety work. The very
difficult decisions of exactly which life-saving initiatives to
sacrifice if this were necessary can not be made until we are much
closer to new fiscal year.
We believe that any cut in CPSC's budget at this time would rob the
American public of essential safety benefits. Injuries from consumer
products presently cost this country $200 billion each year. Past
successes by the agency show that we can reduce deaths and injuries
without expensive and intrusive interventions. The additional funds
requested for 1998, $2.5 million, are small. Judging by recent
accomplishments, this modest investment will deliver almost $400
million in benefits to U.S. consumers. This small investment will keep
one of the country's best working assets in good working order and
build a better future for American families.
When the subcommittee receives its budget allocation, if cuts are
indeed necessary, we will certainly work with the subcommittee staff to
identify those that would result in the least damage to our mission.
Senator Bond. Senator Mikulski.
Senator Mikulski. Thank you very much, Mr. Chairman.
I have no questions for Ms. Nasif. But I do want to thank
you for the excellent and continued work that you have done.
We have had these conversations now for many years, and I
must say that all of the literature that comes out of your shop
is really I think remarkably received by the taxpayer. Often
they wonder if they give us $1, we're going to spend $2 and at
the end of the day have nothing to show for it that means
anything in their day to day lives.
The practical information that you disseminate, whether it
is on how to buy a car or how to buy long-term care insurance
is wonderful. I have looked at all of those. The very excellent
check lists were helpful.
I, myself, used your guide in looking for long-term care
insurance because I was ready for purchasing that product. Like
any other consumer, I wanted to know what specifically I could
turn to.
I could go over many issues like that. So I thank you.
I know you face many financial challenges because you must
be ready for the electronic world. But most people still will
get their information through a printed form. So we look
forward to working with you.
Ms. Nasif. Thank you, Senator.
FRAUD PERPETRATED AGAINST ELDERLY
Senator Mikulski. Congresswoman Byrne, I have a question
about HHS consumer affairs.
What does your organization do to protect people against
fraud in those areas that are vulnerable in HHS service
delivery areas? I am thinking about Medicare scams, for
instance. You know, there are so many scams going on now among
senior citizens, whether it is in products, though not the
dangerous ones that Ms. Brown so effectively oversees--that
privacy of information is absolutely important and I understand
that.
But there are a lot of scams going on in the area of
Medicare and health care, et cetera. Are you involved in that?
Ms. Byrne. What we try to do is go out to the communities
of seniors and make them aware of these scams. One of the
things we find is that we hear about them after the fact, after
the widow has been deprived of $70,000, not once over a scam
but once she gets on a sucker list it's again and again and
again. She has been proven vulnerable in one instance. There
are actual lists that are published, shared among the scam
artists that allow them to go back to her.
So what we are trying to do with education and information
is get information out into the hands of seniors.
Senator Mikulski. And how do you do that?
Ms. Byrne. We do it through AARP and all of the other
organizations. We work very closely with senior organizations,
such as the Senior Citizens Council, the AARP, in educating
their members. We do media campaigns in senior citizen areas
that are heavily populated. We send out alerts when we find out
a particular scam is in a neighborhood, for example. That is
all to that effort of getting information to the consumer.
The other, the back end to that is through our HelpLine and
this kind of first alert that we have, we are able to notify
law enforcement agencies when there is a scam going on directed
toward senior citizens or anyone else. So when they call us, we
go after them.
Senator Mikulski. Thank you. I think everybody wonders what
is--not really your personal job--what is the job of your
agency.
Ms. Byrne. Right.
Senator Mikulski. I really think that where there is need
there is greed, and where there is greed there is scam; and
where there is scam, there is scum.
Ms. Byrne. That's right.
Senator Mikulski. That's the way I see it.
Ms. Byrne. You got it.
Senator Bond. Let me jot that down.
Senator Mikulski. It's need/greed, scam/scum.
I would hope that, instead of looking with a broad brush
across agencies, really that agency, particularly with the
senior population that is so vulnerable, is so helpful.
Ms. Brown, regarding your agency, you are now talking about
a new fire prevention, death prevention initiative. Could you
tell us--and I know my time is short----
Senator Bond. Take your time.
CPSC INITIATIVES
Senator Mikulski [continuing]. Where did that come from?
Where did that idea come from? That then takes me to a second
question, which is are you moving the Consumer Product Safety
Commission to what I call a risk based strategy focus. I mean,
in other words, looking at those consumer vulnerabilities that
are most likely to affect most of the American people.
Ms. Brown. The way that we figured out the fire initiative
is because that is where the major deaths, injuries, and
property damage occur. So we are always a data driven agency.
We have a fine data system, a hospital emergency room system.
We are driven by the fact that we must prioritize. We must
prioritize in this era of limited resources and that must be
done based on where the greatest injuries and deaths occur.
We have three new initiatives, to reduce fire deaths and
injuries, consideration of a multipurpose lighter standard,
evaluation of our child resistant cigarette lighter standard,
and investigator training for CPSC investigators. All of those
were arrived at because that is where we see the largest number
of injuries and deaths.
Senator Mikulski. And what are the other top two?
Ms. Brown. The other top two apart from fire?
Senator Mikulski. Uh-huh.
Ms. Brown. Those would be children's injuries and deaths,
which are, of course, always important to us, and sports
injuries. All of those were arrived at when we looked at our
data and we saw where is the greatest need.
Senator Mikulski. Let me say just one word about fire. I
know that it is one of the terrible problems in my communities
in Maryland. Once again we just suffered the death of three
children, and we would hope that you are also going to be
coordinating with FEMA and the national association. FEMA has
the firefighters. I will get back to floods in a minute. We
hope you do work across agency lines in this area.
What we hope and what we tried to get FEMA to do and EPA--
this committee has been around management--is not to go after
individual boutique issues that capture the headlines--and I'm
not saying you do, but we all know how that goes--but to focus
on where most people are at risk, whether it is to scams and
being defrauded, such as buying the hearing aid that is going
to solve all of your problems, all those sorts of things. That
is important.
It is very important to me that we coordinate with other
agencies. The issue of firefighting and fire prevention is an
intensely local, block by block issue. How will you be
coordinating there?
WORKING WITH OTHER AGENCIES
Ms. Brown. We are already working with the Fire
Administration on many of our fire efforts and other efforts as
well. They are funding some work that we are doing on stoves
and burners.
We work very closely with FEMA, as well, as we have during
this flood. They are giving out all of our material about how
people will reenter a house and the dangers that lurk when
people reenter a house that has been flooded.
I have a list of the agencies with which we cooperatively
work. I would be delighted to submit that for the record so
that you can see that one of our major goals is to work
cooperatively across Government, both in Government and outside
of Government with industries and other organizations. It
really is a way to aggrandize your resources. I would like to
submit that for you.
Senator Mikulski. Thank you.
[The information follows:]
Working with Other Agencies and Organizations
CPSC works with many Federal agencies and private organizations in
many ways to advance safety programs and to maximize the effect of CPSC
safety efforts. These relationships have proven very productive to the
agency and the American public because they provide greatly expanded
resources to the problem of hazard reduction at little cost. We are
always careful not to duplicate services of other organizations, but to
complement and augment one another. CPSC offers other agencies unique
abilities to identify hazards and analyze hazards, and at times,
suggest practical ways to reduce hazards. For example, CPSC has the
best system in the world for collecting information about hospital
emergency room visits--The National Electronic Injury Surveillance
System (NEISS). Many agencies purchase services from NEISS to obtain
data about injuries within their jurisdiction. In one example of such
an arrangement, NEISS is providing children's injury data to the
Department of Transportation for its work on children and airbags.
The reduction of fire hazards provides an excellent example of how
CPSC works with other organizations. CPSC has a long and productive
relationship with local and State fire organizations. CPSC depends on
fire data, collected by local fire departments and coordinated at the
State level through the National Fire Incident Reporting System, to
provide essential support for our regulatory mission. In addition,
special in-depth field investigation projects regarding fire incidents
almost always rely on close coordination with local fire departments.
Examples of such projects include cigarette lighters, upholstered
furniture open-flame fires, smoke detectors, and range fires.
CPSC has also worked with local fire departments and community
groups to develop community-based smoke detector programs. Recently,
under a program organized by CPSC, 5,000 smoke detectors were
distributed and installed by firefighters or trained volunteers in 10
cities, targeted to vulnerable populations.
CPSC also works with many national organizations to address fire
hazards:
The U.S. Fire Administration (USFA) collects and provides essential
data on residential fires to CPSC, stimulates new technology, and
conducts public education campaigns relating to fire. USFA has provided
supporting funds for CPSC projects on Range Fires, Smoke Detectors, and
Home Electrical Wiring Systems.
The National Institute of Standards and Technology (NIST) performs
basic and applied research in the fire sciences, provides their
facilities for CPSC special fire testing, and serves as a comprehensive
resource for standards information. NIST is providing fire test
facility support for our current project on Fire Safety Devices.
The Centers for Disease Control and Prevention (CDC) provide
programs and grants to expand community awareness in the field. CPSC
staff participates in the CDC Healthy People 2000 Work Group on Fire
Prevention, and CPSC has provided funding in support of their fire
prevention initiative.
The Congressional Fire Services Institute (CFSI) was a member of
the Steering Committee of our National Smoke Detector Project.
CPSC communicates with other agencies that have regulatory
authority and conduct research in areas beyond CPSC jurisdiction such
as the Federal Aviation Administration (aircraft), the Occupational
Safety and Health Administration (workplace), the National Highway
Traffic Safety Administration (automotive), and the Department of
Housing and Urban Development (manufactured housing).
The private sector organization, the National Fire Protection
Association (NFPA), also collects and provides CPSC residential fire
data in addition to developing and publishing this country's national
fire codes and voluntary standards, investigating major fires, and
conducting public information and education programs.
In October of 1996, the Commission signed a Memorandum of
Understanding with the International Association of Arson Investigators
(IAAI) through the Commission's Special Investigations Unit (SIU). The
IAAI is a non-profit technical and educational organization comprised
of volunteers through various government organizations, such as ATF,
insurance investigators and certified fire investigators. This
cooperative effort allows both organizations to work together toward
the common goals of improving public fire safety, sharing technical
information and training fire investigators. In addition, the IAAI
publishes bi-monthly Commission recalls to notify IAAI members of fire
hazards associated with potentially defective consumer products.
CPSC works cooperatively with many other public and private
organizations on a variety of product safety efforts. Federal agencies
we have worked with include:
--Centers for Disease Control (data collection on a wide-range of
injuries)
--Customs Service (import surveillance to prevent entry of unsafe
products)
--Department of the Army (share information and expertise on injury
prevention, baby safety events, lead in playground equipment)
--Consumer Information Center (distribution of CPSC safety
publications)
--Department of Energy (chemical emissions from consumer products)
--Department of Housing and Urban Development (injury prevention in
housing)
--Department of Health and Human Services (injury prevention, data
collection)
--Department of Interior (playground safety in National Parks)
--Department of Justice (data collection)
--Environmental Protection Agency (indoor air, lead poisoning,
chemicals)
--Federal Emergency Management Agency (injury prevention in disaster
situations)
--Federal Trade Commission (data sharing on consumer protection legal
actions)
--Food and Drug Administration (poison prevention)
--Fire Administration (fire safety and fire education programs)
--Indian Health Service (injury prevention, fire safety)
--National Highway Traffic Safety Administration (bicycle safety)
--National Institutes of Health (toxins and carcinogens in consumer
products)
--National Institutes of Standards and Technology (product safety
testing)
--Office of Consumer Affairs (coordination of numerous safety
matters)
--Occupational Safety and Health Administration (data collection)
--Small Business Administration (small business concerns,
implementation of CPSC Small Business Ombudsman program)
We work cooperatively with a large number of non-Federal groups to
disseminate injury prevention information, gather injury data, develop
safety standards, and ensure compliance with safety regulations,
corrective actions, and recalls. These groups include:
--American Academy of Pediatrics
--American Association of Retired Persons
--American Nurses Association
--American Red Cross
--Association of Food and Drug Officials
--Better Business Bureau
--Businesses (such as Gerber Foods who is co-sponsoring the Baby
Safety Shower effort)
--Coalition for Consumer Health and Safety
--Consumer Federation of America
--Dana Alliance for Brain Initiatives
--Danny Foundation
--Defense Research Institute (Defense attorneys)
--D.C. Bar Association
--International Association of Chiefs of Police
--National Association of Consumer Agency Administrators
--National Consumers League
--National Safety Council
--National Safe Kids Campaign
--National 4-H Council
--Salvation Army
--Snell Foundation (Bicycle Helmets)
--Society of Academic Emergency Medicine
--State Attorneys Generals
--State and local coroners, medical examiners, health departments,
and consumer protection offices
--Trade Associations (Outdoor Power Equipment Institute; Coalition
for Automatic Garage Door Openers, Gas Water Heater
Association, Toy Manufacturers of America, etc.)
--Voluntary product standard setting organizations (ASTM; the
American National Standards Association; Underwriters
Laboratories; National Electrical Code and Building Code
groups)
Senator Bond. I have to step out very briefly to meet with
some constituents. I am going to ask that Senator Mikulski
continue this hearing.
Senator Mikulski. And if I am done?
Senator Bond. I will be back shortly. I have some more
questions. This will be very brief.
If you will forgive me, I will turn the gavel over to you.
Senator Mikulski [presiding]. Ms. Brown, have you had any
involvement in the air bag controversy?
Ms. Brown. No, we have not.
Senator Mikulski. Has anyone called you--let's wait for the
bells to finish ringing.
[Pause.]
AIR BAG SAFETY
Senator Mikulski. Has the Department of Transportation
contacted you on the air bag issue?
Ms. Brown. We have had some directives from them about what
they are doing, just information.
Senator Mikulski. Well, you see, nobody knows what they are
doing. This is a very prickly situation. There is a great deal
of concern about the safety of air bags. You have just
indicated the concern about the special risks to children in
the home. But there is a special risk in that home on wheels,
called an automobile. Given commuters and day care every day,
our little kids spend a lot of time in cars. We are finding
that they are at risk, either from their child seats, et
cetera, and now the air bags. There is the air bags controversy
not only for what it means to children but what it means to,
essentially, people my size, and where that air bag releases,
hits you, and so on.
There is a great deal of confusion, uncertainty, and
apprehension about what the Department of Transportation is
doing. I am not blaming this on you, of course.
Ms. Brown. It is not in our jurisdiction.
Senator Mikulski. But you are the Consumer Product Safety
Commission with incredible expertise and really significant
data. Your database I think should not be minimized because it
contains risk based information and lots of ideas even for the
private sector to improve itself.
My question is this. Given that, do you know anything about
this? Does your agency have any data on the air bag
controversy? Do we know where the risks are?
It would seem to me that you, you meaning your agency,
would play a significant role. First of all, you probably know
more about what happens to children other than pediatricians
and parents. Am I right in that?
Ms. Brown. Absolutely. You are.
Senator Mikulski. We had that marvelous conversation on
playground equipment.
Ms. Brown. It is both my area of expertise, coming into the
agency as a child safety expert, and, of course, what our
agency has concentrated on.
The problem with air bags or with anything in cars is it is
not legally within our jurisdiction. However, our very
excellent data, the NEISS system, which gets reports of
hospital emergency room injuries every day, has done work for
the National Highway Traffic Safety Administration on motor
vehicle injuries. So they do use our data.
But we are not involved in the air bag controversy per se.
Many people call me, Senator Mikulski, because I, too, am
small, and they ask me what are you doing in your own car.
I, therefore, did my own personal, little survey and told
people that you have to be at least 10 inches away from your
air bag in your steering wheel. I also had found out some
information on how to get extenders on pedals. That I just did
as something personal to help my other short friends.
But this is an area that is very serious and I do know that
there is a lot of concern out in the Nation. We specifically do
collect air bag data specifically for NHTSA.
CPSC SHOULD WORK WITH DOT
Senator Mikulski. Ms. Brown, I am going to ask you because
of the confidence I have in your agency and in your
considerable database, to reach out to Secretary Slater. We
have to really deal with this air bag controversy.
I am glad people know that they can call you. I go to
senior citizen meetings and they ask me the same question,
partly because I have the same personal geography, so to speak,
as they do. But it shouldn't be member-to-constituency groups
of 30 people only. I am absolutely convinced that the
Department of Transportation has not brought in the total
expertise that is available within its own Government.
I know that Secretary Slater, I hope, will be moving on
this.
I am going to really recommend that you call Secretary
Slater and that you have a list of all the agencies that have
been involved in the subject of children--and there are also
parallels to frail elderly or the short elderly--that could be
used here, and that you recommend whatever task force they have
that they use the best information. Let's get out there with
this information. It could be a new line of commercial
products, exactly as you said. People may laugh about a pedal
extender, but if you are 5 foot 2 inches and automobiles are
built for people structured like Clint Eastwood, it gets to be
very difficult for us.
I don't want to turn this into an air bag hearing, but I am
deeply concerned about the sluggish way we are moving toward a
relationship with the private sector and the consumers on this
very significant issue, and perhaps even about talking about
additional consumer products that would enable people to be
more safe. Let me include here also the information on where do
you put your baby's car seat--all of those kinds of things.
Right now, if we have a driving grannie, then maybe grannie
needs to be in the back seat.
I could go on and on here.
Ms. Brown. Senator, I did want to mention also that we have
asked for funds to do some anthropometric work. That sounds
exotic. But what it really is is the measurement of children.
More work to upgrade this would be very helpful to NHTSA in
moving forward to do some greater calculations on car seats.
Education is fine, but I think you've hit it on the head. In
every field of products, it is very important to have as much
as possible safety built into the product.
Senator Mikulski. From what I understand from the private
sector, particularly those involved in the automobile industry,
they are waiting for the Department of Transportation to give
them some guidance on the direction in which they want to go.
I will tell you what I fear--the wholesale dismantling of,
in particular, passenger air bags out of fear rather than out
of science and out of technology. I truly believe the genius of
the American private sector for both liability reasons as well
as good citizenship, and ultimately profit, to be able to come
up with solutions. But right now they need the guidance of DOT.
Knowing what you all know about children, I think it would be
enormously important for there to be a task force. It is
disturbing to me that with DOT there is not a relationship on
this issue.
Ms. Brown. I'll call Secretary Slater this afternoon.
Senator Mikulski. Thank you very much and good luck with
that.
Again, many, many thanks.
CONSUMER'S RESOURCE HANDBOOK
Senator Bond [presiding]. Thank you, Senator Mikulski.
Director Nasif, in 1997, the Congress gave the CIC the
responsibility for producing the Consumer's Resource Handbook.
Can you give us an estimate of the resources you might require
to produce the report in fiscal year 1998 if Congress should
decide to maintain responsibility for the handbook at CIC?
Ms. Nasif. The President's budget does provide for the
transferring back to the Office of Consumer Affairs
responsibility for the Consumer's Resource Handbook for fiscal
year 1998. It is my understanding that the resources required,
whether by OCA or by the Consumer Information Center, would be
in the neighborhood of about $1.50 per publication. I believe
the estimate for printing would be under $1. The estimated cost
for CIC distribution is about $.54. So if 250,000 were produced
and distributed, it would be about $400,000 for the total cost.
In the past, OCA has been very successful in leveraging the
support of the consumer community and other Federal agencies as
well as the private sector in helping to cover the costs of the
Consumer's Resource Handbook. Traditionally, what is done is
that the committee provides a foundation of funding for the
Consumer's Resource Handbook and then the Director of the
Office of Consumer Affairs invites other Federal agencies, as
well as corporate and other private sector organizations, to
contribute resources to cover the costs of the publication.
So it really is a very joint effort in coming up with the
funds to successfully print and distribute the handbook.
DISSEMINATING INFORMATION ELECTRONICALLY
Senator Bond. Can consumers order publications from the CIC
web site? Do you see a demand for this? Do you see a day when
you would move to distributing all of CIC's publications
electronically?
Ms. Nasif. Currently we are working toward consumers being
able to order right off our web site, and we are actually
working with the Government Printing Office to make it a
reality. About 50 percent of the publications in the CIC system
are actually GPO sales documents. So it is not something that
CIC can proceed ahead with on our own. But we are working with
them.
GPO is putting into place an interactive system so that the
public can order from their web site. As soon as they have
perfected and debugged that system, we will work to have it
applied to CIC in the Pueblo facility.
Of course, the main concern of all of us interested in
electronic commerce is maintaining the privacy and the
confidentiality of credit card information, which must go
through the Internet web site.
We are fortunate that we are part of the General Services
Administration because the agency is a leader in the emerging
technologies that do safeguard that kind of personal
information. So we will be working within GSA as well.
As far as whether the day will come when all consumers will
be ordering from the web site as opposed to writing to Pueblo,
I don't think so. Given the explosive growth of the Internet
and especially the World Wide Web, it seems that certainly this
country is going down that path. However, we are totally
committed to maintaining our print program because we know that
the majority of Americans depend on printed publications to get
their information.
So we are looking forward to maintaining a dual track and
keeping both programs going.
Senator Bond. Well, as long as this consumer is still
around, there will be demand for the printed material.
Senator Mikulski. And with big print. [Laughter.]
Senator Bond. Yes; maybe the next generation will be all
electronic, but not me.
Ms. Nasif. The day will come we are told.
Senator Bond. I don't believe that.
Ms. Nasif. I know I am not ready for it. I am holding on to
those publications as best I can.
Senator Bond. Thank you very much, Director Nasif.
USOCA HELPLINE DATABASE
Director Byrne, one of the things, obviously, where I have
already indicated my concern is for the duplication of effort.
I previously served as a consumer affairs counsel in the
attorney general's office. It seems that every State has at
least one, if not several, entities that are providing consumer
information and warning. I happen to know of a man who was one
of the unfortunate ones who managed to get burned twice by the
Nigerian scam, a man who had some money that he no longer has,
but he had enough that he was still hit with it, indeed hit
twice.
Obviously we cannot stop all scams. We have not gotten the
message out. To what extent do you work with States and others
who have the same responsibility you do?
Ms. Byrne. Mr. Chairman, last March Money magazine did a
compendium of all the State and local government efforts in
consumer protection and found that there had been, over the
last several years, a 60-percent cut in State and local offices
in their efforts.
One of our jobs is in just taking up the slack. What we
find in the calls that we are getting is that people don't know
where to turn. Their local offices have sometimes been closed
down. Their 800 numbers have been disconnected. We often tell
them to call their attorney general because they don't know
where to turn.
Oftentimes with these 1-800 numbers and the other agencies
that are available, the consumer finds himself in Dante's third
ring of hell. They push from voice-mail to voice-mail without
ever getting a real person on the line. All they needed was a
simple question answered.
We hope that we provide that kind of answer, that kind of
help to consumers because what we are finding is that we are
not getting the kind of coverage that we would hope in State
and local governments.
Senator Bond. I think some of us in Congress are getting
those calls as well.
MEASURING OCA'S EFFECTIVENESS
Is there any measurement or any impact that you can
identify that your agency has that others do not have? When you
are providing information, I know it is difficult to determine
what impact you are having. But have you developed any means of
measuring the impact of your agency?
Ms. Byrne. One of the things we have implemented with the
HelpLine is a database that we can track people and how they
are getting responded to. If we refer them to another agency,
what was the response from that other agency?
As the Special Assistant to the President, besides being
the Director of the Office of Consumer Affairs, I head up the
Consumer Affairs Council for all the Federal agencies and all
their consumer components. I feed that information back to them
so that they'll know if their agency has been doing a good job.
We can measure now the outcomes which we were not able to
do prior to my arrival, the outcomes of these calls that are
being made. How many people actually got their money back? How
many people actually got their question answered? How many
people actually avoided a scam because that is the data that we
are now keeping that we were not keeping 3 months ago.
Senator Bond. We would be interested to see that
information.
But isn't the HelpLine duplicative of the GSA's Federal
Information Center?
Ms. Byrne. Mr. Chairman, when I served in Congress, I
thought that they were the same thing. I really was not clear
in my own mind what each did. But what I find right now is that
the Federal Information Center is referring calls to us because
they don't know what to do with them.
Congressional offices are calling us because they don't
know where else to turn. Also consumers are calling us because
they don't know where else to turn.
It is different to be a vocal yellow pages, if you will,
for Federal agencies than it is to give help. It is my
understanding that the Federal Information Service is a
vocalized yellow pages for Federal agencies. If you know where
you are going, you can get the right number.
But most people, when they call for help, don't know who to
call. They are swimming through the alphabet soup of Government
agencies.
Senator Bond. The FIC I understand has a staff of over 100
personnel who are supposed to assist citizens with consumer
problems utilizing the Consumer Resource Handbook. Are they not
doing the job?
Ms. Byrne. We have in our agency, in the Office of Consumer
Affairs, over 25 to 30 years experience in every imaginable
consumer issue you can think of. To have that kind of expertise
willing to talk to consumers is much different than just trying
to give somebody a phone number.
I don't think the Federal Information Center is as
equipped, just through lack of experience, to deal with these
consumer inquiries. We have a very specific task.
[The information follows:]
U.S. General Services Administration Federal Information Center
PROVIDING SERVICE TO CITIZENS AND GOVERNMENT AGENCIES
INTRODUCTION
Established in 1966, the Federal Information Center (FIC) is a
single point of contact for people who have questions about Federal
agencies, programs, and services. The FIC currently responds to about 2
million calls per year via its nationwide, toll-free number: 800-688-
9889 (800-326-2996 for TTY users). The FIC is open for public inquiries
from 9 a.m. to 8 p.m., eastern time, Monday through Friday, except
Federal holidays.
The FIC program is operated by a contractor that maintains the call
center in Cumberland, Maryland, and uses about 80 staff-years to
accomplish its tasks. The program's annual budget is about $3.2
million, or approximately $1.50 per call: This includes all contractor
expenses, payments to FTS2000 for the `800' service, and Government
support and oversight.
SERVICE TO CITIZENS
The information specialists either answer directly, refer the
caller to the correct office, or research the inquiry to provide a
suitable response.
The most frequent public inquiries have to do with workplace issues
(safety, discrimination, wages, etc.), State-government matters,
immigration and naturalization, Federal taxes, Federal employment,
savings bonds, Government publications, housing-related concerns, FCC
matters, and disaster assistance. Many other inquiries relate to such
consumer matters as product safety and reliability, advertising, food
products, banking, and motor vehicles.
The metropolitan areas from which the largest number of telephone
calls come are Los Angeles, New York, Miami, Chicago, Atlanta, Dallas/
Fort Worth, Houston, San Francisco, San Diego, and Tampa/St.
Petersburg.
The staff responds to 2-3 inquiries a day from Congressional
offices who call for their constituents.
Citizens may discuss their inquiries with senior staff members who
have a combined total of decades of consumer contact and research
ability. Citizens usually start their inquiries by talking to junior
staff members who have been trained to differentiate between calls they
should refer to the senior staff members and those they should answer
themselves.
a sampling of specific services to other agencies
Copyright Office, Library of Congress.--Since about 1975, have
distributed copyright forms to individuals and answered basic questions
about copyrights. In fact, the FIC distributes more forms to
individuals than the Copyright Office itself.
Bureau of Land Management, Department of the Interior.--Since about
1980, have assisted in the dissemination of information about the wild
horse and burro program.
U.S. Marshals Service, Department of Justice.--Started partnership
in July 1995 to inform the public about acquiring property seized by
law enforcement agencies. In December 1996, expanded partnership by
including GSA's Consumer Information Center.
Passport Office, Department of State.--In 1995 and 1996, expanded
existing level of expertise on passport matters and responded to
passport inquiries referred from the New York, Miami, and Seattle
passport offices.
Authentication Office, Department of State.--Beginning in November
1996, expanded the assistance available to persons wanting information
on certifying documents.
Consumer Information Center, General Services Administration.--Have
assisted in the distribution of the Consumer Information Catalog since
1970. Beginning in January 1997, received requests for the Catalog on a
separate toll-free telephone number.
Travel and Transportation Policy, General Services
Administration.--Starting in November 1996, have served as the main
source for print or electronic copies of the per diem rates issued by
GSA.
U.S. Forest Service, Department of Agriculture.--In late summer of
1995, removed excess workload from their campground reservation line by
answering callers who were requesting information instead of wanting to
make reservations.
reference materials in use at the fic
Principal reference tool is the FIC's own electronic data base,
which lists more than 100,000 points of contact (telephone numbers,
addresses, electronic access) by agency and subject. The data base also
includes the Catalog of Federal Domestic Assistance and many agency
fact sheets. GSA and the FIC contractor are working with the Government
Printing Office to place the FIC's data base on CD-ROM, sell it to the
public, and distribute it to all Government Depository Libraries.
Printed periodicals such as the Federal Register and the Code of
Federal Regulations.
Printed agency materials such as the Consumer's Resource Handbook,
the Budget of the United States Government, and agency telephone
directories.
Printed materials from private sources such as the Encyclopedia of
Associations; directories of key officials in Federal, State, and local
governments; and directories that list foreign travel information.
Regular and frequent use of government and private information
accessed through the World Wide Web.
Senator Bond. But you have had this HelpLine for how long,
2 years?
Ms. Byrne. Yes, sir.
CONSUMER RESOURCE HANDBOOK
Senator Bond. You are proposing to expand substantially the
1998 edition of the Consumer Resource Handbook. Why are you
doing that? What precisely do you have in mind? What is the
precise cost and who will pay the additional mailing costs?
Ms. Byrne. We have proposed that we increase the number of
printings for the Consumer Handbook, that we focus more on how
people can get their questions answered through e-mail, through
web sites. We have a whole, new, growing area of complaints,
which is hardware. People's printers, people's computers don't
work right. The help lines that are put up by these companies
are not responsive.
So we need to focus in on what is happening in the
marketplace. That is our job. So we are going to expand those
sections.
Also there is consumer debt, how to avoid bankruptcy, the
difference between a debit card and a credit card--this last is
causing a great deal of confusion in the marketplace right now.
These are areas that we want to highlight and expand in the
handbook.
We do it by asking other agencies who have interests here
to help us with this. We have asked the Securities and Exchange
Commission, through their efforts on decreasing consumer debt,
to help us with those sections.
This is a cooperative effort. But because we have been in
the business for so long we know where to go to get the help
within the Government. We also have a lot of support within
industry and the marketplace in this product.
So they are willing to help with the costs.
Senator Bond. Do you accept corporate contributions for
this?
Ms. Byrne. We have a gift fund, as you know, ordinarily,
and we would accept corporate help in producing and printing
the book.
USOCA TRAVEL FUND FOR FISCAL YEAR 1998
Senator Bond. Your testimony refers to the OCA's role in
representing U.S. consumers in international fora. What
international travel is planned for fiscal year 1997 and fiscal
year 1998 and at what cost?
Ms. Byrne. We have domestic travel to do seminars and town
meetings at the cost of about $10,000 for the entire year. We
have two international fora in which we participate, which is
OECD. Right now we are working on international parameters for
electronic commerce, so that when people step into this brave,
new world of the Internet that we all think is coming, they
will have a sense of security, trust, and safety about it.
Right now, on the world marketplace that is not true. So we
are looking at what we can do through these various mechanisms
to enhance consumer safety in electronic commerce.
Senator Bond. So what would be the cost of that?
Ms. Byrne. That is $10,000 also. We are looking at like
$20,000 in travel.
Senator Bond. OK. Thank you.
Senator Mikulski, have you any further questions?
Senator Mikulski. No, Mr. Chairman. I look forward to
working with our witnesses.
Senator Bond. All right. Thank you very much.
Additional committee questions
Our thanks to each of you for presenting your testimony. We
appreciate it and we look forward to working with you all in
the months to come.
[The following questions were not asked at the hearing, but
were submitted to the Office for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
Question. How much are you spending on the HelpLine? Are the costs
of the calls being paid for by the White House, or OCA?
Answer. Calls to the National Consumer HelpLine through the White
House telephone grid average $1,100 per month or a cost of $0.08 per
minute based on the rate which was negotiated for all national 800
number lines serviced under the carrier Sprint. The HelpLine is
currently staffed four hours daily by full-time staffers on a rotating
basis, for an average total of 2.5 FTE's. All costs associated with the
HelpLine are paid with funds appropriated to USOCA.
Question. OCA plans to expand substantially the 1998 edition of the
Consumer Resource Handbook, Why is an expansion necessary, who has
suggested you do so, what precisely do you have in mind, and what is
the proposed cost? What will be the additional mailing cost? Do you
have plans to reduce mailing costs, for example by using newspaper-
weight paper?
Answer. The next edition of the Consumer Resource Handbook produced
by USOCA will expand its Consumer Tips section to include information
on dealing with child care as a consumer issue, more specific
information on car leasing, home based businesses, investing and
pension protection. Additional directory listings for computer and
computer software companies will be included. E-mail addresses will be
added to all listings when available. We will delete out-of-date-
information. The new listings are the suggestions from consumers,
government agencies, and businesses. We do not anticipate a substantial
increase in weight, therefore, the printing and mailing costs will be
virtually the same as they have been for the last three fiscal years.
Our mailing costs are controlled by CIC, but we continue to ``shop''
for the lowest price. The use of newspaper-weight paper had been tried
in the past. USOCA received negative responses from the public because
the Handbook is used as reference and needs to stand up to continued
use.
Question. Last year, we learned that OCA discontinued using the
Consumer Information Center to mail out the Consumer Resource Handbook,
at a cost of $2.52 per copy more than what it would cost using CIC. In
fiscal year 1998, do you intend to use CIC to mail out the Handbook
should the Congress agree that OCA retain responsibility for producing
the Handbook?
Answer. USOCA does plan to continue to use the Consumer Information
Center in fiscal year 1998, as long as they can provide us with the
lowest audited mailing prices.
USOCA mails a few thousand copies at the first class rate in
response to requests from Congress, Governors and Lt. Governors,
Attorneys General, district offices of Congressmen and Senators and
other officials, and corporate and community offices when they request
rush delivery. This special service has been provided since Mrs.
Virginia Knauer was the USOCA Director under president Reagan.
Question. OCA has the authority to accept corporate contributions
for the Consumer Resource Handbook. How much do you plan to receive in
corporate contributions in fiscal year 1998? What did the contributions
total in fiscal year 1996?
Answer. Last September Congress eliminated USOCA's gift acceptance
authority in the Omnibus Appropriations Bill. Currently, USOCA is in
the process of regaining its gift acceptance authority through the
President's Supplemental Appropriations Bill. When USOCA receives its
gift acceptance authority USOCA anticipates approximately $100,000 from
private sources.
USOCA received $2,000 from private sources for the Consumer
Resource Handbook in fiscal year 1996, before the gift acceptance
authority expired. These monies cannot be spent until the gift
authority is restored. Non-public funds were used to sponsor National
Consumer's Week events around the country totaling approximately
$25,000. USOCA utilizes in-kind contributions from various consumer
organizations and private sources in partnership for consumer education
events and conferences.
Question. Your budget indicated you plan to revive the Consumer
Newsletter. How much will this cost, and why is reviving this
necessary?
Answer. USOCA has over 10,000 names and addresses of grassroots
consumer groups; national, state and local consumer organizations;
businesses; government; and interested parties in its newsletter
database. The Consumer Newsletter fulfills USOCA's mission by
informing, educating and warning interested parties about issues and
events they need to be aware of. In addition, consumers often want to
know how USOCA views an issue, what other Federal agencies are doing
about a particular issue and what's new on the consumer horizon. The
Consumer Newsletter serves this purpose and helps reduce duplication of
effort by other agencies. The estimated cost for a quarterly newsletter
is approximately $30,000 per year.
Should you require additional information please let us know. We
will be more than happy to assist you.
SUBCOMMITTEE RECESS
Senator Bond. This hearing is recessed.
[Whereupon, at 10:30 a.m., Tuesday, March 11, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MARCH 18, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-562, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Campbell, Mikulski, and Boxer.
FEDERAL EMERGENCY MANAGEMENT AGENCY
STATEMENT OF JAMES L. WITT, DIRECTOR
ACCOMPANIED BY:
GARY D. JOHNSON, CHIEF FINANCIAL OFFICER
GEORGE OPFER, INSPECTOR GENERAL
OPENING STATEMENT OF CHRISTOPHER BOND
Senator Bond. Good morning. The subcommittee hearing will
come to order.
The subcommittee meets today to review the budget request
of the Federal Emergency Management Agency, and we are pleased
to welcome the Director, James Lee Witt, and his team. Welcome,
Mr. Witt. We appreciate all the work that FEMA has done to
respond quickly to the most recent spate of disasters. As we
all know, there were devastating tornadoes, flooding along the
Ohio River, something we know too well just west of the
Mississippi, and in the Northwest. I know that you personally
have visited a number of the disaster areas. Our hearts and our
thoughts go out to the victims of these disasters and we pray
for the speedy recovery of their communities.
FEMA is requesting a 1998 budget of $3.2 billion, of which
$374 million would fund the operating programs, $100 million
would fund the emergency food and shelter program, and $2.7
billion would fund the disaster relief account. The amount
requested for the operating programs represents a slight
reduction below the current year, while the disaster program
would increase $1.4 billion more than the current year
appropriation.
While FEMA's responsiveness is commendable, I do not think
it has been balanced with fiscal responsibility. I continue to
be very troubled by the management of FEMA's multibillion
dollar disaster relief fund, which has never been audited, and
I am very concerned about the request that is pending before
the committee. Currently FEMA has more than 500 open disasters
on the books dating back to 1989 with costs totaling $22
billion. More than $4.5 billion remain to be obligated for
these open disasters and this does not include the costs of the
most recent Ohio flooding disasters and the tornadoes. This is
a very significant amount of expenditures.
The number of major disaster declarations in the 1992-96
period has increased 54 percent above the preceding 5-year
period and FEMA's calculation of 5-year historical average cost
of disaster relief for fiscal year 1998, excluding the
Northridge earthquake, is $2.3 billion, an increase of 28
percent over last year's 5-year average of $1.8 billion.
Now, FEMA has acknowledged that the escalation in cost is
due not only to the increase in large-scale disasters, but also
because ``The scope of Federal disaster assistance has
expanded, the Federal role and response has expanded
considerably, and State and local governments are increasingly
turning to the Federal Government for assistance.''
It seemed to me that FEMA has significant mission creep. It
is no longer simply to come in when States and local
governments are overwhelmed, which was the intent of the
Stafford Act. Indeed, FEMA itself has said, ``The current
system of disaster relief tends to discourage States and local
governments from assuming primary responsibility for initiating
appropriate mitigation, preparedness, response, and recovery
measures before a disaster strikes.''
And FEMA's role seems to be forever expanding, illustrated
by the spate of disaster declarations for snow removal in the
last 5 years. There have been no snow disasters declared from
1979 to 1993, some 14 years, and there have been calls for FEMA
to reimburse the State of New York for costs related to the TWA
disaster.
To my knowledge, the disaster relief program is the only
program in the Federal Government that does not have to
consider fiscal constraints whatsoever. FEMA's other programs
do not compete with this program for funding, so there is no
incentive within the agency to exercise prudent stewardship of
this fund.
When disaster relief funds have fallen short, Congress has
responded quickly time and again to FEMA's request for
additional funds in an effort to meet the needs of disaster
victims expeditiously, and to provide this aid we have slashed
low income housing and other programs to offset the costs. We
have cut other VA-HUD programs totaling $8 billion under my
chairmanship to pay for disaster assistance in the past 2
years. Yet, we have learned that some of these funds have gone
to such questionable projects as golf courses and the planting
of shrubbery.
Recently FEMA was, as we learned from the news media,
considering expending $500,000 to replace a bottle village,
which some have named folk art and others have called an
eyesore, damaged in the Northridge earthquake and eligible for
FEMA funding since it happened to be placed on the Register of
Historic Places. I was glad to learn that Friday you made the
right decision and decided against funding this project.
Following the Northridge earthquake, about $400 million has
gone to one university, UCLA, clearly an institution with
strong revenue generating capabilities. We need to review
whether we can continue to make such expenditures in this era
of belt tightening.
We have learned about some of these expenditures through
inspector general's reports and press accounts since FEMA
budgets do not provide documentation beyond very broad
categories of the specific projects being funded. In fact, FEMA
centrally has no information on the numbers, costs, or status
of the public assistance projects currently underway. There are
literally thousands of such projects underway.
The Agency's responsiveness to disasters is truly laudable,
and I join with others who commend you, Mr. Witt, and the
Agency for moving quickly. But suggestions and even directives
from Congress to submit proposals to reform this program to be
fiscally responsible have gone unheeded or have apparently been
treated someplace in the administration as low priority at
best.
In September 1993, the administration's ``National
Performance Review'' report called for, by March 1995, a
comprehensive plan, including proposed executive orders and
legislation to develop objective disaster declaration criteria
and comprehensive Federal policies to reduce the Federal costs
of disaster assistance. To my knowledge, this commitment has
been ignored.
A series of GAO and inspector general reports have been
issued over the past 2 years at the request of this committee.
They have outlined a number of options for reducing disaster
relief costs, including establishing more explicit and
stringent criteria for providing Federal disaster assistance,
eliminating public assistance grants for revenue producing
private nonprofits, shortening the appeals process from three
levels to one, making marinas, golf courses, trees, and shrubs,
except in parks, ineligible, and clarifying the criteria
related to the standards to which damaged facilities should be
restored. For the most part, these recommendations have not
been acted upon.
Our efforts time and again to get this Agency to propose
plans for implementing those recommendations and reducing
excessive costs have been stonewalled. We discussed these
issues in the hearings for the past 2 years. We have been
through this before. This is not new. This is not a surprise.
We included a requirement in the fiscal year 1997 committee
report for a proposal for reform, including a request for
necessary legislation, if that is required, and we included a
statutory requirement in the fiscal year 1997 VA-HUD bill. To
date, these directives have not been fully met.
Now, we received a draft report on March 12 which was a
about 45 days late in response to the statutory requirement in
the fiscal year 1997 VA-HUD bill for a plan to reduce disaster
expenditure. The report is still in draft form. It falls short
of the mark and it outlines options. That is not what we had in
mind. You knew and we knew what the options were. We do not
need to be told what the options are again. We want specific
suggestions and recommendations.
In response to questions submitted at last year's hearing,
you said:
FEMA is committed to implementing all the inspector
general's recommendations in principle. We believe that our
disaster criteria initiative, which will contain disaster
payment thresholds, as well as declaration thresholds, will
comprise the major portion of reforms called for by both the
GAO and the FEMA inspector general and lay the foundation for
substantial long-term Federal cost share reductions.
Now, the draft report is completely silent on the issue of
disaster criteria. It does not propose an implementation plan
for the inspector general's recommendations. It only repeats
some of the options that the inspector general and the GAO have
proposed in the past.
The report does not address the issue of State cost shares.
While States are required to cost share in the disaster relief
program, I understand FEMA does not enforce its own regulations
and require cost shares to be put forth at the beginning of a
project. Apparently the State of California has not
appropriated one dime--one dime--to match the $5 billion in
FEMA-funded projects. Because the cost share is not required up
front, the State has little incentive to control and reduce
costs.
In addition, last year we received testimony from the GAO
that:
FEMA's criteria for determining the extent of permanent
restoration for public facilities and for determining the
eligibility of certain private nonprofit facilities are
ambiguous. FEMA relies on States to ensure that expenditures
are limited to eligible items.
Regrettably, I have seen absolutely no evidence that these
massive loopholes have been closed.
While some management improvements have been made in such
areas as centralizing processing, reconciling the disaster
relief fund so it can be audited for the first time in fiscal
year 1998, and other administrative reforms which have reduced
costs marginally, the commitments that have been made to us and
that we have directed you to fulfill to address the disaster
criteria have not been met, and the really hard choices have
not been made.
Let me be quite clear. I am a strong supporter of FEMA
getting to a disaster site quickly and dispensing aid to needy
individuals as soon as possible. I am a supporter of helping
communities rebuild so they can get on with their lives. But I
am not a supporter of using the disaster relief fund to gold-
plate revenue generating facilities and to finance golf courses
in wealthy communities. And I cannot condone fiscal
irresponsibility.
Last year, at the suggestion and at the implied request of
FEMA, we did go forward with some of the language that had been
added in the Senate to limit disaster relief. Let me be quite
clear, Mr. Witt. We expect you to come forth with a
comprehensive plan. We want to know where it is, and if we do
not have one in place by the time this bill comes out of
committee, I will strongly consider working with my colleagues
to implement our own system. Something has got to be done. You
all have had a couple of years now since we started requesting
and talking about this to come forward, and if you do not do it
or at least suggest to us how it can be done, we may have to do
it for you because the scope and the amount of these disaster
requests is out of hand.
Now, I am also very concerned about the supplemental
request that we understand the administration will be
submitting. It is my understanding that FEMA currently
anticipates requirements totaling $2.9 billion in fiscal year
1997. Yet, the administration will request about $1 billion,
according to the latest rumors, of which some portion would be
in a contingency fund. How we will pay for the supplemental and
the additional requirements coming due in fiscal year 1998
totaling some $5.9 billion will be an enormous challenge.
There are also very serious problems with the
administration's proposals for funding future disasters through
a contingency fund. Mr. Witt, this is nothing but a gimmick. I
could not take that to the floor with a straight face. My
colleagues rightly would pound me about the head, and we expect
better from OMB and from FEMA. This is a very irresponsible
fiscal gimmick. The proposal to treat these funds off budget is
just not going to work. The Congress has made its position very
clear.
The fiscal year 1998 5-year historical average annual cost
to FEMA disaster relief is $2.3 billion. We know that close to
this level of funds will be needed next year and these funds
need to be budgeted.
In addition, the contingency fund concept gives entirely
too much discretion to the administration to distribute these
funds with virtually no oversight of Congress. I have been in
the executive branch, and I would love to have a honey pot to
go around and hand out money. It makes you feel good. People
love you. You come in town with free money, and it is great.
Love to do that. Nothing is more fun. Unfortunately, that is
not how Government should work. There should be explicit
standards and criteria. We do not have those.
We also have questions about the proposed $50 million
predisaster mitigation fund you have requested. We have seen no
details for this request or any proposal on how we would pay
for it. Moreover, there is $1.4 billion in existing
postdisaster hazard mitigation funds currently unobligated. So,
there are significant questions about why States are not
spending these funds and how the proposed new program would be
more effective.
There are a number of very important issues to be
addressed, including the status of the flood insurance fund,
the level of Treasury borrowing in that program, the future of
chemical stockpile emergency preparedness programs, and FEMA's
progress in developing performance measures for the States
through performance partnership agreements and assessing
States' capabilities in disaster response.
In closing, Mr. Witt, you have earned well deserved
accolades for the many improvements in FEMA's responsiveness in
the last 4 years. You have done an excellent job personally and
made great personal commitments to be there and to have your
people on the ground, but the steps that we must take for
fiscal responsibility are not there. They have got to be put in
place, and I would hope that you would suggest to us and help
us work out how they are put in place rather than have us do it
a cappella because one way or the other, it is going to be
done.
I am now going to turn to my distinguished ranking member,
Senator Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman.
I want to welcome FEMA Director James Lee Witt. I want to
applaud your work with streamlining FEMA and making it a more
effective and efficient Agency.
The chairman raises some very important fiscal questions,
but I would like to go back to 5 years ago when FEMA itself was
a disaster, when our readiness and our response was a national
embarrassment. We were not ready in most States to respond to
disaster. All 50 States were very uneven in their preparedness,
and those often at most risk were the least prepared. We
remember with great sadness what happened in Florida when the
very nature of what occurred overwhelmed the capacity of even
the Governor to estimate what damage that he had. Thanks to
you, Mr. Witt, you then have made us fit for duty in readiness
and response.
But I recall that there were three R's to what we had
talked about for FEMA. It was called readiness, response, and
rehab. The rehab now is what is being discussed by the
chairman, and I believe that those are very serious concerns.
But I think we also need to note that it was under your
leadership that many of the recommendations of the National
Academy of Public Administration about how to improve FEMA in
its work in saving lives and saving communities were followed.
So, we thank you for implementation of the National Association
of Public Administrators' recommendations about bringing down
the artificial wall between the old cold war, civil defense
approach and the new realities of a risk-based strategy.
I believe that FEMA does do what it was supposed to do,
which is save lives and save communities. Now we are called
upon, because we have now done the first two R's and done them
very well, to focus on the third R which is rehabilitation, or,
in some instances, reengineering. In other words, in
communities that are most at risk for flood or hurricane, what
are the things that could be done beforehand that would prevent
future disaster funds for request.
I believe the chairman's concerns are valid and I think you
would agree with them.
But thank you for the first two R's, readiness and
response, saving lives, saving communities. Now we will move to
the issues related to rehabilitation and reengineering, if you
will, of those disaster-prone areas, and we will come back and
talk about that.
I also want to talk about the issue of mission creep. I
know that they are of concern to you, but I know that every
time a disaster occurs, that FEMA is under tremendous pressure
both from a Governor and its two Senators for you to show up,
to be able to be there to provide disaster assistance.
Everybody likes the photographs, the helicopters landing, going
out there to show where people feel powerless, at least that
our response is not.
I believe that that is where that is coming when we talk
about the lack of matching funds and so on. I believe there
needs to be work done with the National Governors Association
really on what are clear triggers that bring you in and also a
real commitment on their cost sharing.
The chairman's concerns are valid, but I believe you are
placed under extraordinary pressure not only by the White House
to respond with compassion and effectiveness, but by the
Governor and the two Senators in those areas to really be able
to do that. So, I believe that much work needs to be done, but
I do not believe the work to be done is a one-sided effort.
The other is this whole issue of what this committee has
borne because FEMA is in it. We all recall after the tremendous
problems in California, this subcommittee was called upon to
fund the entire disaster relief and out of the HUD account. We
never quite recovered from that in terms of our appropriations.
Again, the chairman's concerns are quite valid, but I think we
need to talk about not a honey pot, but really a specific way
of having the resources that, therefore, are not charged
against this committee.
I like the chairman am very reluctant to put big ticket
items off budget. I would agree that it should not, but I am
not quite sure what is the best thinking because we cannot
appropriate for every disaster that might affect the United
States of America.
I know Senator Glenn, when he chaired Government Ops, was
looking at this. I would hope Government Ops would give us some
recommendations as well as ours.
I believe Senator Bond is quite serious when he says if you
do not come up with the recommendations, we will. I would
prefer we could do it together and that we could do it not only
with OMB but with the Governors because I think now is the time
to say thank you for response, thank you for readiness. Let us
now go on to the rehabilitation aspects, and most of all, the
other R which is called fiscally responsible. I think then we
will really have had a holistic approach to this.
Thank you and I look forward to talking with you about the
national issues as well as some in Maryland.
GETTING GOVERNORS INVOLVED IN DISASTER PROGRAM CHANGES
Senator Bond. Thank you very much, Senator Mikulski.
I would agree with you that the Director and the Agency
come under great pressure not only from the White House but
from Governors and Senators. There is nothing like having a
solid wall behind you to stiffen your back and help you say no
if we can get Congress to act, in cooperation with the
administration and the Governors, on specific criteria. It
takes some of the pressure off of Mr. Witt and the Agency.
Senator Mikulski. That is right. Mr. Chairman, you were a
Governor and by all accounts, a very excellent Governor. That
is one of the reasons the people of Missouri sent you for your
first term, and an excellent Senator why they sent you for your
second term.
I really do think the Governors have to come in on this,
and maybe you and I could actually meet with them as well.
Senator Bond. We will make a decision here that you and I
will request of the National Governors Association their views
on this. I will ask our staff to prepare that.
Senator Mikulski. I think that will be excellent.
Senator Bond. We will start with something, but we are
really awaiting the word from the administration because you
are the people who do it and you know how it works or does not
work.
So, with that, forgive me for taking up some time. Let me
turn to Senator Boxer. Good morning, Senator Boxer.
STATEMENT OF BARBARA BOXER
Senator Boxer. Good morning, Mr. Chairman. Good morning,
Senator Mikulski, and good morning, James Lee Witt.
I want to say that I have come to know James Lee Witt
almost too well and his wonderful staff. It seems that we pick
ourselves up from one disaster and we have got another one in
my magnificent State, having gone through so many of these,
both as a Member of Congress where I had one terrible
earthquake in San Francisco where we are still picking up, if
you will, the pieces because FEMA at that time simply did not
have the ability to respond.
I remember very well that when I came here, Mr. Chairman,
the faith and trust in FEMA was almost nonexistent, and I have
to say to James Lee Witt--and I know that not every single
Senator is going to agree with you on every decision you make.
No two people could agree on everything, and you and I have not
agreed on everything either, of course, as I fight for my
State. This is the natural course of events.
What you have done for your country is just fantastic
because you have taken an Agency that was in the depths and you
have brought it up and you have made people understand that we
can respond with a sense of fairness and a sense of urgency and
a sense of efficiency.
Mr. Chairman, I do not have a statement for you, but what I
would like to do is respond to some of the issues that were
raised, I understand, by you before I came in.
I want to say something about earthquakes in general, Mr.
Chairman. You and I have experienced floods in our States and I
have had that awful experience. Earthquakes are very different
than any other disaster because the damage is not readily seen
at first, and that is the reason why we have moving estimates.
That is the reason why Governor Wilson has not yet made the
match because we still do not have the final answer on the
number. So, these things happen and they look strange, but I
would urge you to realize that it is a very, very different
thing.
If you look at the California Seismic Safety Commission,
what they said about Northridge--and I will quote--``Much of
the damage was hidden under fireproofing and finishes.'' So,
you do not find out. You see a little crack. It does not look
like anything and then you get in there and you realize the
incredible damage.
Also, on UCLA, it is, in fact, a public supported
university and it is a major medical center, so it is a public
institution.
I would agree with you, Mr. Chairman. I voted for the
McCain amendment to end the practice of funding golf courses
and so on. I think we really need reform and I will join with
you in doing that. You and I have gone through enough disasters
to understand that we know who really needs the help and we
want to be able to provide it.
First of all, I am so privileged to be with both of you.
You are such leaders in this area, and I hope that as a result
of my experience I can help you and I can work with you in
making the reforms we need and still be able to respond to
people in need.
With that, I want to say to you that what is very
interesting in California now, people are talking in the flood-
prone areas about ways that they cannot rebuild in flood-prone
areas. I think it is happening in California. People are
realizing you just cannot keep going back and making people
whole. We have to have policies here that recognize there are
certain areas that you are never going to be able to secure
from flooding and so on.
So, I am very pleased and privileged to be on this
subcommittee. I want to work with all of you and James Lee Witt
the best that I can. I want to thank you very much for this
opportunity.
Senator Bond. Thank you very much, Senator Boxer. Certainly
you have had the experience with disasters that exceeds that
which we have had in our State, but we have had quite a bit of
experience with it too. That is why we think the Agency is so
important.
Now we will turn to the leader of that Agency with all the
attention. Mr. Witt, welcome.
STATEMENT OF JAMES L. WITT
Mr. Witt. Mr. Chairman, members of the committee, thank you
very much. I am pleased to be here with you this morning to
discuss FEMA's appropriations. Also with me this morning is
Gary Johnson, our Chief Financial Officer. I hope that together
we can be responsive to your questions. We have a capable team
behind us who can respond to any specific questions.
Each year it seems like we start out at appropriation
hearings discussing where we have been and what we have been
doing. Mr. Chairman, you briefly laid out what we have faced
over the last few weeks. I do not think I have ever seen a
January like the one we had this year. We had floods in the
West, in the States of California, Washington, Oregon, Idaho,
and Nevada. At the same period, we had blizzards in the
Midwest, tornadoes in Alabama and Georgia, preceding the floods
in Ohio, Indiana, West Virginia, Kentucky, and Tennessee, and
tornadoes in Arkansas. We had 59 fatalities in this last round
of disasters.
I will be brief so that we have time to answer your
questions.
I think, Mr. Chairman, that you and the members of this
committee have seen the difference that mitigation makes in a
community that has been hit by a disaster. The reason that FEMA
is requesting $50 million for the predisaster mitigation
program is to try to bring the insurance industry and local and
State governments into the fold to help us to eliminate and
high-risk areas. The fact that every $1 we spend in the area of
predisaster mitigation can save $2 in future taxpayer dollars
is well documented. I think that we need to change the
direction we are going as far as dealing with disaster costs.
I totally agree with your view that the costs of disasters
have escalated and need to be controlled. We need to redefine
what we fund and what we do not fund. We should target our
funding to address the health and safety of individuals and
communities. We will work with you and this committee, Mr.
Chairman, to develop language for legislation in that area.
The idea of reducing risk is very prevalent. I have talked
to many Governors, including Governor Voinovich of Ohio, just
this past week, Governor Underwood of West Virginia, the
Governor of Tennessee, other Governors at press conferences and
those with whom we toured communities. They all support
preventive measures to keep from repeating disaster costs in
communities where we can mitigate that particular risk. I think
that is the direction that we need to head in.
Disaster costs have escalated despite the fact that over
the past 4 years, we have declared only 24 more disasters than
during the previous administration. We have also denied 56
requests for disaster declarations during that time period.
Therefore, it is important that we look at the
implementation of the disaster program and how we work with the
States and local communities on predisaster programs. All of
the staff and I recognize the need for a new direction, and we
are working very diligently to make it happen.
PREPARED STATEMENT
I am very proud of what we have accomplished to date,
including the cost-cutting measures that we have taken. We have
been very, very busy, and I do not apologize for what we have
not been able to do. We are making a difference in communities
as they rebuild and in people's lives. I am very proud that we
have been able to cut costs related to the application process.
I am proud of FEMA and I am proud of the employees. They are
very dedicated and they work very hard, Mr. Chairman.
[The statement follows:]
Prepared Statement of James L. Witt
Good morning Mr. Chairman, members of the subcommittee. I'm pleased
to be with you this morning to discuss the appropriation needs of the
Federal Emergency Management Agency (FEMA) for fiscal year 1998.
I am joined today by Gary Johnson, our Chief Financial Officer, and
together I hope we can be responsive to any questions you might have
regarding our request. Also with me are the rest of our executive
management team who can help me in responding to specific questions, if
needed.
It seems that each year we are talking about incredible events that
we could never forecast. In the past it has been historic flooding in
the Midwest, a huge earthquake in southern California, a tragic bombing
in Oklahoma City, or any number of hurricanes that have devastated
parts of our east coast with troubling frequency.
I mention all these events as ones we could not forecast. But just
because we can't see an event coming doesn't mean we can't lessen its
impact. We can make a difference. And it's my hope that in fiscal year
1997 and fiscal year 1998, we at FEMA will begin to suggest a new path
we can take.
We need to do more, much more, from this day forward, to reduce the
risks facing our communities. We can't stop an earthquake or a
hurricane, but we can build better and stronger. We have to get this
message across. We have to break this cycle.
Disasters are no longer unusual or singular events. Their
frequency, and their degree of devastation, demand that we raise our
own expectations about what we can do. We need to set higher standards
in building our communities. We have to make our mission of protecting
public health and safety a shared goal. We can do better. And we know
that.
Yes, we do a great deal in the area of mitigation right now.
Section 404 of the Stafford Act has been a great success in towns like
Arnold, Missouri, Memphis, Tennessee and Miami, Florida. All of these
places have suffered from devastating natural disasters and have
undertaken mitigation measures to reduce the future risk to their
communities. Actions including moving structures out of the floodplain,
seismic retrofit of critical facilities and floodproofing of
residences.
But we shouldn't have to wait for problems to happen. While some
FEMA programs already have made significant strides in mitigation
ranging from our work on building codes to the U.S. Fire
Administration's leadership on the use of sprinkler systems, much of
our most significant work in reducing risks can only be triggered by a
disaster. Foresight, planning, intelligent preparedness work, cannot be
rewarded under our current disaster assistance program--nature has to
force our hand.
The strong message of what communities can do to strengthen codes,
to make schools and public facilities safer, to lessen the impact of
these events, has to be heard outside of this committee room, outside
of the walls of FEMA, outside of the emergency management community,
and insurance roundtables.
The idea of reducing the risks has to enter the mainstream. No one
knows better than the members of the appropriations subcommittees in
each chamber, that the losses from recent disasters are neither small
nor rare.
That is why we are seeking $50 million in pre-disaster mitigation
funding to begin a program of forging coalitions to create disaster-
resistant communities. And we do mean coalitions where everyone plays
an important part.
If pre-disaster mitigation is considered ``a FEMA program'', then
it's a failure. This has to be a program that leverages the resources
and energy of other Federal agencies, States and local governments, and
especially the private sector, and brings them in as partners. They
have to recognize their stake in this; they too have to provide the
leadership.
We believe many State and local governments are ready and willing
to join us. The business community and the voluntary community are
ready to join in. We think this program will demonstrate their
commitment and resolve. It's my belief that this is the ultimate route
for reducing disaster costs.
We must continue to be good stewards of the funds you provide for
disaster response and recovery. We must continue to re-invent the ways
we deliver assistance that help to save resources and provide better
customer service.
But we also believe that pre-disaster mitigation, along with the
enormous amount of post-disaster mitigation work we accomplish, is the
path to increased safety and reduced costs. I hope you'll provide us
the opportunity to continue these efforts.
The resources you have already provided have allowed us to begin to
provide important tools to State and local governments to assess their
risks and to begin to establish a framework for building, and
retrofitting, smarter and safer:
--Just this month we have completed the initial development of the
first nationally-applicable tool to estimate losses from a
natural hazard (at this point, earthquakes, but we hope to make
this an all-hazard system) and to demonstrate the impact of
mitigation actions.
--This year we will complete and issue nationally-applicable
technical guidelines for the seismic rehabilitation of existing
buildings--this is critical. For example, the replacement cost
for bridges averages about $135 per square foot, while the
retrofitting for seismic strengthening averages about $38 per
square foot.
--This year, in partnership with the U.S. Geological Survey (USGS),
we will be issuing the 1997 update of the NEHRP (national
earthquake hazard reduction program) recommended provisions for
seismic regulations for new buildings. This update is
incorporating information based on new USGS spectral response
maps.
--And this year we will continue our partnership work in developing a
proposed international building code. My visit to Kobe, Japan
following that devastating earthquake in 1995 impressed upon me
the need for international standards. We have much to share and
we also have much to learn.
I have gone on at some length on the matter of mitigation, or risk
reduction, because we at FEMA are not satisfied to pride ourselves on
fast response or long-term recovery programs. We want to do less of
that response and recovery business--and I hope every member of the
committee will take this message back to your States and districts.
You can provide the kind of leadership that will put risk reduction
into the mainstream, to make it a fundamental part of community
development and community life.
This year we are asking for $2.4 billion for the disaster relief
fund (DRF) to ``clean up'' all of our disaster requirements as we move
into fiscal year 1998. That's a large sum, but it represents our
estimate of the remaining costs of years of disaster activity. Such an
appropriation would allow us to meet our commitments to hundreds of
communities who are still recovering and rebuilding from the
devastating impacts of disasters.
Congress has been generous in providing assistance for disaster
relief. But we all realize that being locked in a culture of
supplemental spending is not a prudent approach for any of us who work
in this arena. For this reason the President's budget proposes that
Congress appropriate $5.8 billion as a contingency fund for the
emergency requirements for disasters and designate that amount as an
emergency funding requirement.
These funds would be available only to the extent that the
President designates them as emergency funding requirements and only 15
days after notifying Congress that the funds have been so designated.
This approach is similar to that taken by Congress and the President in
the Emergency Supplemental Appropriations Act of 1994, Public Law 103-
211.
This proposal is designed to avoid the numerous emergency
supplemental appropriations that historically occur each year and would
support the six agencies, including FEMA, involved with significant
disaster responsibilities.
I also want to report to you on the progress we have made in
improving our disaster response and recovery programs. Since we met
last year we have worked to implement the commitments we made to the
committees. And we have taken actions on suggestions the committees
have recommended.
One significant area of improvement has been our ability to manage
more closely disasters from previous years. These are the disaster
events that initially persisted due to their scope and complexity, but
then remained open far too long. You may remember I told the committees
that disaster close-out was a top priority for me because of the
potential cost savings.
This effort is beginning to pay off. During the last year, FEMA
closed out 16 disasters. Since February of 1994, we closed out 415
human services programs, resulting in a reconciliation of more than
$1.8 billion to the disaster relief fund from disasters declared as
long ago as fiscal year 1975. Of the $1.8 billion reconciled, over $400
million were returned to the disaster relief fund. This reduced the
Federal Government's interest obligation accordingly.
Our use of our 1-800 Teleregistration System has greatly reduced
our costs to take an application for assistance. Where our on-site
costs used to average close to $60 per application, teleregistration
has brought that down to $19 per application.
Along with, and as a result of our careful auditing practices, we
have also been pursuing an aggressive debt collection process. Up to
this point, we've collected close to $4 million in debts.
We have taken all of these steps because we are aware of the
obligations that come with the large appropriations that have been
entrusted to FEMA. And the cost savings in these areas are an important
part of the Government-wide effort to achieve the President's goal of a
balanced budget.
The recent draft report we sent to the committees on FEMA's
improvements in financial management details the efforts we have made
in grants management, non-specific disaster spending and additional
steps we have taken to prudently manage disaster funds.
We are streamlining our disaster relief procedures by proposing the
elimination of one appeal level for the public assistance program. We
are also making other procedural adjustments that will reduce costs now
and in the out years.
In fact, this year we are undertaking a complete reengineering of
our infrastructure system. We are looking at it from start to finish to
determine what parts of our program make sense and what parts need to
be changed. This comprehensive approach will result in further
improvements and savings.
One of our logistics management initiatives has been the disaster
information systems clearinghouse (DISC). The DISC deploys standard
equipment packs to disaster field offices within 24 hours, recaptures
the equipment after it is used at the disaster site, refurbishes and
repacks it as necessary, and returns it to the inventory for the next
disaster.
Since August of 1995 through January of this year, the DISC process
has filled orders for more than 4,400 personal computers, 900 printers,
250 fax machines, and 2,800 cellular phones from disaster field
offices. If this equipment had been bought new off the shelf the cost
of just these four items, considered to be staples of the modern
workplace, would have exceeded $10 million.
Concurrent with that work, and in response to the appropriations
conference report, I convened an Agency-wide task force which has been
reviewing all aspects of our work and exploring areas where we can cut
costs. Because of the significance of this project, I wanted to have
our partners at the State and local level play a role in developing
this report.
But we can give you a few examples of some of the options we are
considering with our State and local partners both in terms of
regulatory changes at FEMA and legislative changes to the Stafford Act.
Some of the regulatory options would propose to:
--Eliminate eligibility of publicly owned facilities which are rented
out to private enterprise for revenue generation, including
sports arenas, commercial space, or industrial parks.
--Eliminate funding for tree and shrub replacement. FEMA currently
has an interim policy that prohibits funding replacement of
trees and shrubs on otherwise eligible public properties. A
formal policy will be circulated to the States for review.
--Eliminate building contents or cultural objects. Eliminate
assistance for cultural and decorative objects such as
paintings, statues, antique airplanes or trains or fire trucks,
etc.
The legislative options discussed in our report would:
--Abolish or restructure the community disaster loan (CDL) program.
Although used infrequently, the CDL often becomes a grant
rather than a loan because of the forgiveness feature. In fact,
$4 has been forgiven for every $1 collected.
--Eliminate funding for revenue-producing publicly owned recreational
facilities such as yacht harbors, golf courses, and stadiums.
--Require that all private non-profit (PNP's) applicants go through
the Small Business Administration (SBA) loan program prior to
applying for public assistance. This would encourage PNP's to
mitigate potential disaster losses and equalize the treatment
of private and public utilities.
--Eliminate funding for rural utilities service electrical and
utility cooperatives due to their commercial nature and the
availability of rural utilities service or Small Business
Administration loans. Since the cooperatives are eligible to
obtain loans, they should be required to do so first, rather
than automatically qualifying for a grant.
These are all options that should contribute to an informed public
dialogue on disaster costs. But it should be remembered that the report
has one strong conclusion that harkens back to the mitigation message:
If the only solutions implemented involve shifting the burden
within the society rather than a reduction of actual risk of
loss, everyone--taxpayers, insurance policy holders, municipal
bonds, etc. will lose.
Moving from theory to the all too real world, it has, once again,
been a very difficult year in natural disasters. The hurricane season
was severe once again, with Hurricane Fran being especially widespread
in its impact. And we also experienced more State-wide flooding in
California and an extremely harsh winter in the Northwest that
compounded problems from the flooding of the previous year.
There are other commitments from last year that we have kept that I
would like to review. As promised last year, we have published for
comment a proposed rule addressing eligible costs for snow emergencies.
Based on the comments we have received and the recent experiences in
several States, we will likely publish a new proposed rule in the near
future.
Fortunately, this winter has not been as severe in the East as the
last, but we have had important snow declarations in Minnesota and the
Dakotas that have been, perhaps, even more extreme.
In these snow declarations we have maintained our policy of only
clearing primary routes to protect public health and safety. We have
also worked to hold States more accountable for their work in disaster
preparedness and response and recovery work. The steps they have taken
in self-assessment of their programs is helping to establish a clear
base-line of capabilities at the State level.
Additionally, our new budget will, as in fiscal year 1997, continue
to support State Hazard Mitigation Officers. Again, this consistency
will help to bring the emphasis on risk reduction into the mainstream.
And this work is taking place within the context of the Performance
Partnership Agreement (PPA). The PPA has streamlined our assistance to
States and has simplified our processes and encouraged State
initiatives.
I will also continue to work with EPA and DOT to have all of us
work closer in the area of hazardous materials. The more we can mesh
our efforts, perhaps even consolidating our funding streams, the better
it will be for the States and the front line responders.
My earlier discussion on building hazard-resistant communities
should sound familiar in some respects, because it is building upon
another Governmental success story: the National Flood Insurance
Program.
Both the compliance provisions of the Flood Reform Act of 1994, and
our own ``Cover America'' marketing campaign have moved us up to nearly
3.5 million policies in place.
The coming year will bring forth more information, from studies
that the reform act mandated, to tell us what we can do with rate
structures, and what the impacts of any changes would be to communities
and the program itself.
But even in a time of higher borrowing by the flood fund, it is
important to ask what the Nation's resistance to risks and disasters
would look like without the NFIP? It would mean no flood maps, little
mitigation, weaker codes, bad zoning, more Federal disaster spending,
and more private and public losses of all kinds.
The NFIP is, in microcosm, an example of risk reduction as a
mainstream approach: policies that are sold by local agents, policies
that are required by local lending institutions, and communities that
enforce sound flood plain management in exchange for the availability
of affordable flood insurance.
This budget for fiscal year 1998 also contains a request for $100
million for the Emergency Food and Shelter Program. At a time when
great changes are affecting national social service programs it is
vitally important that a supplemental program such as EFS, that assists
the private non-profits ability to provide emergency help, be
maintained at this level.
As with our other efforts, the EFS program encourages coalitions
within communities and leverages funds to help people in greatest need.
I am also concerned with the health and safety of our employees
nationwide and you will see line items that reflect this concern.
Throughout these constant challenges of hard work and long hours
under the most difficult conditions, FEMA employees performed with
dedication and grace. One of the most pleasant parts of my job is
reading the customer service surveys that disaster applicants fill out.
Their level of satisfaction is extraordinarily high, but it's the
personal touches that grab my attention.
On many of these surveys, people take the time to tell us that not
only was their service swift, but it was sympathetic and courteous.
That people were treated with dignity. FEMA employees put a good and, I
believe, true face on Government service. I'm very proud of that.
In summary, this year's budget is not a wish list, but operates
within budgetary constraints. It is a prudent and sensible spending
plan that looks to the future rather than holding on to the past. It
has one message:
We can't go on as we have; from this day forward we have to start
reducing the risks we face.
During my tenure at FEMA the appropriations committees have not
simply provided us the resources to do our job, but have offered the
encouragement and support that have heightened our morale and
contributed to our success. On behalf of all the employees at FEMA, I
thank you for that support.
I hope that in fiscal year 1998 we can continue that tradition.
Thank you for your time and attention. I'd be pleased to answer any
questions you might have.
STATUS OF DISASTER RELIEF FUND
Senator Bond. Thank you very much, Mr. Witt.
Let me turn to the status of the disaster relief fund
first. What is the current balance in the disaster relief fund
and when do you project the fund will be depleted?
Mr. Johnson. Mr. Chairman, as of last Friday the
unobligated balance in the disaster relief fund was $2.295
billion. Without the assistance that is included in the
supplemental request pending at the White House, we would
project right now that we would be unable to meet obligations
this year by about $442 million. Without the supplemental
appropriation, we will be forced sometime this spring to
revisit how we allocate our moneys for our public assistance
type projects to ensure that we have dollars available to meet
individual victims' needs.
Senator Bond. With almost $2.3 billion you would run out
this spring?
Mr. Johnson. We estimate that by the end of the fiscal
year, Mr. Chairman, we would be short $442 million to meet
obligations against requirements. By spring, we would have to
begin to adjust how we would allocate money to the open
disasters to ensure that we have dollars available for
immediate needs of victims.
Senator Bond. Mr. Witt, why are the current projections
exceeding the projections contained in the congressional budget
justification which showed a yearend carryover of $100 million?
Are the most recent spate of disasters the reason?
Mr. Witt. I think so, yes, Mr. Chairman.
Senator Bond. It's not Northridge?
Mr. Witt. Yes, sir; partly.
Senator Bond. How much has that Northridge estimate gone up
this year?
Mr. Johnson. Mr. Chairman since the budget submission was
forwarded to you, the obligations and projections for
Northridge went up about $200 million.
Senator Bond. What is required to meet the cost of all open
disasters and those projected for the balance of the year? In
other words, to wipe the slate clean, what is your best
estimate of the total amount needed? And will the
administration request this amount in the supplemental?
Mr. Witt. I believe, Mr. Chairman, it was $2.4 billion when
the budget was submitted.
Senator Bond. $2.4 billion?
Mr. Witt. Yes, sir.
Senator Bond. I had heard the current reestimate was $2.9
billion.
Mr. Johnson. That's correct, Mr. Chairman, based on more
current forecasting that we have done since the budget request
was prepared. It has escalated up to about $2.9 billion.
Senator Bond. Since we have not gotten the supplemental
request yet, can we expect that $2.9 billion will be in the
supplemental request?
Mr. Johnson. No, Mr. Chairman. I do not think you will see
that. I think you will probably see a supplemental request on
the order of $979 million. The rationale for that is that they
are looking toward our budget request for fiscal year 1998 of
$2.4 billion to address prior year requirements, along with the
$320 million requested for 1998 requirements.
Senator Bond. Well, there are going to be needs for 1998
too. Why do we not go ahead? We know it is there. It does not
make a lot of sense to me that we put off to another year--
where we are going to have tremendous budget pressures--the
request for the things that you know you are going to need now.
That just does not make any sense.
Mr. Witt. I think OMB had intended that the central fund
would help meet those requirements in 1998.
estimates for recent ohio river flooding and tornado disasters
Senator Bond. Oh, yes; that is the contingency fund? Take
it off budget. Yes; that will work.
What is the status of the most recent Ohio River flooding
and the tornado disasters? Do you have any cost estimates on
this?
Mr. Witt. No, sir; the water has just now receded and we
are following through with the preliminary damage estimates for
public assistance. I do not have the total figure for the
checks that were sent out for individual assistance programs
yet, but we will provide it to you with the estimates on the
public assistance.
COSTS FOR NORTHRIDGE
Senator Bond. Can you give us some idea why the cost
estimates for Northridge have increased from $6.1 billion a
year ago to $7.8 billion? Senator Boxer touched on some of
these. I would appreciate any expansion that you would like to
make on that.
Mr. Witt. The cost has increased because of the findings of
the architectural and engineering studies completed for the
rebuilding of large projects. It has become very evident that
when we gave the early estimates on Northridge the extent of
the damages was hidden. The actual cost of repairing those
buildings that were condemned or red-tagged in California is
much more than we had anticipated.
For example, when I was at Cal State University, workers
removed sheetrock from the wall and it revealed 6-inch steel
torn in half in the foundation of the building. Of course, we
could not know the extent of the damage until it was torn out
and the foundation examined.
Senator Bond. Thank you, Mr. Witt. We will come back later.
I turn to Senator Mikulski.
FUNDING FOR DISASTERS
Senator Mikulski. Thank you very much, Mr. Chairman. I have
a set of questions I would like to ask, one of which, of
course, goes to the Maryland situation.
First, let us talk, though, about some national issues. How
do you best think we need to fund disaster relief? This is not
a general question for a general answer. You focused on this.
You see how OMB is essentially pushing this over for a few
years, but essentially how do you think we should do this? Or
if you do not have a recommendation specifically today, what do
you think you will be able to tell the committee on how we
could be able to do that?
Mr. Witt. In light of the data my staff has put together
regarding historical averages faced over the past years, we
have determined that the 5-year average cost, less Northridge,
has been pretty consistent.
I think it is very important that we not only have the
funds to be able to respond and recover, but as the chairman
said earlier and as we all agree we have to get control of the
cost of disasters. We all need to sit down realistically and
say ``This is what is going to be needed to address future
disasters.''
DISASTER CLOSE-OUTS
Senator Mikulski. But what is the process by which we are
going to arrive at this? Are we going to have clear criteria
for what we get into, specific cost sharing by the States, the
issue related to rehabilitation? I understand there are 500
open disasters currently on the books, some dating back to
1989, some small, but they are not small if you have been hit
by a tornado. Are they open because of the ongoing
rehabilitation efforts?
Mr. Witt. First of all, it has been a top priority of mine,
of our Chief Financial Officer, and of the inspector general to
close out the old disasters. Gary, what is the total to date
for disaster close-outs?
Mr. Johnson. $1.8 billion in human services programs with
recoveries of over $400 million back into the fund.
Senator Mikulski. I did not understand that answer, sir. I
am sorry. The microphones are----
Mr. Witt. We have closed out over 100 old disasters that
were opened back in the 1970's during Hugo, and other
disasters. We have also put a top priority on reconciling the
disaster fund, and Gary has done a really great job on this.
CRITERIA FOR REHABILITATION FROM DISASTERS
Senator Mikulski. Let us then go to the whole issue of
rehabilitation as compared to reengineering. This seems to be a
subject of great dispute about what do you rehab to. Do you
rehab to its former state? Do you say that if a hurricane hit
your very expensive project but not a project necessarily to
declare health, safety, economic viability of a community? What
do you think should be the criteria for the rehabilitation
expenditures, and have you been involved with HUD in this
because I understand that is also one of the dynamics? What is
HUD's criteria for that?
Mr. Witt. FEMA's criteria is if a structure has suffered
more than 50 percent damage, then we do a cost-benefit analysis
to determine whether it is realistic to repair that structure
or to rebuild that structure. In most cases, it has proved to
be better to rebuild it rather than repair it, particularly if
it is a high-risk facility such as one that has never been
retrofitted against earthquakes, or one that is located in a
floodplain.
I have not worked with HUD regarding their criteria, but I
will be happy to talk to Andrew and work with him on this
issue.
FLOOD MITIGATION IN MARYLAND
Senator Mikulski. Well, Mr. Director, I am very proud of
what happened in Maryland after the disaster--first of all,
during the disaster when we were hit by so much floods in which
the Potomac overflooded, businesses were wiped out along the
Potomac. There is one area in Cumberland that was so
heartbreaking in which three automobile dealers that were lined
up one after the other lost their entire business and
inventory, and our readiness and response really did save
lives. And we thank you for your response.
Also, as you know, the Hagerstown water supply went out. We
had to take in water by the National Guard to make sure that
nursing homes, schools, and others at risk had fresh water.
After the flood, at my request Governor Glendening
established a flood mitigation task force, chaired by the
Speaker of the House, cochaired by the Army Corps of Engineers,
and Maryland Emergency Management to look at what could be done
so that we would not be faced with such dire economic impact
again on local communities. I believe that that is a model
where local people, working with Federal resources, came up
with a series of specific recommendations on how their home
would not be flooded out, their business would not be flooded
out, and the community would be safe.
What I would like to know is then what is your response to
even the procedure that we did? Do you think that is a national
model?
And then No. 2, based on that, what do you think you could
do to respond to Maryland and what criteria you would be using
to save lives, save communities, but then ultimately, so that
if we ever have those terrible floods again, we do not have to
turn to FEMA because of the homework and Federal investments we
are making now.
Mr. Witt. The flood task force that Governor Glendening put
together and that we all worked on is a very good example of
what needs to be done nationwide, not only to address floods
but to address whatever risk a particular State is facing. The
ideas works very well in conjunction with what FEMA wants to do
with hazard mitigation in developing disaster-resistant
communities. If we can identify high risks up front and start
eliminating those risks before a disaster happens, then the
cost of a disaster when it happens will be less. This is
something that has been proven time and time again. So, it is
important that we try to cut the cost by cutting the risk.
I have had round table discussions with private industry,
including mortgage lending institutes, and representatives from
the insurance industry. They want to start investing in
communities by helping to eliminate the risks faced by those
communities. It is to their benefit as well as the economy of a
community. We can do a lot working together on these task
forces and I think it will make a significant difference in the
long term.
Senator Mikulski. Well, Mr. Witt, I have met with those
families. I met with the business people and said we would do
all we could not only to get them back on their feet but that
they would not face these terrible risks again.
I met with a mother whose family nearly lost their lives
and promised that mother--and the little boy lost his catcher's
mit, but happy that we did not lose his life--that we would
take specific steps along the Potomac, whether it was related
to the relocation of housing, whether it was also retrofitting
a water plant.
What do you see as your criteria for responding to that? In
Maryland what projects do you think could be pursued to do this
type of reengineering and rehabilitation?
Mr. Witt. My staff met with Dave McMillion this week on the
task force recommendations regarding mitigation activities for
Maryland. The criteria for any mitigation project is whether it
is cost effective to do this. Does the cost analysis support
the activity?
The criteria for establishing the disaster-resistant
community concept is very similar to what we have in the flood
insurance program. We have 18,000 communities that belong to
the flood insurance program, but those communities that belong
to the program have to comply with building standards for
future building in that community. If you can get a community
to build better and safer, complying with standards established
to be a disaster-resistant community, this would make a
difference.
Senator Mikulski. So, we can look forward to help in those
areas related to housing, the issues relating to waterproofing
the wastewater treatment program, and issues like that?
Mr. Witt. The projects that they presented to me in the
report I read were very good projects, and they showed that it
was cost effective to do those projects.
Senator Mikulski. Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Boxer.
HAZARD MITIGATION
Senator Boxer. Thank you, Mr. Chairman.
Mr. Witt, I understand that the largest single cost to FEMA
has been public building repairs from earthquakes, and we
discussed that a little as to the fact that they're hidden at
first and once you get behind the sheetrock, it's a nightmare.
The President has proposed in your budget a $50 million
program to work with State and local agencies--and this may
dovetail on what Senator Mikulski was talking about--on steps
to lessen the damage in future disasters--this mitigation idea.
Has your experience with Northridge helped shape this program,
and if so, in what way?
Mr. Witt. Absolutely. If you remember, prior to Northridge,
the State had a program that they were working on to retrofit
the bridges in California for seismic resistance. Every single
bridge that they had already retrofitted stood up to the
earthquake. The bridges that had not been retrofitted
collapsed. The cost of rebuilding those bridges--that
infrastructure--was very, very expensive.
Even the public buildings that had been retrofitted and the
private buildings that had been retrofitted to the new
California building code survived that earthquake with very
minimal damage.
Another good example is that house in Hollywood. Every
house on the block had major damage or was almost destroyed
except one. The owner spent $1,000 on that house, doing the
work himself. He never even had a single pane of glass broken
in his house. He did not even have to ask for any assistance.
That is the type of thing that can make a difference.
Senator Boxer. I hope also what we do through these
programs is let the States know that we want them to pay
attention to this and not leave the deadline wide open because
the States have to work with us on this because as Senator
Mikulski has talked about, we have these disasters that we do
not close out. I just do not think it is a message we want to
send. I think the States, even though it is hard, have to come
with a match. Of course, it is small compared to what they are
going to get out of it, but we have to have some reasonable
expectation that by a date certain, they are going to apply for
this program. Do you not agree?
Mr. Witt. Absolutely. California is a good example. The
State of California has not only been hit by earthquakes but
fires and three floods. The State staff has been overwhelmed in
California.
But what we are doing now is important. Last year you
appropriated $3 million to support State hazard mitigation
officers to work on mitigation projects. We are also working
with the States to put in place a statewide mitigation plan
which will prioritize mitigation projects before a disaster
ever happens. That will make a significant difference. Instead
of a State having to establish a hazard mitigation team and
then follow through trying to prioritize projects, we will be
able to help a great deal.
Senator Boxer. Good. One second.
[Pause.]
DISASTER COST-CUTTING PROPOSALS
Senator Boxer. I wanted to just make sure that I remembered
this correctly. A couple of years ago we passed an amendment
that I wrote in EPW that gave States permission to use their
highway funds for retrofit prior to a disaster. So, we are
trying to help. In other words, if we can get those highway
funds on a regular basis used to retrofit highways and bridges,
it is going to be a big help, and we are starting to see that
happen in California.
Well, I understand you will be presenting a number of cost-
cutting proposals as part of your recommended changes to
disaster legislation. Senator Bond and I both serve on the
Environment and Public Works Committee which has jurisdiction
over this legislation. Without telling us all the different
things that you are doing, at what point do you expect to have
this legislation ready for us to take a look at?
Mr. Witt. I am going to have it in the chairman's hands
before this bill goes to the floor.
Senator Boxer. So, you expect soon?
Mr. Witt. Yes; I will see to it myself.
DISASTER ASSISTANCE FOR RECREATIONAL FACILITIES
Senator Boxer. OK.
My last question had to do with the recreational
facilities. As I mentioned in my opening remarks, I feel that
Senator Bond has hit on a very important point. We have so many
things we need to do and then we look at some of the more
frivolous things that we perhaps do.
However, I want to make a point that if something like the
Los Angeles Coliseum which is a publicly owned facility is hit,
that becomes a major economic loss to a community. So, I am
just hoping that as you look at these areas where we can save
funds, we just cannot say all recreation because in many cases
these sports facilities are economic engines for communities
and they are publicly owned. So, I hope that there would be
some discernment when we look at the whole area of recreation.
Mr. Witt. Authorization for types of spending from the
disaster relief fund has changed over the years.
I agree with the chairman that it is time to revisit this
area. I think if it is a revenue-producing entity, such a
publicly owned piece of property that is rented out to a group
that is operating that facility, then that group needs to look
at getting a low-interest SBA loan. I think we seriously should
look at that.
I think we should concentrate on the health and safety of a
community and of individuals. I think that is absolutely
essential and should come first.
Senator Boxer. Thank you.
DISASTER APPEALS
Senator Bond. Thank you very much, Senator Boxer.
Mr. Witt, going back to your discussion with Senator
Mikulski about the open cases, I gather a lot of these are kept
open because there are three levels of appeals for disaster
projects and for disasters. Apparently there is no disincentive
to States to continue to appeal and appeal and appeal. No. 1,
they have three levels. Why is any more than one needed? What
percentage of appeals are sustained? What additional cost?
There has got to be a way we can clean this mess up, is there
not?
Mr. Witt. Mr. Chairman, I totally agree with you and with
the inspector general's report on this. We want to have one
level of appeal. I was astounded to find, Mr. Chairman, that we
pay for the appeals.
Senator Bond. So, it is a free bite at the apple. You can
keep coming back and going and going and going.
Mr. Witt. There is no disincentive at all. If a State loses
an appeal, it should pay for it.
SEISMIC ALGORITHM
Senator Bond. Somewhere along the line, there is the
beginning of some criteria on that.
Let me jump back to one on this seismic algorithm. I am not
sure I understand what a seismic algorithm is, but I gather it
has cost us about $900 million because the program was designed
to expedite disaster aid, and instead of just repairing the
damage, you have said the funds can be used for an improved
project involving construction of a new building on a different
site.
Under what authority did you implement the program? Do you
think that FEMA can create without congressional authority the
opportunity to launch a major new project like this? Does
Congress not have a role to play in establishing a brand new
program like this?
Mr. Witt. Yes, sir; Mr. Chairman. I did not do it to
circumvent anything that Congress had not approved. The
algorithm is basically an outgrowth of what we have in place
with the mitigation program. I did coordinate the concept with
the inspector general and with our General Counsel to make sure
that I did not violate any laws, and they assured me that I was
not doing so.
The algorithm was put in place to evaluate whether it was
more cost effective to do an alternate project than it was to
rebuild the existing project.
DISASTER ASSISTANCE FOR SPORTS FACILITIES
Senator Bond. Let me go to disaster criteria. My colleague
from California mentioned possible damage to the Los Angeles
Coliseum. If that were completely wiped out, I think it would
cost less than what we put in to UCLA by about a factor of
five.
But we have some brand new sports facilities in St. Louis,
marvelous facilities. We even imported a California quarterback
to try to improve the performance there. [Laughter.]
These are revenue-generating facilities, and we live along
the New Madrid fault. You are well aware of the New Madrid
fault.
Before something happens to a sports facility anywhere, do
you think it would be proper if we met with the Governors
administration and said to those local organizations,
governments owning sports facilities, you better have
insurance, you better take some steps to cover them because in
the future if one of these major revenue facilities comes
tumbling down, we are not going to be able to provide the
relief to the otherwise incapable of paying for it? Is this
something that you would recommend?
Mr. Witt. I totally support that, Mr. Chairman.
TIMETABLE FOR DISASTER CRITERIA
Senator Bond. I have a list of all of our discussions. When
we asked about formulating disaster criteria, you said we are
pretty close to having something concrete. In last year's
questions, you said we are--2 years ago, we are going to define
objective criteria. In September 1996, you said that FEMA is in
the process of developing a new approach. We intend to present
options early in the 105th Congress.
Having these things as we go to the floor may not be early
enough. Where are they and will they include criteria to ensure
that States use their own capabilities to handle disasters not
declared by the President?
Mr. Witt. Yes, sir; they will.
Senator Bond. And when do you think we might see those?
Mr. Witt. Mr. Chairman, if you want it before it goes to
the floor, I will do my very best to get it to you.
Senator Bond. We have been asking for this, and seriously,
if we are going to work on this, we ought to work on this at
the committee level. I do not want to write this. I do not want
the committee to have to write this. We have been called on to
do enough legislating, but if we are going to have to do it, I
would like to have that before we go to markup so we can see
your recommendations.
Mr. Witt. OK.
Senator Bond. Thank you, Mr. Witt.
Senator Mikulski.
INSTITUTIONALIZING REFORM
Senator Mikulski. Mr. Chairman, I have only a very few
questions.
What we are trying to get here is a momentum. I will tell
you the objective that I see is, No. 1, I would like to be able
to institutionalize the reforms that came under your
administration. Because this committee is spread out over such
a wide variety of authorizing committees, this might with some
consensus be able to institutionalize those reforms.
The second part of that is I believe is both the disaster
contingency fund, which is a significant issue, and then the
difference between rehabilitation, restoration, and
reengineering for want of another word. After the flood waters
go down, after the hurricane debris is picked up, after the
earthquake and aftershocks are over, what do we do?
I recall when we were dealing with the San Francisco
earthquake, the whole idea of restoration of some historic
buildings was so phenomenal that it would have been difficult
to undertake. Therefore, that is different from rehabilitation
to make sure that housing for ordinary people or small
businesses are helped back in business. So, you see
rehabilitation is an issue.
The second is restoration and then the third is what are
the steps that we could take during rehabilitation that really
prevent some of the risk-prone aspects from--in other words,
where we know there is risk, where we know that a facility is
risk prone, either through engineering, relocation, all those
techniques that the corps and others can tell us that we can
take so in the process of rehabbing, three raindrops later we
are not back in the flood business. I am not being cynical
here.
I think that last part takes a lot of clarification because
what we face is where people want restoration. In many ways,
that is just not fiscally possible.
No. 2, even though some projects are desirable from a local
community's standpoint, they might not be fiscally feasible
from a Federal standpoint.
I know during the last debate, Senator McCain showed great
sensitivity to Maryland when we were talking about marinas.
Some marinas are private yacht clubs, and I am sorry if anybody
loses their yacht. But in Maryland those marinas were small
business, primarily small boats or where watermen keep their
boats and so on. So, you see, part of it is not to describe
something like a marina, but it is: What is the impact on the
local community? What is the real economic impact? If you take
20 of those marinas and knock them out up and down the 3,000
miles of the Chesapeake Bay, that is not a big ticket item, but
that is 20 small businesses.
Anyway, that is the kind of criteria that we are looking
for. One, what brings you in? What do you pay for it once you
do come in? And No. 3, once the emergency is over, what
business is FEMA in? Rehab, restoration, reengineering, all of
the above, none of the above, and so on. This is a great
opportunity to institutionalize reform and lay the groundwork
for others.
I know that you have been out on the road. It has been an
enormously trying time for you and a great sacrifice for your
family too, to just have to be able to pick up and go. I just
want to say thank you.
Do you have any comments you want to make on what I have
just said?
Mr. Witt. I think it is very important to develop the
disaster criteria and that is what we are trying to do. Mr.
Chairman and members of the committee, I blame no one but
myself for not having everything done on time. What Senator
Mikulski is talking about is important, that legislation be put
in place so that whether I am here at FEMA or someone else is
here, that something is institutionalized. I wholeheartedly
agree with you, Senator. We have to do this.
Senator Mikulski. I think you really need to task a group
within your organization to do this for whatever is your own
management mechanism and to work with us, and then we will be
consulting with the House. You have got three of us
particularly with the chairman of the House committee, Mr.
Bond, and myself are in risk areas because of flood or
hurricane, earthquake, and so on.
Mr. Chairman, I have no further questions, but I think we
have got some momentum going here today.
Senator Bond. I think so. How about July 4?
Mr. Witt. Sounds good.
Senator Bond. Let us do that by July 4. OK?
Mr. Witt. Yes, sir.
Senator Mikulski. Even if we do not have campaign finance
reform by that date, maybe we could have FEMA finance reform.
Senator Bond. These are going to be some unpopular
decisions.
Mr. Witt. Yes, sir.
Senator Bond. How do you plan to deal with these? Is that
going to make it difficult for you to come forward with the
recommendations?
Mr. Witt. It will probably be very difficult, but I think
we can deal with this working with organizations such as the
Governors Association, NEMA, and NCCEM. I think they
understand, Mr. Chairman, that dollars are limited and that in
the future, we are going to have to put those dollars to the
best use that we possibly can. I think it is feasible and I
think we can do it.
INSURANCE FOR PUBLIC FACILITIES
Senator Bond. So long as FEMA is willing to cover a
community's disaster losses, it seems to me there is not much
of an incentive for the community to purchase insurance
coverage for public facilities, and in some instances people
say that FEMA is a lot more generous than the insurance company
would be. Does it not make sense to get those priorities in
line and make sure that we are not discouraging the purchase of
private insurance?
Mr. Witt. Yes, sir; it does.
Senator Bond. Do you have any empirical data as to how
insured versus FEMA-covered facilities fare?
Mr. Witt. Public facilities?
Senator Bond. Yes.
Mr. Witt. I do not have the data now but we are looking at
trying to get the States and local governments away from being
self-insured and try to move them toward the direction of
insuring public facilities.
Senator Bond. That would be part of the proposal?
Mr. Witt. Yes, sir.
The important thing is, if we can work with them and give
them some kind of an incentive such as a better cost share
where they do insure public facilities, then it would help
eliminate the long-term disaster cost.
STATE COST SHARE
Senator Bond. I need to go back to this question of project
cost share upfront. We heard earlier today that California has
not come up with its cost share because they do not know what
the total cost is, but if we have already paid out billions of
dollars, they are getting some cost. Is not the failure to have
this upfront cost a bit of a disincentive for States to control
costs if they do not have to come up with the cash in advance?
Mr. Witt. A lot of States--of course, you are very familiar
with this--legislatures meet every 2 years instead of every
year. So, it is difficult sometimes for States to come up with
that upfront cost-share match. The percentage of the cost-share
match they share in with the local subgrantee varies. Some
States pick up the full cost share, while some States pick up
12\1/2\ percent, and then the county or city will pick up the
other 12\1/2\ percent. It varies across the whole country.
A lot of States will hold their cost share until the final
inspection is done and then finish paying the total amount of
the project.
ELIGIBILITY OF PRIVATE, NONPROFIT ENTITIES
Senator Bond. I think that is something we might want to
address.
Last year the GAO issued a report called ``Improvements
Needed in Determining Eligibility for Public Assistance.''
GAO's recommendations include clarifying the criteria for
certain private, nonprofit facilities and in the September 20
letter you told me that policy changes for revenue-generating
private nonprofits were under consideration. Do you have any
recommendations on that yet?
Mr. Witt. Yes, sir, Mr. Chairman. We will include those
recommendations in the report we are preparing for you. If it
is a private entity that is revenue producing then it should
apply for SBA loans instead of grants.
HAZARD MITIGATION
Senator Bond. Let me turn to the hazard mitigation efforts.
Your 404 hazard mitigation grant program is funded through the
disaster relief program. States are entitled to receive funds
equal to 15 percent of FEMA disaster relief assistance in the
State. There is approximately, I understand, $1.4 billion
unobligated.
What is the problem with it and what do you propose to do
about it? Are the funds not needed?
Mr. Witt. Yes, sir; they are very much needed.
We have been working with State directors on a hazard
mitigation task force to identify how we can speed the process
up, what we need to do to be more accountable, and to be less
bureaucratic and get rid of the redtape.
Most States go through an environmental review process
which we then review. The process goes from the State to the
region to FEMA headquarters. We have been pushing the
responsibility to work directly with the State down to the
regional level.
We are also looking at HUD and other agencies to see how
they do environmental assessments and reviews in order to put
in place the best procedures.
We have been working on the States' capability to
prioritize these projects as well. Last year you graciously
gave us money to support a person in each State to work
strictly on these mitigation projects. We are working now with
the States on the 409 mitigation statewide plans that are going
to help a great deal, as will changes in the cost-effectiveness
review process changes.
When a State has a disaster--and they have had many--they
are often bogged down in disaster recovery and response
activities and they do not have time or staff to concentrate on
mitigation at that point. We really need to emphasize
mitigation as a community being rebuilt, not later.
We are looking at the possibility of putting a sunset
clause in the legislation that we are going to provide to you.
If a State cannot obligate funds and get its projects done in 2
years, then it would lose the money. We just cannot continue to
drag projects out year after year.
CRITERIA FOR PERFORMANCE PARTNERSHIP AGREEMENTS
Senator Bond. All right. So, with $1.4 billion remaining
unobligated--it struck me that we are asking for $50 million
more when we have got a great big pot of money that has not
been utilized. Well, I guess we will see your legislative
proposals on that.
FEMA's budget includes $147 million for State grants, the
so-called performance partnership agreements. When you first
proposed them 2 years ago, your Agency indicated there would be
new criteria for awarding State grants. What are those
criteria?
Mr. Witt. Under the PPA, which has been in place for 2
years, States have the flexibility to design programs with FEMA
to meet the risks that they face in their State. We have been
working with the States in developing a self-assessment process
which will be used to establish a baseline of capability in
those States.
We are tying this baseline assessment into FEMA's GPRA
developmental activities.
INCENTIVES FOR STATES
Senator Bond. Are there specific performance measures so
you know whether the State is getting the job done? How do you
hold them accountable? Are there any rewards for States that do
the good jobs or disincentives for the ones that do not get it
done?
Mr. Witt. One incentive to do a better job or to have a
statewide disaster fund set up could be a favorable cost share
should the State have a disaster that warrants a declaration.
Also, if a State has a mitigation program in place with a
mitigation fund established it could be used in State-declared
disasters, not only in the federally declared disasters. Those
are some incentives that we are trying to work into the changes
that we are going to implement.
Senator Bond. That would require statutory authorization to
do that?
Mr. Witt. Yes, sir.
STATUS OF NATIONAL FLOOD INSURANCE FUND
Senator Bond. Again, we would be anxious to see your
recommendation on that because that certainly would seem to
make some sense.
What is the status of the flood insurance fund in light of
the recent flooding? What is the current level of borrowing? Is
there any danger you would exceed the $1.5 billion statutory
limit on borrowing?
Mr. Witt. Mr. Chairman, with the rash of floods that we
have had recently, I am concerned that even with the additional
$500 million in borrowing authority in 1997, the limit has not
kept pace with changes over the years in the flood insurance
program. We have $370 billion in coverage now compared to the
$8 billion in coverage that we had back in 1974, but we will
still only have a $1 billion borrowing authority in October. I
think we are up to $800 million in borrowing now and we are now
assessing how many policies and claims we have to pay in this
recent rash of floods.
Senator Bond. Are we looking at another overhaul of the
flood insurance program? It sounds to me like it would take at
least 2 years of normal operation just to get that back, would
it not?
Mr. Witt. Yes, sir; at least.
REQUIREMENTS FOR DAM SAFETY
Senator Bond. Dam safety is something that is very
important to Missouri and we worked hard to put that in the
water resources development authorization bill last year. Why
does FEMA not request any funds for the requirements of the new
dam safety legislation? Are these a priority for you?
Mr. Witt. Yes, sir; they are. We are planning to spend
$432,000 for the dam safety program from the flood program. We
are developing an implementation plan for a national dam safety
program as well.
Senator Bond. Will you be seeking reprogramming or anything
more on that program? Do you have the money to carry it out?
Mr. Witt. We have the $432,000 to get the implementation
program in place and determine what other moneys we will need
for the national dam safety program.
STATE AND LOCAL ASSISTANCE
Senator Mikulski. Mr. Chairman, I just have two other
things that I wanted to submit to the record. One is a letter
from the Maryland Emergency Management Agency talking about our
need to continue to focus our interest on the SLA, State and
local assistance account, which, of course, is the one that
really enhances our response and readiness.
MARYLAND REPRESENTATION IN FALLEN FIREFIGHTERS FOUNDATION
Another question goes to the fact that we are very proud of
the Fire Academy in Maryland. The Maryland State Firemen's
Association has played a major role in putting the Fallen
Firefighter Memorial Program together which you know is so
touching. We understand that this year you have turned over the
Fallen Firefighters Foundation, and we are asking if you would
ensure that the Maryland Firefighters Association has a seat at
the table in the foundation.
Mr. Witt. Yes, ma'am.
Senator Mikulski. Because they really provide so much of
the core support to the foundation.
Mr. Witt. Yes, ma'am.
Senator Mikulski. I thank you for that.
Thank you very much, Mr. Chairman, and I look forward to
working with you in advance on the solutions to the really
significant issues we have raised today. Thank you.
INSPECTOR GENERAL RECOMMENDATIONS
Senator Bond. Thank you, Senator Mikulski.
Very briefly I understand Mr. George Opfer, the FEMA
inspector general, is here and I would like to invite him
forward since we have been referring to him all morning on the
recommendations that he has made. I gather the FEMA inspector
general requests a slight increase from about $4.67 million to
$4.8 million.
I will just ask you, Mr. Opfer, what problems face FEMA
over the next few years and any recommendations you have for us
that would improve program integrity at FEMA.
Mr. Opfer. I think, Mr. Chairman, that we are working quite
well with the Agency. Shortly after the Northridge earthquake,
there was a change in the philosophy both within the inspector
general's office and the Agency itself when Director Witt
requested the inspector general's office to immediately respond
to disasters.
That was a change that really was not very common in the
inspector general's community, not only in FEMA but in all the
agencies--a change in the atmosphere where you have an
inspector general's office trying to work with the management
and going out to disasters on the scene so you can give upfront
advice and try to become very proactive.
The Agency itself, as you know, is relatively small in
comparison to other Federal agencies as far as the amount of
money that is passed through to States and what is given out in
disasters. Also, the inspector general's office in itself is
very small. So, we try to marshal our resources with the other
Federal communities to establish a task force.
We have been very successful in trying to weed out any sort
of corruption in the disaster programs because we do not want
the people to become victims twice--from the disaster and from
people scheming to take Federal dollars.
In the 2\1/2\ years that I have been in the Agency, I have
seen quite a change as far as program managers and the Director
requesting the inspector general's assistance in looking at
programs. We are trying to provide service similar to a
management consultant, where rather than doing a full audit or
a full inspection, we can look at a program or look at issues
which might be before the Director at the beginning stages, and
provide recommendations that could possibly prevent any future
problems in that area.
Senator Bond. You mentioned fraud possibly perpetrated on
the victims of disaster. Do you find any other general problems
relating to fraud, abuse, or mismanagement?
Mr. Opfer. We find a correlation between the larger
disaster where more Federal money is put into a disaster area
and the potential or increased, chance for different schemes or
questionable activities.
We have been working with the insurance industry to see
what information we can get as they are responding to disasters
and marshal our resources with them. We also work with the
State and local officials, including the Attorneys General, to
get information in areas such as consumer fraud where we do not
have jurisdiction. We want to make sure that we are marshaling
all the resources that are available both at the State and
local level.
Senator Bond. Well, thank you very much for your testimony
and for your good work.
Mr. Witt, any closing comments or thoughts you wish to
share with us?
Mr. Witt. Mr. Chairman, thank you for your support. We will
work very hard with you, Mr. Chairman, and the committee to
institutionalize those changes we discussed by July 4.
Additional committee questions
Senator Bond. We will expect that by July 4 and look
forward to working with you.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
status of disaster relief fund
Question. What is the current balance in the Disaster Relief Fund,
and when do you project the fund will be depleted?
Answer. As of March 31, $2.1 billion remained unobligated in the
Disaster Relief Fund. Absent a supplemental appropriation, it is
projected that by late spring, as the unobligated balance nears $500
million, FEMA will need to begin adjusting how we allocate money to the
open disasters to ensure that we have dollars available for the
immediate needs of victims and for emergency measures.
Question. Please explain, and provide a break-out for, why your
current projections for the Disaster Relief Fund in fiscal year 1997
exceed the projections contained in the Congressional budget
justification--which showed a year-end carryover of $100 million.
Answer. When the President's budget was prepared in early January,
the projected unobligated balance in the Disaster Relief Fund for the
end of fiscal year 1997 was $107 million. By mid-March, this same
balance showed a deficit of $442 million. During this time period, FEMA
had undertaken a major effort to refine its projected costs and unmet
requirements. The increase of $549 million in projected obligations can
be attributed to the following:
[In millions of dollars]
Northridge:....................................................... 200
1996 declarations................................................. 74
Other prior year disasters........................................ 268
1997 activity..................................................... 7
Question. Why have the cost estimates for the Northridge Earthquake
escalated from $6.1 billion one year ago to $7.8 billion today--an
increase of $1.7 billion? Please describe precisely what accounts for
this increase. To what extent does the increase in Northridge estimates
account for the fund's shortfall in fiscal year 1997?
Answer. The original cost estimate for the Northridge Earthquake
was prepared prior to the development of the detailed cost estimates
for the general acute care hospitals and other structures, the final
estimates for the repair and retrofit of the historic Los Angeles City
Hall, construction cost increases in the Los Angeles area, and the
consequential increase in mitigation funding (which is calculated as a
percentage of the estimated total program costs). These factors raised
the estimated costs for the Northridge earthquake by $1.7 billion as
summarized below:
[In millions of dollars]
Safeguarding hospitals (seismic algorithm)........................ 940
Los Angeles City Hall............................................. 130
Safeguarding other structures..................................... 100
Rebuilding Hospitals to EERI standard............................. 250
Rise in LA construction costs since 1994.......................... 105
Increased Section 404 Mitigation Ceiling.......................... 230
Reduced Administrative Costs...................................... -50
-----------------------------------------------------------------
________________________________________________
Total....................................................... 1,705
The higher estimated cost for the Northridge earthquake is one
factor in FEMA's revised estimated shortfall for fiscal year 1997.
seismic algorithm
Question. How much of the increase in the Northridge estimates is
attributable to the ``seismic algorithm?'' Under what authority did
FEMA implement this program? Do you think it is appropriate that FEMA
has the authority to implement a program of this kind with such sizable
resource implications, with virtually no formal approval process from
the Congress? Do you plan to use this algorithm in other disasters? How
are you measuring the success (or failure) of this pilot program?
Answer. The Seismic Hazard Mitigation Program for Hospitals (SHMPH)
was piloted and implemented under the authority of Sec. 406(c)(2).
FEMA rebuilt the hospitals to a higher safety standard under the
authority of Section 406(e)(1) of the Stafford Act, which defines
eligible costs in rebuilding structures:
``(e) Net Eligible Cost. (1) General rule.--For purposes of
this section, the cost of repairing, restoring, reconstructing,
or replacing a public facility or private nonprofit facility on
the basis of the design of such facility as it existed
immediately prior to the major disaster and in conformity with
current applicable codes, specifications and standards
(including floodplain management and hazard mitigation criteria
required by the President or by the Coastal Barrier Resources
Act (16 U.S.C. 3501 et seq.)) shall, at a minimum, be treated
as the net eligible cost of such repair, restoration,
reconstruction, or replacement.'' Emphasis Added
This higher rebuilding standard for the area hospitals serves two
goals: it reduces the level of damage expected from future earthquakes,
and it helps ensure that acute care hospitals can continue to function
in the aftermath of a future disaster, especially to treat disaster
victims.
The cost increase attributed to the seismic mitigation program for
hospitals was $940 million and included the repair and mitigation of
all 20 affected hospitals. This increase is less than half of the $2
billion requested by two of the hospitals alone.
FEMA believes that mitigation should be integrated into the
rebuilding from disasters. After an event occurs, communities tend to
be more receptive to undertaking mitigation measures, and mitigation
goals can more easily be attained by enhancing reconstruction
standards.
Congress has a vital role to play in implementing a program with
major resource implications. For Northridge specifically, FEMA included
the projected spending for these infrastructure projects in its two
supplemental budget requests for Northridge, both of which were
approved by Congress.
FEMA took into careful consideration the Congress's opinion as
stated in a March 21, 1996 letter to Director Witt signed by
Congressmen Jerry Lewis and Bob Livingston and Senators Kit Bond and
Mark Hatfield. This letter applauded the use of the algorithm and
encouraged FEMA to use the Earthquake Engineering Research Institute
(EERI) to further evaluate these projects.
Because many hospitals were closed due to damage, the algorithm was
specifically designed to address rebuilding after the Northridge
earthquake. When the detailed estimates were first being developed, it
became apparent that reaching closure on hospital repairs would be
extraordinarily time consuming and contentious due to the complexity of
the facilities and differences in professional judgment of architects,
engineers and other technical specialists. To reach a timely solution
at a reasonable cost, a consortium of professional experts developed
the algorithm for calculating the costs of repairing damages and
providing hazard mitigation measures. This algorithm produces a repair
and retrofit program that is consistent with hazard mitigation goals.
The success or failure of this seismic program will be measured by
the ability of the hospitals to withstand a future earthquake (or other
catastrophic event) and continue functioning.
We discussed this program with Members of Congress and their
staffs, particularly those Members chairing or ranking on the relevant
Committees of the House or Senate and in the affected areas. We believe
the SHMPH is a prudent expenditure from the Disaster Relief Fund (DRF)
since it will avoid future DRF expenditures and, more importantly,
provide public health and safety services after the next earthquake.
A central concept of the algorithm, that is the arithmetical
computation of disaster assistance in damaged critical facilities, is
that it expedites recovery and diminishes confrontational exchanges
between the Federal sector and disaster victims. Nevertheless, the
SHMPH is not presently contemplated for use in other earthquake
disasters.
Since mitigation is frequently a long-term investment, declarations
of success (or failure) would be premature at this point. Expenditures
under the SHMPH, however, are being tracked so that avoided costs can
be estimated after the next earthquake.
report to congress on reducing expenditures
Question. The fiscal year 1997 VA-HUD appropriations act required
FEMA to propose a plan to reduce disaster relief expenditures. The
Subcommittee recently received a draft report, about 45 days late and
still not final. The draft report includes only some of the proposed
recommendations of the GAO and the I.G. Why were the other
recommendations--such as eliminating alternate projects, and changing
the so-called 50 percent rule which triggers full-scale replacement of
a damaged facility--taken off the table? Please explain which other
options were considered and rejected, and why, and the cost-savings
associated with the rejected options.
Answer. In developing the Report to Congress on Reducing Disaster
Relief Expenditures, a broad range of options were considered,
including all of the recommendations of the General Accounting Office
and the FEMA Inspector General. Some of the GAO and IG recommendations
were determined not to be feasible at this time. For example,
eliminating alternative projects may provide an incentive for State and
local officials to rebuild facilities even if they no longer serve the
public welfare, in order to receive the grant award. Elimination of the
50 percent rule which triggers replacement would be inconsistent with
the National Flood Insurance Program and may impact negatively on
mitigation.
Two other approaches recommended by the Inspector General--the
disaster tax return system of assistance and block grants--will be
studied for potential applicability in the future.
Specific cost savings for these options have not been identified.
Question. Some of the proposed changes undoubtedly will be
unpopular with certain constituents. Will this impede your ability to
proceed with the changes and how do you plan to deal with these
impediments?
Answer. We are currently in the process of consulting with our
partners on potential policy changes. In general, they recognize that
governmental resources at all levels are becoming more limited, and
there is a need to reduce disaster relief expenditures.
To the extent possible, we have tried to focus on prudent ways of
reducing disaster costs without impeding service delivery. For example,
streamlining the public assistance program will not only save dollars
but will actually improve customer service. We are also trying to
reduce total costs through a pre-disaster mitigation program, rather
than simply shifting the costs to another level of government.
We recognize that there may be some measures, particularly those
which reduce eligibility, which may be unpopular with our constituents.
In those cases, we will work with our constituents and Congress to
develop appropriate legislative solutions.
disaster criteria
Question. Two years after the initial commitment, FEMA has not made
any changes to the disaster criteria. What changes--and when--will you
be proposing to the declaration process?
Answer. In the fall of 1996, FEMA established a Panel on Disaster
Cost Savings to examine, among other things, the issue of declaration
criteria. Upon analysis and consultation with our partners, we have
concluded that the high costs in the disaster program are driven by the
number of large major disasters and broad eligibility criteria, rather
than the number of declarations.
While we believe that the current declaration criteria continue to
be appropriate, we can reduce costs by streamlining activities and
targeting eligibility. However, factors used to judge severity,
magnitude and impact are being updated to reflect current dollars, and
procedures for conducting Preliminary Damage Assessment are being
reengineered.
Question. How will the new criteria ensure that states use their
own capability to handle disasters that should not be declared by the
President?
Answer. The current criteria involve making a judgment on whether
the severity, magnitude, and impact warrant Federal assistance to
supplement the State's capability. FEMA provides grants to State and
local governments through the Performance Partnership Agreement grants
for the purpose of developing the capability to handle disasters.
Question. The number of disaster declarations has increased 54
percent in the last 5 years, compared to the previous 5-year period,
partly due to FEMA's more liberal interpretation of the law. Don't you
believe disaster declaration criteria would bring some much-needed
discipline to this program?
Answer. The increase in total number of declarations is greatly
influenced by the number of fire suppression grants in recent years, as
well as a documented increase in severe weather events. Over the years,
the Congress has changed the statute to be more liberal in its eligible
benefits. Restricting eligible costs would achieve long-term savings in
the disaster program.
state-share
Question. Why isn't FEMA enforcing its own regulation to require
states to demonstrate they have their project cost-share upfront? Isn't
your policy of not requiring this upfront commitment a disincentive for
states to control costs? What is FEMA doing to ensure that recipients
of disaster assistance are satisfying their cost-sharing requirements?
Answer. Current disaster assistance regulations do not require a
specific timing for the payment of the State's portion of the non-
Federal share. A FEMA/State Agreement, which is executed between the
Governor and the FEMA Regional Director immediately following a major
disaster declaration, specifies the portion of the non-Federal share
that will be paid by the affected State. At the end of a disaster
contract, States are required to certify that they have paid their
share of a project's costs as agreed to in the FEMA/State Agreement.
Consistent with the intent of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (Public Law 93-288, as amended),
current FEMA policy includes in the Agreement a provision for a
Federal/State cost-share arrangement. FEMA believes that States have an
incentive to control costs, because they are making a contribution to
recovery efforts. FEMA only obligates and makes available to the State
the Federal share of the estimated costs of a project (usually 75
percent). Therefore, in order to complete a project, the remainder of
the funds must come from either the grantee or the subgrantee. If a
project is not completed, the Federal share will be deobligated and any
Federal funds that were already disbursed must be repaid by the
grantee.
INSURANCE
Question. What measures is FEMA taking to see that public
facilities are insured against the most probable perils they face?
Should disaster assistance be reduced for public facilities in
vulnerable communities that could have been insured but were not, as is
currently done with flood insurance?
Answer. As a condition for receiving Public Assistance grants,
insurance must be purchased and maintained to cover future damages for
any insurable hazard to any public facility for which FEMA funding is
provided. If the facility is insured at the time of a disaster, FEMA
will fund damages not already covered by insurance.
Establishing the vulnerability of communities for hazards other
than floods is a difficult task. While some areas of the country have
established vulnerability to earthquakes, participation in earthquake
insurance programs has been limited due to the expensive nature of the
program. For example, in California, the State Insurance Commissioner
has ruled that earthquake insurance is not reasonably available because
it is not affordable. FEMA's regulations state that the Agency shall
not require greater types and extent of insurance than are certified by
the State Insurance Commissioner. Consequently, FEMA has been unable to
require the purchase of earthquake insurance in California as a
condition of Public Assistance grant funding.
SNOW DISASTER DECLARATIONS
Question. In your draft report, FEMA said it would, ``publish
revised regulations to ensure that FEMA is consistently only paying for
those snow removal costs that are extraordinary and significantly
beyond the states normal capability and resources.'' When will these
regulations be revised? How do you define costs that are extraordinary
and significantly beyond states normal capability and resources?
Answer. In October 1996, FEMA published a proposed rule that
specified the work and costs that would be eligible for assistance in
the event of a major disaster declaration for a snowstorm. The proposed
rule stated that eligible work would be the clearance of snow from one
lane in each direction on ``snow emergency routes'' or their
equivalent, and from routes to critical facilities. The rule did not
address declaration criteria or the measurement of States'
capabilities.
Based on comments received on the proposed rule and FEMA's
experiences in three snow declarations in January 1997, FEMA has
decided to withdraw the October 1996 rule and publish a new proposed
rule. This new proposed rule will establish declaration criteria and
cost eligibility to ensure that assistance is only granted when the
situation is truly beyond a State's capability and resources. As
published in the Semi-annual Agenda of Rulemaking, the proposed rule
for snow disasters will be published between April and November of
1997.
COMMUNITY CENTERS
Question. Last year, in response to questions for the record, you
stated that FEMA would more precisely define community centers in order
to clarify which of these facilities FEMA considers eligible. Has this
been done? If not, when?
Answer. FEMA has published draft Policy No. 4511.050A, ``Private
Nonprofit Community Center Eligibility.'' The draft policy provides a
more specific definition of community centers than the definition found
at 44 CFR 206.221(e)(6), and includes examples of both eligible and
ineligible community centers. In particular, the policy more
specifically defines criteria such as: (1) open to the general public;
and (2) established and primarily used as a gathering place for a
variety of social, educational enrichment, and community service
activities.
This draft policy is currently in the internal approval process.
Pending its final approval, FEMA considers and rules on eligibility
applications in the Private Nonprofit Community Center category on a
case-by-case basis.
GRANTS MANAGEMENT
Question. When will FEMA have in place the new grants management
system? Will it ensure that FEMA funds are spent effectively,
efficiently, and according to law?
Answer. The Office of Financial Management, assisted by the
Logistics Management Institute (LMI), has recently completed a thorough
assessment of the grants management process for all of the Agency's
disaster and non-disaster grant programs. An Agency-wide Team, reviewed
and documented the current processes, identified issues and made
recommendations for improving the grants management processes used in
each of FEMA's disaster grant programs. A report, summarizing the
reengineering process and the Team's recommended solutions covering the
full cycle of the grants management process will be finalized in the
near future.
In general, the Teams recommendations include instituting
procedures that will enable FEMA to more effectively comply with
federal regulations on grants administration and financial management;
track grants from application through close-out, including timely
financial reports and program performance monitoring. Once FEMA
management formally accepts the recommendations of the Team, the Office
of Financial Management (OFM) will secure a charter for managing the
implementation of appropriate changes and developing an improved grants
management system in the Agency. It is anticipated that the Agency will
begin initiating some recommendations immediately and that a detailed
action plan will be developed this summer. The development of this plan
will include close coordination with other FEMA Directorates to assure
that it is all inclusive and takes into consideration other disaster
program initiatives. It should be noted, however, that it is expected
that FEMA management will consider additional improvements and
alternatives as the Agency begins implementing the recommended changes.
FEMA will realize several benefits by implementing the Team's
recommendations. The Agency can not only expect to more effectively
comply with federal regulations governing grants administration and
financial management, but also to improve the Agency's ability to
provide oversight and manage the disaster grant programs. Including the
other cross-cutting disaster program improvements, along with the need
for external coordination and significant internal training must be
accomplished prior to seeing long term results. Full implementation of
the Agency's improved grants management system is expected to take
between two-three years.
DISASTER CLOSE-OUTS
Question. Why do you have disasters open that go back to 1989? Why
can't you close-out disasters within two years or less? What is the
average length of time to close out a disaster? What does FEMA believe
is a reasonable time to close-out a disaster? Wouldn't a shorter period
enhance fiscal responsibility and accountability? How long does the
insurance industry take to close-out major projects, and why couldn't
FEMA follow an insurance industry model? Couldn't FEMA deobligate
significant amounts of disaster relief funds if it closed out disasters
in a more timely manner?
Answer. FEMA funding is made available to the disaster-affected
State as a grantee and further transferred to the sub-grantee in
accordance with the Office of Management and Budget's requirements for
Grants management. Public Assistance grants are governed by FEMA's
regulations, also known as the common rule. The intent of the rule is
to allow the States more discretion in administering Federal programs
in accordance with their own procedures. Because these grants are for
reimbursable costs, the grantee must make an accounting to FEMA for all
eligible costs on each approved large project. Final payments are made
only after the approved work is completed and certified by the State.
Large, complex projects that require extensive design and
construction phases in addition to compliance with all codes,
regulations, standards and local permitting procedures can be extremely
time-consuming. As a result, disaster close-outs are often delayed by
these large projects. However, FEMA has made significant progress in
closing out disasters. For example: in fiscal year 1993, FEMA closed
out seven (7) disasters; in fiscal year 1994, FEMA closed out 31
disasters; in fiscal year 1995, FEMA closed out 42 disasters; and in
fiscal year 1996, FEMA closed out 16 disasters.
As part of our Business Process Reengineering effort, FEMA is
considering several options--including looking at insurance industry
methods--to determine if we can adopt a more rapid settlement approach,
based on accurate cost and scope estimates, and additional means of
providing incentives to complete work as quickly as possible.
FAST-TRACKING
Question. Following the Northridge Earthquake, FEMA used a system
referred to as ``Fast tracking'' to deliver assistance to individuals,
which involved providing aid to applicants prior to inspecting homes. I
understand a very high proportion of those receiving aid were deemed
ineligible and FEMA is attempting to recover those ineligible costs.
Will you be using this method again? Do you believe it is appropriate
that FEMA has such discretion to dispense federal aid without following
appropriate and prudent procedures? Are you using fast-tracking now?
Answer. The extent of the damage and the densely populated
geographic areas impacted by the Northridge Earthquake indicated that
FEMA would receive an unprecedented number of applications for disaster
assistance. In an effort to help the greatest number of disaster
victims as quickly as possible, FEMA assisted applicants from areas
where the damage was most pervasive on a expedited basis; prior to
inspecting the applicant's home.
To identify the most heavily damaged areas, FEMA used computer
mapping of Modified Mercali Intensity (MMI) readings. ``Fast-track''
checks were then mailed to disaster assistance applicants only if: (1)
the applicants resided in a zip code that corresponded with the four
MMI zones of most intense seismic activity (67 zip codes were
identified); and (2) the applicant indicated that they had experienced
real property damage when they registered with FEMA. Recipients of
``fast-track'' assistance were notified at the time of their
application that a subsequent housing inspection would take place, and
that if they were found to be ineligible for assistance, they would be
required to return their assistance grant to FEMA.
Each home was subsequently inspected, the degree of damage was
assessed, and the determination of eligibility for housing assistance
was evaluated. Recipients found to be ineligible for assistance were
required to return their checks. The rate of confirmed eligibility for
those households assisted before inspection was 90 percent.
The fast-track method of expediting assistance helped thousands of
severely impacted disaster victims significantly more quickly than
standard procedures could accommodate. During the seven-week period the
fast-track system was implemented (from January 21-March 9, 1994) FEMA
issued 152,573 checks totaling $400,486,000 of assistance.
Approximately one-third of these applicants, 48,302, were provided
assistance via the fast-track system. It should be noted, however, that
recipients of ``fast-track'' assistance represent only 7 percent of the
total number of applicants who registered for assistance.
Although the fast-track process resulted in some ineligible
recipients, FEMA believes it was appropriate to implement the fast-
track system, given the unique circumstances of the Northridge
earthquake. FEMA is not currently using the ``fast-track'' system, but
would not rule out its use in the future under appropriate emergency
conditions.
ADMINISTRATIVE COSTS
Question. Last year, in response to questions submitted for the
record, FEMA stated it would propose a rule requiring grantees to
provide a full accounting of their administrative costs associated with
public assistance grants. To date, FEMA has taken no action to clarify
the rules governing administrative costs, or to ensure that grantees
properly account for administrative costs. Why? Also, FEMA stated it is
planning to promulgate a proposed rule that would require small project
expenditures to be accounted for and excess funds returned to FEMA. Why
hasn't this been done?
Answer. Last year, in response to recommendations from the General
Accounting Office (GAO) and the FEMA Inspector General (IG), FEMA
proposed to develop a regulation that would require an accounting of
grantee administrative costs. Prior to drafting such a rule, FEMA
determined that the statutory administrative expenses were also
intertwined with both State disaster management costs, and indirect
costs that may be claimed in connection with Federal grants. Therefore,
FEMA is conducting studies to determine the complete picture of the
costs to States to manage a disaster recovery effort. The goal is to
develop a single cost factor that will cover all administrative
expenses, both direct and indirect.
In response to further recommendations in the subject GAO and IG
reports, FEMA began to examine the impacts of a regulation that would
require refund of overpayments on ``small projects.'' Concurrently,
FEMA embarked on a 12-month process to study existing Public Assistance
procedures, develop new procedures, and implement the procedures in
actual disasters. Because these changes may affect the concept of small
projects as it was originally envisioned in 1988, we have delayed
proposing a rule change.
public assistance/business process reengineering
Question. FEMA has underway a ``BPR'' effort to streamline the
public assistance program. When will this be complete? What specific
changes do you envision at this time? What sort of cost-savings might
we expect?
Answer. A draft report on the proposed reengineered process was
issued on April 7, 1997, to FEMA regional offices, the National
Emergency Management Association (NEMA), and various project
participants for comment and feedback prior to issuing a final report.
The final report on the Public Assistance Reengineering project is
scheduled to be completed on April 30, 1997. The next phase of the
project moves beyond redesign in concept and into actual
implementation. This will include development of a pilot test
implementation plan, a pilot set-up and pilot test and a pilot
evaluation, prior to full-scale implementation. We anticipate
conducting a pilot-test and evaluation within the next six months.
Some of the changes envisioned in the proposed redesign include:
--Pre-identify and pre-educate potential applicants;
--Provide applicants with alternatives for accessing the Public
Assistance application process;
--Use Preliminary Damage Assessment (PDA) data to make initial
obligations to the State for immediate emergency funding needs,
rather than relying on additional site inspections;
--Establish deadline for State reconciliation of emergency work
costs;
--Require a more detailed and deliberate application for permanent
restorative work to include a schedule of damaged sites,
location, damage description, preliminary cost estimate, and
insurance coverage;
--Establish a FEMA single point of coordination for applicants and
States;
--Capture damage information one time, at the source, and
electronically if possible;
--Move decision-making and project review closer to the customer;
--Empower the States to validate small projects (under $46,000)
without always requiring a Federal inspection;
--Process large projects (over $46,000) or complex projects through
inspection and field review by certified FEMA/State inspection
teams;
--Focus on organizing work around the applicant and developing
``projects'' that best meet their recovery needs;
--Institute a settlement approach (based on an accurate scope and
cost estimate) versus actual cost reimbursement to avoid
revisiting cases multiple times;
--Provide incentives to complete permanent work as quickly as
possible and to submit documentation within a reasonable time-
frame; and
--Strictly adhere to and enforce time frames such as project
completion deadlines, deadlines for submittal of documentation,
appeal submittal deadlines, and appeal resolution deadlines.
The expected benefits of the redesign include quantitative
reductions in time and costs that will enhance and strengthen
qualitative aspects of FEMA's relationship with the States and
applicants. Benefits include: Reduced processing time; reduced
administrative costs; more efficient allocation of resources; reduction
in job redundancy; improved tracking; fewer de-obligations; and fewer
appeals.
HAZARD MITIGATION GRANT PROGRAM
Question. FEMA's Sec. 404 hazard mitigation grant program is funded
through the disaster relief program. States are entitled to receive
funds equal to 15 percent of FEMA disaster relief assistance in the
state. Currently, more than $1.4 billion remains unobligated. Has there
been an increase in section 404 mitigation activity since the federal
cost share was raised and the formula was revised to increase the
amount made available?
Answer. There has been a significant increase in Section 404 hazard
mitigation grant program activity since the Federal cost share was
raised and the formula was changed to increase the amount of funding
made available. The reasons for this have been two-fold: First, States
and Territories receive an increased amount of total available dollars
for mitigation. For example, in the Midwest Floods alone, total
available HMGP funds increased by approximately five times. Secondly,
changing the cost share from 50 percent federal to 75 percent federal
funding has made grants more attainable for State and local
participants.
It is essential to note that nearly 67 percent of the remaining
funds (approximately $776 million) stems from three unique disaster
situations:
--The State of California accounts for approximately $642 million of
this figure. In that State, numerous sizable disasters
(including multiple flood events, wildfires, and the most
costly disaster in U.S. history, the Northridge Earthquake)
have occurred in the last several years. This tremendous
workload has greatly strained the State's ability to identify,
review, and process available monies in a timely fashion to
meet mitigation, response and recovery needs.
--Similarly, the Virgin Islands accounts for approximately $50
million of the outstanding HMGP balance, due in large part to
the fact that the islands were struck by two powerful
Hurricanes--Marilyn and Bertha--within a year.
--Finally, Hurricane Fran, which caused Presidentially declared
disasters in seven States, accounts for another $84 million in
unobligated funds. The outstanding balance of HMGP funds for
these disasters is not unusual, in that the event occurred only
recently (last Fall).
These three unique situations account for over $776 million of the
unobligated HMGP funds. They are not due to recurring programmatic
obstacles.
It also should be noted that FEMA has taken substantial action in
recent years to improve the management of the HMGP in order to speed
the obligation of funds. For example, this fiscal year an additional $3
million was made available to States to improve implementation of
Hazard Mitigation Programs. To improve National Environmental Policy
Act (NEPA) compliance reviews, FEMA published an expanded list of NEPA
categorical exclusions which have significantly reduced the time
required for environmental review for approximately 50 percent of the
projects submitted by States for HMGP funding. FEMA has developed a new
process to streamline project cost-effectiveness determinations which
emphasizes quick determination of lower and upper bound estimates to
allow State staff to focus resources on potentially eligible projects.
In addition we have provided substantial new training sessions to both
FEMA Regional staff and State Hazard Mitigation staff. All of these
activities are expected to greatly speed the HMGP process in the
future.
Question. FEMA is proposing a new $50 million pre-disaster
mitigation program. Why would this program be used more by the states
than mitigation activities authorized under sec. 404?
Answer. Section 404 funds are only available if a disaster has been
declared; therefore, mitigation actions are generally limited to
declared area(s).
This means that States must absorb a cost-share associated with
mitigation activities at the very same time that they must identify
resources to pay for the tremendous costs of disaster response, which
is often prohibitive. Through the Pre-Disaster Mitigation Program,
however, communities will be able to thoughtfully plan and budget for
their contribution to eligible risk reduction activities. They will
also have the time to work with other elements of the community,
including the private sector, to leverage additional funding and
resources against their own. These advantages will help ensure that
Pre-Disaster Mitigation Program funds are used effectively to reduce
our nation's risk from natural hazards.
Question. FEMA funds some mitigation work using public assistance
funds (sec. 406) and sometimes in combination with sec. 404 funds. Is
this appropriate and in accordance with the Stafford Act? What is FEMA
doing to clarify whether mitigation should occur under sec. 406 versus
sec. 404?
Answer. When Congress amended Public Law 93-288, the Disaster
Relief Act of 1974, in 1988 (upon enactment of Public Law 100-707) the
legislation was amended to: (1) add new section 404, which authorized
hazard mitigation funding; and (2) revise the authority of what is now
Section 406 to add the reference at subsection 406(e)(1) that
prescribed hazard mitigation criteria.
The use of Section 406 alone or in combination with Section 404 is
both appropriate and consistent with explicit Stafford Act authorities.
Section 406(e)(1) allows for ``hazard mitigation criteria'' to be
included in funding determinations for discrete public assistance
projects. A Section 404 project may affect several Section 406 public
assistance projects, as well as the community at large. If a Section
404 project ties into and augments the mitigation elements of a Section
406 project, it is neither an inconsistent nor an inappropriate use of
Stafford Act funding. There is no indication in the Stafford Act that
these two hazard mitigation authorities cannot be used in conjunction
with each other, and FEMA believes that it has implemented these two
hazard mitigation authorities consistent with the congressional intent
behind their simultaneous enactment.
To clarify the use of these two authorities, FEMA has issued
policies that distinguish between the mitigation scenarios in which
either Section 404 or 406 can be invoked. FEMA has also assembled a
404/406 Mitigation Task Force, which will provide additional
clarification as specific instances require.
Question. When will you submit your legislative proposal for this
new $50 million plan? How many projects do you anticipate will be
funded, and what will be the criteria for participation? How will you
maximize the use of this relatively modest sum for mitigation projects?
Answer. The legislative proposal will be included in the package
containing cost eligibility changes that we are planning to send to you
in July of this year. We will try to fund as many projects as we can in
order to achieve some balances among the geographic spread, the types
of risks and hazards, and the categories of mitigation measures carried
out. We will be testing criteria for participation with the pilot
effort this fiscal year, and proposed criteria will be formalized
through regulations authorized by the legislation being drafted. In
addition to criteria that relates to risk reduction requirements, we
will also be looking at leveraging non-Federal resources in order to
maximize the modest amount of funds requested.
Question. We understand that mitigation saves money, but we have
seen no quantification of the extent to which mitigation reduces future
disaster relief costs. Has an assessment been done to provide some
baseline for cost-savings? If not, when will it be done?
Answer. Over the last several years, the need for an assessment of
mitigation cost savings has become apparent. At this time, we are in
the process of planning a project to perform a macro-economic analysis
of mitigation. We plan to initiate a study of the cost-effectiveness of
a broad spectrum of mitigation measures (such as building codes and
acquisition/relocation projects) before the end of fiscal year 1998.
Because this analysis will take time to complete, we commissioned a
smaller report on the cost-effectiveness of mitigation that is
scheduled for release in the next two weeks. This report includes a
brief explanation of many of the types of mitigation which have
produced useful effects. It also includes 16 ``case studies,'' which
were chosen to provide multi-hazard examples of a variety of mitigation
techniques across a wide geographical distribution. A copy is attached
for your reference.
performance partnership agreements
Question. FEMA's budget includes $147 million for state grants
through the so-called ``performance partnerships'' agreements. Two
years ago, when FEMA first proposed performance partnerships, the
agency indicated there would be new criteria for awarding state grants.
Please explain what those criteria are.
Answer. A driving force behind the Performance Partnership
Agreement (PPA) is to make performance a consideration in the awarding
of annual pre-disaster grants to the states. The PPA is a five-year
agreement designed to implement the strategic planning concepts of
GPRA. A June 1, 1998 deadline has been set for all state PPA's to be
modified to reflect measurable performance indicators.
FEMA Regions continue to consider annual performance as criteria
for annual cooperative agreement grant funding. Risk, need and special
projects also continue to be considerations in how funds are divided
among the states.
Question. What are the specific performance measures states are
held to under these new performance partnership agreements, and how are
states held accountable for meeting these measures? How are high-
performing states rewarded?
Answer. Performance measures under the PPA are jointly developed by
the State and FEMA. The measures vary depending on the unique
circumstances of the state and objectives set as part of that states
strategic planning. Eventually, states will be held accountable by
making long-term PPA performance a criteria for annual CA funds. In
addition, FEMA is exploring options for rewarding states for pre-
disaster performance in mitigation and increasing their disaster
capability through post-disaster grants. Another option under
consideration is a more favorable cost-share on public assistance
disaster grants.
Question. How are performance partnerships used to encourage states
and local governments to undertake mitigation activities to reduce the
risk of losses to public facilities?
Answer. The PPA is developed around the four functions of emergency
management: preparedness, mitigation, response and recovery. Each
function has partnership and state objectives and strategies for
accomplishing the objectives. Mitigation is a major focus of the PPA
objectives and strategies and is an area FEMA is working to encourage
through future incentives.
Question. Other than reducing administrative burdens and providing
a single funding stream, how are the performance partnerships any
different from the old grant process under the comprehensive
cooperative agreements?
Answer. The PPA was developed to replace FEMA's comprehensive
cooperative agreement (CCA) process. Under the PPA, states have more
flexibility in the use of funds in exchange for accountability of
performance; while the states, not FEMA, propose how the funds will be
spent, annual activities must clearly reflect state priorities and
needs and contribute to the achievement of long-term state objectives
in the PPA. Under the old CCA, FEMA determined how the funds were to be
spent and there were no established long-term objectives that annual
CCA activities worked towards accomplishing.
Question. What is the status of FEMA's ability to assess states'
capacities to respond to disasters? What means do you use to make these
assessments? Has the I.G. deemed whether your method is adequate and
appropriate? How can you rely on states' self-assessments to make
determinations on capabilities? In your opinion, how many states
currently have a reliable assessment of their capability to respond to
disasters?
Answer. FEMA is currently developing the capability assessment
process to assess the capabilities of State and local governments to
effectively respond to catastrophic disasters. The Program Elements
Guide (PEG) is the principal tool that FEMA is currently developing to
accomplish this task. This tool categorizes emergency management
activities into the following 13 components: (1) Laws and Authorities;
(2) Hazard Identification and Risk Assessment; (3) Hazard Management;
(4) Resource Management; (5) Planning; (6) Direction, Control and
Coordination; (7) Communications and Warning; (8) Operations and
Procedures; (9) Logistics and Facilities; (10) Training; (11)
Exercises; (12) Public Education and Information; and (13) Finance and
Administration. It was recently favorably reviewed by representatives
from the National Emergency Management Association (NEMA), an
organization of State Directors of Emergency Management. It is
anticipated that the PEG will be finalized by April 21, 1997. The
Inspector General's office has participated in the briefings on
capability assessment and the implementation schedule.
The capability assessments will be completed for all States during
fiscal year 1997, and FEMA will submit a report to the Congress by
October 1, 1997, on the status of State capabilities and the Emergency
Management Partnership to respond to major disasters. FEMA will not be
relying entirely on State self-assessments. It is our intention that
there be substantial Federal involvement in as many of the State
assessments as possible this year, given timing, staffing and funding
restraints. Many of the States have conducted capability assessments
over the course of time, but these have not been developed in a
standardized format; therefore, it is difficult to draw substantive
conclusions on these efforts. The goal of the FEMA capability
assessment process is to create an assessment system that will be
acceptable to all States and will result in a reliable and consistent
national evaluation of the state of readiness in the nation.
GPRA
Question. Under the Government Performance and Results Act (GPRA),
FEMA is required to develop a mission statement and strategic plans.
I'm very concerned with mission creep at FEMA over the last several
years. The mission creep is evident in the fact that there's been a 54
percent increase in the number of major disaster declarations in the 5-
year period fiscal year 1992-96, compared to fiscal year 1987-91. Where
FEMA used to confine itself to responding when state and local
governments were overwhelmed, FEMA's new role seems to be about being
all things to all people. What process are you using to develop your
mission statement and strategic plan, and who are you consulting with
to ensure it meets the intent of Congress?
Answer. FEMA was one of the first federal agencies to develop a
strategic plan back in December 1994. The strategic plan's mission
statement and its goals were developed even earlier and served to guide
the agency's 1993 reorganization. In its June 1996 report, entitled,
``Executive Guide--Effectively Implementing the Government Performance
and Results Act,'' Congress's General Accounting Office (GAO)
highlighted FEMA's reorganization around its mission statement and
strategic goals.
In 1993, FEMA's new Director refocused the agency on meeting its
mission and aligning its activities to better serve the public. As part
of its first agency-wide strategic planning effort, FEMA
comprehensively reviewed its programs and structures and initiated a
major reorganization in November 1993. By more closely aligning its
activities, processes, and resources with its mission, FEMA appears
today to be better positioned to accomplish that mission.
As a result of experience gained through the GPRA pilot phase FEMA
realized that agency-wide training on the concept of GPRA and strategic
planning would be necessary. To date, training has been conducted for
over 400 managers and staff agency-wide. The training effort includes a
two-day workshop in each of the 10 regions for our regional staff and
our State partners.
FEMA is in the process of updating its strategic plan, and making
it more precise, measurable and consistent with GPRA requirements. FEMA
established a GPRA Steering Committee, made-up of representatives from
throughout the agency, to oversee the process. FEMA is not proposing
any changes to its current mission statement (in fact, the
Congressional Institute and National Academy of Public Administration
which trained congressional staff on GPRA used FEMA's mission statement
as a model). Our six strategic goals have been reduced to three draft
goals which we believe represent FEMA's statutory mandates.
A significant part of FEMA's mission is to lead and support the
national emergency management system. Therefore, performance measures
for FEMA's draft new strategic goals will reflect how well the national
system is performing. We believe the information we need to measure our
performance already exists in the public and private sector. We expect
to have draft performance measures identified by May 1997.
FEMA's primary stakeholders are the State governments and the State
emergency managers and the National Emergency Management Association in
particular. We have discussed the direction of our strategic planning
efforts with the States and NEMA and shared draft documents. We will
continue to consult with them throughout the process and ask for final
comments before the plan is finalized. FEMA has also shared its draft
strategic plan with Federal agencies such as EPA, Transportation, SBA,
Army Corps of Engineers, etc., to ensure a complimentary approach to
GPRA.
FEMA has already briefed two congressional committees and will be
making more consultations to discuss all aspects of proposed changes to
the agency's strategic plan, including, options for performance
measures.
The Agency is on track to have the updated plan and new performance
measures, as well as the GPRA required fiscal year 1999 Performance
Plan completed this summer in advance of the September 30 deadline.
CSEPP
Question. In January, GAO presented preliminary findings of a
review conducted on CSEPP, a joint Army/FEMA program to improve
emergency response capabilities in the communities near the chemical
weapons storage sites. GAO found that while $420 million has been
appropriated to date, local communities still lack critical items 9
years after the program's inception and there are long-standing
management weaknesses at the federal level, including unclear roles and
responsibilities.
Why has so little progress been made with the $420 million spent to
date? What is the status of negotiations with the Army over the future
of the CSEPP program. What role does FEMA believe it ought to play in
this program? Who should be held accountable for the lack of progress
in this program?
Answer. FEMA has discussed with GAO the validity of the draft
report's finding that emergency preparedness capability has been unduly
slow in the communities surrounding the eight chemical weapons storage
sites. We anticipate that the final report may differ from the draft
somewhat, since it is demonstrable that considerable progress has been
made in CSEPP emergency preparedness. States are significantly better
prepared to respond to a chemical incident today than even two years
ago. Alert and notification systems have been installed to warn the
public, in-place communications systems will allow on- and off-post
responders to communicate effectively, and, through Federally-funded
public education programs, the public is continually informed of
protective action measures to be taken in case of a chemical accident.
FEMA recognizes that not all anticipated emergency preparedness
equipment has been purchased and/or installed, and, as a result, full
programmatic capability has not yet been attained in all sites.
However, many sites have completed the purchase and installation of
necessary equipment, and are nearing the maintenance phase. While not
all equipment is in place, operational capability has been attained for
most benchmark items at each site. Thus, while capability will
undeniably improve, employable capability exists in nearly every case.
There have been issues requiring resolution between FEMA and the
Department of the Army regarding the day-to-day management of CSEPP.
However, while we recognize that perceptions exist in some quarters
that the issues are affecting program delivery, both FEMA and the Army
have worked very closely to ensure the uninterrupted delivery of
program services. Given the different operating styles of FEMA and the
Army, it is reasonable to expect periodic problems to arise with
program delivery. As they have with previous programmatic or stylistic
differences, both FEMA and the Army have been taking positive steps
toward resolving those issues and believe that they will be resolved
shortly for the maximum benefit of the program. It is worthy of note
that FEMA Director James Lee Witt and Secretary of the Army Togo West
are personally involved in resolving these issues expeditiously.
ARSON INITIATIVE
Question. In the fiscal year 1997 operating plan, FEMA proposed a
reprogramming of $775,000 for participation in the President's National
Arson Prevention Initiative, which was established in response to the
rash of church burnings last year. Can you tell me precisely what
FEMA's role is in this initiative, what has been accomplished so far,
and whether additional funds are requested in fiscal year 1998 to
continue participating in the President's initiative?
Answer. In June 1996, the President asked FEMA Director Witt to
lead a National Arson Prevention Initiative and coordinate available
public and private sector resources to combat arson nationally.
Although prompted by the tragic series of fires at houses of worship,
the Initiative is intended to address the larger problem posed by arson
in this country. FEMA has been joined in this effort by the Departments
of Justice, the Treasury, Housing and Urban Development, Education,
Agriculture, and the Corporation for National Service. Governors in
States most affected by the church burnings have rallied in their
support of arson prevention and they, with local leaders throughout the
country, have been strong partners in the Initiative.
Each of the major law enforcement, crime prevention, education,
church, and voluntary groups and organizations have been tremendous
contributors to the Initiative. In addition, eight national fire
service organizations pledged their memberships in the fight against
arson including the Alliance for Fire and Emergency Management
(International Society of Fire Service Instructors), the International
Association of Arson Investigators, the International Association of
Black Professional Fire Fighters, the International Association of Fire
Chiefs, the International Association of Fire Fighters, the National
Fire Protection Association, the National Association of State Fire
Marshals, and the National Volunteer Fire Council.
Recognizing that arson is a local problem that requires local
solutions, FEMA's role in the Initiative has been to facilitate
community arson prevention efforts and apply public and private
resources to their best effect. Provided for the record is a copy of
``Fire Stops With You--The National Arson Prevention Initiative: Six
Month Report to the President.'' This report details the interagency
and intergovernmental accomplishments of the Initiative from June
through December 1996.
The Initiative entered a new phase in January. FEMA is piloting the
creation of community-based arson prevention coalitions in three cities
in the Southeast and one city in the Northeast. The cities that are
participating include Macon, Georgia, Nashville, Tennessee, Charlotte,
North Carolina, and Utica, New York. The experiences of these
communities in forming a coalition and actively engaging their
residents in arson prevention will serve as models for communities
across the country. Three of the pilot cities will ``launch'' their
coalitions nationally as part of a series of events occurring during
National Arson Awareness Week, May 4-10, 1997. As part of that week,
arson prevention grant awards of $12,000 will be made to every State
($5,000 to each territory and the District) to encourage and support
Statewide arson public education and awareness effort.
Efforts on the full range of arson prevention topics also continue.
In partnership with the Department of Justice, a series of Statewide
arson prevention conferences will be conducted over the next several
months in seventeen States. Additionally, development of training and
public education materials on juvenile firesetters is underway. Between
July 1996 and March 1997, the National Arson Prevention Clearinghouse
received nearly 15,000 telephone calls and distributed approximately
half a million packets of information.
The National Arson Prevention Initiative has resulted in a
framework to support State and local governments that capitalizes on
available resources from a variety of sources and has resulted in
increased understanding and awareness of the problem. Individuals have
begun to recognize the impact that arson has on their lives and have
become involved in preventing it within their communities. This
Initiative will be institutionalized and will serve as the umbrella
strategy for the Agency's overall arson efforts within the U.S. Fire
Administration. Funding requested for fiscal year 1998 will continue to
support vital training, public education, and technical assistance
efforts, as well as the continuance of the National Arson Prevention
Clearinghouse and the coalition-building efforts.
mt. weather emergency assistance center
Question. In the fiscal year 1997 operating plan, FEMA indicated
the need to renovate and expand building 430 at MWEAC to accommodate a
rapidly expanding demand for additional training class rooms and
conference areas, at a cost of $1.67 million. At the time, FEMA said
``we are currently evaluating options to fund this requirement later
this fiscal year. Should sufficient funds be available, we will forward
to you the required reprogramming request.'' What is the status of your
evaluation? Do you anticipate a reprogramming request? Are any funds
requested in fiscal year 1998 for renovations at Mt. Weather? When will
there be a long-term plan for the Mt. Weather facility, and why should
any renovations take place prior to the completion of such a plan?
Answer. The Office of Financial Management is conducting a mid-year
review of all FEMA spending plans. Upon completion of the review, a
final determination will be made as to the distribution of fiscal year
1997 funds held for prior year obligations. The expansion of the Mt.
Weather Training Center has already been determined a high priority
candidate for any funds that may become available. If funds are
determined to be available, a reprogramming request will be forwarded.
Mt. Weather has been selected as the initial participant in FEMA's
Working Capital Fund (WCF) and in fiscal year 1998, will complete the
transition to a fully operational mode, continuing to provide office,
conference, training and billeting accommodations for FEMA and other
Federal agencies. Currently Mount Weather supports seven internal
customers and several external Federal tenants. While an aggressive
marketing plan has been implemented to attract new customers, the
fiscal year 1998 anticipated income will not fund extensive building
renovations. Some building maintenance projects such as roof repair,
road maintenance, painting and concrete repair are planned and will be
funded through the collections of the WCF.
Mt. Weather has become a hub of emergency activity since it was
restructured in 1993 to support the all-hazards mission of the agency.
A population explosion has occurred during the last 4 years, moving
from a daily workforce of about 400 employees to one of more than 900.
The Conference and Training Center (CTC) activity has expanded
dramatically from fewer than 6,000 students/conferees in 1993 to more
than 18,000 in fiscal year 1996.
Much of this growth is attributed to the decision to locate fixed
disaster operations at Mt. Weather. Six major disaster functions have
been established at the Facility that include: the National Processing
Service Center-Virginia; Satellite Teleregistration Center; Disaster
Finance Center; Disaster Information Systems Clearinghouse; Disaster
Personnel Operations Division; and the Agency Logistics Center. On a
day-to-day basis, Mount Weather supports about 250 new disaster CORE
positions that did not exist in 1993.
This changed environment requires careful strategic planning to
support current operations and to accommodate the growth that is likely
to occur with the implementation of an aggressive marketing effort. As
part of the strategic planning, a capital expansion plan, based upon an
assessment of the Agency's operational requirements over the next 5
years, has been prepared. This plan includes six projects that will
provide additional space and capability to include major building
renovations, expansion of training facilities and infrastructure
improvements.
NATIONAL PROCESSING CENTER
Question. What is the status of the new National Processing Center
in Hyattsville, MD? How many staff have been hired at Hyattsville, and
how many additional staff are anticipated?
Answer. The Hyattsville National Processing Services Center build-
out is nearing completion and FEMA and the General Services
Administration (GSA) are entering into final lease negotiations. While
these deliberations are taking place, FEMA has initiated recruitment
actions for 66 of the 112 baseline staffing positions at the facility
and has established a Human Resources Management recruiting office on-
site. The Human Resources Management Office will also be responsible
for the recruitment of surge staff that will provide additional
operational staffing capacity on a disaster by disaster basis.
Occupancy of the facility will occur as soon as the lease between FEMA
and GSA is signed, which is expected to occur sometime during the month
of June.
INEEL
Question. In the fiscal year 1997 operating plan, FEMA proposed
funding for the Idaho Nuclear Engineering Laboratory (INEL) out of
funds set aside by the Congress for pre-disaster mitigation activities,
even while the conference report stipulated that no such funds be spent
until the agency develop a comprehensive pre-disaster mitigation plan.
Even more astounding in the agency's proposal was the fact that in
answers to questions proposed by Congressman Jerry Lewis last year,
FEMA said, ``We advised [INEL] that they should discuss research with
the National Science Foundation. With limited resources for hazard
mitigation, it is our opinion that additional research and testing
facilities are not needed at this time. The money could be better spent
by taking existing research and putting it into application for use by
state and local governments to reduce the damages to life and property
from natural disaster.'' Why did FEMA reverse itself and propose
funding INEL's research proposal? What is the status of the
International Multi-hazard Mitigation Partnership to be created by
INEL, and what is this partnership intending to accomplish?
Answer. FEMA's response to Chairman Lewis' question regarding the
Idaho National Engineering and Environmental Laboratory (INEEL) was
based on an initial proposal presented by INEEL. Later, INEEL changed
the proposal significantly, to emphasize the concept of a private--
public partnership to promote full-scale environmental hazard
simulation. INEEL informed FEMA that many private sector potential
partners were prepared to make significant contributions to this
initiative if FEMA would step forward and provide an initial financial
contribution. FEMA technical staff carefully analyzed the revised
proposal and consulted many of our mitigation partners. The analysis
and discussion with our partners, underscored some of the benefits of a
full-scale wind storm simulation facility.
FEMA recognizes the need to move towards a greater emphasis on
disaster loss mitigation through the development of policies and
procedures that may either prevent future losses or reduce their
magnitude. FEMA has also identified the need for a greater coordinated
effort in the area of Private-Public partnerships. This need is
greatest in the area of windstorm mitigation. The FEMA--Department of
Energy agreement is designed to result in the creation of a new
mitigation partnership called the International Multi-Hazard Mitigation
Partnership (IMMP).
Since the benefits derived under the IMMP will be diffused across a
broad spectrum, FEMA expects INEEL to identify a broad spectrum of
technical and financial support. The Agency's continued involvement in
the IMMP is predicated on a broad coalition being constituted. It
expects that its financial contribution will be leveraged against the
contributions of others, particularly the private sector that will reap
much of the benefit from the testing that will occur at this facility.
FEMA`s future financial contributions should not be the primary source
of funding for the IMMP or the construction and use of any proposed
testing facilities.
In an effort to advance the IMMP, FEMA agreed to provide an initial
financial contribution of $1 million dollars. To date, INEEL has
contributed a similar amount of funds, in both cash and services. To
ensure accountability, FEMA is providing funding in four installments.
Presently, the IMMP has received and spent $731,000. The remaining
funding of $269,000 is proposed to come from the fiscal year 1997 Pre-
disaster Mitigation Program. These funds have recently been obligated
based on Congressional concurrence with FEMA's proposed Predisaster
Mitigation Program spending plan.
MOBILE ASSETS
Question. Last year, FEMA identified 10 actions considered to be of
highest priority for upgrading its mobile response actions. While no
funds were requested by the administration, the Congress appropriated
$3.4 million in fiscal year 1997 for the first of these 10 actions.
What is the total cost associated with the remaining ``high priority''
actions, and are any funds requested in fiscal year 1998, and if not,
why not? How much is requested to maintain the Mobile Emergency
Response System (MERS)? What is the status of the baseline capability
assessment of MERS, which was due at the end of calendar 1996? What did
the baseline assessment reveal? What are the costs in the next 5 years
required to maintain adequately the MERS system?
Answer. The projected cost associated with the remaining high
priority actions is $18.85 million. While the fiscal year 1998 budget
submission was made prior to the initiation of the baseline assessment
of the MERS, the annual budget requested $5.75 million for the
Operation and Maintenance of the MERS. This supports the costs of
electricity, water, heating oil or gas, trash collection, vehicle/
equipment maintenance, spare parts, maintenance contracts for unique
equipment and systems, facility maintenance, and training.
Following completion of the initial phase of the baseline
capability assessment of MERS in December 1996, a summary of the
assessment was provided in the Report to Congress. The second phase of
the baseline assessment will continue in 1997 and the results will be
used to reprioritize any request included in the fiscal year 1999
Budget submission. The baseline assessment determined the priority for
the replacement/upgrade of MERS vehicles and equipment. In addition, a
list of vehicles and systems no longer required to support the FEMA
All-Hazard Mission was developed. These vehicles and systems are to be
declared excess to the needs of MERS and offered to other elements
within FEMA and through GSA to other Federal Departments and Agencies
for their use.
The projected O&M budget of $5.75 million is adequate to maintain
the MERS if limited or no replacement/upgrade of vehicles or systems is
accomplished. To insure the replacement/upgrade of those systems
identified by the baseline assessment is accomplished over the next 5
years, the additional funds estimated are: fiscal year 1998: $5.15M;
fiscal year 1999: $5.45M; fiscal year 2000: $4.75M; fiscal year 2001:
$3.5M. Following these replacements/upgrades, an additional $1.5
million per year should be programmed to allow for the replacement/
upgrade of other vehicles, equipment, or systems that will become non-
maintainable.
______
Questions Submitted by Senator Campbell
fire suppression declaration
Question. I understand that it is FEMA's responsibility to make a
Fire Suppression Declaration to get aid to communities in fighting
wildfires. Is it possible to streamline this process so communities can
get the help they need in a shorter amount of time?
Answer. The Fire Suppression Assistance program provides assistance
to any State for suppression of any fire on publicly or privately owned
forest or grassland which threatens such destruction that would lead to
a major disaster declaration.
The entire process, described below, is accomplished in an
expedited or streamlined manner, normally by telephone, and many times
a FEMA decision is rendered within an hour upon receipt at national
headquarters. FEMA can respond to a State's request for Fire
Suppression Assistance 24 hours a day.
The program is administered on a real time active ``incident fire''
basis, under which the Governor or authorized representative submits a
request for assistance to FEMA's Regional Director at the time a
``threat of a major disaster'' exists. The Region contacts headquarters
with the State's request, the Regional recommendation, and the U.S.
Forest Service's Principal Advisors assessment of the fire situation.
FEMA then evaluates the following factors in order of priority to
determine the approval of a Fire Suppression Assistance grant:
--The location of the fire and continued threat to life and improved
property.
--The existence of high fire danger conditions: humidity, wind speed
and direction.
--The availability of State and local resources.
--The existence of two or more fires in the same area.
To facilitate program delivery, FEMA has updated the Fire
Suppression Assistance manual, which should be ready for distribution
in June of 1997.
PUBLIC-PRIVATE PARTNERSHIPS
Question. Following the Buffalo Creek wildfire and the flooding
that resulted in Colorado, I understand that FEMA produced some
educational materials for homeowners. The JANUS group paid for
production while Rotary Clubs distributed the material. Is FEMA looking
at this excellent model of a public-private partnership in other areas
of its responsibility?
Answer. For the past year and a half, FEMA has been actively
exploring opportunities to partner with the business sector to develop
and distribute educational materials and better coordinate and
communicate with the business sector during and after disasters.
Director Witt has sponsored several roundtable discussions with
business and constituency groups to explore partnership opportunities.
FEMA is currently working with insurance industry representatives on
several task forces seeking ways we can work together to provide better
service to mutual customers, and is in the final stages of developing a
local-based emergency management pilot project designed to include the
business sector in emergency management planning and operational
activities at the local level. FEMA has also worked closely with the
business sector in managing donations of goods and services to
communities and individuals impacted by disasters.
DROUGHT ASSISTANCE
Question. During and after the devastating drought in the
Southwest, it seemed to take a long time to get relief to communities
and individuals in need. Has FEMA considered changing its policy on
dealing with drought problems as rapidly as it already does with higher
profile emergencies such as hurricanes?
Answer. Unlike the immediate devastation usually caused by a
hurricane, droughts develop and inflict damage over an extended period
of time. In response to the Drought of 1996, FEMA formed a task force
to coordinate Federal response to drought affected States by
identifying needs, applicable programs and barriers to programs, and
outlining suggestions of the participants for improved drought
management. At the urging of the Western Governors' Association (WGA)
Drought Task Force, a Memorandum of Understanding was signed early this
year which identifies the United States Department of Agriculture
(USDA) as the lead Federal agency on drought issues. USDA volunteered
to be the lead agency because agriculture is most severely affected by
drought. Currently, a Coordinating Council is being formed by the WGA,
which will include other relevant Federal agencies, including FEMA, to
address drought on an event-by-event basis and to also establish long-
term planning, mitigation and response policies for droughts.
HAZARDOUS MATERIALS
Question. Some of the nation's major highways run through Colorado.
This places our citizens at risk as hazardous materials routinely move
through our state. Do you feel confident that FEMA is prepared to deal
with emergencies resulting from accidents involving these hazardous
materials?
Answer. Initial response to a hazardous materials incident is a
state and local government responsibility. In Colorado, the State
Highway Patrol has responsibility for hazardous materials response.
This organization is well trained and equipped to respond to most
hazardous materials transportation emergencies. In the event that an
incident should be severe enough to require a presidential disaster
declaration, FEMA, in partnership with the Environmental Protection
Agency (EPA) would respond under the Federal Response Plan. The Federal
Response Plan has been successfully used in past disasters and I am
confident that it would save lives and property in the case of a severe
hazardous materials spill.
______
Questions Submitted by Senator Craig
LANDSLIDE POLICY
Question. Please clarify what policy, if any, the federal
government has related to disaster assistance for landslides. Please
differentiate between FEMA assistance during an incident period as it
relates to actual slide damage and FEMA assistance either during or
after the incident period as it relates to potential land slides and
damage.
Answer. The FEMA policy related to assistance when landslides
occur, has remained substantially unchanged since 1984, although it was
recently (November 30, 1995) republished in a format that FEMA has
adopted for all disaster assistance program policies. The policy is
best explained as it relates to two different types of work, emergency
protective measures, and permanent repair of damaged facilities.
Eligible emergency protective measures are defined as work
necessary to alleviate an immediate threat to public health and safety
or improved property that is the result of a slide caused by the
declared disaster. When such a slide results in an immediate threat,
that threat may be reduced by removal of slide material or by temporary
stabilization. Such emergency work may also be completed if the
disaster event causes an immediate potential of a slide that would
damage improved property or endanger public health and safety.
Emergency protective measures could also include work completed during
the incident period to reduce immediate threats. The basic eligibility
question to be answered in both situations is whether the threat is a
result of the disaster and not a condition that existed before the
disaster.
When an eligible facility has been damaged by a landslide, work to
stabilize the slide is only eligible when it is integral to the
eligible repair of the damaged facility and when the site is not
unstable due to a pre-existing condition. The applicant must first
correct any pre-existing condition before the facility repair will be
approved by FEMA.
fema coordination of long term flood recovery plans
Question. As I understand it FEMA is currently responsible for
coordinating the response phase of a disaster. Is any agency
responsible during the recovery phase of federal disaster efforts? In
your opinion, could FEMA be the lead agency in the recovery phase? If
so, how would you direct your agency to handle the responsibility?
Answer. FEMA has been working with the primary Federal departments
and agencies involved in the Federal Response Plan (FRP) to determine
if, and how best to integrate recovery into the FRP. The complexity
arises from the significant difference between response and recovery
operations. Different authorities, Federal agencies and programs are
involved during disaster recovery. The full recovery effort may take a
considerable period of time, and continue long after FEMA field
operations have been concluded. The State and local role in recovery is
much more critical because that is where mitigation priorities are
determined and implemented.
FEMA has the clear responsibility under statute and executive
orders to lead and coordinate the Federal response to an emergency or
major disaster. Normal disaster response includes many of the recovery
efforts we now engage in for the full range of disasters, including
floods. At present, FEMA addresses recovery issues on a case by case
basis with our State and Federal counterparts to determine: (1) what
recovery efforts are appropriate; (2) who should participate; and (3)
what resources are available. FEMA's long-term goals to reduce the
impacts of future disasters can often be implemented by focusing on
increased mitigation efforts during the recovery phase. In addition,
during this year's Midwest floods, FEMA was asked by President Clinton
to establish a Long-Term Recovery Task Force to coordinate the Federal
effort. This approach may serve as a model for our future efforts;
however, to do this effectively additional personnel and financial
resources should be required. Normally, FEMA would transition out of
the recovery process as quickly as possible to free up critical
manpower and resources for other disasters, and to permit State and
local authorities to assert themselves in carrying out their recovery
responsibilities.
We acknowledge that specific Federal programs may continue as an
integral component of the long-term recovery effort. These programs
would operate under their own authorities and program guidelines.
PRE-DISASTER MITIGATION/INTERNATIONAL MULTI-HAZARD MITIGATION
PARTNERSHIP
Question. The President's budget request includes funding for pre-
disaster mitigation. Would you please tell the subcommittee what
specifically that funding is intended to accomplish?
Answer. Specifically, our priority goal is to reduce the impact of
natural hazards on public facilities eligible for disaster assistance
under the Stafford Act.
Question. Do you feel there is a need for additional technical
knowledge to help understand the science of how physical structures
react to disasters?
Answer. FEMA recognizes the need to improve our understanding of
how structures react to natural hazard events. Improved understanding
may either prevent future losses or reduce their magnitude. For this
reason, FEMA's National Mitigation Strategy (NMS) has identified
applied research and technology transfer as one area for further work.
Question. Do you feel there is a role for the national laboratories
in the pre-disaster mitigation program? What is that role?
Answer. The Department of Energy's National Engineering and
Environmental Laboratories have a long history of developing and
transferring state-of-the-art technologies throughout the public and
private sectors. The laboratories have been involved in studying the
effects of natural hazards for many years, such as the effects of high
winds and earthquakes on nuclear facilities. Currently the laboratories
have numerous initiatives underway in the area of natural hazards
mitigation. As examples, the Idaho lab is implementing the
International Multihazard Mitigation Partnership, intended to promote
full-scale simulation of natural hazards on structures and the Oak
Ridge lab has formed a partnership with the Roofing Industry Council On
Wind Impacts (RICOWI) to study the effects of high winds from tornadoes
hurricanes on roofing systems.
Question. Could you explain FEMA's position on the need for full-
scale testing of physical structures against simulated environmental
phenomena?
Answer. There is a broad agreement, both inside and outside
government, that a full scale wind test facility may improve our
understanding of the performance of buildings, structures, and
infrastructure when exposed to high winds associated with hurricanes,
coastal storms, gust fronts, thunderstorm downbursts, and limited
tornado scenarios.
FEMA and the Department of Energy have an inter-agency agreement to
establish a mitigation partnership called the International Multi-
Hazard Mitigation Partnership (IMMP). The IMMP shall work to achieve
relevant goals of the National Mitigation Strategy, specifically the
coordination of applied research and the implementation of research
results and public education. The IMMP will emphasize wind hazard
mitigation and utilize the Idaho National Engineering and Environmental
Laboratory (INEEL) as its applied research instrument.
Since the benefits derived under the IMMP will be diffused across a
broad spectrum, FEMA and INEEL believe there must be a broad coalition
of technical and financial support. FEMA's continued partnership with
INEEL is predicated on such a broad coalition being established.
Therefore, FEMA expects that its financial contribution will be
leveraged against the contributions of others and that the agency's
future financial contributions will not be the primary source of
funding for the IMMP or the construction and use of any proposed test
facilities.
______
Questions Submitted by Senator Mikulski
MARYLAND FLOOD TASK FORCE REPORT
Question. What commitments if any has FEMA made to assist with the
projects recommended in the Task Force Report?
Answer. FEMA has committed to working with the State of Maryland in
order to define statewide mitigation priorities relative to the
projects and measures identified in the Western Maryland flood
mitigation report. Prioritization will be based upon costs, projected
benefits, the effectiveness of the measures, and any other criteria
which the State believes need to be included. This is a critical step
in the process of carrying out the mitigation measures and actions
delineated in the report since the estimated cost of them is, at this
point, well beyond even those resources available nationwide.
Question. What time-line has FEMA committed to providing any
assistance to Maryland for projects outlined in the Flood Task Force
Report?
Answer. Two of the projects have already been approved for hazard
mitigation grant program funds: (1) the floodproofing of the Hancock
waste water pumping station and (2) floodproofing of the Friendsville
water treatment plant.
Question. Will any of the localities be eligible for a greater
match from FEMA than 75 percent?
Answer. Matching for hazard mitigation grants is set at 75 percent
Federal/25 percent State by the Stafford Act.
FLOOD INSURANCE CLAIM PROCESSING
Question. What steps have been taken in the last year by FEMA to
improve flood insurance claim processing?
Answer: While there are no published industry guidelines, the
private insurance industry accepts average claims closure of 60 days.
They expect 90 percent of all claims to be closed in 90 days. The NFIP
processing compares very well with private industry. Our record is
above private industry standards when you consider NFIP's losses are
much more severe and more difficult to adjust than windstorm losses
sustained by private industry in similar events.
In fact, private industry standards for claims check processing is
7 days from receipt of proof of loss. The average claims check
processing time for the NFIP is 3 days. Additionally, the standard for
claims adjustments averages 45 days from receipt of notice of loss. The
NFIP average is 31 days.
Ninety-two percent of the National Flood Insurance Program (NFIP)
policies are written by private insurance companies participating in
the Write Your Own (WYO) Program under an agreement with the Federal
Insurance Administrator. The agreement calls for the WYO Companies to
handle flood insurance as they would any other line of business.
When a claim is presented by the policyholder, the WYO company
handles the claim as if it were any other line of business they write.
Depending on their own rules, they will allow the agent to assign the
claim to an independent adjuster or the company will make the
assignment themselves, either to an independent or staff adjuster.
The other 8 percent of the NFIP policies are handled by the NFIP
Servicing Agent, National Con-Serv Incorporated (NCSI). These flood
policies are written through an insurance agent, but there is no
private company involved. The Federal Insurance Administration (FIA)
has staff on site to oversee the claims and policy operations.
At the time of a disaster, the WYO companies or NFIP Servicing
Agent decide whether to set up a claims office in the area of the
flooding. This generally depends on how many claims each entity expects
from the flooding event. Some of the WYO Companies have contracts with
independent insurance adjusting firms to handle the flood claims;
others rely on the local agents' knowledge of competent local adjusters
to handle the claims; and others assign the claims, or some of them, to
staff adjusters.
It should be remembered that the NFIP is an insurance operation and
must deal with an insurance contract that spells out what is covered
(paid) and under what circumstances. An adjuster is assigned to
determine what coverage is available to the insured, what the true
damages are, and what the values of the damaged items are. In order to
do this, the adjuster must write a building estimate and help the
insured compile a damaged contents list. All of this activity takes
some time and may require several visits to the same structure to
conclude the loss.
When a homeowner reports a fire claim under his homeowners policy,
it is assigned to an adjuster, generally a staff adjuster, who has a
backlog of about 30 claims, assigned to him over a period of a month.
In a flood catastrophe, the adjuster is assigned about 30 claims, or
more, all at once. Some structures are not ready to be inspected,
either because they are not completely dry or actually have flood
waters in them. Some dwellings are secondary dwellings, and the
insureds are not in the area. In hurricane catastrophes, some areas are
inaccessible, either because the roads/bridges are washed out or it is
too dangerous for anyone other than emergency or repair people to
enter.
The FIA has Computer Sciences Corporation under contract to act as
the NFIP Bureau and Statistical Agent. One of their duties is to employ
experienced, knowledgeable property insurance ``general adjusters''
(GA's) to be in the field to help the company and the NFIP Servicing
Agent adjusters with claims handling in general and with specific
coverage questions. The GA's also conduct reinspections of claims to
determine if the rules and regulations of the NFIP are being followed.
Also, the FIA has seven claims professionals who oversee various
aspects of the claims process and are available to give guidance to the
companies, contractors and adjusters. They also handle claims appeals
that deal with technical issues. The FIA staff go into the field to
help in the overall claims process and to give support to the Federal
Coordinating Officer (FCO) at the Disaster Field Office (DFO). The FCO
is also supported by the NFIP Bureau and Statistical Agent staff in the
aftermath of a Presidentially declared disaster.
Finally, to improve NFIP claims processing, the Bureau and
Statistical Agent holds adjuster workshops all over the United States.
The adjuster workshops teach what is expected by the NFIP on claims
handling processes and also claims coverage. Some of these workshops
are done in conjunction with workshops put on by the larger independent
claims adjustment firms or for staff adjusters of individual WYO
Companies. In fiscal year 1996 FEMA conducted 33 workshops.
MITIGATION EFFORTS
Question. Director Witt, like you, I am an advocate for strong
mitigation efforts that take a proactive approach to reducing the
impact from nature's fury. At last year's hearing, you mentioned that
FEMA was working on Memoranda of Understanding (MOU's) with the States
to establish a statewide mitigation plan within each State where they
identify their high-priority mitigation projects. What is the status of
the MOU's? What are the State plans looking like--are the standards
consistent with FEMA's view of what standards States should meet?
Answer. After last year's hearings, a workgroup composed of both
FEMA and State representatives met and determined that there are
several existing FEMA/State documents beyond MOU's that can serve as
tools for resolution and clarification of issues. These documents range
from formal long-term agreements (such as the Performance Partnership
Agreements), to extremely detailed operational documents (such as the
Hazard Mitigation Grant Program Administrative Plan).
Because of the existence of these other tools, FEMA and the
National Emergency Management Association decided to leave it up to
each State whether or not they wish to develop a separate MOU with FEMA
in order to capture high-priority mitigation projects and other
critical pieces of information that could streamline State mitigation
activities. FEMA's Regional Offices are currently working with the
individual States to determine their interest in developing separate
MOU's.
Question. FEMA's budget request for fiscal year 1998 includes $50
million for a pre-disaster mitigation program. Has the program been
authorized? If not, what is the status of FEMA's attempt to get the
program authorized? Will the program take into account lessons learned
in past mitigation work by FEMA and local communities? What are the
eligibility criteria for communities seeking funding? Will communities
that have received post-disaster mitigation money in the past be
eligible for funds? Has FEMA done an analysis of how much money could
be saved by doing needed pre-disaster mitigation?
Answer. There is presently no statutory authority for the pre-
disaster mitigation program for which FEMA has requested $50 million in
fiscal year 1998 appropriations. However, by July 4 we will be
submitting draft legislation to amend the Stafford Act to authorize a
pre-disaster hazard mitigation program.
In designing the Pre-Disaster Mitigation Program (using the $2
million already provided by the Congress in fiscal year 1997), FEMA
considered lessons learned from Federal, State and local mitigation
activities in order to ensure the success of the program. For example:
--Historically, the most successful mitigation actions have been
those which involved persons and organizations from across the
community. That is why the Pre-Disaster Mitigation Program will
encourage communities to bring all the necessary players to the
table from the very beginning to develop a consensus regarding
mitigation needs and priorities.
--In many areas, the support of the private sector has been critical
in gaining the necessary resources and support for mitigation
work, and in ensuring that the subject mitigation actions
protect the economic health and vitality of target communities.
That is why FEMA's Pre-Disaster Mitigation Program will place
such a heavy emphasis on bringing in private sector partners
(such as insurance companies, financial institutions, and area
manufacturers) at an early stage.
--Communities often have difficulty managing unreasonable
administrative requirements associated with Federal programs.
At FEMA, we are committed to reducing paperwork and
bureaucratic red-tape in the delivery of this new mitigation
program.
--Both past experience and research have demonstrated that mitigation
is a ``dollars and cents'' issue (i.e., incentives are
necessary to effectively encourage mitigation at the State and
local levels). This is the reason why the Pre-Disaster
Mitigation Program will leverage State, local and private
sector contributions with Federal project funding.
While these are but a few examples of how we plan to use ``lessons
learned'' from past experience, they demonstrate that we are trying to
avoid past mistakes and maximize our successes in implementing this new
program at FEMA.
The communities selected to participate in the program will be
chosen according to a number of factors, including: their level of
risk; the degree to which the proposed pre-disaster mitigation actions
and processes will reduce that risk; and the ability to transfer the
processes, approaches, or technologies to similar at-risk communities
throughout the United States. In addition, communities will be selected
according to the proposed level of commitment of State, local, and
private sector partners (i.e., time, funding and resources brought to
the table). This should help maximize the ``bang for the buck''
realized for each taxpayer dollar invested through the Pre-Disaster
Mitigation Program. Communities will not be disqualified or lowered on
the priority list simply because they have experienced past disasters
and have received prior mitigation funding from FEMA.
The actual level of cost-savings resulting from this program are
difficult to quantify at this time, since the return on the Federal
investment will be highly project-specific, and will vary upon the
amount of non-Federal contribution to each activity. However, we have
found that mitigation measures return, on average, more than $2 for
every $1 invested. This demonstrates that an investment in pre-disaster
mitigation now will result in real cost-savings over the long-term to
the American taxpayer.
FITNESS FOR DUTY/PREPAREDNESS TRAINING
Question. What is the status of FEMA's work with states on
developing a plan to evaluate state capability that gauges fitness for
duty, and not just written reports?
Answer. FEMA is currently working with our partners to develop a
formal system that will enable us to assess the effectiveness of State
and local capabilities. The goal is to create an assessment system that
will be acceptable to all States and will result in a reliable and
consistent national evaluation of the state of readiness in the nation.
Our intent is to have the capability assessment tool tie into and
complement the States' strategic plans developed as a part of their
performance partnership agreements developed cooperatively by FEMA and
the State and local emergency management departments and agencies. We
expect that we will soon be able to provide an objective appraisal of
their capabilities and progress.
It is intended that States will use these Mitigation Assistance
funds to enhance their capabilities to implement mitigation, and
provide assistance to local governments to implement mitigation. As a
result, these funds should have minimized any impact that reduced SLA
support would have on State mitigation programs.
Question. The budget request asks for $11.3 million less for
Preparedness, Training and Exercises. I understand that some of this is
due to limiting development, revision, and dissemination of field
courses. How will this impact the ability of FEMA to ensure we have
adequate fitness for duty training?
Answer. Nearly 80 percent of the $11.3 million reduction results
from the redistribution of funds that support the Mt. Weather Emergency
Assistance Center from the Preparedness, Training and Exercises
activity to users/customers of the facility. A shift to decentralized
counter-terrorism programs results in the reduction of approximately 17
percent of the total reduction. Lastly, less that a two percent
reduction applied to training activities. This $200,000 reduction will
somewhat reduce centrally-developed materials which support field
delivery of training, and will defer two course development/revision
projects. FEMA has not taken any steps that will reduce fitness for
duty training, either for our State and local partners, or for in-house
personnel.
Question. The Maryland Emergency Management Agency and the National
Emergency Management Association have contacted me about the negative
impact experienced at the local level by reductions in the State and
Local Assistance Grants (SLA). My understanding is that there was a
$2.9 million cut to SLA for deficit reduction purposes, and that FEMA
has requested additional money for the account to bring it back up to
fiscal year 1996 levels. What impact has the cut had on States'
response and recovery and hazard mitigation efforts?
Answer. FEMA's fiscal year 1998 budget request for SLA is at the
same level as the fiscal year 1997 appropriation. This request includes
funding in support of implementing counter-terrorism activities and
improving HAZMAT emergency preparedness. FEMA also has several other
programs that provide assistance, directly or indirectly, to State and
local governments for the development and enhancement of emergency
management capabilities.
The decrease in SLA funds should have had no impact on States'
mitigation efforts. In fiscal year 1997, FEMA provided an additional $3
million to States for the purpose of enhancing their capabilities to
implement hazard mitigation efforts. These Mitigation Assistance funds
were distributed equally among all 56 States and Territories.
Additionally, FEMA provides risk-based funds to States that have an
identified hurricane or earthquake hazard (in fact, during 1997 FEMA
doubled the funding it provides to hurricane-prone States). Both of the
Hurricane and Mitigation Assistance funds are provided to States as
elements of the Mitigation Assistance Program, which is part of the
FEMA/State Performance Partnership Agreement/Cooperative Agreements
(PPA/CA) process.
Our current approach emphasizes development of partnerships with
State and local emergency management departments and agencies that will
allow greater flexibility to better meet their needs. FEMA provides
grants to the States and encourages the locals to work through their
States to ensure a coordinated effort in working towards the objectives
identified in their Performance Partnership Agreements. These
partnerships are based on the expectation, and the confidence, that
giving the States greater control over the process will enable the
States and their subdivisions to perform more effectively and
efficiently. We are developing a nationwide capability assessment
process in fiscal year 1997 which will allow us to provide an objective
appraisal of the level of capability among all pieces of the emergency
management partnership nationwide, and our progress.
DISASTER RELIEF (FEMA REPORT ON REDUCING COSTS)
Question. During consideration of last year's VA-HUD bill, FEMA was
directed to submit a report within 120 days proposing steps to reduce
disaster relief costs. The draft of this report was delivered to staff
last week. What has FEMA done to reduce disaster relief costs? How
effective have these efforts been in reducing costs?
Answer. As indicated in FEMA's March 13, 1997 Report to Congress
entitled ``Improving Management Controls in the Disaster Relief Fund,''
major steps have been taken in the administration of disaster programs
that have not only helped contain costs, but have also resulted in
better and more timely service to our customers. Chief among these
steps is the central processing of our Human Services Programs. We no
longer establish Disaster Application Centers throughout the declared
areas or a separate processing center for each disaster--which can be
very costly in terms of staff and equipment. Rather, disaster victims
are encouraged to call a toll-free number to register for assistance,
and all applications are processed at one of three National Processing
Service Centers. In a similar fashion, a single Disaster Finance Center
has been established to aggregate disaster payments and reduce overhead
costs.
Administrative improvements have been accomplished in many other
areas to streamline our operations and reduce costs. These include the
establishment of a Disaster Resources Board to review and monitor
funding for those support functions needed to support all disasters,
and reinvigorated efforts for disaster debt collection and disaster
close-outs.
FEMA also has a major initiative underway to streamline the Public
Assistance Program, and has proposed measures to reduce program costs
by limiting eligibility for certain types of assistance. These measures
were addressed in a separate March 13, 1997 Draft Report to Congress,
entitled ``Reducing Disaster Relief Expenditures.'' That report has
been transmitted to our State partners in emergency management for
review and comment.
However, a number of the recommendations from that report are
already in the process of being implemented.
--A final report with recommendations to streamline the Public
Assistance Program will be issued by late April, and measures
to streamline the program will be pilot tested by early summer.
--A proposed rule was published in October 1996 to limit appeals from
three to two. FEMA is now in the process of preparing a final
rule to reduce the number of appeals.
--A massive training effort was undertaken in the past year to train
Public Assistance Inspectors to ensure that the program is
implemented efficiently and consistently. Over the past two
years over 1,000 inspectors have been trained.
--On February 20, 1997 FEMA issued an interim policy stating that
trees and shrubs would no longer be an eligible cost under the
Public Assistance Program. On March 10, 1997 a formal policy
disallowing trees and shrubs was sent to all FEMA regions and
to States for review and comment.
--FEMA is in the process of preparing legislative changes that would
implement many of the other recommendations of the draft
report.
It is difficult to calculate the cost savings of many of our
administrative or program improvements, though we do have specific cost
figures on some of these measures. FEMA, in a study two years ago,
calculated that using teleregistration rather than Disaster Application
Centers for the Human Services Programs has reduced the cost per
application from $59 to under $14. FEMA's accelerated disaster close-
out effort has resulted in closing out 415 Human Services Programs,
with a reconciliation of more than $1.8 billion in the Disaster Relief
Fund. Of this amount nearly $403 million in obligation authority was
returned to the Fund.
Measures to streamline the Public Assistance Program, and to
restrict types of assistance, are still in the early stages of
development and implementation so their effectiveness has not yet been
measured. Cost-savings could potentially be great if substantive
measures are taken to refocus this program on essential governmental
facilities and the protection of life and property.
Question. Which of the options for reducing costs outlined in the
FEMA report can realistically be implemented in the next 1-2 years?
Answer. Those recommendations which do not require statutory change
could be implemented in the next 1-2 years.
Question. What is FEMA's time-line for implementing the options
noted in the FEMA report?
Answer. Those recommendations which can be done without statutory
change can be implemented within the next 1-2 years. FEMA will also be
submitting a legislative proposal by July, 1997 to implement those
recommendations which require statutory change.
Question. What is the status of work on clarifying the criteria for
disaster declarations?
Answer. In the Fall of 1996, FEMA established a Panel on Disaster
Cost Savings to examine, among other things, the issue of declaration
criteria. Upon analysis and consultation with our partners, we have
concluded that the high costs in the disaster program are driven by the
number of large major disasters and broad eligibility criteria, rather
than the number of declarations.
We believe that the current declaration criteria continue to be
appropriate, and, in order to reduce costs, have placed major focus on
streamlining activities and targeting eligibility. However, factors
used to judge severity, magnitude and impact are being updated to
reflect current dollars and procedures for conducting Preliminary
Damage Assessment are being reengineered.
CHEMICAL STOCKPILE EMERGENCY PREPAREDNESS PROGRAM
Question. FEMA and the Army have been working jointly on the
Chemical Stockpile Emergency Preparedness Program (CSEPP). I know there
has been some dispute over the management of the program, and the
funding of some programs and activities that didn't necessarily fit the
mission of the program. What is the status of FEMA's involvement with
the CSEPP program?
Answer. There have been issues between FEMA and the Department of
the Army regarding the day-to-day management of CSEPP that require
resolution. However, while we recognize that there is a perception in
some quarters that the issues are affecting program delivery, both FEMA
and the Army have worked very closely to ensure the uninterrupted
delivery of program services. Given the different operating styles of
FEMA and the Army, it is reasonable to expect periodic problems to
arise with program delivery. As they have with previous programmatic or
stylistic differences, both FEMA and the Army have been taking positive
steps towards resolving these issues and believe that they will be
resolved shortly for the maximum benefit of the program. It is
important to note that FEMA Director James Lee Witt and Secretary of
the Army Togo West are personally involved in resolving these issues
expeditiously.
Question. What are some improvements that you think both the Army
and FEMA could make to ensure that we are getting the most bang for the
taxpayers buck, and to make sure we are sticking to the mission of the
program?
Answer. With respect to program funding, of over $536 million
requested to date by the States to support the program, only $240
million has been provided. In many instances, this difference is the
direct result of the Federal government's insistence that only projects
consistent with CSEPP policy be funded. Thus, while in some instances
States and local governments continue to make budgetary requests which
exceed programmatic needs, FEMA is confident that strong program
oversight has minimized the approval of these excess or extravagant
projects.
NATIONAL DAM SAFETY PROGRAM
Question. The National Dam Safety Act was signed by the President
in October. This program to help States prevent dam failures seems like
a prudent investment toward protecting people and property below dams,
especially considering there are over 1,800 unsafe dams in the country.
There are 55 high hazard dams in Maryland alone--many of which don't
have effective emergency warning plans. The issue of effective warning
systems was raised after the flooding at Port Deposit, Maryland last
year. What is FEMA doing to implement the Dam Safety Act Program?
Answer. After the National Dam Safety Act was signed into law, FEMA
developed a work plan, which established a mechanism and process for
implementing the new legislation. The work plan consists of nine
sections:
--Establish an Interagency Committee on Dam Safety (ICODS).--ICODS
was originally established in 1980 under Executive Order 12148
and operated under a Charter published in the Federal Register
on August 28, 1985. Now that the National Dam Safety Act has
codified the ICODS, the group's charter is being revised to
reflect its new status.
--Develop and Complete the Implementation Plan for the Dam Safety
Program.--A task force, including representatives from FEMA,
the Departments of Agriculture, Defense and Interior, the
Federal Energy Regulatory Commission, and the States, has been
formed to accomplish this initiative. To date, the Task Force
has met three times and the assignments made to members have,
to date, progressed on schedule. The Task Force is on course
for completion of the implementation plan by the deadline
established in the National Dam Safety Act.
--Training for State Dam Safety Officials.--An ICODS training
subcommittee has been revived, and members are now working on
developing a list of priorities for new training courses. In
addition, FEMA recently developed two new courses: (1) Dam
Safety Emergency Action Plan Development for Dam Owners; and
(2) Dam Safety Emergency Action Plan Exercise Development for
Dam Owners. If the funds that were authorized for training are
appropriated by the Congress, the dissemination of new training
opportunities will escalate.
--Establish Goals, Objectives, Priorities, Schedules, and Regulations
for Implementing the National Dam Safety Program.--The Task
Force, in a largely parallel effort, is developing information
on goals, objectives, priorities and schedules necessary to
prepare the needed regulations. All activities are on schedule
at this time.
--Provide Recommendations on Establishment of the National Dam Safety
Review Board.--The Act specifies the composition of this Board,
and the Task Force is in the process of developing
recommendations to present to the FEMA Director on the
feasibility, desirability and viability of forming this Board.
--Develop and Implement a Program of Technical and Archival
Research.--This assignment is being accomplished at two levels:
(1) the ICODS Subcommittee on Research has been established and
will identify research needs both at the Federal and non-
Federal level; and (2) the National Performance of Dams Program
(located at the Center on the Performance of Dams at Stanford
University) has been established as an outreach mechanism to
obtain information and data on dams.
--Prepare a Biennial Report to Congress on the Status of the National
Dam Safety Program for Fiscal Year 1996-97.--FEMA has been
providing biennial reports to the President and Congress since
1980. This process will continue. The 1996-97 report will be
ready to transmit to Congress and others by December 31, 1997.
--Report to Congress on the Availability of Dam Insurance.--We have
solicited information from the Federal Insurance Administration
and the Insurance Industry, and are in the process of analyzing
available data. This report should be ready by April 30, 1997.
--Develop a Staffing Plan for Implementing the National Dam Safety
Program.--At this time, two FTE are dedicated to the Program.
No change in the staffing level is anticipated for fiscal year
1998.
Question. I understand that one dam failure last year alone caused
$5.5 million in damages and the death of one woman. What amount of
disaster relief funds have been spent by FEMA as a result of dam
failures over the past five years?
Answer. While dam failures may have resulted from some incidents,
they have not been the principal cause of any recent major disaster
declarations. FEMA's charting of the causes of natural disasters
generally reflects the weather event (hurricane, storms, tornadoes,
etc.) which was the initial cause of the declaration.
COORDINATION EFFORTS WITH COUNCIL ON ENVIRONMENTAL QUALITY (CEQ)
Question. I know that FEMA works in partnership with other
agencies. Working in partnerships with other agencies can help produce
a more effective and efficient government approach to disaster
readiness, response, recovery, and mitigation. What is FEMA doing to
coordinate with the Council on Environmental Quality (CEQ) to make sure
that environmental mandates don't impede relief efforts?
Answer. FEMA has historically coordinated with CEQ as we developed
improved environmental compliance methodologies or as complex and
controversial issues have arisen. Of special note is the fact that CEQ
recently hired an individual to act as primary point of contact with
FEMA. This provides a mechanism to better interact with CEQ as we
continue to improve the process to evaluate and minimize environmental
impacts of our activities while ensuring environmental mandates do not
impede relief efforts.
FEMA, in coordination with CEQ, has undertaken several significant
initiatives recently which have helped reduce potential impediments of
environmental compliance. The most significant initiatives include:
--FEMA has revised its environmental regulations at 44 CFR adding to
its list of Categorical Exclusions activities requiring minimal
environmental review and documentation. This has reduced
environmental review requirements by as much as 50 per cent for
some Agency programs.
--FEMA has provided a National Environmental Policy Act (NEPA)
training course to over 300 FEMA and State Emergency Management
staff Nationwide to enhance the capabilities of individuals
involved in environmental review. This has served to provide
the State Agencies who administer many of FEMA's programs with
the ability to identify and resolve environmental issues early
in the relief effort or project development phase.
--FEMA has hired seven Regional Environmental Officers to coordinate
environmental issues in the field. This is a significant step
in the process of decentralization of environmental review that
will allow for improved coordination between FEMA, other
federal agencies, and State and local officials on
environmental issues related to disaster relief efforts.
Question. I suggested to CEQ Chairman Katie McGinty at their
hearing in February that FEMA, CEQ and other relevant agencies develop
SWAT teams that can rapidly determine emergency provisions in
environmental regulations so that relief efforts won't be unduly
delayed while FEMA is trying to save lives. What can you commit FEMA to
doing regarding this coordination of SWAT teams? What can FEMA do to
involve CEQ in its simulation maneuvers?
Answer. It is very important to note that provisions within the
Stafford Act and FEMA's regulations are in place to ensure that
environmental requirements will never delay FEMA's immediate efforts to
save life or property. The issue of streamlining environmental review
requirements by utilizing emergency provisions and through coordination
with other Federal agencies is an issue which is more relevant in FEMA
undertakings for which there is sufficient time to plan and evaluate an
action.
One of the primary responsibilities of the recently created
position of Regional Environmental Officer is to coordinate
environmental issues immediately following a disaster event. This
includes being located at the Disaster Field Office to coordinate with
relevant agencies such as the Environmental Protection Agency, the Army
Corps of Engineers, and the U.S. Fish and Wildlife Service in order to
streamline implementation of the requirements of the environmental laws
that these agencies administer. FEMA will continue to further define
the roles of the Regional Environmental Officers and work with CEQ to
ensure coordination of relevant agencies, an approach which is
consistent with the ``SWAT'' team concept.
SUBCOMMITTEE RECESS
Senator Bond. The subcommittee stands in recess until April
8, at 9:30 a.m., when we will take testimony from the EPA.
[Whereupon, at 10:58 a.m., Tuesday, March 18, the
subcommittee was recessed, to reconvene at 9:30 a.m., Tuesday,
April 8.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, APRIL 8, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:34 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Shelby, Craig, Mikulski,
Leahy, Lautenberg, and Boxer.
ENVIRONMENTAL PROTECTION AGENCY
STATEMENT OF CAROL M. BROWNER, ADMINISTRATOR
ACCOMPANIED BY:
FRED HANSEN, DEPUTY ADMINISTRATOR
SALLYANNE HARPER, ACTING CHIEF FINANCIAL OFFICER
AL PESACHOWITZ, ASSISTANT ADMINISTRATOR, OFFICE OF
ADMINISTRATION AND RESOURCES MANAGEMENT
JONATHAN Z. CANNON, GENERAL COUNSEL
DAVID GARDINER, ASSISTANT ADMINISTRATOR, OFFICE OF POLICY,
PLANNING AND EVALUATION
ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR, OFFICE OF WATER
TIMOTHY FIELDS, ACTING DEPUTY ASSISTANT ADMINISTRATOR, OFFICE
OF SOLID WASTE AND EMERGENCY RESPONSE
MARY NICHOLS, ASSISTANT ADMINISTRATOR, OFFICE OF AIR AND
RADIATION
STEVE HERMAN, ASSISTANT ADMINISTRATOR, OFFICE OF ENFORCEMENT
AND COMPLIANCE ASSURANCE
LYNN R. GOLDMAN, ASSISTANT ADMINISTRATOR, OFFICE OF PREVENTION,
PESTICIDES AND TOXIC SUBSTANCES
ROBERT J. HUGGETT, ASSISTANT ADMINISTRATOR, OFFICE OF RESEARCH
AND DEVELOPMENT
WILLIAM A. NITZE, ASSISTANT ADMINISTRATOR, OFFICE OF
INTERNATIONAL ACTIVITIES
NIKKI L. TINSLEY, ACTING INSPECTOR GENERAL
JULIE ANDERSON, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF
CONGRESSIONAL AND LEGISLATIVE AFFAIRS
MARY LOUISE UHLIG, ACTING ASSOCIATE ADMINISTRATOR, OFFICE OF
REGIONAL OPERATIONS AND STATE/LOCAL RELATIONS
PHILIP LANGRIGAN, EPA CONSULTANT, CHILDREN'S OFFICE
J. CHARLES FOX, ASSOCIATE ADMINISTRATOR, OFFICE OF REINVENTION
W. MICHAEL MC CABE, REGIONAL ADMINISTRATOR, EPA REGION, III
KATHRYN S. SCHMOLL, COMPTROLLER
ELIZABETH CRAIG, DIRECTOR, BUDGET DIVISION
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The subcommittee will come to
order.
We meet this morning to take testimony from the
Environmental Protection Agency on its fiscal year 1998 budget
request. The request totals $7.6 billion, an increase of $845
million, or 12 percent over the current budget. Today, we are
pleased to welcome EPA Administrator Carol Browner, Deputy
Administrator Fred Hansen, and other EPA officials.
While most agencies in the VA-HUD portfolio have budget
requests which would maintain current services at best, EPA
would enjoy increases in virtually every programmatic area
under the President's proposal with the exception of clean
water State revolving funds. Not surprisingly, I do not believe
EPA's proposal is realistic in the budget environment in which
we are operating.
Overall spending available to this subcommittee for
Veterans Affairs and Housing and Urban Development, EPA, NASA,
and other areas may not be significantly more than a freeze at
the current year's level. Yet to maintain current health care
service for veterans, at last $500 million above last year's
level would be needed. About $5.6 billion would be needed to
maintain existing low-income housing contracts scheduled to
expire next year, and a total of $5 billion will be needed to
meet FEMA disaster assistance requirements this year and next
year. Clearly, we have to be looking closely at all aspects of
EPA's budget requests to ensure that dollars are targeted to
those areas offering the largest opportunity for risk
reduction.
Quite frankly, EPA's budget proposal is disappointing. Last
year, Deputy Administrator Hansen testified that EPA's fiscal
year 1998 budget process would be based on a new system,
bringing together risk-based planning, budgeting, and
accountability. But there is no evidence that such a process
was employed to develop the budget for the coming year. It
seems to me that no hard choices were made to discontinue lower
priority programs or to reduce costs through program
efficiencies.
Despite internal EPA analyses dating back to 1987 that
found that Superfund sites rank relatively low in risk compared
to such problems as air pollution and pesticide residue on
foods, EPA's budget proposes a 50-percent increase, $700
million for the Superfund program. The proposal seems based
entirely on a campaign commitment made by the President in
Kalamazoo, MI, to double the pace of cleanups. If EPA were
truly applying a relative risk methodology to its budget
process, I am convinced this program would not merit a 50-
percent increase.
While the Superfund budget would increase dramatically, the
clean water State revolving fund, a program which works well
and for which tens of billions of dollars are needed, would be
cut by $275 million. Rumor has it that EPA offered up this
program to be cut as an offset to the Superfund increase. If
additional funds are to be found within our allocation, my
highest priority within EPA will be to restore the cut to the
clean water SRF program.
Now, the General Accounting Office has done a little study
in the high-risk series. It has found that Superfund is 1 of 25
Government programs which is high risk, subject to fraud,
waste, abuse, and mismanagement. It is not just the GAO. This
program has been criticized by many, many in this room, I dare
say, over the years because it lines the pockets of lawyers
while sites get studied and studied and studied. Legislative
reforms have been blocked. But until legislative reforms are
enacted, I cannot support any increase in this program. If we
get this program reformed so it cleans up sites, call me
immediately. I can be reached day or night when a proposal to
reform Superfund is adopted.
EPA's fiscal year 1997 budget showed outyear budget
projections of $1.4 billion through the year 2000 for the
Superfund program. Yet now we are told $2.1 billion is
imperative for each of the next 2 years. Indeed, top officials
at EPA have been quoted in the press warning about the dire
consequences of not fully funding the President's request for a
50-percent increase. Why all of a sudden this program became
EPA's highest priority has not been fully explained. How EPA
would manage to spend prudently 50 percent more in the program
has not been explained. Which specific sites will be funded, at
what cost and when has not been explained. It appears that the
methodology used to support the Superfund request is flawed,
and uses inflated cost assumptions, according to the
Congressional Budget Office.
Finally, I note that skepticism abounds over the Superfund
proposal. Senator Chafee, chairman of the authorizing
committee, has stated:
That Superfund remains a fundamentally flawed program.
Cleanups still take too long, many cleanups are still too
costly, and there is still too much litigation. It would be
unwise and irresponsible for Congress to authorize a
significant increase in funding for this program until we
complete the task of reauthorization and can be sure that the
money will be used to accelerate the pace of cleanup and
protect our citizens.
And the Association of State and Territorial Solid Waste
Management Officials, in testimony, states:
We do not know whether there is enough pending work for the
full $700 million in additional funds requested in fiscal year
1998, nor that the infrastructure exists to spend it
effectively.
Other items in EPA's budget request rekindle debates of the
past. For example, $149 million is requested for the climate
change action plan, a 73-percent increase over current spending
even while the global environment management initiative
recently reported that voluntary programs are not affected. In
its recent report, GMI stated programs which depend for their
success on cooperation, voluntariness, and trust still do not
fare well. To date, the Green Lights Program, which would enjoy
the largest proportion of the requested increase, has achieved
a relatively small amount of greenhouse gas reductions and
participants have not upgraded as much floor space as
anticipated.
Also, an earmark of $100 million is requested for Boston
Harbor, more than double what was approved in the VA-HUD bill
last year. While the clean water State revolving funds which go
to every State on a fair share basis would be cut by $275
million. Several new initiatives have been proposed with scant
detail, including an urban livability initiative and a new
right to know initiative announced by the President in
Kalamazoo.
Outside of the budget proposal, we have other concerns.
While this committee has strongly supported efforts to provide
more flexibility and reduce oversight on the States, and the
National Academy of Public Administration recommended 2 years
ago, recent reports raise concerns about EPA's relationship
with the States. While EPA promised there would be a new
partnership, it appears that the marriage is on the rocks. Ms.
Browner, the Environmental Council of States told you after
your interview with the New York Times in December, in which
you criticized State enforcement efforts:
States are very concerned about what appears to be a
retreat on your part from the partnership relationship which
has been carefully, and in some instances painfully built over
the past 4 years. State commissioners are disappointed to be
the objects of your apparent lack of trust.
In addition, there are significant problems with EPA's so-
called reinvention efforts. Ms. Browner, in our hearings 2
years ago you told Senator Mikulski:
We would like nothing better than to see an integration of
our underlying statutes. I believe we can achieve almost exact
same results through programs such as the common sense
initiative. We want to focus our energy on those kind of
concrete on-the-ground changes. Our reinvestment effort CSL
project XL will in the end achieve as important results as the
kind of legislation which you speak of.
Unfortunately, it appears that project XL and the common
sense initiative hardly have lived up to the promises made.
Earlier this year the petroleum industry withdrew from the
common sense initiative, and the auto industry apparently said
it would remain a part of CSI until work it has done is
completed. CSI participants have told us that little has been
accomplished in the way of meaningful reforms, and too much
emphasis has been placed on reaching absolute consensus.
As to project XL, which has been called the centerpiece of
the administration efforts to reinvent environmental
regulations, 2 years ago EPA claimed it would be launching 50
initiatives in 1995. Yet today there have been only three
project approvals. Bill Sugar, senior director of environmental
affairs for Anheuser Busch in St. Louis, one of the eight pilot
XL projects selected in November 1995, has said we could not
seem to get the out of the box thinking we wanted to get out of
them.
EPA recently announced the creation of an Office of
Reinvention. We look forward to hearing about how this new
office will reinvigorate these initiatives and get them on the
track. I would note that the enterprise for the environment
project under Bill Ruckelshaus' stewardship, is nearing
completion. EPA has been an active participant in that project,
and I particularly commend Fred Hansen for the many hours he
has devoted to it. E4E is intended to offer recommendations for
an improved environmental management system, including
legislative recommendations. We are anxiously awaiting the
final report and recommendations of E4E, and hope to see
positive bipartisan recommendations to address some of the
current problems.
In closing, it is my hope that EPA's appropriation can be
resolved in an expeditious nonpartisan manner, and that we can
work together to address some of the problems we are seeing and
achieve the most effective allocation of resources. We look
forward to your testimony, and now it is my pleasure to turn to
my ranking member, Senator Mikulski.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
want to welcome Administrator Browner here today, and her team.
I note that this is Ms. Browner's fifth appearance before this
subcommittee, and I want to take this opportunity to thank her
for her efforts and her leadership over the last 5 years.
I also note that Ms. Browner's tenure has not been
uneventful. Budget cuts and Government shutdowns have not made
it easy to do her job or easy for the people who work at EPA to
do their job. In addition, often a climate of hostility toward
environmental protection in the Congress as a whole,
particularly the authorizing committees, has not necessarily
been the most constructive climate to move our agenda. I
believe that EPA has survived these challenges, and has taken
many initiatives to make the long-term changes that are
necessary to keep up with a changing world.
I would agree that we need to do more in better management
and more in better use of technology. I happen to believe that
environmental protection goes hand in hand with economic growth
and job creation. Protecting our environment does create jobs,
and not destroy them. New economic opportunities and markets
flow from environmental protection services and technology
which hopefully generate jobs in our own country, and even give
us an opportunity for global exports with both exporting our
knowledge, our services, and our technology, an area I would
like to pursue in our questions.
Also, Maryland has benefited from the Environmental
Protection Agency in the bipartisan support for the Chesapeake
Bay, going back to Richard Nixon, to Senator Mathias, who
really is the father of the Bay Program, until now. Cleaning up
the Bay is not only good environment, but it is sure very good
for Maryland economy. Watermen, commercial fishermen, economic
development, and a host of other businesses depend upon a clean
bay to earn a living. The Chesapeake Bay Program is an
investment in cleaner environment and a healthier economy.
I also want to talk about two other aspects in our
questioning that I think will generate jobs, and then, also,
another to save lives. Administrator Browner, I look forward to
hearing from you more on the brownfields initiative. The
brownfields legislation was recently passed by my own Maryland
General Assembly. We are now looking forward to how brownfields
could be an absolute tool to helping clean up some of the toxic
areas around Baltimore that would then leave us new land, and,
therefore, new opportunity in the very empowerment zone to
attract jobs.
We also note the President's child's health initiative,
which though might not generate jobs, sure saves lives. We note
again in my own home State of Maryland the rise in lung and
respiratory illness gives me enormous pause, particularly the
rise if asthma among children and the onslaught of adult asthma
among adults is really of concern. This does not seem to have a
genetic base, but it certainly does seem to have an
environmental base. And for the little kids in Baltimore that
we are trying to get in school and having them read by the time
they are in the third grade, we want to make sure that this is
an initiative that we want to hear more about, and is not just
a photo op, just not a press release, and it is not a throw-a-
line at press conference, but a real initiative.
I must say that in the budget, though, I am deeply
concerned about the cut in the State water revolving fund. This
has been a very important tool when I was both the chairman and
now as ranking. We get more requests for special projects from
our colleagues in the Senate around the need to have more water
infrastructure, and as you know, Ms. Browner, infrastructure in
our cities is really aging.
So we look forward to working with you. We want to look at
how we can reduce costs, and we also want to hear more about
project XL, the commonsense initiative, and how you have
continued to implement the NAPA project.
So I welcome you, fellow or sister resident from downtown
Tacoma Park, one of the garden spots in Maryland, and look
forward to your testimony.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Burns.
STATEMENT OF CONRAD BURNS
Senator Burns. Thank you very much, Mr. Chairman. I do not
have much of a statement. It would not make any difference
anyway. There are a couple of areas that I cannot get my hands
on. I got in late last night, and I cannot get my hands on
them, but I am going to look at them very shortly. We had a
list of all this money that goes to foreign countries to do
something that comes out of the EPA. I do not know what it
does, but I know there is a chunk of it. I would rather spend
it in this country, to be honest with you.
I am sensitive to ground water. I want to give you a little
figure here, and I will tell you why. We in the West get very
sensitive about our water. I got a daughter that graduates
medical school in June. Her advice to me right now is very
economical; however, she says after June 7 it goes up sharply.
But she said, you know, the increase in the average life span
of an American has gone up rather sharply since World War II.
The medical profession cannot take but maybe 5 or 10 percent
credit for that advance. The rest of it goes as how we handle
our water, because more life-shortening diseases are waterborne
than any other disease. So we are sensitive to that, and I want
to look at it.
You have also requested 100 more people in each one of your
regions for EPA people, I think, and this is what I read in a
newspaper, I think, the Casper Star. Well, anyway, it is always
a big surprise, but the President has got it in his budget, and
that should be you, I would imagine. I would want to change the
emphasis of enforcement to people who help in compliance rather
than a hammer. I want to carrot people, I do not want hammer
people. And if I heard anything on small business hearings, and
we had two of them in Montana and Wyoming over this last break,
it is that.
There are people who are willing to comply, but will not
say much to anybody for the simple reason the way they have
been treated in the past, and we have got to turn that around
some way or another, and I do not know how we do it, but that
is where I am going to place my emphasis, and I will get a hold
of this other stuff later on.
Thank you very much, Mr. Chairman
Senator Bond. Thank you, Senator Burns.
Senator Lautenberg.
STATEMENT OF FRANK R. LAUTENBERG
Senator Lautenberg. Thank you, Mr. Chairman. I am pleased
to see Administrator Browner here to talk about the EPA budget
for 1998. I believe that the President's budget places the
proper priority on protecting the environment by increasing
funds for several Environmental Protection Agency programs. It
also follows through on his pledge to offer a balanced budget
while advancing the goals that Americans share in continuing
programs to protect our Nation's environment.
In poll after poll you will see that people will say I am
willing to pay more if it goes to environmental cleanup. I want
to know that it goes directly there, but they are willing to do
it because that is the one legacy that all of us agree--that we
ought to be giving our children a better environment in future
generations.
I am particularly impressed by the fact that the
President's budget recognizes the importance of speeding the
cleanup of our Nation's most hazardous wastesites. After 16
years, the Superfund Program is now primarily in the
construction rather than the study phase, and since
construction is generally more expensive than studies, the need
for funding is growing. Level Superfund spending would mean
slower cleanups and a hampered ability to protect our
neighborhoods and ground water from hazardous waste.
The President's budget provides an additional $700 million
for Superfund. It is a 50-percent increase, bring the total
Superfund spending to over $2 billion. This increased spending
is the first phase of funding that will allow an additional 250
Superfund sites to be cleaned up by the year 2000. We will
double the pace of that cleanup. The fact that the President's
budget seeks to spend more on Superfund is a good sign. It
means that we now have a handle on our hazardous waste
problems, and that we are on the verge of making significant
progress in expediting the cleaning of hazardous wastesites.
Some have said that providing additional money to Superfund
would simply be throwing more money at the problem. Well, in
1993, I was one of the leading critics who claimed that
Superfund was severely broken and needed fixing. In fact, in
his first inaugural address President Clinton committed to
changing Superfund so that money would go toward cleanup of
hazardous wastes instead of paying lawyers. Since that time, I
believe the administration's reform efforts have moved
Superfund much closer to the goals of faster, fairer, and more
efficient cleanups.
It bears noting that these reforms do not reflect only the
goals of the present administration; rather, Ms. Browner's
administrative reform efforts were based on studies and task
force recommendations developed under Administrator Bill Riley,
a Bush appointee. And as a result of their reform efforts,
Superfund is no longer in need of drastic overhaul.
At the same time, I am in negotiation with the
administration and Senators Baucus, Smith, and Chafee on
improving Superfund, and I am confident that we can reach
agreement on the issues that separate us and end up with a bill
that will meet the goals of faster, fairer, more efficient
cleanups, and we will receive the support of both parties, the
various stakeholders, and the administration.
Whether we fail or not in this ambitious goal, whether it
takes the Congress one session or two, the President's budget
recognizes a necessary and proper increase in EPA's budget so
that we can speed the cleanup of our Nation's most hazardous
wastesites. Seventy-five percent of the sites have proven
health impacts, and holding funding hostage while we in
Washington referee fights between the insurance industry and
polluters and States and communities is not a position that I
find appealing.
I want to again thank Administrator Browner for her hard
work, her leadership, and I look forward to hearing her
testimony and her continued service.
Senator Bond. Thank you, Senator Lautenberg.
Senator Shelby.
STATEMENT OF RICHARD C. SHELBY
Senator Shelby. I have just got a few remarks.
Ms. Browner, welcome again to the committee.
I believe overall that EPA has changed a lot of things for
the better in this country: clean air, water, you name it, we
can go on and on. But I want to associate myself with the
remarks of Senator Burns that I believe your administration, if
it were guided from the top down, could do a lot of things
maybe with a velvet glove, a softer glove, and get notice to a
lot of people that they have got to comply rather than a
vicious attack on them. I think it would help the Agency and
the image of the Agency.
Having said that, I want to support you where I can. But I
do not believe that everything is money. A lot of it is
management. A lot of it is administration. I know it takes some
money, but we are in some tight money situations up here. The
chairman alluded to that earlier in his opening statement. But
all of us are having to do basically more with less money, and
I think EPA might have to do that.
But I commend you for a lot of good things that I believe
you are doing. I believe you are committed to the health, clean
air, and water for people, and water is very, very important.
Air is very, very important. You do not have to have asthma to
know that. We all know it. But people with asthma or touches of
it realize it more than some of us. But think about how you can
do more with less, how you can be a top-flight administrator
with less dollars, with fewer dollars, and I think you would
hit it off not only here but with the American people, because
overall your purpose is good.
Thank you.
Senator Bond. Thank you very much, Senator Shelby.
Now, Administrator Browner, you have heard all of our
views. We are ready to hear your testimony.
STATEMENT OF CAROL M. BROWNER
Ms. Browner. Thank you, Mr. Chairman and members of the
subcommittee, for this opportunity to testify before you on the
1998 budget request for the Environmental Protection Agency. I
am proud to be joined by colleagues at the Agency, including
the new Associate Administrator for Reinvention, Chuck Fox, and
Dr. Phil Langrigan, who has joined us in our work to create an
Office of Children's Health.
As we approach the 21st century, EPA faces many stiff
challenges in our mission to the public health and the
environment, including the air, the water, the land, the food
they eat. We believe that Americans want us to meet these
challenges, that they want clean, healthy air to breathe, they
want to know their tap water is safe to drink, and that the
food they buy is safe to eat. They want us to rid the Nation of
its toxic waste dumps and to prevent the further pollution of
America's neighborhoods.
Americans want their children protected from environmental
hazards. They want to pass on to their children a safe and
healthy environment. And they have come to expect that we can
do the job of protecting their health, their environment, and
provide for the Nation's economic growth and security. We
firmly believe, as I think all here believe, that environmental
protection goes hand in hand with economic progress, that a
healthy environment is, in fact, vital to the long-term
economic success of the Nation, and vice versa. Indeed, this
has been our history.
EPA celebrates its 27th anniversary this year. Over the
past 27 years, we have made tremendous strides in cleaning up
our environment. While we have taken these efforts to reduce
pollution, America's gross domestic product has nearly doubled.
Over the past 4 years in particular, President Clinton has
shown that it is possible to bring down the deficit, restore
the Nation's economic health, and at the same time strengthen
protection of public health and the environment.
The budget request we make today totaling $7.6 billion
expands on that commitment and that promise. It calls for an
increase of nearly $850 million over this year's appropriated
levels, most of which would be used to fund the President's
call to action to clean up the worst environmental problems
millions of Americans face in their own community. We are
talking about doubling our record pace of cleanups at the
Nation's worst toxic wastesites, and ridding our country of 500
more Superfund sites by the end of the year 2000. We want to
expand on our brownfields initiative, so that we can help the
communities across the country clean up literally thousands of
old, abandoned industrial sites and return them to productive
use.
Additionally, this budget request increases funding for
expansion of the public's right-to-know about toxic pollution
in their neighborhoods, without imposing any new reporting
requirements on anyone. It also means tougher, more aggressive
criminal enforcement against those who actually pollute our
air, our water, and our land.
NEW LEGISLATION
On another front, this requested increase enables EPA to do
its part to implement two major new environmental laws passed
by Congress last year. Both enjoyed broad bipartisan support:
The Safe Drinking Water Act amendments of 1996 and the new Food
Quality Protection Act, are two shining examples of how
Congress and the administration can work together to protect
the public health and our environment.
Under the Safe Drinking Water Act amendments, EPA will
undertake a variety of new efforts to improve the way we set
and enforce drinking water standards, protect drinking water
supplies, help communities upgrade their facilities, and
provide timely and important information to consumers. The new
law is a model for regulatory reform. It gives EPA flexibility
to act on contaminants of greatest risk, and to analyze cost
and benefits while keeping the public health as the paramount
concern.
Under the Food Quality Protection Act, EPA will be adding a
new level of protection from harmful pesticides in our food.
The budget includes funds to set a single health-based child-
first standard for pesticides and all foods.
CHILDREN AS A HIGH PRIORITY
In addition to funding these new, high-priority items, the
EPA budget request for 1998 supports a greater overall emphasis
on protecting children. Since the President came to office we
have tried to put children at the focal point of our mission,
because they are among the most vulnerable to environmental
threats. Their bodies, their brains, are still developing.
Relative to their body weight they consume more of certain
types of foods and fluids, and breathe more air than adults.
When we set public health and environmental standards, we will
do so after taking into account the unique vulnerabilities of
our children.
We believe that by doing all of this we will be ensuring
that everyone is protected. All of these initiatives, Mr.
Chairman, will be enhanced by our efforts to continue
reinventing the way EPA works. We are determined to carry out
our action plan in the most commonsense, cost-effective ways.
We are resolved to strengthening our partnerships with States
and tribes, and to providing them more flexibility in how they
reach the environmental goals we all share.
We intend to improve our success at reducing redtape,
adopting alternative strategies so long as they produce
superior environmental results.
In closing, Mr. Chairman, this budget will take us further
down the road toward our goal of a cleaner, safer, and
healthier environment. It is a budget that says to our citizens
we can put our fiscal house in order without sacrificing our
basic values; we can protect both the health of our economy,
the health of our children; we can have both economic progress
and environmental protection that is second to none.
Thank you, Mr. Chairman, and I am happy to answer any of
your questions.
[The statements follow:]
Prepared Statement of Carol M. Browner
Mr. Chairman, I appreciate the opportunity to be here before you
and the Members of your Subcommittee to present the President's 1998
Budget Request for the U. S. Environmental Protection Agency. This
request is $7.6 billion and 18,283 FTE's. President Clinton showed
during his first term that it is possible to reduce the deficit,
restore the nation's economic health, and protect public health and the
environment, and he believes in continuing on that course. The
President and I believe strongly that a healthy environment and a
strong economy go hand in hand.
This budget focuses on the environmental challenges of the 21st
Century by strategically expanding EPA's resources for protecting the
air we breathe, the water we drink, and the land on which we live. By
protecting the environment we protect the health of millions of
Americans, particularly our children, who are often the most vulnerable
to environmental health risks. Everything we do to clean our air, water
and soil, and to make the environment more healthy, we do for them.
The President is requesting an increase for EPA of nearly $850
million over this year's appropriated levels. When you add the
additional resources that our agency will be redirecting from other
areas, this budget contains a total of more than $900 million in new,
high priority investments for environmental protection and public
health.
Last August, the President presented America with a ``call to
action'' to deal with the most pressing environmental problems faced by
our nation's communities. Of this year's budget increase, $736 million
will fund these high priority initiatives, including an acceleration of
Superfund cleanups, a revitalization of communities through Brownfields
cleanups, a commitment to expand the public's access to information
about toxic pollution in their neighborhoods, and a strengthening of
criminal enforcement against polluters.
This budget proposes $2.1 billion for Superfund, including a $650
million increase over 1997 to meet the President's pledge to nearly
double the pace of toxic waste cleanups. This increase is the first of
two installments of the $1.3 billion planned to accomplish this goal,
which will result in the cleanup of another 500 sites by the end of the
year 2000. Twenty-seven million Americans live near a Superfund site. A
commitment to clean up these sites means that millions of Americans who
live near the nation's worst toxic waste sites will start off their
21st Century in healthier neighborhoods free of toxic impacts. Cleaning
up toxic waste sites will not only ensure the health of our citizens,
but will generate jobs and economic development through returning
damaged areas of our country to productive use.
This budget also proposes a major expansion of the Brownfields
initiative with a $50 million increase to the budget, as part of a
program to ensure cleanup of approximately 5,000 sites by the year
2000. Restoring these areas through a partnership with communities and
the Department of Housing and Urban Development will result in economic
revitalization for communities throughout the country, where scores of
abandoned commercial properties will be re-developed and put back into
commercial use.
Americans have a right to information about toxic pollution in
their neighborhoods. This budget proposes an additional $35 million for
an initiative to expand the information available to people about toxic
threats to their families--without imposing more reporting requirements
on anyone. Informed, involved citizens will always make far better
decisions than some distant bureaucracy. Information on toxics will be
available to American citizens through a comprehensive monitoring
system with computer links to schools, libraries, and home computers.
The President has also made a commitment to a more aggressive
criminal enforcement effort against those who pollute our air, our
water, and our land. This budget requests a modest funding increase to
enhance the training available for state, local, and tribal officials
who work at the grassroots of environmental law enforcement.
On another front, this budget contains a $36 million increase to
enable EPA to implement two major new environmental laws passed by
Congress last year: the Safe Drinking Water Act Amendments and the new
Food Quality Protection Act. Those bipartisan legislative successes
show how the Congress and the Administration can work together to serve
the American people by enhancing the safety of the water we drink and
the food we eat.
Under the Safe Drinking Water Act Amendments, EPA will undertake a
variety of new efforts to improve the way we set and enforce drinking
water standards, protect drinking water supplies, help communities
upgrade their facilities, and provide timely and important information
to consumers. The new law is a model for regulatory reform. It gives
the EPA flexibility to act on contaminants of greatest risk and to
analyze costs and benefits, while keeping the public health as the
paramount concern.
Under the Food Quality Protection Act, EPA will be adding a new
level of protection from harmful pesticides in our food. The budget
includes funds to set a single, health-based, children-first standard
for pesticides in all foods, along with the resources necessary to re-
evaluate some 9,000 different pesticides to assure safety and to
provide better information to the public. By carrying out this act, we
will help families to have the safest possible food on the dinner
table.
In addition to our commitment to helping implement this new
legislation, the President's budget supports the broad goals of
protecting children from environmental health threats, revitalizing the
environmental and economic health of cities, and strengthening
partnerships with state, local and tribal governments.
Because children may face significant, long-term, and unique
threats from environmental toxics, we are taking a comprehensive
approach to providing children with the strongest possible health
protection. Children are more at risk from toxics because their systems
are still developing. Relative to their body weight, children consume
more of certain types of food and fluids and breathe more air than
adults. We are addressing these concerns in programs across the Agency
with an initiative called ``Assessing Health Risks to Children.'' This
budget dedicates $15.5 million to this initiative. Through focusing
activities such as standards-setting and scientific research on
children, we will invest in the health of those Americans who will live
most of their lives in the next century.
This budget recognizes that states and tribes play a central role
in protecting the environment. To strengthen our partnership with them,
the President requests an increase in the State and Tribal Assistance
Grants account from $674 million to $715 million. Because tribes face
some of the greatest environmental challenges today, this increase
includes $31 million in additional funds to tribes.
The Administration recognizes the unique circumstances facing
states and tribes when it comes to environmental protection. Last year,
Congress enacted the President's proposal for EPA's Performance
Partnership Grants, which allows states and tribes to combine several
categorical grants into a single multi-media grant. These grants give
states and tribes more flexibility to reach environmental goals, and
they allow less-extensive EPA oversight for States that show strong
performance. Last year, 20 states took advantage of the flexibility you
provided in our fiscal year 1996 appropriation. In 1997, we expect at
least 13 more to use this same flexibility. As more states recognize
the benefits of these grants, we expect most, if not all, of them to
participate in this program. We are confident that Performance
Partnership Grants will continue to reap environmental benefits while
they streamline grant administration and strengthen our partnerships
with states and tribes.
An important part of our partnerships with local governments
involves helping communities upgrade their drinking water
infrastructure. This budget proposes $725 million in capitalization
grants for the new Drinking Water State Revolving Funds, which make
low-interest loans to municipalities to help them meet the requirements
of the new Safe Drinking Water Act Amendments. Combined with last
year's levels, the states will ultimately receive $2 billion to help
provide all Americans with safe, clean drinking water.
Through specific initiatives such as the Project XL and the Common
Sense Initiative, we are reinventing the way EPA does business. Forging
productive relationships with industry, environmental groups, and
concerned citizens is a common thread through all that we do at EPA. In
Project XL, industries are able to adopt alternative strategies to
current regulations, so long as they produce superior environmental
results. Industry has responded positively to this initiative. One
example is Intel's new computer chip manufacturing plant in Arizona. An
agreement with EPA provides for Intel to reduce overall pollution at
the plant, as well as inform and involve local residents on
environmental matters through frequent and regular public meetings. In
return, Intel gains regulatory flexibility to continue to adapt its
operations quickly and efficiently in a competitive and rapidly
changing industry.
The Common Sense Initiative (CSI) is another commitment to build
effective partnerships. Through this initiative, EPA is working with a
variety of stakeholders who have voluntarily come together to explore
comprehensive environmental strategies for entire industries. The
future of environmental protection rests on cooperative relationships
among all stakeholders. CSI can demonstrate how interested sectors can
work together for the dual goals of environmental protection and
economic productivity.
Agency-wide, our reinvention efforts have been bolstered by the
Government Performance and Results Act (GPRA). Our new processes will
link planning, budgeting, and accountability to improve EPA's ability
to focus on targeted environmental results. In 1996 EPA was a major
player in efforts across the Federal Government to pilot GPRA planning
activities. We had six of the roughly 70 government-wide accountability
pilots. In 1997 we have put in place nearly 50 internal Agency pilots
to help strengthen our ability to manage for results. We believe GPRA
is a positive tool that can help us reach our most important goal:
providing the highest level of environmental protection for our
ultimate customer--the American people.
Let me conclude by saying that since the start of this
Administration, we have tried to put children at the focal point of
EPA's mission. We know that by protecting the most vulnerable among us,
we will be protecting everyone. This is a budget for America's
children--and for a cleaner, safer and more healthy environment. It is
a budget that says to America: ``We can put our fiscal house in order
without sacrificing our basic values. We can protect both the health of
our economy and the health of our children.'' The President has made a
commitment to both goals. With this budget we can carry that commitment
into the next century.
I will be happy to answer any questions you have at this time.
______
Prepared Statement of Peter F. Guerrero, Director, Environmental
Protection Issues, Resources, Community, and Economic Development
Division, General Accounting Office
Mr. Chairman and Members of the Subcommittee: We appreciate the
opportunity to present this statement for the record, which discusses
the Environmental Protection Agency's (EPA) efforts to improve its
methods of establishing priorities, allocating resources, and measuring
performance. As you know, EPA is currently developing a new approach
for managing its strategic planning, budgeting, and accountability
processes. The new approach, known as the planning, budgeting, and
accountability system, responds to the National Academy of Public
Administration's (NAPA) April 1995 recommendation that EPA improve and
integrate its management processes.\1\
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\1\ ``Setting Priorities, Getting Results: A New Direction for
EPA,'' NAPA (Apr. 1995).
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In response to this Subcommittee's continuing interest in how EPA
sets priorities and helps to manage the nation's environment, we
reviewed the status of EPA's efforts to (1) establish an Office of
Planning, Analysis, and Accountability to develop and implement an
integrated planning, budgeting, and accountability system and (2)
ensure that the agency has comprehensive scientific and environmental
data and appropriate environmental measures of progress in carrying out
its strategic planning, budgeting, and accountability processes. Our
testimony today is based on the preliminary results of our ongoing work
for the Subcommittee. A final report on our work will be provided to
the Subcommittee this summer.
In summary, our preliminary findings are as follows:
In March 1996, the EPA Administrator announced plans to create a
new Office of Planning, Analysis, and Accountability. The office was
established in January 1997. In the interim, an EPA work group composed
of employees on temporary assignment started to develop the new
planning, budgeting, and accountability system. However, the work group
was not fully staffed, and the development of the new system is still
in the early stages. The new Office of Planning, Analysis, and
Accountability will not be fully staffed before July 1997.
EPA faces long-term challenges to obtain the scientific and
environmental data needed to fully support its new system. Although
much environmental information has already been collected, many gaps
exist and the data are often difficult to compile because divergent
data collection methods have been used. Likewise, much effort is still
required to identify, develop, and agree on a comprehensive set of
environmental measures to link the agency's activities to changes in
environmental conditions. Without environmental measures, EPA has to
rely solely on administrative measures, such as the number of permits
issued or inspections made, to measure its performance or success.
BACKGROUND
In an April 1995 report, the National Academy of Public
Administration recommended that EPA establish specific environmental
goals and strategies to attain them, and use comparative risk analyses
to select priorities and develop strategies for specific programs. NAPA
also said that EPA should consolidate its planning and budgeting
functions, use the budget process to allocate resources to the agency's
priorities, and establish accountability by setting and tracking
benchmarks and evaluating performance. The NAPA study's recommendations
are similar to the requirements for federal agencies established by the
Government Performance and Results Act of 1993 (GPRA). Under GPRA,
agencies must establish, by September 30, 1997, strategic plans and
annual performance plans, including annual performance goals and
performance measures.
In response to NAPA's recommendations, in July 1995, EPA created a
task force to study ways to improve the agency's management processes.
In its report, the task force recommended an integrated system composed
of strategic planning, budgeting, and accountability processes. In the
planning process, EPA was to develop a strategic plan that would be
based on the agency's goals. During the budgeting process, each goal in
the strategic plan would be considered, and an annual performance plan
would be prepared showing the agency's progress to date and plans for
future expenditures. During the accountability process, EPA would
determine progress under the annual plans and use the data on progress
to make corrections in the strategic and annual performance plans.
In March 1996, the EPA Administrator and Deputy Administrator
endorsed the task force's recommendations for developing an integrated
planning, budgeting, and accountability system and directed that the
recommendations be implemented. In making a commitment to substantially
revise the agency's management systems, EPA officials recognized that
the effort would take several years to complete. The EPA Administrator
and Deputy Administrator also announced plans to create a new office by
January 1997 to consolidate the agency's planning, budgeting, and
accountability processes. In the interim, a work group composed of
employees on temporary assignment was established to begin developing
the new system.
EPA IS IN THE PROCESS OF STAFFING ITS NEW OFFICE
In January 1997, the EPA Administrator approved the structure and
staffing plans for the new office, called the Office of Planning,
Analysis, and Accountability. The interim work group that had been
assigned to develop the new system was detailed to the new office to
continue its work. The work group has 21 employees, fewer than half the
number that EPA had planned for the group.
The new office is authorized 49 employees. As of the end of March
1997, EPA had published job announcements to fill 26 of the new
positions. EPA officials told us that these announced positions, which
are open only to current EPA employees, will be filled in May 1997. The
remaining positions, which are to be announced governmentwide, are not
likely to be filled before July 1997. The officials told us that the
office was not fully staffed when it was established because time was
required to determine the most appropriate types of skills and work
experiences needed and to implement a competitive process for selecting
staff.
Given the office's limited staffing, the development of an
integrated system is in the early stages. For example, EPA is reviewing
the agency's former accountability process to find out what did and did
not work well, contacting other federal agencies to determine how they
account for progress in meeting their goals, and examining reporting
systems in the agency's program offices to identify their potential use
in the new system. EPA hopes to have the accountability component in
place by September 1999. According to EPA officials, the development of
the new budgeting component will begin after the agency completes its
strategic plan in September 1997. They said that EPA's fiscal year 1999
budget will be structured along the lines of the goals in the strategic
plan.
Thus far, the work group members have spent most of their time
developing a strategic plan, which is required by September 30, 1997,
under GPRA. An important part of the new strategic planning process is
the selection of goals and objectives that can be used to guide the
agency's actions and to measure its performance. Although EPA is making
progress toward developing its strategic plan, it has not completed two
studies that are intended to identify the most appropriate goals for
the agency and to provide the latest scientific information on
environmental risk.\2\ EPA officials told us that the September 30,
1997, strategic plan will be updated, as appropriate, to reflect the
final results of these studies, which are likely to be completed in
late 1997 or early 1998.
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\2\ One of the studies, EPA's National Environmental Goals Project,
is being performed to establish a set of long-range national
environmental goals with realistic and measurable milestones for the
year 2005. The other study, the Integrated Risk Project, is being
performed to rank the relative risk of environmental problems, and to
develop methodologies that EPA can use to make future risk rankings.
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EPA MUST OVERCOME INFORMATION CHALLENGES TO IMPLEMENT ITS NEW SYSTEM
Although EPA continues to expand and improve the environmental data
it compiles, it still needs to fill data gaps; improve the quality of
its data; integrate information systems; and build the capability to
compile, organize, and analyze the data in ways useful to EPA managers
and stakeholders. In addition to the measures of outputs or program
activities that it currently relies on to assess its performance, EPA
is working to develop environmental measures that enable the agency to
evaluate the impact of its programs on the environment and determine
whether they are achieving the desired results.
epa's environmental data and systems need to be improved
The need to assess EPA's performance in terms of changes in
environmental conditions substantially increases the demand for high-
quality environmental data. Such data are also needed to identify
emerging problems so that they can be addressed before significant
damage is done to the environment. Despite EPA's efforts to improve the
quality of its data, these data are often unreliable, and the agency's
many disparate information systems are not integrated. These
shortcomings have been raised in various external and internal reports
on EPA, including the Vice President's report on reinventing
government.\3\
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\3\ ``Reinventing Environmental Regulation,'' National Performance
Review (Mar. 16, 1995).
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In its April 1995 report, NAPA also identified the lack of high-
quality data on environmental conditions as a particularly important
problem for EPA. NAPA specifically noted the limited amount of
information based on the real-time monitoring of environmental
conditions. Without monitoring data, EPA must rely on estimates and
limited, site-specific data. NAPA also concluded that much remains to
be done to improve the overall management of environmental information
in the agency. It noted that EPA had over 500 information systems and
that program offices, which are responsible for their own data, use
different methods and definitions to gather data. Furthermore, EPA
relies on data compiled by other federal agencies and the states.
According to NAPA, these agencies and the states also use divergent
methods of collecting data.\4\
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\4\ In ``Environmental Protection: EPA's Problems With Collection
and Management of Scientific Data and Its Efforts to Address Them''
(GAO/T-RCED-95-174, May 12, 1995), we testified that our previous
reports had identified long-standing data quality and data management
problems at EPA.
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More recently, a 1996 EPA report concluded that the agency needs to
redesign its many disparate fiscal and environmental data systems so
that it and others can measure its success in meeting environmental
goals and determine the costs of doing so.\5\ The agency's difficulty
in demonstrating its performance or the impact of its actions is
illustrated by the findings of a team of agency personnel, which was
formed in 1995 to evaluate the agency's needs for environmental
information. The team identified various problems with the information
needed to report on environmental goals, such as gaps in the data and
inconsistencies in the methods of collecting and/or reporting data
across states or federal agencies. Specific examples include the lack
of (1) national reporting on risk reduction at waste sites, (2)
reliable data on the nature and cause of pesticide poisonings, (3)
effective reporting on progress in improving the nation's water
quality, and (4) complete data on air pollutants.
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\5\ ``Managing for Results,'' EPA's Planning, Budgeting, and
Accountability Task Force (Feb. 23, 1996).
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EFFORTS TO DEVELOP ENVIRONMENTAL MEASURES NEED FOCUS
EPA and the states are devoting considerable attention to
developing environmental indicators or measures for use in assessing
programs' performance and better informing the public about
environmental conditions and trends. Some efforts are just starting,
while some of the agency's program and regional offices and some states
have begun to use these measures in reporting on their programs'
performance. Although EPA and state officials believe that
environmental measures are more useful than measures of activities for
assessing programs' performance, they recognize that scientific and
technical issues have to be addressed before indicators that really
measure environmental conditions and trends can be widely used.
Developing and using environmental indicators for an entire program
presents significant challenges.
The scientific and technical challenges include identifying (1) a
range of health or environmental conditions that can be measured and
(2) changes in these conditions that can be linked to a program's
activities. These tasks are especially difficult because natural
causes, such as changes in weather patterns, and other factors outside
a program's control can affect environmental conditions. In some cases,
data or indicators are not available for a specific aspect of the
environment because of high costs or technical difficulties. Thus, it
could be some time before EPA is able to develop and use a set of
environmental indicators that accurately reflect the impact of its
programs or their results.
According to EPA officials, the agency's and the states' efforts to
develop and use environmental measures have been valuable but
disparate. Furthermore, at a conference convened by EPA in September
1996 to better coordinate these efforts, as well as in interviews
conducted by EPA staff to prepare for the conference, regional and
state representatives cited several concerns. They said, for example,
that (1) clarification is needed on EPA's and the states' direction in
developing goals and indicators, (2) the qualities of a good indicator
are not well understood, and (3) determining whether the best
indicators have been chosen will take many years. The representatives
also believed that the data and resources needed to develop and use
environmental indicators are inadequate.
An additional challenge will be to reach agreement within EPA and
among its stakeholders on the specific environmental indicators that
will be used to measure performance. A consensus may be difficult to
reach because of the potential for debate on what is important about
individual programs and whether a relatively small number of measures
can adequately reflect the effects of an agency's or a program's
activities. EPA will need a set of measures common to all the states to
report to the Congress and the public on the agency's performance and
the state of the nation's environment. At the same time, the
development of national measures, to the extent that such measures
drive the implementation of environmental programs, will reduce the
states' flexibility to tailor the programs to meet local needs and
conditions, a major concern of the states. Reporting on new measures
will also increase the states' costs unless other reporting
requirements are eliminated or reduced.
In May 1995, EPA signed an agreement with state leaders to
implement a new system of federal oversight for state environmental
programs. This new National Environmental Performance Partnership
System (NEPPS) fundamentally changes EPA's working relationship with
the states because it places greater emphasis on the use of
environmental goals and indicators, calls for environmental performance
agreements between EPA and individual states, and provides
opportunities for reducing the agency's oversight of state programs
that exhibit high performance in certain areas. As of March 1997, about
half of the states had signed performance partnership agreements to
participate in the system.
EPA's Office of Regional Operations and State/Local Relations is
developing a set of core performance measures, including some
environmental indicators, that the agency's regional offices are to use
in negotiating annual work plans and agreements with the states. The
core measures are to be focused and limited in number, representing
measurable priorities for each of EPA's national program managers. They
are to serve as the minimum measures in performance agreements with the
states, which may develop additional measures to represent their own
environmental or programmatic issues. In addition, a particular core
measure may not be required if a state can demonstrate that the measure
does not apply or cannot be addressed. According to EPA, its national
program managers will finalize their core measures in April 1997 and
its regional staff will begin negotiations with the states to
incorporate the measures into the agreements for fiscal year 1998. At
this point, it is too soon to know how extensively EPA's regional
offices will be negotiating measures that reflect programs' direct
effects on human health and the environment.
______
Prepared Statement of Stanley J. Czerwinski, Associate Director,
Environmental Protection Issues, Resources, Community, and Economic
Development Division, General Accounting Office
Mr. Chairman and Members of the Subcommittee: We appreciate this
opportunity to provide a statement for the record for use in the
Subcommittee's hearing on the Environmental Protection Agency's (EPA)
fiscal year 1998 appropriation. As you requested, we have reviewed
certain aspects of EPA's contracts and assistance agreements \1\ that
are used to accomplish the work of the Superfund program. Specifically,
we are providing information on (1) the total amount of unspent
obligated funds remaining on completed contract work orders and
assistance agreements and the EPA offices and regions primarily
responsible for administering these funds and (2) the timeliness of
EPA's recovery of such funds.
---------------------------------------------------------------------------
\1\ Assistance agreements include grants, cooperative agreements,
and interagency agreements. Grants provide financial assistance to
organizations to carry out a program without substantial federal
involvement. Cooperative agreements provide financial assistance and
require substantial federal involvement to carry out a program.
Interagency agreements transfer funds between federal agencies.
---------------------------------------------------------------------------
In summary, we found the following:
--As of December 1996, about $249 million in unspent obligated funds
was potentially available to be recovered on over 6,000
completed work orders and assistance agreements. EPA's Office
of Solid Waste and Emergency Response and its regional offices
located in Atlanta, New York, and Philadelphia administer most
of the funds.
--In the early 1990's, EPA recognized the need to take more timely
action to recover unspent funds. However, according to the
agency's Inspector General, EPA's offices responsible for
managing contracts and assistance agreements were not provided
sufficient resources to do so, while carrying out their other
responsibilities. Consequently, in 1994, EPA created the
Superfund Deobligation Task Force to respond to a growing
backlog of completed work orders and assistance agreements, and
the associated unspent funds. Since fiscal year 1994, the task
force has recovered over $400 million. However, the task force
is not keeping up with a growing backlog of completed work
orders and assistance agreements because it is composed of
part-time members who perform these activities only when their
primary job responsibilities enable them to do so.
BACKGROUND
EPA relies heavily on contracts and assistance agreements for the
Superfund program, which was created to clean up the nation's most
hazardous waste sites. EPA relies on contractors to accomplish the work
of the program, including (1) cleaning up hazardous waste sites, (2)
supervising cleanups performed by others, and (3) providing technical
and scientific support to the program. Contracts are generally used to
obtain the services of private businesses when EPA manages the work.
Assistance agreements are generally used to support the activities of
states, nonprofit organizations, and universities in the Superfund
program. From fiscal years 1990 through 1996, Superfund contracts
accounted for $5 billion, or 57 percent, of the $8.8 billion that EPA
obligated for all contracts awarded during that period. From fiscal
years 1990 through 1995, the most recent period for which information
is available, EPA entered into 620 Superfund assistance agreements
valued at about $387 million.
EPA issues individual work orders to describe the specific tasks
and requirements to be completed on contracts. When a new work order is
awarded or a new assistance agreement is entered into, EPA obligates an
amount equal to the estimated cost of the work. As work progresses, EPA
releases funds to contractors or the recipients of assistance
agreements and liquidates its obligations. In many instances, the
amount of funds obligated exceeds the amount eventually needed to pay
the contractor or other entities for the completed tasks and other
requirements. In such cases, the unspent funds may be deobligated and
recovered when all work has been completed or when the specified period
of performance has expired. Before recovering unspent funds, EPA
reviews the completed contract or assistance agreement to ensure that
all appropriate payments have been made. EPA leaves between 10 to 15
percent of the total expenditures made under the contract or assistance
agreement as a reserve to cover any additional costs, as determined by
a final audit. Recovered funds are to be used for other Superfund
activities, since congressional appropriations for the Superfund
program remain available for use until expended.
EPA contracting officers or grant specialists are responsible for
reviewing the costs of the work and performing other closeout
activities. The maximum amount of time allowed for closing out
contracts according to the Federal Acquisition Regulation is 36 months
from the date the contracting officer receives evidence of the
project's completion. Similarly, EPA's Final Closeout Policy for
Assistance Agreements specifies that assistance agreements be closed
within 180 days after completion.
SUBSTANTIAL UNSPENT FUNDS COULD BE RECOVERED FROM INACTIVE SUPERFUND
CONTRACTS AND ASSISTANCE AGREEMENTS
Using EPA's data systems,\2\ we identified contract work orders and
assistance agreements having unspent obligations for work that has been
completed or for which the specified performance period has expired.
Our analysis of the data shows that about $249 million in unspent funds
are potentially available for recovery, mostly on contracts and
agreements administered by the Office of Solid Waste and Emergency
Response and three EPA regional offices. As shown in table 1, hundreds
of work orders or agreements were completed prior to 1991.
---------------------------------------------------------------------------
\2\ The EPA data systems that we used include (1) the Contracts
Information System, (2) the Financial Information System, (3) the
Grants Information and Control System, and (4) the Management and
Accounting System. We did not verify the accuracy or reliability of the
data systems.
TABLE 1.--BALANCES OF UNSPENT OBLIGATIONS BY CONTRACT AND ASSISTANCE
AGREEMENTS' COMPLETION
------------------------------------------------------------------------
No. of orders/
Fiscal year assistance Unspent
agreements obligations
------------------------------------------------------------------------
1981-84................................. 7 $100,945
1985-87................................. 30 1,542,836
1988-90................................. 886 16,871,139
1991-93................................. 2,477 68,923,588
1994-96................................. 2,682 161,484,102
-------------------------------
Total............................. 6,082 248,922,610
------------------------------------------------------------------------
We found that each of EPA's 10 regional offices and various
headquarters offices currently have unspent balances obligated for work
that has been completed. (See app. I.) Completed work orders and
agreements administered by the Office of Solid Waste and Emergency
Response total over $54 million in unspent funds. In addition, such
funds total over $43 million in region 2 (New York), over $18 million
in region 3 (Philadelphia), and over $30 million in region 4 (Atlanta).
These four agency units account for approximately $145 million, or
about 58 percent, of the $249 million potentially available for
recovery.
EPA officials told us that the Office of Solid Waste and Emergency
Response has a large amount of unspent funds because the Superfund
Deobligation Task Force, thus far, has given higher priority to
recovering funds in EPA's regions. However, the director of the task
force told us that more emphasis will be placed on headquarters' units
during fiscal year 1997. He also told us that EPA regions located in
the eastern part of the United States, such as regions 2, 3, and 4,
typically award a greater number of Superfund contracts and assistance
agreements than other regions and, therefore, have more unspent funds
on work orders and agreements.
TIMELY ACTIONS HAVE NOT BEEN TAKEN TO RECOVER FUNDS
EPA has experienced a continuing problem in recovering unspent
funds on completed Superfund work orders and assistance agreements. To
address this problem, EPA created a Superfund Deobligation Task Force,
which has succeeded in recovering nearly $400 million in unspent funds
since fiscal year 1994. Nevertheless, the backlog of completed work
orders and assistance agreements with unspent funds continues to grow,
as additional work orders and assistance agreements are completed.
Consequently, on October 1, 1996, the agency implemented a policy that
allows EPA offices to use the funds they recover for their own
Superfund activities, rather than returning them to the agency for
redistribution. However, thus far, this incentive has not resulted in
increased recoveries of funds.
Recovering Unspent Funds Is a Long-Term Problem
In December 1990 hearings before the Subcommittee on Oversight and
Investigations, House Committee on Energy and Commerce, we said that
EPA's failure to recover unspent funds increased the government's need
to borrow; increased the agency's vulnerability to fraud, waste, and
abuse; and resulted in missed opportunities to obtain interest payments
due the government from overpayments to contractors.\3\ A few years
later, EPA's Inspector General reported that, as of March 1993,
contracts awarded under the Superfund program still had balances of
over $100 million in unspent obligated funds that were no longer needed
for their original purposes.
---------------------------------------------------------------------------
\3\ ``EPA's Contract Management: Audit Backlogs and Audit Follow-Up
Problems Undermine EPA's Contract Management'' (GAO/T-RCED-91-5, Dec.
11, 1990).
---------------------------------------------------------------------------
According to the Inspector General's report, EPA had experienced
delay in recovering unspent funds because it had given a low priority
and few resources to closing contracts, which involves ensuring that
all goods and services have been received, evaluating performance, and
resolving all outstanding issues or problems. The report stated that
EPA's Contract Management Division had requested, but not received,
additional resources to carry out these responsibilities in a more
timely manner.
In addition, according to the Inspector General's report on
assistance agreements,\4\ EPA officials stated that competing
priorities for staff resources also has resulted in untimely closings
of Superfund assistance agreements. Officials of EPA's Grants
Administration Division, which administers the agreements, stated that,
while closeout functions are important, the division places more
emphasis on entering into new assistance agreements than on closing old
ones.
---------------------------------------------------------------------------
\4\ ``Final Report of Audit on EPA's Controls Over Assistance
Agreements,'' EPA's Office of Inspector General (Sept. 28, 1995).
---------------------------------------------------------------------------
EPA's Task Force Has Recovered Substantial Funds
To handle a backlog of completed work orders and assistance
agreements, in 1994 EPA established a Superfund Deobligation Task
Force. The task force is composed of about 30 part-time members,
representing several headquarters offices and each of EPA's 10 regional
offices. Members review individual contract work orders to identify
completed projects, determine the amount of unspent funds available for
deobligation, and prepare requests to deobligate and recover the unused
funds. The task force gives priority to work orders and assistance
agreements with the largest potential recovery of funds.
After the task force identifies unspent funds, EPA takes action to
deobligate and recover them, except for an amount held in reserve
pending a final audit of the actual costs of the work. If the reserve
funds are not sufficient to cover the final costs, as determined by the
audit, EPA uses current-year appropriated funds to pay the difference.
Since fiscal year 1994, the task force has recovered over $400
million. However, we found that substantial funds remain on work orders
and assistance agreements that were completed years earlier. For
example, our analysis shows that 3,400 work orders and assistance
agreements were completed more than 3 years earlier, the maximum amount
of time that the Federal Acquisition Regulation and EPA's regulations
allow for closing out contracts and assistance agreements. Funds
totaling approximately $87 million, or about 35 percent, of the $249
million that we identified were associated with these orders and
assistance agreements. If the work orders or assistance agreements are
not closed within the time specified, EPA is required to do so as soon
as possible.
Furthermore, while the task force has recovered substantial funds,
it apparently is not keeping up with a growing backlog of completed
work orders and assistance agreements. For example, in a May 1, 1996,
statement for the record to the Subcommittee on VA, HUD, and
Independent Agencies, House Committee on Appropriations, we said that
unspent funds on completed work orders totaled $164 million as of March
1, 1996.\5\ Our analysis shows that as of January 1, 1997, such unspent
funds had grown by $13 million, an increase of about 8 percent.
---------------------------------------------------------------------------
\5\ ``Environmental Protection: Selected Issues Related to EPA's
Fiscal Year 1997 Appropriation'' (GAO/T-RCED-96-164, May 1, 1996).
---------------------------------------------------------------------------
Task force officials told us that during fiscal year 1996, they
spent less time on recoveries than they had during the previous 2
fiscal years. The task force recovered $160 million in fiscal year
1994, $170 million in fiscal year 1995, but only $67 million in fiscal
year 1996. According to task force officials, fewer staff resources
were provided and fewer funds were recovered during fiscal year 1996
because higher priority was given to other work requirements of the EPA
units providing the part-time task force members.
These officials also told us that EPA does not have records showing
the amount of time that members spend on their task force activities
but noted that it is not unusual for competing priorities to severely
limit the staff resources that are available. The officials also told
us that EPA has never performed an analysis to determine the resources
needed to eliminate the agency's backlog and to keep pace with new
completed work orders and assistance agreements.
The director of the task force told us that EPA intends to continue
with its task force approach. He acknowledged, however, that other
options may be considered if sufficient progress is not made in
achieving timely recoveries of unspent funds. Among such options are
adding resources to the EPA organizations responsible for managing and
auditing contracts and grants so that they may be closed in a more
timely manner.
New Incentive Policy
EPA believes that a new policy, initiated on October 1, 1996, may
result in additional recoveries by providing more incentive to
headquarters and regional task force members to identify, deobligate,
and recover funds on completed work orders and assistance agreements.
Until fiscal year 1997, recovered funds were placed in a central pool
and then distributed on the basis of national Superfund priorities. As
of October 1, 1996, the funds remain with the offices recovering them
to meet the offices' Superfund cleanup needs. EPA officials told us
that this new policy might achieve better results by providing greater
incentive to EPA offices to deobligate and recover unspent funds. The
officials acknowledged, however, that under the new policy, task force
members must still find time to perform the recovery activities while
meeting other work requirements having higher priority within their
organizational units.
CONCLUSIONS
The recovery of substantial unspent funds on completed Superfund
contract work orders and assistance agreements could help EPA in
meeting its responsibilities for cleaning up Superfund hazardous waste
sites. Although the agency has taken actions to recover such funds, it
has not succeeded in eliminating a substantial backlog of completed
work orders and assistance agreements while keeping pace with annual
additions to the backlog. Consequently, EPA is not achieving timely
recoveries of these funds, as required by agency policy and the
applicable federal contracting regulation.
RECOMMENDATION
To recover unspent funds on inactive Superfund contract work orders
and assistance agreements, we recommend that the Administrator of EPA
develop a strategy for identifying, deobligating, and recovering
unspent funds within the period specified for contracts by the Federal
Acquisition Regulation, and for assistance agreements by EPA's Final
Closeout Policy for Assistance Agreements.
AGENCY COMMENTS
EPA officials, including the Director of the Budget Division,
Office of the Comptroller, generally agreed with the information
contained in this statement for the record. They also agreed that a
strategy was needed for recovering unspent funds within the period
specified by Federal Acquisition Regulations and EPA's regulations. We
have incorporated clarifying comments provided by EPA where
appropriate.
Appendix I
FUNDS AVAILABLE FOR DEOBLIGATION FROM SUPERFUND WORK ORDERS AND
ASSISTANCE AGREEMENTS BY EPA ORGANIZATION AS OF DECEMBER 2, 1996
------------------------------------------------------------------------
No. of
orders/
assistance Estimated
EPA organization agreements recovery
to be
deobligated
------------------------------------------------------------------------
Region 1................................... 229 $7,668,938
Region 2................................... 589 43,569,654
Region 3................................... 423 18,983,622
Region 4................................... 590 30,651,835
Region 5................................... 452 18,905,755
Region 6................................... 247 11,504,173
Region 7................................... 243 8,764,694
Region 8................................... 190 12,931,893
Region 9................................... 275 14,986,054
Region 10.................................. 175 11,218,870
Office of Research and Development......... 704 5,061,885
Office of Solid Waste and Emergency
Response.................................. 1,088 54,905,483
Office of Policy, Planning, and Evaluation. 113 1,802,992
Office of Administration and Resources
Management................................ 497 4,751,486
Office of Enforcement and Compliance
Assurance................................. 132 2,086,980
Miscellaneous.............................. 135 1,128,296
----------------------------
Total................................ 6,082 248,922,610
------------------------------------------------------------------------
PROPOSED SUPERFUND INCREASE
Senator Bond. Thank you very much, Madam Administrator.
To go back to the points that I raised in my opening
questions, EPA's most significant budget proposal is for
Superfund, where there is a 50-percent increase proposed. The
amount requested, $2.1 billion, is the highest ever requested,
at a time when budget constraints are tighter than ever. In the
fiscal year 1997 budget EPA requested, and the Congress
provided, a $1.4 billion Superfund budget. Last year EPA
projected outyear Superfund budgets of $1.4 billion through the
year 2000. Now EPA claims a budget of $2.1 billion for each of
the next 2 years is imperative. What I would like to know is
what occurred between the preparation of last year's budget and
the President's trip to Kalamazoo at which a decision was made
to increase the budget by 50 percent for fiscal year 1998 and
1999, and why did this program suddenly become a much higher
priority for EPA?
Ms. Browner. The Superfund Program, the cleanup of the
Nation's worst toxic dump sites, has long been a priority for
the EPA. Since I came to EPA almost 4\1/2\ years ago, this
program has taken almost more of my time than any other
program. It is a large undertaking. It is one that is important
to literally thousands of communities across the country.
We have made progress in this program, that we would all
agree has had its share of problems. I am the first to say that
and I have said it for 4 years. I have worked hard to change
the day-to-day management of this program, and I think you can
see the effects. In the last 4 years we have cleaned up more
sites than had been cleaned up in the entire 12 years prior to
that. This is an example of how we are getting the job done
faster, fairer, and more efficiently. We looked at the number
of large toxic dump sites that would be ready to go into the
final cleanup phase. This phase takes approximately 2 years,
and we have a growing number of such sites. With additional
money we could get these done on an expedited basis. We could
give these communities back the productive use of these sites.
It is just that simple. We have moved the sites through the
early phases of the program. We now have in excess of 600 sites
where either construction or design is underway. In other
words, in the next 2 years we will have candidates ready to do
the final 2 years of work if the dollars are there. It is that
simple. There is nothing else going on.
Senator Bond. Well, we all like to see progress, but quite
frankly, as you indicated earlier, the program is matured. One
of the reasons that we are able to move forward is because
there has been 12 years of study, and we are at the position
where more sites are ready to go into the construction phase.
But is it not true that Superfund sites rank relatively low
on a risk continuum, and that EPA could achieve substantially
greater risk reduction by applying $650 million to other EPA
programs such as the air program?
Ms. Browner. Mr. Chairman, we are responsible for
implementing more than a dozen national environmental laws.
They each speak to different problems. In the case of
Superfund, I think Congress ought to speak to the needs of
individual communities, of the people who live next to a toxic
dump site, who want their children to be able to play and drink
the ground water, and who want a quality of life free of toxic
contamination. In looking at the needs of those communities, in
looking at our desire to be responsive to the needs of those
communities, this is the best investment we can make. Let us
get the job done.
We can all spend a lot of time talking about why it took us
so long to get here. I think we would all agree, there were
problems. The truth of the matter is, today we have the sites
ready to go. Why not get it over with and give these
communities back their neighborhoods?
SUPERFUND: NEW YORK TIMES ARTICLE
Senator Bond. Well, you will recall you were questioned
about this previously in the Sunday New York Times of March 21,
1993. There was a very thoughtful article calling environmental
policy misguided. Quote:
These experts say in the last 15 years environmental policy
is too often evolved largely in reaction to popular panics, not
in response to sound scientific analysis, of which
environmental hazards present the greatest risks.
It goes on to state:
That as an example few experts question the value of
spending roughly $3 billion each year on new sewage treatment
plants. Many experts, however, question the wisdom of spending
billions of dollars to protect people from traces of toxic
compounds,
To which you responded in that article, quote,
The President is aware of this dilemma, and there is
leadership in this administration for trying to change the way
we do business in every aspect of governing, including
environmental protection. We have to allow for change to occur
as new information becomes available. This is not an area where
a solution will fit forever.
And then the article goes on to say almost everyone
involved, including community and local environmental groups,
agrees that the toxic waste program stands as the most wasteful
effort of all.
Ms. Browner. That is a quote from me?
Senator Bond. No.
Ms. Browner. That does not sound like me.
Senator Bond. I said the article went on to say that. I
would like your response based on what purports in the New York
Times article to be the state of scientific thinking. How do
you respond to the priority for putting money into Superfund?
Ms. Browner. I apologize. I think it is an older article,
and I am not familiar with it at this point. I would be more
than happy to look at it.
Senator Bond. We will be happy to share it with you.
Ms. Browner. I can tell you that from day one of coming to
EPA I believed, the President believed, that we had to change
the way Superfund functioned on a day-to-day basis, and that is
why we have instituted literally dozens of administrative
reforms. It is why we have been able to reduce the amount of
time it takes to clean up a site. It is why we have been able
to reduce the amount of money that is necessary to clean up a
site. It is why we have been able to take out the small parties
that no one thinks should be trapped in the Superfund net. It
is why we have been able to come up with better technologies
and presumptive remedy. There are a whole host of changes that
result in a very different program today than yesterday.
In terms of the people who live in these communities, in
terms of their experiences of these sites, in terms of the
health effects and the environmental effects, which they deal
with on a day-to-day basis, getting the job done is probably
the most important thing we can do for these people at this
point in time, and that is why we seek an increase in the
budget. This would allow us to complete 500 sites by the end of
the year 2000 to give these neighborhoods a future.
Senator Bond. Thank you, Madam Administrator. In the words
of General MacArthur, I shall return.
Senator Mikulski.
BROWNFIELDS INITIATIVE
Senator Mikulski. Thank you, Mr. Chairman.
Ms. Browner, as you know, one of my great passions is
really to be able to generate jobs, believing that the best
social program is a job. And our urban areas are so hard hit in
the ability to do so. This is why I am tremendously interested
in the brownfields initiative. The Maryland General Assembly
has just passed legislation. We are recommending funds for a
substantial brownfields initiative. And I am very much
interested in knowing how the brownfields initiative will work,
and No. 2, how will EPA be working with urban areas,
particularly those that have urban or enterprise zone like my
own hometown, what will that mean in terms of your initiative,
coordination with HUD, working with the mayor and the county
executive on the ground to make sure we not only clean up a
lemon, but in the process create a whole new lemonade stand?
Ms. Browner. That is precisely what we have been doing.
Approximately 3 years ago, after meeting with mayors from
across the country, it became clear to me that these brownfield
sites were something we needed to address. Within our existing
budget resources, we began a modest program of providing
relatively small dollars to allow communities and cities to
assess the nature of contamination and bring in those who would
both clean up and redevelop the sites. This program turned out
to be far more successful than anyone could have imagined on
the front end. That is why we are here today asking for an
increase in the dollars that we can make available to local
communities across the country.
What we have seen at the brownfield sites that we funded in
the early phase of the program is really quite remarkable. We
have seen in community after community that when a site is
cleaned up, businesses are reopened, jobs are created, and a
tax base is restored. What we want is to replicate that in
many, many more communities.
The increase that we seek, $50 million, is in addition to a
base of $37 million. That would allow for a total of $87
million for this program. It would allow us to dramatically
increase the number of assessment grants. We currently make
$200,000 assessment grants to cities. It would allow us to
create a revolving loan fund for cleanup at 106 pilots. We have
found sometimes a little bit of money is needed on the front
end. We could make a grant that would then be loaned out and it
would be repaid.
Senator Mikulski. How will it work, like, in a city? How
will it work in a city?
Ms. Browner. In an individual city they would receive a
grant, as they can right now. There would be more available. A
certain percentage of those would be available in the
empowerment zone communities. They would be able to take that
money, go out and do an assessment of the sites that they think
are appropriate for redevelopment. They would bring in the
developers, bring in the banks, bring in the lenders, and
actually see the job of cleanup restoration.
Senator Mikulski. In the communities?
Ms. Browner. Yes.
CHESAPEAKE BAY PROGRAM
Senator Mikulski. Will you be coordinating with Housing and
Urban Development on this initiative so that we are actually
working to leverage each other, because the chairman said
without limited resources in the subcommittee and cuts in HUD,
as well, we need to make sure that every dollar of EPA money
and HUD money is actually working for empowerment so that
people can move from work to welfare and move to work.
Let us then go on to the Chesapeake Bay Program, which I
know is of your great interest. The bay program has been in
existence for 10 years, and does seem to show cleanup results.
But yet, at the same time, oyster and crab harvest have been
declining in the bay. My question is, First of all, and I am
sure you would agree, you do not want to see our watermen
become as much of an endangered species as our oysters and our
crabs. How is the Chesapeake Bay Program now going to move from
research to results, from research to focusing on how to
maintain both water quality, but also deal with the species
decline of oysters and crabs and clams in the bay?
Ms. Browner. The primary focus of the Chesapeake Bay
Program is working out in the field. For example, we have found
working with farmers to deal with nitrogen control practices,
that to be a tremendous problem throughout the region. Working
a field in terms of habitat restoration, the States, the
District, and EPA have made a commitment to restoring habitat
along the bay and along the streams that feed into the bay. I
think, at this point in time, it is fair to say we have moved
beyond the research phase and are out in the field. As
important as the environmental protections are, so are the
economic realities of the bay. I think the bay is a good
example of how we can achieve both a better environmental
protection and an economic growth.
But it is not without its challenges. This is an area that
is experiencing tremendous growth, and that is probably our
single greatest challenge. We have to continue to work in the
partnership from Pennsylvania all the way down to EPA to find
the commonsense, cost-effective, and on-the-ground solutions
that we are now implementing.
Senator Mikulski. Thank you, Mr. Chairman. I see my time is
up.
Ms. Browner, I look forward to EPA issuing the proposed
cluster rule for the paper industry that has had a great impact
on those jobs in western Maryland, Westvaco. Westvaco is the
only thing we have got going in western Maryland now with the
close of the Bausch & Lomb.
Ms. Browner. As you know, we have probably spent hundreds
of hours in meetings with both industry, community
representatives, and States' officials. We do anticipate
sending that to OMB in the course of this month for their
interagency review.
Senator Mikulski. Thank you.
Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Shelby.
NAAQS PROPOSALS
Senator Shelby. Thank you, Mr. Chairman.
Administrator Browner, do you agree that the American
people have a basic right to know the scientific basis for the
EPA's rulemaking proposals?
Ms. Browner. Yes.
Senator Shelby. Has the data used to support the ozone and
particulate matter rule been made available to the public? In
other words, the information?
Ms. Browner. There has been a 4-year public process
reviewing the science that underlies our proposal.
Senator Shelby. What does that mean?
Ms. Browner. That means there were many, many meetings of
the Science Advisory Board held in the public. There are more
than 250 peer-reviewed published scientific reports that have
been made available to the public. We have not had this kind of
extensive scientific review and public discussion. This is not
an EPA internal review; this is external.
Senator Shelby. Excuse me. Did you say you have not had it
before?
Ms. Browner. This kind of review.
Senator Shelby. You have not had this type of scientific
review?
Ms. Browner. Not of this magnitude. We began this 4 years
ago when I first came to EPA.
Senator Shelby. OK.
Ms. Browner. To just explain one thing briefly, we have
dramatically changed in the last 4 years both how we do our
scientific review and how we subject our science to peer
review: whether it be our own internal science or science we
looked at from outside of the Agency. We have dramatically
increased the number of peer-review panels we use.
NAAQS: SCIENTIFIC DATA
Senator Bond. Do you believe that your basic decisions
regarding health should have a scientific basis?
Ms. Browner. Absolutely.
Senator Shelby. Has EPA, Administrator Browner, received
any Freedom of Information requests for this information
regarding your scientific data?
Ms. Browner. Senator Shelby, with all due respect, I think
I know the question you are asking. So if I might say what I
think the question is then maybe I can answer it a little bit
more directly.
Senator Shelby. You go right ahead.
Ms. Browner. There have been some who have raised a
question about some of the data that underlies some of the
published peer reviewed studies in the 200-plus studies that we
and our external peer-review panel relied on in reaching a
scientific proposal regarding a health standard for air. Those
data bases, one of which is at Harvard, another of which is
with the American Cancer Society, underlie those studies. We
have encouraged both Harvard and the American Cancer Society to
make those databases public.
Senator Shelby. Excuse me just 1 minute. Do you have those
databases?
Ms. Browner. No; we do not.
Senator Shelby. You do not have what they came up with?
Ms. Browner. What the scientific community does in this and
any other effort of this type is look at the scientific studies
that are done.
Senator Shelby. Absolutely.
Ms. Browner. We have all of the peer-reviewed studies.
Senator Shelby. Excuse me just 1 minute. But you at EPA, as
the Administrator, you commissioned these people----
Ms. Browner. No.
Senator Shelby. You do not, to do these studies?
Ms. Browner. Not necessarily, no.
Senator Shelby. Well, did you in any of these cases? Did
you commission or encourage the American Society to do a study
in this regard?
Ms. Browner. No; we did not commission or encourage the
American Cancer Society to collect this data or to do a
particular study. No; we did not.
Senator Shelby. But have you requested from them as the
Administrator the data in which they based their decisions?
Ms. Browner. The American Cancer Society.
Senator Shelby. I know who they are. I just asked you a
question. Have you requested from them as the Administrator the
data on which they based their decision?
Ms. Browner. The American Cancer Society does not have any
decision. They have a database that any scientist with an
appropriate scientific research question can access. They have
a written protocol. Anyone can access it.
Senator Shelby. Do you have that.
Ms. Browner. No; do we have the protocol? We would be more
than happy to get it for you, certainly. It is a written
protocol of what a scientist should do.
Senator Shelby. Would you get that and furnish it to the
committee and to this Senator?
Ms. Browner. Yes, we would be more than happy to.
[The information follows:]
Cancer Prevention Study II
DESCRIPTION
Cancer Prevention Study II (CPS-II) is a prospective mortality
study of approximately 1.2 million American men and women, begun in
1982. Participants were recruited into the study in all fifty states,
the District of Columbia, and Puerto Rico by approximately 77,000
volunteers for the American Cancer Society. Many of the participants
were friends, neighbors, or acquaintances of the volunteers. Enrollment
was restricted to adult members (age 30 or older) of families in which
at least one household member was 45 years or older.
Each participant completed a four page confidential questionnaire
and returned it in a sealed envelope. Baseline questions included
personal identifiers, height, weight, demographic characteristics,
personal and family history of cancer and other diseases, use of
medicines and vitamins, menstrual and reproductive history (women),
occupational exposures, dietary habits, alcohol and tobacco use and
various questions regarding exercise and behavior. For males, the
questionnaire covered 376 items, and for females, 395 items.
During the first six years of follow up (September 1, 1982 to
August 31, 1988), each participant's vital status was determined at two
year intervals through personal inquiries by the volunteers. Volunteers
were asked to check whether their enrollees were alive or dead and to
record the date and place of all deaths. Death certificates were
subsequently obtained from State Health Departments and coded by a
nosologist according to a simplified system based on the International
Classification of Disease, 9th revision (92 categories). For deceased
persons whose death certificates mentioned cancer, clinical information
was sought from cancer registries, physicians and hospitals to verify
the primary cancer site and histologic type.
The CPS-II study population is being traced beyond 1988 using
computerized linkage with the National Death Index (NDI), a database of
all deaths in the U.S. NDI provides ACS with a list of deceased
persons, their dates of death, states of death, and death certificate
numbers. With this information, ACS National is able to obtain most
death certificates directly from the State Health Departments. Vital
status follow-up at completion of the 1991 follow-up is shown in Table
1.
Follow up of CPS-II is expected to continue for many years (See
Figure 1) to maximize the information obtained from this valuable
study.
CPS-II NUTRITION SURVEY
In the Fall of 1992 and 1993 we recontacted approximately half of
the CPS-II Study population (men and women age 50-74 in 21 states) and
obtained updated information on nutrition and other cancer risk factors
on approximately 90,000 men and 100,000 women. The 21 States (26
Divisions) participating in this survey were California, Connecticut,
Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, New Mexico, New Jersey, New York, North
Carolina, Pennsylvania, Utah, Virginia, Washington, and Wisconsin.
Our objective is to establish ongoing cancer incidence follow-up
for the CPS-II Nutrition Survey cohort through linkage with state
cancer registries. We then will be able to study the association of
many factors (e.g. diet, lifestyle, environment) reported in both 1982
and 1992 with cancer incidence. Because we will continue our mortality
follow-up of the entire CPS-II cohort (through linkage with the NDI),
we also will be able to study the association between reported risk
factors and survival.
A new questionnaire will be sent to the CPS-II Nutrition Survey
cohort in the Fall of 1997. This questionnaire will update information
on exposures and will also capture self-reported cancer incidence.
PUBLICATIONS
As of March 1997, 56 scientific papers on CPS-II had been published
or were about to be published in peer-reviewed journals. CPS-II is also
discussed extensively in two reports by the U.S. Surgeon General on The
Health Consequences of Smoking (1989), and The Benefits of Quitting
Smoking (1990). A list of references is attached.
ONGOING ANALYSES
Staff in the Epidemiology and Statistics Program are currently
conducting a series of analyses on CPS-II. These include analyses of
diet, hormones, and other risk factors for selected common fatal
cancers, analyses of risk factors for fatal breast and prostate cancer,
and updated dose-response analyses between smoking and mortality.
Collaborative studies are underway with the National Cancer Institute,
the Centers for Disease Control, and several universities.
CPS-II PUBLICATIONS
In Press
1. Heath CW, Lally CA, Calle EE, McLaughlin JK, Thun MJ.
Hypertension diuretics, and anti-hypertensive medications as possible
risk factors for renal cell cancer. Am J Epidemiol, 1966.
2. Kahn HS, Tatham LM, Rodriguez C, Calle EE, Thun MJ, Heath CW.
Stable behaviors associated with adults' 10-year change in body mass
index and likelihood of gain at the waist. Am J Public Health, 1996.
3. Thun MJ, Day-Lally C, Myers DG, Calle EE, Flanders WD, Zhu BP,
Namboodiri MM, Heath CW. Trends in tobacco smoking and mortality from
cigarette use in Cancer Prevention Studies I (1959-1965) and II (1982-
1988). In: National Cancer Institute, Smoking and Tobacco Control,
Monograph 6: Changes in Cigarette-Related Disease Risks and Their
Implication for Prevention and Control. Washington, DC: National
Institutes of Health.
4. Thun MJ, Myers DG, Day-Lally C, Namboodiri MM, Calle EE,
Flanders WD, Adams SL, Heath CW. Age and the exposure-response
relations between cigarette smoking and premature death in Cancer
Prevention Study II. In: National Cancer Institute, Smoking and Tobacco
Control, Monograph 6: Changes in Cigarette-Related Disease Risks and
Their Implication for Prevention and Control. Washington, DC: National
Institutes of Health.
5. Thun MJ, Heath CW. Changes in mortality from smoking in two
American Cancer Society prospective studies since 1959. Prev Med.
Published
1. Calle EE, Mervis CA, Thun MJ, Rodriguez C, Wingo PA, Heath CW.
Diethylstilbestrol and risk of fatal breast cancer. Am J Epidemiol
1996;144:645-52.
2. Cardenas VM, Thun MJ, Austin H, Lally CA, Clark WS, Greenberg
RS, Heath CW. Environmental tobacco smoke and lung cancer mortality in
the American Cancer Society's Cancer Prevention Study II. Cancer Causes
Control, 1997;8:57-64.
3. Miracle-McMahill HL, Calle EE, Kosinski AS, Rodriguez C, Wingo
PA, Thun MJ, Heath CW. Tubal ligation and fatal ovarian cancer in a
large prospective cohort study. Am J Epidemiol 1997;145:349-57. Calle
EE, Mervis CA, Thun MJ, Rodriguez C, Wingo PA, Heath CW.
Diethylstilbestrol and risk of fatal breast cancer. Am J Epidemiol
1997; 144:645-52.
4. Rodriguez C, Tatham LM, Thun MJ, Calle EE, Heath CW. Smoking and
fatal prostate cancer in a large cohort of adult men. Am J Epidemiol
1997;145:466-75.
5. Collaborative Group on Hormonal Factors in Breast Cancer. (Calle
EE, Heath CW, Jr., Miracle-McMahill HL, collaborators). Breast Cancer
and Hormonal Contraceptives: Further Results. Contraception 54, No.3
(Supplement), 1996.
6. Collaborative Group on Hormonal Factors in Breast Cancer. (Calle
EE, collaborator). Breast cancer and hormonal contraceptives:
collaborative reanalysis of individual data on 53,297 women with breast
cancer and 100,239 women without breast cancer from 54 epidemiological
studies. Lancet 347:1713-27, 1996.
7. Doll R. Cancers weakly related to smoking. Br Med Bull
1996;52:35-49.
8. Peto R, Lopez AD, Boreham J, Thun M, Heath C, Jr, Doll R.
Mortality from smoking worldwide. Br Med Bull 1996;52:12-21.
9. Steenland K, Thun MJ, Lally CA, et al. Environmental tobacco
smoking and ischemic heart disease in the American Cancer Society CPS-
II cohort. Circulation 1996;94:622-628.
10. Steenland K, Lally C, Thun M. Parity and coronary heart disease
among women in the American Cancer Society CPS-II population.
Epidemiology 1996;7:641-643.
11. Soucie JM, Coates RJ, McClellan W, Austin H, Thun M. Relation
between geographic variability in kidney stones prevalence and risk
factors for stones. Am J Epidemiol 1996;143:487-95.
12. Willis DB, Calle EE, Miracle-McMahill HL, Heath CW. Estrogen
replacement therapy and risk of fatal breast cancer in a prospective
cohort of postmenopausal women in the United States. Cancer Causes
Control 1996;7:449-57.
13. Thun MJ, Day-Lally CA, Calle EE, Flanders WD, Heath CW. Excess
mortality among cigarette smokers: Changes in a 20-year interval. Am J
Public Health 1995;85:1223-1230.
14. Thun MJ, Heath CW. Aspirin use and reduced risk of
gastrointestinal tract cancer in the American Cancer Society
Prospective Studies. Prev Med 1995;24:116-118.
15. Rodriguez C, Calle EE, Coates RJ, Miracle-McMahill HL, Thun MJ,
Heath CW. Estrogen replacement therapy and fatal ovarian cancer. Am J
Epidemiol 1995;141:828-835.
16. Pope, CA, Thun MJ, Namboodiri MM, Dockery DW, Evans JS, Speizer
FE, Heath CW. Particulate air pollution as a predictor of mortality in
a prospective study of U.S. adults. Am J Respir & Crit Care Med
1995;151:669-674.
17. Holmberg L, Ekbom A, Calle EE, Mokdad A, Byers T. Parental age
and breast cancer mortality: a cohort study of 384,000 women.
Epidemiology 1995:6:425-427.
18. Calle EE, Mervis CA, Wingo PA, Thun MJ, Rodriguez C, Heath CW.
Spontaneous abortion and risk of fatal breast cancer in a prospective
cohort of U.S. women. Cancer Causes Control 1995;6:460-468.
19. Calle EE, Miracle-McMahill HL, Thun MJ, Heath CW. Estrogen
replacement therapy and risk of fatal colon cancer in a prospective
cohort of postmenopausal women. J Natl Cancer Inst 1995;87:517-523.
20. Thun MJ, Aspirin, NSAIDS, and digestive tract cancers. Cancer
Metastasis Rev 1994;13:269-277.
21. Soucie JM, Thun MJ, Coates RJ, McClellan W, Austin H.
Demographic and geographic variability of kidney stones in the United
States. Kidney Int 1994;46:
22. Thun MJ, Calle EE, Myers DG, Heath CW. Response. Hair coloring
products: safe or still suspect? J Natl Cancer Inst 1994;86:943-944.
(Correspondence.)
23. Calle EE, Miracle-McMahill HL, Thun MJ, Heath CW. Cigarette
smoking and risk of fatal breast cancer. Am J Epidemiol 1994;139:1001-
1007.
24. Thun MJ, Altekruse SF, Namboodiri MM, Calle EE, Myers DG, Heath
CW. Hairdye use and risk of fatal cancers in women. J Natl Cancer Inst
1994;86:210-215.
25. Thun M, Namboodiri M, Calle EE, Heath CW. Nonsteroidal
antiinflammatory drugs in skin cancer revisited: Response. J Natl
Cancer Inst 1993;85:581. (Correspondence).
26. Calle EE, Martin LM, Thun MJ, Miracle HL, Heath CW. Family
history, age, and risk of fatal breast cancer. Am J Epidemiol
1993;138:675-681.
27. Thun MJ, Namboodiri MM, Calle EE, Flanders WD, Heath CW.
Aspirin use and risk of fatal cancer. Cancer Research 1993;53:1322-
1327.
28. Calle EE, Terrell DD. Utility of the National Death Index for
ascertainment of mortality among Cancer Prevention Study II
participants. Am J Epidemiol 1993;137:235-241.
29 Halperin Mt, Gillespie BW, Warner KE. Patterns of absolute risk
of lung cancer mortality in former smokers. J. Natl Cancer Inst
1993;85:457-464.
30. Thun MJ, Calle EE, Namboodiri MM, Flanders WD, Coates RJ, Byers
T, Boffetta P, Garfinkel L, Heath CW. Risk factors for fatal colon
cancer in a large prospective study. J Natl Cancer Inst. 1992;84:1491-
1500.
31. Peto R, Lopez AD, Boreham J, Thun M, Heath C. Mortality from
tobacco in developed countries: indirect estimation from national vital
statistics. Lancet 1992;339:1268-1278.
32. Lee PY, Silverman MK, Rigel DS et al. Level of education and
the risk of malignant melanoma. J Am Acad Dermatol 1992;26:59-63.
33. Thun MJ, Namboodiri M, Heath CW. Aspirin use and reduced risk
of fatal colon cancer. N Engl J Med 1991;325:1593-1596.
34. Shopland DR, Eyre HJ, Pechacek TF. Smoking-attributable cancer
mortality in 1991: is lung cancer now the leading cause of death among
smokers in the United States? J Natl Cancer lnst 1991;83:1142-1148.
35. Garfinkel L, Boffetta P. Association between smoking and
leukemia in two American Cancer Society prospective studies. Cancer
1990;65:2356-2360.
36. Garfinkel L, Boffetta P. Smoking and Estrogen-Related Sites
Data from American Cancer Society Studies. In Smoking and Hormone
Related Disorders. N. Wald, J. Baron (Eds.). Oxford, England: Oxford
Medical Publications, 1990.
37. Stellman SD, Garfinkel L. Proportions of cancer deaths
attributable to cigarette smoking in women. Women Health, 1989;15:19-
28.
38. Garfinkel L, LaVerda N. Dietary patterns of nurses. Proc of 5th
National Conference on Cancer Nursing. American Cancer Society, 1989.
39. Stellman, SD. Brief Reports: The case of the missing eights--An
object lesson in data quality assurance. Am J Epidemiol, 1989;129:857-
860.
40. Boffetta P, Stellman SD, Garfinkel L. A case-control study of
multiple myeloma nested in the American Cancer Society prospective
study. Int J Cancer 1989;43:
41. Stellman SD, Garfinkel L. Patterns of artificial sweetener use
and weight change in an American Cancer Society prospective study.
Appetite (suppl. II) 1988;85-91.
42. Stellman SD. Sweetener usage in America. A brief history and
current usage patterns. In G.M. Williams (Ed.), Sweeteners: Health
Effects. Princeton, NJ: Princeton Scientific Publishers. 1988:1-18.
43. Stellman SD, Boffetta P, Garfinkel L. Smoking habits of 800,000
American men and women in relation to their occupation. Am J Ind Med
1988;13:43-58.
44. Boffetta P, Stellman SD, Garfinkel L. Diesel exhaust exposure
and mortality among males in the American Cancer Society prospective
study. Am J Ind Med 1988;14:403-415.
45. Garfinkel L, Stellman SD. Mortality by relative weight and
exercise. Cancer 1988;62:1844-1850.
46. Garfinkel L, Stellman SD. Smoking and lung cancer in women:
findings in a prospective study. Cancer Res 1988;48:6951-6955.
47. Stellman SD, Garfinkel L. Patterns of reported age: Lack of
digit bias. JAMA 1987;257:2593-2594. (Correspondence).
48. Garfinkel L, Stellman SD. Cigarette smoking among physicians,
dentists, and nurses. CA cancer J Clin 1986;36:2-8. (Reprinted in World
Smoking & Health 1986;11:2-9).
49. Stellman SD. Cigarette yield and cancer risk: Evidence from
case-control and prospective studies. In: Zaridze D, Peto R, Eds.
Tobacco: A major international health hazard. International Agency for
Research on Cancer, Lyon, IARC 1986;74:197-209.
50. Stellman SD, Garfinkel L. Artificial sweetener use and one-year
weight change among women. Prev Med 1986;15:195-202.
51. Stellman SD, Garfinkel L. Smoking habits and tar levels in a
new American Cancer Society prospective study of 1.2 million men and
women. J Natl Cancer Inst 1986;76:1057-1063.
OTHER IMPORTANT PUBLICATIONS USING CPS II DATA
U.S. Department of Health and Human Services. Reducing the Health
Consequences of Smoking. 25 Years of Progress. A Report of the Surgeon
General. U.S. Department of Health and Human Services, Public Health
Service, Centers for Disease Control, Center for Chronic Disease
Prevention and Health Promotion, Office on Smoking and Health. DHHS
Publication No. (CDC) 89-8411, 1989:140-152.
U.S. Department of Health and Human Services. The Health Benefits
of Smoking Cessation. A Report of the Surgeon General. U.S. Department
of Health and Human Services, Public Health Service, Centers for
Disease Control, Center for Chronic Disease Prevention and Health
Promotion, Office on Smoking and Health. DHHS Publication No. (CDC) 90-
8416, 1990:75-84.
Smoking and Health in the Americas. A 1992 Report of the Surgeon
General, in collaboration with the Pan American Health Organization.
DHHS Publication No. (CDC) 92-8419. 1992.
Peto R, Lopez AD, Boreham J, Thun M, Heath C. Mortality from
smoking in developed countries 1950-2000. New York, NY: Oxford
University Press; 1994.
guidelines for collaboration with the epidemiology and surveillance
research department of the american cancer society
The following criteria will be used by the American Cancer Society
(ACS) to evaluate collaborative proposals by external researchers
involving use of ACS databases for epidemiologic analysis.
1. A written proposal must be submitted describing the project, its
intent, public health importance, and methodology.
2. The scientific question must be important, biologically
relevant, and timely.
3. ACS data must be suitable to study the topic.
4. ACS must have confidence in the ability of the collaborator(s)
to work productively with its staff.
5. Higher priority will be given to analyses that concern common
cancers or other issues of direct value to ACS.
6. Priority will be placed on cancer-oriented research. The number
of studies addressing only endpoints other than cancer will be limited
at any given time.
7. It is (highly) preferable that the collaborator(s) complete most
of the research at the ACS Home Office in Atlanta.
8. Scientific papers must be jointly authored by the collaborators
and ACS Epidemiology and Surveillance Research staff.
9. The timing of the analysis will depend upon the need for and
availability of support staff to assist in the project. Projects which
can provide funds to reimburse ACS for computer programming will
receive special consideration.
epidemiologic collaboration using american cancer society data
Title of Epidemiologic Research Project:
________________________________________
TERMS OF AGREEMENT
1. This epidemiologic research project involves active professional
collaboration between the American Cancer Society (ACS) and ______.
2. The agreement will cover the work outlined in the written
proposal submitted for the project, as later amended in writing by
mutual agreement, if applicable.
3. The project is planned to be completed within______ months
beginning ______ and ending ______.
4. The investigator(s) will complete most of the project work at
the ACS Home Office in Atlanta.
5. Work space and equipment will be provided for ______ external
collaborators at the ACS Home Office during the planned project period.
6. Any scientific papers submitted for publication as an outcome of
this project will be jointly authored by the collaborators and ACS
Epidemiology & Surveillance Research staff.
7. ACS Epidemiology research analyst staff support will be provided
to assist with the project for a total of ______ hours.
8. ACS will be reimbursed for computer programming by the
collaborator for hours at the rate of ______ per hour.
Work under this agreement will be governed by the following principles:
1. In addition to providing data necessary for analysis, ACS staff
will participate in development of the study protocol and in the
analysis and publication of study results. In this process, the
collaborating groups will reach mutually agreeable decisions regarding
data to be analyzed, protocols to be followed, and participation in
data analysis.
2. Access to ACS data will be contingent upon acceptance of the
terms of this agreement by all collaborating parties and upon
assurances of confidentiality for all personal identifying material in
the data. When the research project is completed, all original data
materials (tapes, printouts, etc.) will either be destroyed or returned
to ACS.
Signed:
__________________________________________________
Clark W. Heath, Jr., M.D. Date
Vice President for Epidemiology
and Surveillance Research
American Cancer Society
__________________________________________________
Name: Date
Title:
Institution:
NAAQS: PROTOCOL FOR ACCESSING DATA
Senator Shelby. Have you commissioned or have you
encouraged the National Academy of Sciences to do some
scientific studies regarding this?
Ms. Browner. Again, there are 250 scientific peer-review
published studies. Each study came through a process on its own
of peer review. Once that was completed, and some of those
extend over a 10-year period, the body of the science was then
subject to an external peer review. So you have peer review of
peer review of peer review.
We have encouraged both the American Cancer Society and
Harvard to make public those underlying databases. We have
encouraged that and we have written to them. Mary Nichols, the
Assistant Administrator for Air and Radiation, has written to
them asking them to make those public. It is important to
understand that these are peer-reviewed published scientific
studies that then were peer reviewed again by an independent
panel. The panel, which is made up of industry, university
scientists, and others, then formed the scientific basis of the
proposal we have made to the American people on public health
protection.
Senator Shelby. Again, do you believe that people that may
be questioning some of your decisions in various areas as the
Administrator of EPA would have a right to the data in which
you base your decision?
Ms. Browner. The American Cancer Society has an absolute
protocol, as does Harvard, for allowing people to access that.
We have encouraged them to go beyond that, to just put it out
in the public. We agree with you.
Senator Shelby. Very important, because it goes to what you
base your decisions on, is it not?
Ms. Browner. What we based our proposal on--there was no
decision yet--there is a proposal.
Senator Shelby. But there has been decisions in the past on
various things. And you base them, or try to I hope, on a
scientific basis?
Ms. Browner. The process I have used the last 4 years in
setting a public health standard or in adopting a regulation,
is to understand the body of science that is available.
Senator Shelby. Absolutely.
Ms. Browner. Each statute asks us to do something a little
bit different, so we have to take that into account. Once we
understand the body of science, it is then and in most
instances, subjected to a peer review.
Senator Shelby. We understand.
Ms. Browner. From that flows a proposal, which we take
public comment on. This is where we are today in the air
process. No final decision has been made and will not be made
until we have completed review of the 16,000 comments we
received. That is not pages; that is the number of comments.
Some of those comments may be hundreds of pages, which we are
now committed to reviewing and being informed by.
Senator Shelby. I understand what you are going through. I
know my time is up. If I could just take 10 seconds.
But, again, the scientific data that would support the new
particulate matter rule, do you believe that other people that
would be affected by this in America are entitled to the same
information, and would you make sure that people that request
it from you get this information to evaluate the basis on which
you make these proposals, to see if they are real or if they
are flawed? That was my question.
Ms. Browner. The two databases, the American Cancer Society
and the Harvard database are the databases there have been
questions about. They are available for valid research
purposes. You can file with either institution a request to
access it.
Senator Shelby. But do you have that information?
Ms. Browner. No; we do not have the databases.
Senator Shelby. So you make a decision just on their
findings, and you do not go back to their basis of their
information? I am troubled by this.
Ms. Browner. We use a 4-year process to evaluate published,
peer-reviewed scientific studies.
Senator Shelby. You still have not answered my question. I
have got another round. I will be back.
Senator Bond. Senator Shelby, I know this is an extremely
important area. I apologize, but we do want to make sure that
everybody has a shot at it.
Senator Shelby. My time is up.
Senator Bond. Yes; Senator Boxer.
BUDGET PRIORITIES
Senator Boxer. Secretary Browner, I am just going to step
back for 1 minute and say that--Mr. Chairman, thank you. Excuse
me for coming after the hearing started. I had to give a talk
down the hall in another meeting.
Just stepping back and wearing my budget committee hat, it
seems to me, as we look at the overall budget in these very
tight times, that we have got to make some pretty tough
decisions about where our priorities lie. And what the
administration did in this budget, pretty boldly I think, is
take out--is to target a few areas and say, you know what, this
is important to the American people.
Now, one of those is your Agency, EPA. And as I look from
the perspective of my State and the country, I think it is
right.
Now, that does not mean that when you throw money at
something, it necessarily has results. We have got to make sure
that, if we do that, we have results. I am extremely impressed
with what I see you have been doing in the past.
BROWNFIELDS SITES
Senator Boxer. I think what the people of my State want,
and I think it is true across the country--and I will give an
example of these contaminated strawberries as just an example--
of where people, if they demand anything at all--we know they
want the country to defend its borders and to act in the
national security interest of the Nation, but a lot of the
enemies they face in their daily lives are not knowing if they
can take their kid to the corner hamburger stand, if you will.
And I have met more than one parent who has had that
experience, done it 100 times and the 101 they lost a child
from E. coli. And when a mother cannot turn on the tap water
and give her child clean water, this is something they do not
ask us to do, they demand.
So I think, just overall, the fact that this administration
would recognize this as a priority is very important. And I
want to be as supportive as I can.
Now, certainly one of the reasons is that we have a great
number of Superfund sites in my home State. Over 40 percent of
Californians live within 4 miles of a Superfund site. We have
96 Superfund sites, the third highest of any State, seven
natural resource damage sites--that is, sites where the
environment has been damaged by the release of hazardous
substances--more than any other States. And we have got to have
brownfields.
And I would echo what Senator Mikulski said, when you have
these abandoned brownfield sites, it means there are fewer job
opportunities, you have neighborhood blight, and increased
pressure of urban sprawl. And the city of San Francisco alone
has over 5,000 of these sites.
So, to me, when we spend funding to clean it up, we are
making a major--we are making major progress, should that
cleanup go forward, if you will, toward economic redevelopment,
for jobs and toward a future that we will all be proud of. So
my question to you, I want to make sure everything we do is
based on science. I want to make sure everything is based on
reality. I want to make sure, to the greatest extent possible,
everything we do is based on consensus, which you are so good
at. So in terms of these cleanups, do you feel comfortable in
asking for these increases and that we are not going to see
this funding go toward attorneys?
I do not have anything against attorneys. I happen to be
married to one. My father was one. My son is one. But I
honestly feel, we give you money, we want cleanup. We do not
want court cases. So can you make us feel more comfortable as
we hopefully come through with some of this--I hope we come
through with all of it; I do not know if we will--that we are
going to see a dramatic improvement, we are going to see these
Superfund sites cleaned up by the year 2000, we are going to
see these brownfields sites cleaned up?
Ms. Browner. This money is for cleanup. Let me say this the
easiest way: we now have a universe of 600-plus sites that are
candidates that may beready to go, or just about ready to go,
into the final 2-year phase, which is the construction cleanup
phase. The lawyers are essentially done.
When we give you the numbers, it is based on the candidate
list we have and our belief that, within this level of
resources and the kind of experts we need to get it done, we
can deliver to you 500 sites, with the money, if we have the
money, by the end of the year 2000.
The lawyer part of this happens in an earlier phase. For
these particular 600-plus candidate sites, out of which will
come the 500, we are essentially done with the lawyers.
Senator Boxer. And brownfields, you feel the same way?
Ms. Browner. I think that brownfields is a great example of
how we avoided, in many instances, the lawyer problem up front.
We sat down with the American Bar Association, and with the
American Banking Association, and together crafted legal
agreements, to avoid any problems that could have flowed.
Senator Boxer. And just to finish this part, and then I
will wait to the next round. Eighty-two percent of your
increase would go toward these Superfund sites.
Thank you.
FISCAL YEAR 1997 SUPERFUND BUDGET
Senator Bond. Thank you very much, Senator Boxer.
Administrator Browner, my first question to you was why the
knowledge of the progress on Superfund sites, which led to a
projection of $1.4 billion in spending in the fiscal year 1997
budget, changed. I do not believe I got an answer for that, so
I will ask you to submit that for the record.
Senator Bond. My second question was why the Superfund
program merits a higher priority on the scientific risk
continuum than other areas. I do not believe the answer was
responsive to the question and I would invite you to submit
that answer in writing for the record.
SUPERFUND: REAUTHORIZATION
Let me try another area. In the February 1997 GAO report,
which stated that Superfund was a high-risk program, vulnerable
to mismanagement, waste, fraud and abuse, have you not----
Ms. Browner. We may not have seen this final report. I
apologize.
Senator Bond. It is dated February 1997.
Ms. Browner. We have seen this one. There are several GAO
reports. Some we have seen and some we have not.
Senator Bond. Yes; all right. This one was titled ``High
Risk Series, February 1997 Superfund Program Management,'' 1 of
25. We have the luxury in this committee of handling the high-
risk Superfund Program, the entire Department of HUD, which is
high risk, and the NASA contracting agency. This has been our
year. But I would call your attention to this.
The report does say that the program is vulnerable to
mismanagement, waste, fraud, and abuse. The report said:
That although EPA has been addressing weaknesses in
contract management, the Agency remains vulnerable to
overpaying its contractors and not achieving the maximum
cleanup work with its resources.
GAO also found that EPA pays its cleanup contractors a
higher percentage of total contract costs to cover
administrative expenses rather than ensuring the maximum amount
of available funds go to the actual cleanup. And I would like
to know why, with the demonstrated problems in Superfund, we do
not have a priority on reauthorization, correction of the
statutory deficiencies, and codification of the program reforms
prior to the request for an increase.
Ms. Browner. Mr. Chairman, I have spent the better part of
3 years asking the U.S. Congress to rewrite the Superfund law.
I have probably testified on proposals to rewrite that law more
than any other. I had reached an agreement with everyone, from
the Chemical Manufacturers Association to the Sierra Club, on
what a rewrite of that program could be. That was more than 3
years ago. Unfortunately, it did not come to pass.
Elections happend. Things changed. I accepted that. We are
back at it again this year. I will be meeting again this week
on both the House and the Senate side, asking the committees of
jurisdiction to please work with us in a bipartisan, consensus-
based manner, as we did on drinking water and on food quality.
Food quality took more than 20 years, but this body,
working with the administration, did it. There is no reason we
cannot do it again on Superfund. There is absolutely no reason
we cannot see this law rewritten in the next several months and
see it move through the congressional process. We are ready,
willing, and able to be at the table to write the legislation
to see the law changed.
However, we do not think that the funding increase that we
seek should be held hostage to a legislative rewrite,
particularly, since we have been about this now for the better
part of almost 4 years and have been unable to succeed.
Senator Bond. Madam Administrator, I am running out of
time. I would be happy to ask you to submit any further
comments on that for the record. But let me point out that when
the leadership went to the White House and asked to put
Superfund on the fast track, the Vice President said that they
were not ready to do so. We know that you have worked for a
long time to do it. We are waiting for your proposals. We are
not holding anything hostage.
We have a simple request that rather than pouring money
into a program which has been criticized by probably one-half
the people in this room, and the GAO says is vulnerable to
mismanagement, waste, fraud, and abuse because of the statutory
scheme in which it operates, that we need to work together to
see your proposal, to get your proposal first, and to sit down
and work on it, to make sure that we are putting money into
cleanup rather than into continued litigation problems and the
possible waste and abuse that has been identified.
Ms. Browner. Mr. Chairman, if I may, I know my time is up.
But we have gone to the relevant committee chairmen and asked
how they would like to proceed with getting it done this year.
They have suggested that rather than us crafting another bill,
they would like to work with us. I think that is important for
the record to reflect. That has been our understanding of their
request to us.
If we have misunderstood something and they want a bill,
then we will deliver you another bill. But I believe, at this
point in time, we are more likely to get this done, after 4
years of trying, if we just get in a room, close the doors and
hammer out our differences. Now, if they want a bill, if that
is what they are telling you, then tell me, and we will deliver
you a bill. We have written a bill.
What we need now is an honest dialog, in the same way we
had it on drinking water and we had it on food safety. There is
a way to do this, and that is what I am committed to.
Senator Bond. Well, I share your commitment. And we need to
get it done, because we need to make sure that the money goes
to cleanups and that the program works as efficiently as
possible.
Senator Mikulski.
SUPERFUND REFORM
Senator Mikulski. Thank you. Mr. Chairman, I am sorry that
Senator Lautenberg had to leave because of a pressing hearing
on the issues around tobacco, a longstanding public health
commitment of his. But I believe that Senator Lautenberg did
state and has said to me privately that he is working on a
Superfund reform effort with Senator Chafee, the driving force
in the environmental authorizing committee, and that they were
close to arriving at, if not a consensus, at least a workable
framework to bring to the full Senate for discussion and
amendment. And I think it might be useful if we then got a real
read on where that negotiation was going.
If they are stalled out, as you feel, that is one
situation. If they are moving, then that is optimistic. If they
are stalled out, then I think it is important that the
authorizers and Ms. Browner, and perhaps you and I, get into a
room to jump start the Superfund. But I do believe that there
has been very serious and methodical work on both cleaning up
Superfund sites, but also cleaning up our cumbersome Superfund
site process, which is costly and lends itself to needless
litigation and often excessive payments.
Am I right in this Ms. Browner?
Ms. Browner. From our perspective, the process is not
stalled. I will be meeting on both the House and the Senate
side later this week. I hope to come to closure on the Senate
side on what steps will be taken, when they will be taken, how
they will be taken, and who will be in the room. We had very
productive meetings with Senator Smith and with Senator Chafee
prior to the recess.
Senator Mikulski. You know what is happening here is Bond
raised the question. You are answering Bond and it is on my
nickel. [Laughter.]
Ms. Browner. I do not think the process is stalled.
Senator Bond. We will give you a few cents change, Senator
Mikulski.
Senator Mikulski. Can I get a few cents change?
Ms. Browner. From my perspective, the process is not
stalled. If Senator Chafee or Senator Smith believes the
process is stalled, then I am very disappointed, since we are
working in good faith.
INTERNATIONAL PROGRAM VISION
Senator Mikulski. And I do not know if it is stalled
either. I just know that we are working on, each, different
sets of assumptions here.
Now, I would like to come back to two areas of interest of
mine, one being the international effort. And, Ms. Browner, I
know you have a very modest international office, and I am not
for building up the Agency, but I do believe very strongly that
there is an international effort in exporting our knowledge,
our services and our technology. In conversations with me from
the private sector, there have been concerns that your
international office--and these are not my words but the words
given to me--are a lot of guys sitting around in khakis who
like to fly around the world, going to conferences and sitting
at head tables, talking about how the world ought to clean up.
My question to you is, while you are grappling with such
compelling issues like Superfund, do you have a vision and a
plan for this international office to really be a mechanism by
which we really promote not only environmental knowledge but
this opportunity, and are you connected to the Department of
Commerce in being able to achieve that?
Ms. Browner. We think there is a tremendous opportunity for
the export of American environmental technology. The world
market for environmental technology is growing dramatically.
There is no reason why the United States should not be No. 1 in
that export market. We are not, unfortunately, No. 1. There are
other countries that now surpass us.
Part of our international work is in partnership with the
Department of Commerce and others to ensure that our
technologies and our environmental technology firms are able to
access those foreign markets. Last year there was a lot of
discussion about our environmental technology initiative. In
the budget, we are requesting $10 million for technology
verification.
This is one of the most important things we can do for
these technology firms. When they go to other countries, the
first thing that is asked of us is, what does EPA think? If
they can demonstrate they have our verification, then it makes
their product and their technology that much more interesting.
Senator Mikulski. Ms. Browner, have you given an explicit
direction to your international office that this must be a
focus, and require from them a strategy, a plan of action,
targeted opportunities either in sectors or in geographic
areas?
Ms. Browner. Yes.
Senator Mikulski. Why is it that we do not sense a momentum
in that?
Ms. Browner. Well, I think the challenge is large. Other
countries, quite frankly, are extremely aggressive. They put a
large amount of resources into pushing their technology in
other countries, far more, I think, than we probably do. We
also do work in conjunction with the Department of Commerce,
which saw some of their budget cuts targeted to these areas.
But certainly we see it as a priority which is, you know,
twofold. First, we get the opportunity for American businesses,
and second, we all solve a pollution problem. Pollution does
not recognize political boundaries and some pollution problems
in other parts of the world may ultimately affect us. So we see
it as twofold, a pollution reduction and a technology
advancement.
Senator Mikulski. I know my time is up. I am supportive of
the AMI initiative.
Senator Bond. You have got a couple of seconds.
Senator Mikulski. I agree with that.
Ms. Browner. Thank you.
Senator Mikulski. And I would really like to be able to
have, for me, really what is this strategy and plan of action,
so that we can look at how we can support it and become more
aware.
Ms. Browner. OK.
Senator Mikulski. Many thanks.
Ms. Browner. Thank you.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Shelby.
[The information follows:]
Strengthening EPA'S International Programs
INTRODUCTION
In the Report accompanying EPA's fiscal year 1997 appropriations
bill, the Senate stressed the important role EPA's international
programs play in fulfilling the Agency's environmental mission: ``The
Committee recognizes that the protection of the U.S. environment
depends in part on the environmental protection efforts of other
countries * * *. The Committee encourages the integration of EPA's
international goals more coherently into its principal mission and
objectives.''
To this end, the Senate Appropriations Committee directed EPA to
report to Congress by March 1, 1997 on its measures to strengthen its
international program. The Committee specified that EPA's report should
address: (a) the integration of international considerations into EPA's
primary objectives (Section II); (b) the prioritization of
international activities (Section III); the role of other Federal
agencies in international environmental activities and their
relationship to EPA's Office of International Activities (Section IV);
and (d) the value to the American people of EPA's international
programs (Section V).
This report responds to that Congressional directive. Structured
according to the specific request from Congress, the report contains a
separate section for each of the four elements identified by the
Committee. It concludes with a section describing measures EPA is
taking to strengthen the Agency's international programs.
ACHIEVING EPA'S MISSION
EPA leads the nation's efforts to protect and preserve public
health and the vitality of natural ecosystems in this country. The
Agency is committed to achieving these goals by reducing risks to human
health and the environment, preventing pollution, and fostering
environmentally sound and sustainable economic development in a cost-
effective and efficient manner.
International cooperation is a key element in EPA's ability to
achieve this mission. The U.S. faces significant challenges in
protecting the health of its citizens and its natural resources from
environmental hazards. In today's world, since pollution does not honor
national boundaries, overcoming these challenges requires the
cooperation of other countries. Some examples:
--Cross-border air, water and waste pollution from Mexico, Canada and
other areas affect the health, environment and well-being of
American citizens living along borders as well as other areas
of the United States.
--Improper use of chemicals abroad can affect the safety of food and
other products imported into the United States.
--Health and environmental benefits resulting from the multi-billion
dollar U.S. investment by industry under the Clean Air Act to
reduce emissions of stratospheric ozone depleting compounds
could be undermined by failure to control production or use of
these chemicals in other countries, such as China, India or
Russia.
--Pollution of the marine environment in the Wider Caribbean Region
\1\ can damage U.S. fisheries and coral reefs and jeopardize
tourism and other livelihoods.
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\1\ The Wider Caribbean includes the Gulf of Mexico, the Straits of
Florida and the Caribbean Sea. These shared waters are bordered by the
United States, Mexico, Belize, Honduras, Nicaragua, Costa Rica. Panama,
Colombia, Venezuela, Guyana, Suriname, French Guiana, and all of the
Caribbean islands.
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--Pollution of the oceans and irreversible loss of species and
habitat worldwide damage natural systems critical to our well-
being and quality of life, and deprive us of commercially
valuable and potentially life-saving genetic materials.
--The long-range transport of persistent organic pollutants like DDT,
chlordane and polychlorinated biphenyls (PCB's) can adversely
affect health and environment in the United States.
Every major EPA program area has an important and indispensable
international component. The Air Office must concern itself with the
transboundary fluxes of pollutants such as sulfur dioxide; the
Pesticides Office must establish safe tolerances for the import of food
to ensure food safety and share information on certain pesticide
exports and regulatory decisions; the Office of Solid Waste must ensure
the safe import and export of waste; the Office of Enforcement and
Compliance Assurance must work with foreign countries, for example, to
stop the smuggling of ozone-depleting chemicals; the Office of General
Counsel works with USTR on such issues as reformulated gasoline and to
defend EPA's regulations when these are challenged at the World Trade
Organization (WTO); the Office of Policy, Planning and Evaluation must
examine how non-environmental policies, such as trade policies, affect
EPA's regulations; and the Office of Water must deal with ocean dumping
and pollution of international watercourses such as the Great Lakes. It
is absolutely clear, therefore, that EPA's work to protect human health
and the environment in the United States has an essential international
component that cannot be considered independently from EPA's other
work.
Within EPA, the Office of International Activities (OIA) leads
these international efforts working in close cooperation with other
parts of the Agency. As described by the General Accounting Office in
its report of September 1996,\2\ OIA ``serves as the focal point and
catalyst for the agency's international agenda, providing leadership
and coordination on behalf of EPA's Administrator.'' OIA is essential
to a strong and efficient international program at EPA. Centralizing
certain core international functions prevents costly duplication and
facilitates the mobilization of Agency program and regional office
resources in support of U. S. environmental goals and objectives. As
chief advisor to the EPA Administrator on international issues, OIA
plays a particularly important role with respect to cross-cutting
programs and projects and ensures that the Agency speaks with one voice
on critical policy matters. OIA also serves as EPA's principal point of
contact on international environmental matters with the Department of
State, the U.S. Agency for International Development, the Department of
Commerce and other federal departments, and oversees the Agency's
international travel and visitors programs.
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\2\ ``International Environment: U.S. Funding of Environmental
Programs and Activities,'' Report to the Chairman, Committee on Foreign
Relations, U.S. Senate, United States General Accounting Office, GAO-
RCED-96-234, September 1996, Page 22.
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EXCERPT FROM THE U.S. GENERAL ACCOUNTING OFFICE--SEPTEMBER 1996
EPA is the nation's chief technical and regulatory agency for
environmental matters. As such, it plays a major role not only in
domestic environmental protection activities but in international
environmental programs and activities as well * * *. EPA's
international programs also serve important U.S. economic, foreign
policy, and security interests.
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Consistent with EPA's Five-Year Strategic Plan \3\ and the National
Environmental Policy Act, EPA has taken steps to incorporate essential
international activities into the Agency's programs. Program and
regional offices now have a point of contact for international
activities. OIA also facilitates a network of regional coordinators to
better mobilize the scientific and technical expertise available
through the Agency's regions and laboratories. The reduction of global
and regional environmental risks is one of twelve environmental goals
identified in EPA's draft ``National Environmental Goals for America''
report. In addition, corresponding goals, objectives and measures for
international activities are being developed as part of the ``planning,
budgeting, analysis, and accountability'' process that is currently
being introduced in the Agency. The Agency's goal is to link budget
decisions with priorities in a more formal, structured way, and to
measure results.
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\3\ ``The New Generation of Environmental Protection: EPA's Five-
Year Strategic Plan,'' Office of the Administrator, U.S. Environmental
Protection Agency, EPA 200-B-94-002, July 1994.
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EPA has been very successful in advancing the U.S. international
environmental agenda. With new planning and management tools, and
enhanced cooperation with the Congress and other partners, the Agency
can do an even better job in meeting today's challenges. This will
require, among other things, developing well-targeted international
activities within major programmatic areas.
SETTING CLEAR PRIORITIES
The Agency recognizes the importance of ensuring that its
international activities contribute to its primary mission. To that
end, the Agency has developed a set of criteria to help determine the
relative priority of EPA's proposed international efforts for planning
and budgeting purposes. As part of its implementation of the Government
Performance and Results Act (Public Law 103-62) and the restructuring
of its planning, budgeting, analysis, and accountability processes, the
Agency is also developing a results-oriented process for evaluating the
effectiveness of its international programs.
Criteria
EPA has identified the following criteria to better determine the
relative priority of international efforts within the Agency. Proposed
programs and activities are weighed according to the degree to which
they:
--Protect U.S. public health and the environment from transboundary
or global environmental risks;
--Fulfill statutory and treaty obligations and respond to
congressional mandates and court-ordered deadlines;
--Contribute directly to U.S. domestic environmental programs by
increasing the effectiveness or lowering the cost of
environmental protection in the United States (e.g., through
the acquisition of new research, data or technology);
--Advance broader U.S. foreign policy, economic or national security
objectives as defined by Congress and the Administration; and
Take advantage of EPA's unique expertise and experience in the most
cost-effective manner possible.
Evaluation and Monitoring
Responding to the Government Performance and Results Act of 1993,
EPA is increasing its efforts to measure the environmental results of
its activities, including those in the international arena. The Agency
has begun to develop measurable outcomes for environmental programs at
the national and programmatic levels. The ``National Environmental
Goals for America'' report, released recently in public draft form,
defines broad goals to improve the nation's environment. Included in
this report are a series of proposed milestones to indicate progress
toward achievement of the proposed national environmental goals. To
achieve the milestones, Federal agencies, states, tribes, communities,
industries and individuals must work collectively to implement
programs, monitor results and report successes and deficiencies. The
draft Goals Report includes a chapter on the global environment that
proposes specific, measurable milestones within defined time frames for
achieving international environmental objectives. EPA will implement
programs to help achieve the global environmental goal and related
milestones and will monitor the progress of these programs.
EPA is developing specific goals, objectives and outcome measures
to indicate environmental achievements across the Agency. Each major
program of the Agency, including international activities, is required
to define subordinate programmatic goals and measures and employ
monitoring and evaluation techniques for positive environmental
results. If these evaluation and monitoring efforts suggest that
statutory changes would be beneficial, EPA will report these findings
to Congress for its consideration. Our overriding objective is to
provide the best protection possible for U.S. citizens and natural
resources, consistent with the full range of U.S. political, economic
and environmental interests.
COOPERATION WITH OTHER FEDERAL AGENCIES
EPA's environmental mandate and expertise make it uniquely
qualified to represent the nation's environmental interests abroad.
While the Department of State is responsible for the conduct of overall
U.S. foreign policy and other agencies are also involved in the
international environmental arena, only EPA has environmental expertise
as its primary mission and focus of expertise. The following summarizes
EPA's cooperative relations with other U.S. agencies.
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Major Global Environmental Treaties:
1996-Protocol Relating to the London Dumping Convention \1\
1992--Framework Convention on Climate Change \1\
1992-Convention on Biological Diversity
1989--Basel Convention on the Control of Transboundary Movements of
Hazardous Wastes and Their Disposal
1987--Montreal Protocol on Substances that Deplete the Ozone Layer
\1\
1985--Vienna Convention on the Protection of the Ozone Layer \1\
1982--United Nations Convention on the Law of the Sea
Principal North American Environmental Agreements:
1992--North American Agreement on Environmental Cooperation \1\
1991--Canada-United States Air Quality Agreement \1\
1983--Agreement Between the States and Mexico on Cooperation for
the Protection and Improvement in the Border Area \1\
1983--Convention for the Protection and Development of the Marine
Environment of the Wider Caribbean Region \1\
1978--Great Lakes Water Quality Agreement \1\
\1\ Ratified/given final approval by U.S.
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Under the Foreign Relations Act of 1979 (Public Law 95-426), as
amended, the Department of State is given primary coordination and
oversight responsibility for all major science and technology
agreements and activities between the United States and foreign
countries, international organizations, or commissions of which the
United States and one or more countries are members. Relations between
EPA and the Department of State cut across several offices/bureaus in
both organizations. For example, EPA works closely with the Bureau for
Oceans, Environment and Scientific Affairs (OES), the offices of the
Legal Adviser, International Organizations, Economic Affairs, and
regional bureaus. OIA at EPA and the OES at State serve as principal
points of contact for overall coordination.
EPA plays a large role in the negotiation of international
environmental agreements and programs and, at the request of the State
Department, sometimes leads U.S. delegations. The degree and level of
responsibility for policy development and treaty negotiation on
environmental agreements varies by issue between EPA and the Department
of State. The policy development necessary for negotiation and
implementation of these agreements is invariably dependent upon EPA
expertise and support. This expertise is especially critical with
respect to ensuring consistency with our domestic environmental
policies and regulatory programs.
Recognizing that international agreements are only as effective as
their implementation, the Agency also draws on its statutory authority
and unique technical and policy expertise to assure the effectiveness
of these agreements, both within the United States through the
promulgation of appropriate regulations and abroad through technical
assistance and training. EPA's policy leadership and technical
cooperation programs under the Montreal Protocol, London Ocean Dumping
Convention and Framework Convention on Climate Change, for example,
have been critical to the success of those international agreements.
The Agency is now playing a similar role in preparing for negotiations
on a global convention on persistent organic pollutants (POP's) and
existing negotiations on prior informed consent (PIC) for the export of
certain banned or severely restricted chemicals.
EPA recently signed a Memorandum of Agreement with the Department
of Defense and Department of Energy to formalize on-going cooperation
in the area of ``environmental security''. Responding to the
recommendation of EPA's Science Advisory Board that EPA ``recognize
that global environmental quality is a matter of strategic national
interest,'' \4\ the agreement will facilitate inter-agency cooperation
in responding to emerging environmental threats to the health and
safety of U.S. citizens, U.S. foreign policy interests and
environmental problems associated with the legacy of the Cold War. EPA
is offering its unique technical expertise in such areas as
environmental monitoring and assessment, emergency planning and
response, risk assessment, environmental technology development and
transfer, and the investigation of international environmental crimes.
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\4\ ``Beyond the Horizon: Using Foresight to Protect the
Environmental Future,'' Science Advisory Board, U.S. Environmental
Protection Agency, EPA-SAB-EC-95-007, Page 6.
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EPA has often been asked by the State Department and Defense
Department to provide leadership on critical political and security
issues. For example, EPA officials and experts were an important part
of the U.S. team that promoted scientific and technical cooperation as
an effective tool for reducing Cold War tensions with Eastern Europe
and the Soviet Union. EPA chaired the U.S. delegation to the historic
NATO environmental conference in 1993 that included former Soviet bloc
countries for the first time.
EPA and the many components of the Department of Commerce work
together closely on a range of different issues, including many science
and technology issues. OIA has the lead for coordinating with the
Department of Commerce on international issues, including
responsibility for organizations carrying out EPA's activities under
the Export Enhancement Act of 1992. The Act mandated EPA participation
on the Environmental Trade Working Group (ETWG) of the Trade Promotion
Coordinating Committee (TPCC), an inter-agency working group chaired by
the Secretary of Commerce to coordinate the government's overall trade
promotion activities. OIA represents EPA on the sub-cabinet TPCC
Deputies' Committee and, along with the International Trade
Administration at Commerce, co-chairs both the ETWG and the ETWG
``Advance Team''.
The Department of Commerce and other trade promotion agencies often
look to EPA for information on international environmental needs and
market opportunities. Cooperative activities among these agencies have
also led to joint economic and environmental benefits for the United
States. Joint funding for environmental training of foreign officials,
for example, has helped strengthen environmental management
capabilities worldwide while leading to over $150 million in sales for
small and medium-sized companies in the U.S.
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excerpt from the epa science advisory board--january 1995
Recognizing that the United States is part of a global ecosystem
that is affected by the actions of all countries, EPA should begin
working with relevant agencies and organizations to develop strategic
national policies that link national security, foreign relations,
environmental quality, and economic growth.
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EPA also works extensively with the National Oceanic and
Atmospheric Administration (NOAA) and the U.S. Coast Guard on
international environmental scientific and policy issues related to the
protection of our coasts, marine environment and atmosphere. At the
Coast Guard's request, for example, EPA's international office chairs
an inter-agency work group tasked with negotiating an international
agreement on air pollution standards for ships through the
International Maritime Organization. EPA provides technical and policy
guidance to the Coast Guard on other vessel safety and pollution
prevention matters, for example, problems associated with anti-fouling
paint used on ship hulls.
OIA serves as EPA's primary point of contact and liaison with the
U.S. Agency for International Development (U.S. AID). Specifically,
drawing on expertise from throughout EPA, OIA administers a number of
inter-agency agreements for environmental assistance. Under the Support
for Eastern European Democracy Act and the Freedom Support Act, for
example, OIA coordinates the provision of technical assistance,
training, information exchange, and demonstrations in building
environmental institutions and human resource capabilities in Central
and Eastern Europe, Russia and the New Independent States. OIA also
coordinates similar inter-agreements with respect to capacity-building
in Central America and Asia.
EPA works extensively with the Office of the U.S. Trade
Representative (USTR), particularly its Office of Environment and
Natural Resources, to ensure that U.S. international trade policies are
mutually supportive, reflecting the Administration's continuing
commitment to sustainable economic growth. For example, through the
Agency's participation in the negotiation of both the North American
Free Trade Agreement and the World Trade Organization and in the
Committees created by both sets of agreements, EPA has worked with USTR
to ensure that U.S. obligations under international trade agreements do
not hamper the ability of federal and state governments to maintain
high levels of domestic environmental protection. The two agencies also
work together to ensure that EPA's rules, regulations and other
programs are consistent with U.S. obligations under international trade
agreements. EPA is represented on the subcabinet Trade Policy Review
Group (TPRG) and the Trade Policy Staff Committee (TPSC), coordinated
by USTR and responsible for the development of U.S. international trade
policy.
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THE MURMANSK INITIATIVE: SUCCESSFULLY APPLYING THE CONCEPT OF
``ENVIRONMENTAL SECURITY''
EPA, the Department of Defense and other agencies are working with
Russia and Norway to upgrade and expand a low-level liquid radioactive
waste (LLW) processing facility in Murmansk, Russia. Designed to halt
possible sea disposal of LLW from the decommissioning of Russia's
nuclear submarine fleet, the project is introducing an innovative U.S.
technology employing special filtering, containment and processing
techniques.
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EPA has participated in all of the work leading up to the Report of
the WTO Committee on Trade and Environment (WTO/CTE) to the Singapore
Economic, Ministerial in December 1996. The WTO/CTE was created with
strong support from the U.S. in order to provide, among other things, a
mechanism to help ensure that the international trade rules are
environmentally sensitive. EPA, together with State and USTR, also
leads U.S. delegations to meetings of the OECD Joint Experts Group on
Trade and Environment.
Finally, EPA works closely with a number of other agencies with
environmental, health or safety mandates, including the departments of
Labor, Transportation, Agriculture, Interior, Health and Human Services
and the Food and Drug Administration.
BENEFITS TO THE AMERICAN PEOPLE
EPA's international environmental programs help protect the health
and environment of American citizens. They enlist the cooperation of
other nations in reducing transboundary and global environmental
threats to the United States and reduce the cost of the nation's
environmental protection. They also serve the nation's broad foreign
policy, economic and national security interests.
Reducing Environmental Threats Along Our Borders
Over half of the U.S. population lives in the 19 States that form
our borders with Mexico and Canada. Nowhere are the benefits of EPA's
international programs more apparent than along our common borders with
Mexico and Canada and in the Arctic and Wider Caribbean Region.
EPA's cooperative programs with Mexico, along with the Agency's
role in negotiating the North American Free Trade Agreement (NAFTA),
have led to specific environmental gains in both countries. The
construction of wastewater treatment facilities in Mexico is helping
solve decades-old problems affecting human health and the environment
in California, Arizona, New Mexico, and Texas. Joint air pollution
efforts under the 1983 Border Environment Agreement will help reduce
respiratory and other health problems in U.S. cities along the border,
as well as their Mexican ``sister'' cities (e.g., Ciudad Juarez,
Tijuana). Coordinated enforcement efforts are reducing illegal waste
dumping and other pollution on both sides of the border. Working
closely with the Department of Health and Human Services, the
Department of the Interior and the Department of Agriculture, EPA will
play a leading role in implementing ``Border XXI'', a new five-year
program for protecting health and environment along the border (See
box).
Long-standing cooperation with Canada has resulted in corresponding
environmental gains along our northern border. Benefitting from the
Great Lakes Water Quality Agreement and other cooperative agreements,
mercury levels in fish in Lakes Michigan, Huron and Erie have dropped
by more than 75 percent since 1970. Phosphorous loadings into Lake Erie
decreased by more than 50 percent over the same time period, improving
water quality and raising fish stocks. EPA and Environment Canada are
working closely with public and private interests on both sides of the
border to eliminate health and environmental risks from persistent
organic pollutants in the Great Lakes.
U.S. and Canadian efforts to achieve the goals of the U.S.-Canada
Air Quality Agreement resulted in reductions of sulfate wet deposition
over eastern North America by over 20 percent of 1979 levels. U.S. and
Canadian federal, British Columbia provincial and Washington state
agencies are cooperating to achieve shared goals for the Puget Sound-
Straits of Georgia Basin eco-region. Their top four priorities are
minimizing habitat loss, protecting marine plants and animals,
minimizing introduction of non-native species, and creating marine
protected areas. Joint contingency planning with Mexico and Canada is
helping prevent and ensure appropriate response capabilities for
chemical accidents or other hazardous spills along inland borders.
Finally, the U.S. and its NAFTA partners have determined that some
transboundary issues related to Mexico and Canada are better addressed
on a regional scale through the Commission for Environmental
Cooperation (CEC), which was established under the North American Free
Trade Agreement side agreement. For instance, the three parties have
developed regional actions plans for DDT, mercury, PCB's and chlordane,
and are negotiating procedures to notify and mitigate transboundary
environmental impacts. They are also considering a conservation
strategy for North American migratory songbirds. The CEC has
facilitated cooperation among the North American nations on other
issues such as environmental enforcement; development of a North
American pollutant release inventory; regional greenhouse gas emissions
trading; and regional implementation of global environmental
agreements.
Reducing Global and Regional Environmental Risk
Global threats have local effects since they can affect the health
and well-being of every U.S. citizen. Depletion of the stratospheric
ozone layer increases the amount of the sun's ultraviolet radiation
reaching the earth's surface, thereby increasing risk of skin cancer,
cataracts and suppression of human immune systems. Pollution of the
oceans originating in other countries threatens health and environment
along U.S. coasts. Similarly, the United States is vulnerable to the
impacts of climate change caused by global greenhouse gas emissions.
Even with stabilization of emissions by the year 2100, global
temperatures would continue to rise for several decades and sea level
for centuries. Loss of biological diversity is damaging the health of
ecosystems and depleting the world's commercially valuable and
potentially life-saving genetic materials. The global ramifications of
the nuclear accident at Chernobyl underscored U.S. vulnerability to the
results of environmental mismanagement in other countries.
Environmental problems like ozone depletion and water pollution also
have adverse economic effects for industries like agriculture and
fishing.
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BORDER XXI: PROTECTING U.S. HEALTH AND ENVIRONMENT ALONG THE U.S.-
MEXICO BORDER
EPA will play a leading role in implementing ``Border 21'', the
next five-year phase of the binational program to address
environmental, public health and natural resource issues along the
U.S.-Mexico border. EPA's goal is to make border communities safe and
cleaner for the more than 10 million people who live there. Underlying
principles for the plan include enhanced public participation, greater
involvement of tribal nations and state agencies, and enhanced
coordination and integration of effort among federal agencies and
between federal and state agencies.
Objectives of the plan include: (1) reducing and responding to
health problems from exposure to chemical, physical and biological
agents; (2) building or upgrading wastewater and drinking water
systems; (3) reducing air pollution in innovative ways, including
expansion of monitoring and control programs; (4) expanded tracking of
trans-border shipments of hazardous and toxic substances; (5) expanded
use of pollution prevention and recycling practices; (6) improved
emergency response procedures; (7) intensified enforcement of
environmental and health protection laws in both countries; and (8)
increased public access to information, including environmental data.
To achieve maximum environmental results under this program, EPA is
using implementation of Border XXI as a pilot under the Government
Performance and Results Act.
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Drawing on its policy and technical expertise, and in accordance
with its statutory authority, EPA plays a leading role in negotiating
and implementing international agreements and programs on global and
regional environmental problems directly affecting the United States.
The Agency was a leading policy and technical voice in the
international negotiations on the Montreal Protocol on Substances that
Deplete the Ozone Layer. EPA was a key participant on the U.S.
delegation to many technical working group meetings, and had lead
responsibility for domestic implementation of the Protocol through the
promulgation of regulations under the Clean Air Act. The Agency is also
instrumental in carrying out U.S. responsibilities related to the
provision of technical assistance to developing-country Parties to the
Protocol. EPA is now leading the inter-agency effort to reduce illegal
exports and imports of chlorofluorocarbons (CFC's) through enforcement
cooperation with other countries.
EPA also provides policy and technical leadership in international
efforts to implement the Framework Convention on Climate Change,
particularly through the President's Climate Change Action Program, and
international agreements to prevent and reduce pollution of the marine
environment from dumping, vessels and land-based sources. The recent
agreement under the London Convention to ban the sea disposal of
radioactive and industrial wastes, for example, helps protect U.S.
coastal areas, fisheries and human health. Through U.S.G. activities
like the U.S. Country Studies Program and the United States Initiative
on Joint Implementation (USIJI), EPA assists developing countries in
identifying innovative, cost-effective ways to reduce greenhouse gas
emissions. Increasing private sector investment in developing countries
while enhancing environmental and human health benefits are goals of
the USIJI, the Country Studies Program and related programs. The
Country Studies Program is expanding its analytic activities with the
fifty-five participating countries to support the negotiations,
including assisting up to ten additional countries in assessing the
extent of emissions reductions achievable through implementation of
``win-win'' or ``no regrets'' measures. These activities stimulate the
development and diffusion of clean, energy-efficient technologies in
developing countries and reduce the need to achieve the same greenhouse
gas reductions in the United States.
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EXCERPT FROM THE NATIONAL ACADEMY OF PUBLIC ADMINISTRATION--APRIL 1995
EPA's role as protector of the national interest in environmental
matters would require it to work with other nations on problems
affecting the United States and the world.
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EPA has been a global leader in international efforts to control
the long-range transport of persistent organic polychlorinated
biphenyls (PCB's). The Agency recently helped secure international
consensus on the need for a legally binding convention on these
pollutants. Such a convention will enlist the cooperation of nations in
limiting the production of chemicals long banned or restricted for use
in the United States and whose continued use abroad poses a threat to
health and environment in this country. EPA has also played a major
role in international agreement on prior informed consent (PIC) for the
transboundary movement of certain toxic chemicals and pesticides, and
for a Biosafety Protocol to the Biodiversity Convention seeking to
construct an international regime for trade in living modified
organisms.
Similarly, EPA has a key role on implementing the Global Programme
of Action on Land-Based Sources of Marine Pollution adopted at the
Washington Conference in 1995, and in negotiations on a Land-Based
Marine Pollution Protocol under the Cartagena Convention for the Wider
Caribbean Region. The development and implementation of effective
controls on land-based sources of marine pollution such as outfalls and
runoff will go far toward advancing important U.S. environmental and
economic interests. Clean beaches and healthy coral reefs, for example,
are very important to the tourist, fishing and recreation industries.
EPA's international programs on safe pesticide use are helping to
improve the quality of the U.S. food supply. Many off-season fruits and
vegetables are imported from developing countries whose environmental
inspection and regulatory systems are considerably less stringent than
those in the U.S. By working with foreign environmental protection
agencies and agricultural producers, EPA is able to promote safer
pesticide use and food production practices in countries producing a
significant amount of export crops for the U.S. market. Since 1991, for
example, EPA has provided technical assistance on pesticide management
to many countries in Central America. Much of the produce grown in
Central America is intended for the U.S. market.
Elevating the Quality and Reducing the Cost of Environmental Protection
in the United States
The United States is a world leader in environmental protection,
with significant expertise residing in both the public and private
sectors. Cooperative research and regulatory development enables the
United States to share the costs of environmental protection efforts
and to benefit from scientific and technological breakthroughs in other
countries, thereby elevating the quality and reducing the cost of
environmental protection in the United States.
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learning lessons from abroad: the polish biosolids project
EPA's international technology and assistance projects not only
help solve pressing environmental problems abroad; they can also
identify innovative approaches for use in the United States. Over the
last three years, for example, EPA has used AID-funding to work with
the Government of Poland in demonstrating the use of biosolids (sewage
sludge) in revegetating and detoxifying land contaminated by coal
mining and smelter wastes. The successful results of this small-scale
demonstration could help introduce the use of this low-cost and
effective technique in the U.S.
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Cooperative research with several countries, including Canada,
Germany, Sweden, Japan, China, and India, has yielded valuable
information to the United States at a fraction of the cost of
collecting and analyzing the data here. In a cooperative study with
China, for example, EPA was able to assess the loss of lung function in
children due to their exposure to coarse and fine air-borne particulate
matter. Joint testing with Germany on the development of thermal
destruction techniques for hazardous waste saved the U.S. taxpayer
millions of dollars and accelerated the U.S. domestic program in this
area three to four years. Shared testing through the Organization for
Economic Cooperation and Development (OECD) of over 700 high production
volume chemicals greatly reduces the cost and administrative burden of
chemical testing in the United States. OECD's long-standing Test
Guidelines harmonization program for toxic chemicals data has been
expanded to explicitly consider pesticides data, thereby leading to
even greater resource savings for national regulatory agencies and
industry as well as more consistent scientific and regulatory
conclusions. Cooperation with the European Union is helping to enhance
the effectiveness of ecolabeling as a market-based, environmental
policy tool.
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RUSSIA: PROTECTING OUR SHARED ENVIRONMENT
Environmental cooperation with Russia plays a critical role in
reducing global and transboundary risks affecting health and the
environment in the United States. Russia is the largest source of
industrial and radioactive pollution in the Arctic. It possesses the
world's largest forested area and a considerable share of the world's
biological diversity. It is also the world's third largest emitter of
greenhouse gases and the largest remaining producer of ozone-depleting
substances. EPA's cooperative programs with Russia have helped:
--Leverage the funding needed to achieve significant emission
reductions of CO2 and other greenhouse gases over
the next few years;
--Cease Russia's dumping of low-level radioactive waste in the
Arctic, thereby enabling Russia to comply with the London
Dumping Convention (see related box on Murmansk);
--Reform major components of Russia's environmental management
system, particularly for air pollution;
--Introduce low-cost, innovative technologies to reduce and prevent
pollution; and
--Achieve measurable improvements in environmental quality in the
Moscow area and in several other Russian cities, including
Volgograd and Nizhnii Tagil.
EPA's cooperative programs have helped strengthen U.S. ties with
strategically vital nation.
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EPA is also working with many developed countries in sharing
environmental management expertise on new, non-regulatory mechanisms
for protecting the environment. Other countries are extremely
interested in our experience with voluntary, non-regulatory programs
like the Common Sense Initiative, an industry sector approach to
environmental protection. In addition, as EPA moves away from the
medium-by-medium approach of the past toward a more integrated view of
the environment, it can learn much from the experience of other
countries that have already applied such techniques. Swedish and Dutch
authorities, for example, have been implementing multi-media systems of
environmental protection for many years. Similarly, experience in
Germany and other countries in rehabilitating derelict industrial sites
offers valuable lessons for the ``Brownfields'' program in the U.S.
EPA ``know-how'' and experience is in great demand throughout the
world. One very cost-effective way to assist other countries in
designing and implementing environmental protection strategies is
through EPA's international visitors program. In 1996, for example, EPA
hosted over 1,200 visitors from 109 countries. These typically brief
stops at EPA enable environmental professionals from other countries to
meet and exchange ideas with their counterparts in the United States.
Such visits often serve as a springboard for building or strengthening
environmental institutions abroad and set the foundation for mutually
beneficial future exchanges.
Serving Broader National Objectives
As emphasized by the General Accounting Office in its recent review
of international environmental programs across the U.S. government,
``EPA's international programs also serve important U.S. economic,
foreign policy, and security interests.'' \5\ Working closely with
other U.S. agencies, for example, EPA has actively supported regional
cooperation under the auspices of the Middle East Peace Process
Multilateral Working Group, including bringing together regional
parties to cooperate on reducing risks from pesticides, small community
wastewater, and preventing and responding to chemical accidents or oil
spills.
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\5\ GAO Report, Page 22.
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EXCERPT FROM THE ENVIRONMENTAL TECHNOLOGIES TRADE ADVISORY COMMITTEE--
JUNE 1996
Widely recognized as the leading source of environmental regulatory
and management expertise worldwide, EPA is frequently approached by
foreign governments and organizations for assistance in establishing
the environmental regulatory and management capabilities that can drive
the demand for U.S. technologies.
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The Agency's emphasis on community-based environmental management
plays an important role in encouraging the development of more
responsible, participatory decision-making in countries around the
world. Reduced environmental problems can relieve pressures for illegal
immigration, promote economic and political stability, and serve other
national security interests.
Technical cooperation has also played an important role in foreign
policy initiatives in Latin America and with Mexico, China, India,
Russia, and South Africa. Finally, EPA's technical assistance and
training programs create demand--and markets--for environmental
technologies and expertise, thereby enhancing commercial opportunities
for U.S. business and industry and creating high-wage jobs for American
citizens.
Senior private sector individuals and groups have recently
reaffirmed the key role EPA's international technology and capacity-
building programs play in creating commercial opportunities for U.S.
suppliers of environmental technologies and expertise. In so doing,
they have differentiated the export assistance (supply-side) role of
the Department of Commerce, Export-Import Bank and other export
promotion agencies from EPA's role in creating demand for U.S.
technologies and expertise through the development of environmental
standards, institutions and human resource capabilities. EPA's short-
term technical assistance to the Royal Thai Government, for example,
not only helped solve a pressing health and environmental problem in
the Mae Moh Valley, it also led to the sale of almost $200 million for
U.S.-made air pollution monitoring and control equipment.
International harmonization of good laboratory practices, test
guidelines and mutual acceptance of data for industrial chemicals and
pesticides means more efficient data development by industry and
greater assurance of the quality of data EPA uses in responding to
statutory requests for risk and risk benefit assessments. The mutual
acceptance of data for risk assessment purposes must now be expanded
beyond countries of the Organization for Economic Cooperation and
Development to include emerging markets in Asia and Central and Eastern
Europe. EPA's efforts to promote the upward harmonization of
environmental standards also protect U.S. business and industry from
unfair trade advantages through lax or non-existent environmental
controls in other countries.
conclusion: strengthening epa's international programs
EPA has long been a central player in the formulation and
implementation of U.S. international environmental policy. The direct
benefit to U.S. citizens and natural resources resulting from this
involvement underscores the importance of ensuring an active and
continuing international presence. EPA is working to strengthen its
ability to lead and support U.S. efforts to prevent and control
environmental pollution at the regional and global level. In addition
to the priority setting, evaluation and monitoring measures described
earlier, EPA is undertaking the following steps to strengthen its
international programs.
EMPHASIZING RISK REDUCTION
Consistent with recommendations of the EPA Science Advisory Board
(SAB) \6\ and the recommendations of the National Academy for Public
Administration (NAPA),\7\ EPA is putting much greater emphasis on the
potential for risk reduction in setting priorities. The SAB called
particular attention to top-ranked risks to the natural ecology and
human welfare, all of which have significant international
implications. By making better use of good science and balancing
numerous environmental, social, economic, political and scientific
considerations, the Agency is working to ensure that its limited
resources are devoted to the areas of greatest risk.
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\6\ ``Reducing Risk: Setting Priorities and Strategies for
Environmental Protection,'' Science Advisory Board, U.S. Environmental
Protection Agency, SAB-EC-90-021, September 1990.
\7\ ``Setting Priorities, Getting Results: A New Direction for
EPA,'' A National Academy of Public Administration Report to Congress,
April 1995, Page 12.
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Responding to the NAPA recommendations, the Agency is also making
better use of science, strategic planning, budgeting, and
accountability in the planning and implementation of its international
programs. The following steps will ensure more rigorous evaluation of
the risks associated with different international environmental
problems as well as better use of this information in making Agency
decisions:
--Evaluation of all existing international commitments in light of
the relevant risks to U.S. health and ecosystems;
--Establishment of a more formal mechanism for evaluating future
international involvements against the criteria outlined in
section III.A of this report; and
--Comparative examination of the Agency's international activities,
with accompanying investments and disinvestments.\8\
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\8\ Coordinated by EPA's Office of International Activities, this
effort will review all program and regional office involvements
internationally.
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Strengthening Internal Coordination
EPA is committed to improve internal coordination within the Agency
in planning and implementing its international activities. The Agency
currently uses a variety of mechanisms to tap the best expertise
available within the Agency and to ensure effective integration between
domestic and international programs. Overall coordination of programs
through the Office of International Activities ensures policy
coherence, integration and efficiency, particularly on cross-cutting
environmental issues and programs.
Consistent with the overall restructuring of the Agency's planning,
budgeting and accountability procedures, EPA will institutionalize an
annual planning process for its international activities. Under this
process, OIA will coordinate an agency-wide effort to develop an annual
activity plan describing the various project areas for the coming
fiscal year. These activities will include short-term and long-term
projects and major upcoming events.This process will ensure that
international activities are reflected adequately in the Agency's
overall strategic plan, and incorporated into the specific workplans of
the various program and regional offices. This process will help EPA
prioritize its international activities and provide a forum for
assessing the results of the previous year's activities. It will also
lead to the necessary disinvestments.
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excerpt from the general accounting office--september 1996
EPA's Office of International Activities serves as the focal point
and catalyst for the agency's international agenda, providing
leadership and coordination on behalf of EPA's Administrator.
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In addition to the international contact points for many program
and regional offices, OIA has recently: (1) created a strategic
planning team of senior managers and staff, (2) undertaken a program to
identify specific milestones for EPA's international work, and (3)
reassigned one of its senior staff to work full-time on strategic
planning. The person is working with program and regional offices in
developing appropriate goals, objectives and milestones for
international activities under the Agency's new planning, budgeting,
accountability and analysis system. OIA will also lead an EPA-wide
strategic planning process to apply the criteria described earlier to
prioritize among existing and new activities and to begin the process
of linking budget decisions to priorities.
Finally, with respect to internal coordination, EPA is taking steps
to ensure greater accountability and streamline the international
travel process for Agency officials traveling abroad and to improve the
efficiency of its international technical cooperation programs. The
Agency has begun developing, for example, a set of generic ``technology
diffusion'' modules to disseminate information and training on selected
U.S. environmental management techniques. Coordinated closely with
complementary programs in the non-profit and private sector, and
building on the success of existing domestic programs, the modules will
cover priority environmental management techniques (e.g., risk
assessment, pollution prevention), sectors (electronics, pulp/paper)
and problems (chemical safety, urban air pollution).
Improving External Coordination
EPA cannot achieve its environmental mission on its own. One of the
most effective ways of strengthening EPA's international program is
through building and maintaining effective partnerships with its many
stakeholder organizations. It must also leverage its limited resources
through closer cooperation with other federal agencies, state and local
governments, foreign governments, and international organizations. Such
collaborative efforts will bring benefits to the American people
through wise allocation of funds that avoid duplication of effort and
tap into the wealth of expertise that other organizations offer.
EPA is working to leverage resources for environmental purposes
(e.g., lead abatement, methane recovery) and improve the lending
practices of the World Bank and other multilateral funding and
development institutions. Accounting for approximately $35 billion of
development assistance in developing and transition countries, lending
institutions play an influential role in shaping international
financial practices.
EPA is looking for additional ways to better enlist the expertise,
creativity and resources of the U.S. private sector in achieving U.S.
environmental objectives abroad. The private sector can benefit, for
example, from EPA's extensive network of contacts and detailed
understanding of environmental needs and market opportunities
worldwide. To protect EPA's credibility and international reputation
for objectivity and to ensure that EPA's activities in this area are
carried out in a way consistent with the Agency's domestic
environmental mandate, EPA has developed the following set of
operational guidelines for ensuring that this work is carried out
consistent with the Agency's statutory authority and environmental
mission:
--What is the environmental rationale for the activity?
--Is the program or project an appropriate activity for public sector
involvement?
--Is the activity appropriate for EPA as opposed to another federal
agency?
--Does EPA's involvement imply endorsement or favoritism for
participating private sector parties?
--Can EPA's participation in the activity be conducted
professionally, impartially and objectively?
--Does EPA's role in the activity jeopardize the Agency's ability to
fulfill its domestic regulatory or enforcement
responsibilities?
--How were private sector parties selected for participation in the
project?
Finally, EPA is making better use of regional offices and their
international program managers to enlist greater cooperation of States
and other public and private sector groups in the international arena.
State and city-based managers and organizations often have more to
offer to foreign groups seeking to benefit from U.S. expertise and
experience. The Agency is also working to strengthen its ties with
environmental, conservation and consumer organizations and other non-
governmental organizations (NGO's). EPA's Office of Communication,
Education and Public Affairs maintains ongoing dialogue with a wide
variety of these organizations, including those working on
international issues.
Taken together, the steps discussed in this report should
strengthen EPA's commitment to international cooperation, and ensure
that the Agency's international goals are pursued in the most efficient
and cost-effective way possible. Most importantly, active EPA
international engagement will result in greater protection against
pollution for U.S. citizens and natural resources. These measures
should also serve broader U.S. foreign policy, economic and security
interests well. Working closely with the Congress, federal agencies,
the private sector, and other partners, EPA leadership can continue to
make a difference in the United States and around the world.
NAAQS: CLEAN AIR ACT
Senator Shelby. Thank you, Mr. Chairman.
Administrator Browner, you used the phrase, I believe, a
few minutes ago, and correct me if I misquote you, that we need
to have an honest dialog--I believe that was your phrase--
dealing with all of this.
Ms. Browner. Yes, on Superfund.
Senator Shelby. And I hope that we will.
As I said earlier, the EPA, along with numerous Federal
agencies, States, corporate America, and the citizens of this
Nation, should be congratulated on a lot of the accomplishments
that have occurred over the years. Numerous constituents, the
same people that have supported prior clean air regulations,
have come to me and others with their concern. A lot of people
are troubled by rushing pellmell into new particulate
standards. Has the 1990 Clean Air law been implemented in all
of its respects?
Ms. Browner. The 1990 Clean Air Act is built on a law that
has been in existence since the mid-1970's.
Senator Shelby. I know that.
Ms. Browner. We are continuing with the implementation.
Senator Shelby. Implementing it.
Ms. Browner. Yes; we are basically on target. There are
many components to the law. For example, in toxic air
emissions, we have achieved the single largest reduction in the
last 4 years in the history of the United States because of our
implementation work.
Senator Shelby. We have come a long way, have we not?
Ms. Browner. We should all be very proud. But the job is
not done.
Senator Shelby. But we have not completely implemented the
1990 amendments to the Clean Air Act, have we?
Ms. Browner. One of the provisions in the 1990 amendments
is a 5-year review of the public health standards. We are in
the process of taking public comment on our review of two of
the six public health standards. We have not proposed to change
three of the six, and one we did not review.
Senator Shelby. Your new proposals have come under attack
by a lot of sources.
Ms. Browner. I think it is fair to say that some in
industry do not like them.
Senator Shelby. Not just industry. It has been sharply
criticized by a lot of the State Governors, municipal leaders
and business organizations. And, also, I have been recently
made aware that these rules have also been criticized, Ms.
Browner, by other Federal agencies, such as the Council of
Economic Advisors, the Department of Science and Technology
Policy, the Department of Commerce, the Small Business
Administration, and the Department of Agriculture have also
expressed concern about the scientific basis and--let me
finish--and the massive cost for implementing these
regulations. Yet, your Agency is continuing full speed ahead.
Why, Administrator Browner, should not the concerns of
these other Federal agencies and departments be investigated
and heard, proven or disproved, prior to the implementation of
these regulations? And are you going to ask that these agencies
be made part of the process?
Ms. Browner. They are part of the process. And they have
been, dating back to, in some instances, several years and, in
all instances, last fall.
I would like to go back to the question of Governors. You
suggest that all Governors oppose strengthening.
Senator Shelby. I did not say all; I said a lot of
Governors.
Ms. Browner. A lot of Governors also support strengthening
the public health standards in the way that we have
recommended, including Governor King, Governor Weld, Governor
Whitman, and Governor Romer. There are a number of Governors
who believe that it is important to strengthen the public
health protections. We take all of the Governors' comments into
account, whether they be supportive or not.
Senator Shelby. You named four or five; you are going to
consider those other 45 you did not name, I hope?
Ms. Browner. We did not hear from all 50 Governors.
Senator Shelby. But I bet you heard from more than four or
five.
Ms. Browner. I was just pointing out that there were some
who had been supportive of our proposal and there were some who
had not been.
Senator Shelby. Sure. You were naming the ones who
supported you.
Ms. Browner. My response is in keeping with what you had
said.
It is absolutely appropriate when any agency, be it EPA or
another agency, makes a proposal. That is exactly what happened
here. We would have an opinion if the Department of Agriculture
wanted to do something. We would have questions that we would
want to see answered.
Senator Shelby. Absolutely.
Ms. Browner. The Office of Management and Budget runs what
is called an interagency process that brings all of the various
Federal agencies and departments to the table for a vigorous
debate and discussion. That is what happened in this instance.
It was vigorous, without a doubt.
At the end of the day, a decision was made by the Office of
Management and Budget to clear our proposal for public comment.
While we have been in a public phase and while we are reviewing
all of the comments we have received, we have stayed in a
discussion across the Federal Government, seeking to understand
the concerns, the questions and the points of view that others
may have, and speak to them. This is an ongoing process and
will continue until a final decision is reached.
OZONE NAAQS: CEA LETTER
Senator Shelby. I want to ask you this, and tell me if this
is correct. I have been told that EPA has stated that the total
national cost of implementing the ozone rule would be $2.5
billion; is that correct? Is it about like that?
Ms. Browner. We projected a range of costs. The range is
from $500 million to $2.5 billion.
With all due respect, Senator, I do need to remind you that
the law is very clear. The Clean Air Act, which you all rewrote
in 1990, is very clear in telling us this is not a cost/benefit
decision. It is a public health decision. Cost/benefit, which
we did, because we thought it was an important thing, is
somewhat speculative. Until you sit down and sort out
community-by-community, State-by-State, and industry-by-
industry, and determine where you can get the most cost-
effective pollution reductions, you cannot do more than give a
range.
Senator Shelby. Sure. Now, let me remind you of this. I
have also been told that the Council of Economics Advisors has
stated that the cost of full attainment of just the ozone rule
could be $60 billion--or $57.5 billion more than what was
estimated by EPA. Now, somebody is way off on their numbers.
Ms. Browner. Yes.
Senator Shelby. Now is it EPA or is it the Council of
Economic Advisors?
Ms. Browner. I presume you are referring to a draft memo.
We have docketed that memo. It is in the public record, because
we think it is an important memo. We did not receive it from
the Council of Economic Advisors.
Senator Shelby. Did you disregard the memo and its
contents?
Ms. Browner. I am trying to explain to you what we did. We
subsequently wrote a letter to the chairman of the CEA, asking
for all of the backup documentation and any analysis they may
have done. We want to make it part of the public record so we
could fully consider it.
Senator Shelby. OK.
Ms. Browner. To the best of my knowledge, we have not
received that backup documentation. I personally placed a phone
call to the chairman of the council, asking for the backup
documentation, because we want to consider it. All we have is
what you have, which is a three- or four-page memo stamped
draft. It was produced after our proposal was made public in
November. When it was brought to our attention by a reporter,
not by the CEA, we docketed it and asked the CEA for all of the
backup documentation. CEA did not give us the memo.
Senator Bond. Thank you very much, Senator Shelby.
Senator Shelby. Thank you, Mr. Chairman.
Ms. Browner. But the concerns are concerns that should be
taken into account. That is why we have asked for backup
documentation.
Senator Bond. Thank you, Administrator.
Senator Shelby. Thank you, Mr. Chairman.
Senator Bond. Senator Boxer..
CLEAN AIR ACT REVIEWS
Senator Boxer. Thank you, Mr. Chairman.
Administrator Browner, to pick up on the Clean Air
minidebate between you and Senator Shelby. As I understand it,
we have gained great benefit from the Clean Air Act over the
last 25 years. It was a bipartisan act with great bipartisan
support. And as I understand the law, you did not just get
involved and say, OK, it is time for more stringent standards.
Did not the courts say that you had to look at the standards
and see whether, in fact, they were the proper standards for
the health and safety of our people?
Ms. Browner. The law requires EPA to review the six most
commonly found air pollutants on a 5-year basis. EPA reviews
the best available science and determines whether or not the
current public health standards adequately protects the
American people.
For a variety of reasons, not the least of which was you
did have a time when the White House was very hostile to EPA,
EPA had not done this for the better part of 10 years. When I
came to EPA, we were sued by the American Lung Association
because we had not been doing these things on schedule. We
agreed that we should be. It is what the law said. It is what
the Congress had promised the American people. We settled the
lawsuit by laying out a schedule on which we would fulfill our
obligation to review these standards.
We were also threatened with a lawsuit on the other
standard, ozone. In that case, the lawsuit was eventually
withdrawn because we made a public promise, through a Federal
Register notice, to similarly undertake the review that the
statute has required of us. That is why you now have two that
we have proposed and have taken public comment on whether or
not we should change.
We also did three more reviews. There are six of these. We
have done five reviews. Three of them we are not proposing to
change. Two of them we are proposing to change. And one we did
not review. It is lead. And the reason we did not review it is
because, in many ways, our work is done on that side of things.
Senator Boxer. So I think it is important, Mr. Chairman,
that we understand that it was Congress, in a bipartisan
fashion, that crafted the Clean Air Act, and that a court has
now ordered EPA to take a look at these standards. And I feel
that the legitimate question is, are you going to base your
final decision on science? That is quite legitimate. And I
support that. But we are supposed to consider the health of the
people when we set these standards, by our own laws, unless we
decide to change it, which I would hope we would not do.
And as I understand it, we are talking about saving lives
here. And the latest estimate is 15,000 lives, as I understand
it.
Ms. Browner. That is for the fine particles. In the case of
ozone, we are talking about literally hundreds of thousands of
respiratory illnesses, asthma attacks avoided and aggravated
asthma cases avoided. Large numbers of people, particularly
children or senior citizens, should we finalize the standards
as we propose them, will receive tremendous public health
benefits and protections.
SAFE DRINKING WATER ACT
Senator Boxer. Speaking of children, the Safe Drinking
Water Act--I sit on the authorizing committee, as you know--and
the Safe Drinking Water Act, I was very proud of. And there
were two amendments that got included that I was involved in.
One dealt with consumer confidence reports.
Ms. Browner. Yes.
Senator Boxer. So every year people find out what is in
their water. And then the other is that when we set drinking
water standards, we set them at levels that protect children
and other vulnerable populations. You have asked for an $8
million increase in research funding, and I am hopeful that
some of that will go toward children.
Ms. Browner. Yes.
Senator Boxer. Is that an accurate assumption?
Ms. Browner. Yes; we have made our public health standards-
setting program focus on the children, whether it be drinking
water, air, or whatever. Therefore, we are increasing budget
and research dollars, so that we can better understand the
environmental effects on the health of our children.
Senator Boxer. And, in addition, the implementation of the
consumer confidence reports, you will be able to----
Ms. Browner. We are on track.
Senator Boxer [continuing]. Make sure that that happens?
Ms. Browner. Yes.
Senator Boxer. I have written a bill, and Jim Moran is
going to carry it on the House side, called the Children's
Environmental Protection Act. And it really builds on this
progress we made in the Safe Drinking Water Act, where we are
now seeing that when we set any type of standard, it really
ought to be not for the--with all due respect--the 165-pound
guy, who is the strongest among us, but to look at the most
vulnerable.
Because, you know, even if you look at air bags today, one
of the problems is they set that standard on the air bag for a
175-pound male who was not strapped in. Well, you take a
littler person, some of whom are sitting at this dais, and it
is a little bit of a force here for us, which could wind up
leaving us without a very important part of our body, such as
our head. [Laughter.]
So I think it is important that when we set these standards
we not go for the strongest, but, in fact, look at the most
vulnerable. Therefore, everyone is protected, not just a select
group.
Ms. Browner. I agree.
Senator Boxer. You know, a survival-of-the-fittest kind of
approach.
I would love to have your reaction--I know you have not
seen the final draft of our bill, but, in theory, would you
support taking that same idea that we applied in safe drinking
water and applying it more broadly?
Ms. Browner. I have issued guidance to all of the offices
at EPA to take into account children in every decision we make.
And we would certainly welcome the opportunity to review your
legislation.
Dr. Phil Langrigan, who was one of the authors of the
National Academy of Sciences report on children and pesticides,
has recently joined us to assist us in this effort of putting
children first and foremost when we make public health and
environmental decisions for the country. We would appreciate
the opportunity to look at your legislation.
Senator Boxer. Mr. Chairman, I will hold for a final round.
Senator Bond. Thank you very much, Senator Boxer..
Senator Leahy.
MERCURY STUDY
Senator Leahy. Thank you, Mr. Chairman.
Madam Administrator, good to see you here, as it is when we
see you in Vermont.
You seem to be spending a lot of time on the question of
air quality, and I think that is wise. Everyone has to take
some responsibility for controlling pollution in their own
communities. I look at my own State of Vermont, which has some
of the strongest environmental laws in the country, but even
though we have strong standards within our own borders, we have
become a dumping ground for a lot of other States. We have
imposed very high environmental standards on ourselves. We pay
the price of maintaining those. But then we are faced with an
uphill battle when the pollution we are striving to control
just silently creeps through the air, comes across borders, and
then is dropped in Vermont--pollution that is caused by other
States but it comes and hits us.
Now, we are concerned about that. Acid rain taught us that
our tough laws on the environment were not enough to protect
us.
Now, I think it is safe to say that Vermonters are proud
that you serve as our Administrator. You have made a lot of
efforts to address pollution transport. I commend you for
proposing new regulations on ozone and particulates. Acid rain
demonstrated that sulfur dioxide can go hundreds of miles. So,
too, can Ozone and particulates, which can cause up to 15,000
premature deaths a year. These are intricately related to
whatever kind of deregulation we do in the electric utility
industry. Our own legislature is debating that issue right now.
But I think the deregulation of the utility industry adds a
level of urgency to your proposed ozone and particulate
standards. Some, and some even on this committee, have
challenged the science behind the standards. I have reviewed
the citations of the studies that back up the EPA rules. They
are remarkable. The bibliography alone of science that supports
these regulations, I think, is over 100 feet long. The science
behind the standards is comprehensive. It is objective.
Now, because there is sound science behind these proposed
rules, I am puzzled by the EPA's attempt to postpone the
release of another study on mercury. The Science Advisory Board
recently recommended the release of this report. I hope that
you will do just that. The effects of transport of mercury will
be important information to know as we go forward with utility
restructuring.
This report is 1,700 pages long. And it contains state-of-
the-art information. In February, the Science Advisory Board
joined a long list of scientists in saying the report should be
released. I wonder why it is that when the Agency's mercury
report is supported by equally compelling and sound science as
the ozone and particulate standards, the Agency has not
released it. Can you tell me when it may be released to the
public?
Ms. Browner. Yes; we are currently involved in the peer-
review process. The Science Advisory Board met in March to
review the analysis that has been done and the underlying
science that has been provided. We expect to hear back from
them in writing. We do not have the Science Advisory Board's
final report, but we expect to have it by the end of the
summer.
Depending on what they tell us in that report, we will make
the appropriate adjustments and would expect to see release,
hopefully, by the end of the year. It really depends on how
much we get back.
Senator Leahy. By the end of 1997?
Ms. Browner. It depends on how much we get back from the
Science Advisory Board. Since they have not put it in writing
yet, we do not know. They were complimentary of the work that
we had done. However, they do need to give us a written report,
and we are awaiting that.
Senator Leahy. If the SAB recommends a release, will you
release it?
Ms. Browner. Certainly.
LAKE CHAMPLAIN MANAGEMENT PLAN
Senator Leahy. Now, when you were here last year, you and I
discussed EPA's commitment to the Lake Champlain management
plan. And you have cited the Lake Champlain program as a model
for how we can bring together all the parties, develop plans,
and find solutions to watershed issues. And I agree with you on
that. Two of your regional offices have approved the management
plan. Your Assistant Administrator for Water has reaffirmed the
Agency's commitment to implement the pollution prevention and
restoration plans. I do not see this in your fiscal year 1998
request.
Can you tell me what actions your Agency will take to
support the implementation of the management plan and what kind
of resources we can expect from the EPA over the next 5 years?
Ms. Browner. We will continue to work, as I think we have
to facilitate the relationships among the 31 member management
team that has been developed. There are many other Federal
agencies, as you are well aware, who participate in this and
provide funding. We believe that that funding and perhaps some
additional dollars we may be able to make available will allow
us to continue our work.
Senator Leahy. Well, as you can imagine, you and I probably
have a lot more discussions on this. The Lake Champlain
management plan is a particular favorite of mine.
Ms. Browner. Yes.
Senator Leahy. Any time you would like to come up, Mr.
Chairman, we would love to show it to you.
Senator Bond. I enjoyed my last visit up there, when we
went up there with the agriculture committee. You were a
gracious host.
Senator Leahy. Please come again. Thank you.
Senator Bond. It is a beautiful, beautiful lake.
Thank you very much, Senator Leahy.
Would you check--Senator Craig wanted to ask some
questions--is he ready?
Senator Leahy. Mr. Chairman, I might note that you have
been very helpful to those in both New York and Vermont and all
others who use Lake Champlain in the past. And I appreciate
that.
Senator Bond. Last year's bill looked as if somebody had
put a Vermont glitch in the computer that printed it.
[Laughter.]
We noted that.
Senator Leahy. Do not get that glitch out of the computer.
Senator Bond. And we are trying to get the computer fixed
this year. [Laughter.]
PM AND OZONE STANDARDS
I will go ahead. Senator Craig is not available. I will go
ahead on several questions.
Thank you, Senator Leahy.
I would note, following up on Senator Shelby's comments,
that we have received letters with regard to the PM and ozone
standards from over 30 mayors and elected officials. Both
houses of the Missouri General Assembly have passed resolutions
raising questions and concerns about the standards. When they
agree on a final resolution, we will share that one with you.
Ms. Browner. Thank you.
Senator Bond. I also will ask, for the record, but I wanted
to tell you in person, that we are concerned about the cost
figures you used on the operable units. The Congressional
Budget Office told my staff the average cleanup cost in 1994-95
was $5.6 million, and with a 20-percent growth factor, to $6.6
million for each operable unit. Yet EPA is assuming a $10
million cost per operable unit.
We also would need to see a list of the specific projects
to be funded under Superfund, including a risk-based ranking
and estimated cost for each, along with a project start date
and whether you are going to continue to use the risk-based
ranking.
Ms. Browner. Yes.
Senator Bond. We also have questions about staff to manage
and the contracting capacity to carry out these additional
things. I will submit those for the record and ask you to
respond to those.
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Ms. Browner. We have given some of those lists to your
staff already. We have given to you a list of 600 candidates.
We can work with you on that list.
Senator Bond. Yes; we have a broad universe of science. We
want the specifics.
Ms. Browner. Right. We can do that.
Senator Bond. And we will work with you to get that and
share that with the committee.
Ms. Browner. Good.
EPA/STATE RELATIONSHIPS
Senator Bond. Let me turn to your relationship with the
States. As you will recall, we have discussed here before the
National Academy of Public Administration, 2 years ago,
recommended that EPA turn more responsibility over to the
States. We are hearing from the States that despite your claims
to wanting to develop a partnership, the efforts to foster the
partnership are disintegrating. A recent Inside EPA article
states,
State officials are becoming increasingly concerned that
Hansen and Browner are not living up to their rhetoric
regarding a new partnership between the Agency and the States.
They see a trend of EPA walking away from the partnership
process.
Why is there an appearance that the relationship with the
States is collapsing? Is EPA committed to working with the
States and devolving the responsibility?
Ms. Browner. Absolutely, we are committed to working with
the States. I think one of the earlier quotes you referenced
talked about how we had begun this in the last 4 years. This is
not small. This is not easy. No two States are the same. No two
State legislatures are the same. No two State Governors feel
the same about these issues.
We look to the States to manage a variety of Federal
responsibilities on a day-to-day basis. In most instances, it
works quite successfully. There will inevitably be times when
there are challenges in individual States. We have found that
if we can sit down and talk through these challenges, we can
reach a resolution. I will give you just one recent example.
The State of Texas is not a State with which we are
expected to be able to find resolution. The State passed a
piece of legislation that raised concerns in our minds and in
our lawyers' minds, about whether or not they could adequately
fulfill their responsibilities under Federal statutes,
responsibilities we had delegated to them.
We had a lot of meetings. Fred Hansen had meetings. Steve
Herman had meetings. Approximately, 2 weeks ago, we agreed that
there is a way to allow them to meet the needs of their State
legislation, but to honor the Federal statutes.
Similarly, in Utah.
Senator Bond. May I interrupt just to ask one last question
on this round. Mr. Hansen abruptly pulled back last month a
draft agreement to establish a process for reviewing and
improving innovative regulatory reform projects conceived by
the States. This brought a lot of surprise and disappointment
to the State officials. They were very much concerned and
upset.
Why did the process break down? What specific problems did
you have with the draft agreement? And where do you see the
possibility for this going forward?
Mr. Hansen. Mr. Chairman, for the record, I am Fred Hansen,
Deputy Administrator.
It was with great reluctance that I took the step to pull
that draft agreement back. But, upon review, what was at issue
is that the States and we both agree on the need to be able to
move ahead with good, innovative approaches. The language that
was included in the draft agreement went well beyond what I
think both of us felt were the types of projects that would be
brought forward under that agreement. As a result, it raised
very legitimate concerns in other people's minds about whether
or not that agreement was too broad.
We and the States have agreed to be able to, in fact,
redraft an agreement. The Administrator and I met with the
ECOS, the Environmental Commissioners of the States, governing
body and agreed to, in fact, be able to relaunch that effort.
Our staffs have been meeting and things are progressing. I
cannot tell you today that it has been agreed to, but there has
been very real progress made in making sure that what was the
intent of the States and what was our intent can be captured in
such an agreement.
Senator Bond. Thank you very much, Mr. Hansen.
Senator Boxer, if you do not mind, I would like to turn now
to Senator Craig, since he missed out on that last round.
Senator Craig, welcome.
WIPP
Senator Craig. Mr. Chairman, thank you very much.
Administrator Browner, let me thank you for coming before
us this morning. I apologize for being in and out and not
hearing all of your testimony or comments. I will direct my
questions specific ally to a couple of activities that EPA is
involved in at the moment that are giving us considerable
consternation.
Specific to my State of Idaho, but also very true across
the country, is the concern for our ability to deal with
transuranic waste. Last year, the Senate passed a Sense of the
Senate, in a very strong bipartisan vote, to expedite your
activities in the overall oversight and certification of the
WIPP facility in Carlsbad, NM. Time is important. We gave you
authority and we gave you time, and you are not meeting those
schedules.
Now, let me comment first, then you will have ample time to
comment. The Sense of the Senate suggested that you be able to
open it by November of this year. Now you have asked for an
extension of at least 1 year, arguing that you need more
information. In fact, you have gone back to DOE, requesting
more information. The Sense of the Senate, in essence,
suggested that you run parallel tracks with your certificate of
completeness. Why?
To get the time sequence down, so that we could cope with
and respond to a national need. In fact, we gave EPA authority
in this area largely to solve some problems. I helped move the
legislation, along with Senator Domenici, that allowed you
greater flexibility to deal with your role in that area. In
fact, it was new authority.
My simple question to you is, why the extension? Why the
request for more time? Why are you suggesting that it will be
now May 6, or somewhere near that, of 1998, instead of the
Sense of the Senate direction that you open it by November of
this year by completing your work using parallel tracks? Can
you respond to that with detail?
Ms. Browner. We will be more than happy to respond with all
of the different model requests and model runs that we are
awaiting from DOE in writing. But, to step back and speak
broadly, we are in dialog with DOE about the information we
need to make the determination. I think we have explained that
from when DOE completes its work, it would take us
approximately 1 year to complete our work.
Senator Craig. That is why the Congress reacted last year
by saying parallel the tracks so that it would not take 1 year.
Ms. Browner. Yes.
TRANSURANIC WASTE
Senator Craig. Because we have a Federal court order
requiring the transuranic waste begin to move in a timely
fashion; therefore, we need to expedite with certainty.
Ms. Browner. Yes; we have been attempting to move as much
as possible in parallel tracks. We are still awaiting some
information from the Department of Energy. We have no reason to
think they are not going to be forthcoming. I want to suggest
there is a problem. We are in dialog with one another.
Secretary Pena and I have spoken recently about this. I think
we are going to meet later this week or next week again about
this. Once we have that, we will do an analysis and go through
a public notice and comment. At which point, we will then
evaluate the comments and come to a conclusion.
We share your desire to get this done expeditiously. We are
doing it quicker than I think anyone imagined we would.
However, there is this issue of more information.
If you would like, we will explain the modeling.
Senator Craig. No; I understand the modeling. In fact, I
know more about this issue than I would like to know. What I am
concerned about is timely action.
Ms. Browner. Yes.
Senator Craig. Because many of us believe what you are
doing is duplicative of what has already been done. But we
understand the political waltz that has to go on here to
satisfy certain requirements. We also understand the
criticality of public appreciation for safety and for
completeness. I was of the latter, thinking that EPA did not
necessarily have to have a role, but we played that game out
with you all. We have given you that authority. We just cannot
live with an extension of time that takes us well into 1998,
with no certainty that we will even get there at that point.
This facility, by most scientists' and engineers'
knowledge, has been ready to open for several years. And it is
a phenomenally costly environment we are dealing with.
Ms. Browner. You have given us a responsibility to review
this. We do take that seriously. We are doing it expeditiously.
But in order to fulfill the responsibility of review, there are
certain steps we will have to follow.
Senator Craig. Yes.
Ms. Browner. We are doing that as quickly as possible.
Senator Craig. Have you, then, changed the time schedule,
or do you feel you can stay on track when you are announcing
now, in 1998?
Ms. Browner. We believe we will be able to make what is
called a completeness determination in the next couple of
months. From that point, it would take us no more than 1 year
to give you the certification.
Senator Craig. Completeness by when, May 1998?
Ms. Browner. No; this is a completeness for what DOE has to
provide to us. A completeness determination will be done by the
end of May.
Senator Craig. Of this year?
Ms. Browner. Yes.
Senator Craig. 1997?
Ms. Browner. Yes.
Senator Craig. And then another year following that, into
1998?
Ms. Browner. At the most, it will take us 1 year.
Senator Craig. At the most. OK.
Ms. Browner. We are required to go through a public notice
and comment period. The comment period will be 120 days.
Senator Craig. And it was with that sensitivity,
Administrator Browner, that this Congress acted 1 year ago,
suggesting that you do parallel tracking to speed up the time.
Ms. Browner. We are doing that.
Senator Craig. You are doing that?
Ms. Browner. As DOE makes information available, we analyze
it. So we are moving parallel.
Senator Craig. Well, we are going to two-track you on this
and stay with you on it. My Governor has just written to the
President. DOE is under a Federal court order to respond in a
timely fashion.
Ms. Browner. Yes; we are aware of that.
Senator Craig. We expect them to comply. If they do not
comply, I would not be surprised if my State would once again
have to shut its borders to the movement of naval spent fuel.
And that brings the ships at sea to a halt. I do not think you
need that as your burden. I do not want that to happen. But my
State is very insistent. They have waited long enough for this
repository to open so that we can start a major movement of
transuranic waste to a safe storage facility.
Mr. Chairman, I am out of time?
Senator Bond. Yes.
Senator Craig. Thank you.
Senator Bond. I think Senator Boxer. said she had just a
few minutes. So let me turn to Senator Boxer..
Senator Boxer. Yes; I have 3 minutes. I will be glad to
yield.
Senator Craig. No; why don't you go ahead, Senator, and
then I will come back with one more question.
METHYLBROMIDE
Senator Bond. I will come back to you, Senator.
Senator Boxer. Five minutes ago I had to be somewhere, but
I will be fast.
Mr. Chairman, there is a river on the Mexico-California
border called New River. It is one of the most polluted in the
entire world. And I know you smiled when you thought about
going up to Vermont to see the beautiful lake. I would not even
want to take you down there. I hope that we can make some
progress on this cleanup. I went down there to look at it, and
it just bubbles up filth and dirt and foam and chemicals. And
the good people who go in there to try and clean it up or to do
any sort of river work have to wear astronaut's gear. And it is
extraordinary.
I went down there. I was promised EPA would clean it up.
And they have begun to do that. I just want to make sure that
you are still committed to this cleanup and that this year we
will see some more cleanup done there.
Ms. Browner. Absolutely.
Senator Boxer. Excellent. And I would hope that I could go
back there and see a little less filth. Because it was an
experience you could never, ever, ever forget. So I am going to
take you up on that and monitor that.
In terms of methylbromide and the ozone layer and all the
problems, because I represent such a diverse State, we have so
much agriculture. There are countries that will not take
produce that has not had methylbromide sprayed on it. My
question is, how are we doing in the search for substitutes?
Because there is no way anybody that I know of is going to do
away with one product the world is still using, and then we
cannot ship our produce anywhere. So how are we doing? Do we
have a commitment to search for substitutes to methylbromide?
Ms. Browner. Yes; and there have been dollars made
available through the EPA budget to form groups out in the
field that are looking at how to manage in terms of moving away
from the use of methylbromide. The Department of Agriculture
has had almost $55 million over the course of a 3- or 4-year
period, which looks at alternatives in doing its work.
We are still working in this area, and appreciate all of
the cooperation we are receiving both at the State and local
level and from the farming organizations across the country.
Senator Boxer. So what is your commitment to finding a
substitute?
Ms. Browner. We all want to find a substitute. The work is
underway. We are working diligently. The Department of
Agriculture industry is working diligently to find a
substitute. Everyone wants to find a substitute.
Senator Boxer. I am just saying that unless we do that, we
are not going to phase out methylbromide until we have a
substitute. That is my own particular view. I just think that
is a prevailing view, period. Because there is no point in it,
when you have got everybody else using it, unless we have a
substitute that works. It is a real crisis situation for our
farmers.
Ms. Browner. I do not think anyone, scientists, the
scientific community or otherwise is suggesting that there will
be one alternative to methylbromide in all of its many uses.
There has been some progress made in the varieties of pest
control tools which can manage pests currently controlled with
methylbromide. It does take a series of steps. But work will
continue in finding a substitute. There is a tremendous amount
going on there.
SOUTH LAKE TAHOE
Senator Boxer. Mr. Chairman, last point. I look forward to
working with you on my South Lake Tahoe export pipeline. I know
there were reasons why we could not resolve that problem. And
members of Congress and I are very concerned. If we want to
avoid a catastrophic bill and serious harm to Lake Tahoe, I
hope we can work together this year. So I look forward to
working with you on what you think is the right approach. And I
want to thank you so much for your courtesy.
Senator Bond. Senator Boxer., let me emphasize that the
concerns that you bring are very important concerns. We look
forward to working with you and the EPA to address the New
River concern, methylbromide, and South Lake Tahoe. These are
all very important issues, and very valuable members of this
committee bring to our attention. I think Senator Leahy has
already achieved success. Some of the rest of us have farther
to go.
And now, turning back to another issue that is very
important to this committee, as well as to the distinguished
Senator from Idaho, Senator Craig.
WIPP REVIEW
Senator Craig. Thank you very much, Mr. Chairman.
Administrator Browner, I just have a couple of additional
questions that are reasonably short. But let me suggest to you
that May 1998 as a time line that gets talked about for the
opening of the WIPP facility in Carlsbad is an unacceptable
time line for this Senator and for a good many members of
Congress, and we would much prefer you try to find a date
earlier than that.
Now, we understand the process you have to go through, and
that is why the Congress acted with the urgency that it did 1
year ago--knowing that we did not want to shortcut the process,
we just wanted to engage you along the way at a quicker time
than would otherwise play out if there was not an expression of
urgency as it relates to this environmental concern.
Ms. Browner. Senator, if I might, for the record, provide
for the record, a list of what we have been doing on the
parallel track. That might be helpful.
Senator Craig. I would appreciate that.
[The information follows:]
WIPP: EPA Activity on Site Evaluation
The Waste Isolation Pilot Plant (WIPP) Land Withdrawal Act (LWA),
as amended, requires that EPA make a determination as to whether WIPP
meets the Radioactive Waste Disposal Regulations at 40 CFR Part 191.
The LWA requires that EPA make this determination by rulemaking under
Section 553 of the Administrative Procedures Act (APA). This
requirement imposes certain procedural and substantive obligations upon
the Agency in making this determination. EPA is currently proceeding
with rulemaking activities in accordance with the provisions of the
WIPP Compliance Criteria at 40 CFR Part 194.
EPA is taking every step to facilitate the certification decision
with the Department of Energy (DOE) since the original application was
submitted on October 29, 1996. Almost weekly over the past six months,
the Agency has been sending people to New Mexico to work with DOE and
their science advisor, Sandia National Laboratory. EPA is reviewing
their extensive records to ensure that the Agency understands what was
done, and that DOE understands our concerns and information needs
required to fulfill the regulations.
EPA has completed its review of the original application which DOE
submitted on October 29, 1996. EPA has sent DOE three requests for
additional information to fulfill the regulatory requirements of 40 CFR
Part 194. The first letter, sent on December 19, 1996, identified
completeness and technical sufficiency issues and identified required
information that was not included; the second letter, sent on February
18, 1997, provided clarification for resolving an issue raised in the
December 19, 1996 letter regarding Sandia National Laboratory's record
center; and the third letter, sent on March 19, 1997, identified
technical sufficiency issues requiring additional information to
fulfill the regulatory requirements. EPA believes that the information
requested in these letters is absolutely essential for the Agency to be
able to make a certification determination that withstands the scrutiny
of a reviewing court under the Administrative Procedures Act (APA).
While DOE was fulfilling the December 19, 1996 request, the Agency
continued its extensive review of the application. EPA met with key
stakeholders to provide them an opportunity to inform the Agency of
their comments early in the process, and held a series of public
hearings to solicit additional public comment. Since that letter was
sent, DOE has been periodically submitting responses to the requests
and the Agency has been reviewing those as quickly as possible once
received.
Following the close of EPA's public comment period on DOE's
application on March 17, 1997, and while DOE is responding to the
remaining information requests, the Agency is, in parallel, drafting
sections of its proposed certification rulemaking where we have
sufficient information. The Agency will continue to draft proposed rule
sections as DOE submits information to fulfill the requests in the
above mentioned letters.
In addition, the Agency is reducing the complexity and amount of
time required for internal Agency review of the certification decision.
EPA will propose to the Office of Management and Budget to expedite the
time required for interagency review required under Executive Order
12866.
Accomplishing all this work in parallel will allow the Agency to
publish a proposed rule 2\1/2\ months after DOE submits all the
information required to fulfill the requirements of 40 CFR 194 (as
identified in the March 19, 1997 letter from EPA to DOE). Following
proposal, a four month public comment period will begin as required by
40 CFR 194.62. Upon completion of the public comment period, EPA will
need 3\1/2\ months to accomplish an expedited rulemaking process
including responding to public comments, completing the technical
support, drafting the final rule and completing the intra- and
interagency review [see schedule below]. In total, it will take the
Agency 10 months to complete the final certification decision once DOE
has submitted the required information.
EPA Schedule for a WIPP Certification Decision
Days
EPA Analysis of DOE Final Submission, Complete Proposal and
Technical Support............................................. 44
Expedited Intra/Interagency Review Process........................ 31
-----------------------------------------------------------------
________________________________________________
Total....................................................... 75
EPA will propose the certification decision 2\1/2\ months after the
last piece of information required to fulfill the requests in the March
19, 1997 letter is received.
Days
Public Comment Period............................................. 120
Respond to Comments, Finalize Technical Support Documents and
Complete Final Rule........................................... 74
Expedited Intra/Interagency Review Process........................ 31
-----------------------------------------------------------------
________________________________________________
Total....................................................... 225
EPA will complete final rule on certification decision 7\1/2\
months after the proposed rule, which is 10 months after DOE submits
the last piece of information to fulfill the requests in the March 19,
1997 letter.
NATIONAL MINING STRATEGY
Senator Craig. I think the citizens of my State would
greatly appreciate that.
Could you please explain to me what your Agency is doing in
the area of developing a national mining strategy? Now, I say
this with this concern--because I know that your Agency is
involved. What is your authority for this work? And what have
been your expenditures to date in this area? And the third
question would be, what is your budget request for fiscal year
1998 as it relates to your participation in a national mining
strategy of this administration?
Ms. Browner. As you pointed out, there are many other
Federal agencies and departments that have a role to play in
mining activities in the United States. Our focus is largely
threefold. First, we look at the impacts on water quality,
second, impacts on air quality issues, and finally, impacts on
waste issues.
If I might, with the leave of the chairman, ask Bob
Perciasepe, who is the Assistant Administrator for Water, to
speak to what we are doing in this area. He has been taking the
lead within EPA on the interagency work.
Senator Bond. We welcome Mr. Perciasepe.
Mr. Perciasepe. Thank you. For the record, I am Bob
Perciasepe, Assistant Administrator, Office of Water.
Senator Craig. You probably better come up, Bob, and use
the microphone.
Mr. Perciasepe. Yes; I am coming up so that they can hear
me.
Senator, as the Administrator said, EPA has a number of
programs which impact the mining industry, Superfund, RCRA, the
Clean Water Act, and the Clean Air Act. We are working inside
the Agency to try to make sure that those efforts are
coordinated. We are also reaching out to the mining industry,
to the States and to others as to how a strategy might be
pulled together.
I would say that our expenditures are just nominal, ongoing
staff work to come up with a strategy. We have not finalized
the strategy yet. We had a meeting just a couple of weeks ago,
with a couple of the assistant administrators, to talk through
what the staff has found. We have shared their findings with
outside stakeholders.
What the long-term consequences of a strategy would be
inside EPA's coordination, and then with the other agencies has
yet to be determined. There is not a specific budget request in
1998, other than our ongoing work, which we have many programs
that impact mining. Thus, we think it is a good idea to try to
coordinate our efforts and to do it with the industry.
Senator Craig. I appreciate the need to coordinate. I
believe mining is an important industry of our country, but it
has to be done in an environmentally sound and safe way. We are
on the verge of overkill--not in the cleanliness--current rule
and regulation is doing quite well there. The problem is that
we have mines operating in Idaho that now have as many as 10
Federal and State agencies overviewing them. They spend all of
their time with Federal or State agencies and no time
underground. And I know of three State agencies, so that leaves
five to six Federal agencies.
We really do not need that kind of excessiveness. And a
coordinated strategy that allows certain agencies to do that,
and has the capability of playing dual roles, as long as there
is reasonable oversight, makes good sense. And I am less
critical of your expenditure and more interested in the work
you get done to get a strategy, so that we can move away from
this kind of regulatory overburden that is very close to being
excessive. We have a tremendous exodus from our shores right
now of the industry for a lot of reasons. This happens to be
one of the reasons.
Now, that is perfectly satisfactory to some people. But
when I see thousands of high-paying jobs leaving our country
and our mineral and metals base leaving our country, and
Government cannot get its act together, that is an additional
concern that I think we have got to deal with. So I am
concerned and I am very interested in the dollars and cents you
spend, and the fact is that you have a targeted effort at
getting the job done.
Ms. Browner. Senator, if we might, we would be more than
happy to keep you informed on both the work we are doing
internally and across the administration, in the coordinated
strategy. However, I think equally important is the work across
the administration. The administration recognizes that you have
a variety of Federal agencies and departments that get a piece
of this, in looking at it more broadly. We would be more than
happy to keep you informed as we proceed.
[The information follows:]
Mining Strategy: Status
Addressing the environmental impacts of mining activities requires
the coordination of a number of statutory authorities under which EPA
operates, as well as extensive coordination with other Federal agencies
with jurisdiction in the mining area. The principal environmental
statutes that EPA has used to regulate releases to the environment as a
consequence of mining over the last decade are the Clean Water Act
(CWA) and the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA). The Resource Conservation and Recovery Act
(RCRA) has been used by the Agency to examine the environmental impacts
of mining. In addition, EPA's role in the National Environmental Policy
Act (NEPA) process has been important in mine site evaluation and
planning.
In an effort to better address the statutory and regulatory
complexities involved in mining activities, EPA's former Deputy
Administrator, Robert Sussman, directed EPA's Office of Water in 1994
to lead a multi-program, cross-organizational workgroup to draft an
Agency-wide mining framework. The workgroup was comprised of staff from
EPA's Regional offices, the Office of General Counsel (OGC), the Office
of Solid Waste and Emergency Response (OSWER), the Office of
Enforcement Compliance and Assurance (OECA), and other affected
programs.
Currently in a Final Draft Form, the Hardrock Mining Framework
identifies recommendations that will help EPA implement a multi-media,
multi-statute approach to dealing with the environmental concerns posed
by hardrock mining. The Framework focuses on understanding and
improving the use of existing EPA authorities with a clear recognition
of the role of other stakeholders. Building effective working
relationships with other mining stakeholders is a key element of EPA's
efforts to improve the effectiveness of its own programs. In developing
the Framework, EPA solicited input from a number of mining
stakeholders, including other Federal agencies, States, Tribes, local
government, industry, and environmental groups.
While the Agency continues to work to improve coordination within
the Agency, EPA also recognizes the importance of working in
conjunction with other Federal and State agencies to address the
environmental concerns posed by hardrock mining. One example where
interagency coordination is presently taking place is an effort to
develop an interagency strategy to address abandoned mine sites on
federally managed lands. The workgroup is comprised of staff from EPA,
Department of Interior, and Department of Agriculture. The Agency
agrees that any future efforts will require a similar level of
coordination among affected parties.
NEW LEGISLATION IMPLEMENTATION
Senator Craig. Mr. Chairman, one last comment to the
Administrator, because I think she understands the urgency of
it. But I want her to know that there are a lot of Senators who
are watching, and appreciate the urgency of it.
As you know, last year, with the Food Quality Protection
Act, we, in essence, abolished the Delaney clause and, at the
same time, recognize that there were new standards that needed
to be set for the protection of food, food quality, crop
production, and all of that. I will be submitting a number of
questions for the record for you to respond to, so that we can
keep this thing on track. What we do not need is 2 or 3 years
of reg writing, and keeping an industry in limbo.
It took us two decades here to get to a proper handling of
the Delaney clause. We think we have done it. And now we need a
new mode of operation for what I think we all recognize is
probably one of the most important industries of our country to
produce a quality food product of the kind that it does, and to
be able to do that in a competitive environment. I think
Senator Boxer.'s references are a part of all of that concern
that we get it done and that we have scientifically acceptable
tolerance levels for crop production, and that we are able to
respond to it.
So, Mr. Chairman, I will be submitting some questions to
the record that we will send to the Administrator.
Senator Bond. Thank you very much, Senator Craig. We will
keep the record open for those questions. I will have a number
of my own.
Madam Administrator, do you have a response?
Ms. Browner. Yea; just one just very briefly. I might call
the attention of the Senator to the fact that in the budget
request before you, we are asking for additional dollars to
honor the implementation activities that we think are necessary
to keep on track and stay on schedule with both the Food
Quality Act and drinking water. In fact, we ask that we be
allowed to spend $35 million just for the implementation of the
new Food Quality Act. That does not speak to the other
components of our pesticide program, only to the
implementation. Similarly, we ask that we be allowed to spend
$48 million in drinking water.
In both instances, these are dramatic increases off of the
base from the prior year.
Senator Craig. Thank you.
Ms. Browner. As far as I know, we have not missed any
deadlines and any statutory deadlines under either of these
statutes. We are on time.
Senator Craig. And we do not want you to.
Ms. Browner. Neither do we. I would just point out to you
that we are not asking for new dollars. We have redirected them
internally.
Senator Craig. Yes; I understand that.
Ms. Browner. We have looked at things that we do not think
we should be doing anymore, and we have moved them over so we
can honor the commitments that we have all made under these
statutes.
Senator Craig. Thank you.
Senator Browner. Thank you, Mr. Chairman.
NAAQS: STATE GRANT REQUEST
Senator Bond. Thank you very much, Madam Administrator.
Let me turn now to some other areas. We talked earlier
about the proposed standards for ozone and PM fine
particulates, and you talked about the importance of this.
There is that one study, which has been discussed, that
suggests averting 20,000 premature mortalities. I am concerned
that your budget does not reflect the commitment to carrying
out the air quality standards. There is only a 3-percent
increase for grants to the States to administer the air
program.
We have talked about the importance of the States in this
process. And if there is to be a major task of the magnitude
envisioned by these new standards, do you think that an
inflationary-only increase in the air grants to the States
would be adequate to implement it?
Ms. Browner. In fact, in terms of the money to the States
for their air work, there are some redirects. Thus, in the case
of fine particles, the recognition that we will all need to
install a fine monitoring network we do provide for an increase
in funding. I believe, we provide $11.2 million to the States
under the statute. We provide a match of approximately $7
million. We can detail for you how we take into account what
may be required of the States--when we reach a final decision
on the proposed standards.
Senator Bond. Well, some of the moneys that you are
reprogramming, are they not for programs that are still
required under the Clean Air Act? I mean if you are talking
about shifting some money around to deal with perhaps the
particulate matter standards, as I understand it, you are
talking about taking away from other programs.
Ms. Browner. Here is an example of where, quite frankly, we
have made some progress and we do not need to continue the same
level of funding. It is the toxic air emissions and the MACT
standard work. We are recommending a redirection in excess of
$1 million. We are on target to do the work we are supposed to
do under the Clean Air Act. We have sort of caught up with the
backlog. Thus, we are recommending to Congress a redirection
from that program to other higher-priority areas.
CWSRF
Senator Bond. Turning now to the clean water State
revolving funds, the only major disinvestment EPA is proposing
for fiscal year 1998 is the clean water State revolving funds.
I spoke with Mr. Perciasepe at hearings last year. I commend
him on the progress we are making. And I expressed my interest
in seeing that we move forward on this program. It works
effectively. There is a tremendous need for the dollars. EPA's
own estimate of the cost of needed wastewater treatment
construction is about $140 billion nationwide.
Could you tell me why EPA chose to cut the program by 20
percent, $275 million? And can you put to rest the rumors that
the program was cut as an offset to the increase in Superfund?
Ms. Browner. It was not cut as an offset to anything. Our
commitment has been to see this very, very successful State
revolving fund revolve at $2 billion. That was the President's
commitment when he took office. It is in excess of what
President Bush committed to in his work on clean water, because
we think there should be a Federal cost share in these
programs.
In fiscal year 1998, the amount of money that will be in
the clean water funds across the country will be $25 billion.
This program is reaching a level of maturity, and we should all
be proud of that. Money has been lent out. It is being repaid.
The bonds have been leveraged. More money is coming in. The
State matches are in. Thus, the size of these funds has grown
dramatically. With the budget request we make, we are on track,
to honor the revolving level at $2 billion, and to see the very
important projects for which this money goes be successfully
completed.
Senator Bond. Well, that does not answer my point. Because
we know there--as I said, there is $140 billion worth of needs.
I think we were looking at a target of--was it $10 billion, I
think, that we--excuse me, I was thinking of the drinking water
fund.
Ms. Browner. Yes.
Senator Bond. But there are 140 billion dollars' worth of
needs out there, and your outyear projections shows the funding
going along, being cut and then going back up in fiscal year
1999. Why does that make sense? I mean, granted, there is a lot
of money in the pipeline. There is supposed to be a lot of
money in the pipeline. It is supposed to be paid back, because
there is such a need. Why the dip in the funding and then
reinstatement of the funding request later?
Ms. Browner. What you are seeing is a growth in the total
dollar amounts available in each State to be loaned for the
construction. The percentage of funds made up from the Federal
appropriation is decreasing. This is because other things are
coming into play. The size of the fund is growing, but you do
have State matches. You have the leveraged bonds, which have
grown dramatically. We would be more than happy to provide
information for the record, to show you that given what the
States have available to do the job, there is a growth in the
dollars out there.
It is a success story that we should all be proud of. It is
not only a success story from the Federal Government's point of
view. The States have done an important piece of this. In
addition, local governments are, in fact, repaying the fund so
other local governments can now get a loan.
[The information follows:]
CW-SRF Fiscal Year 1998 Funding
The attached charts show: (1) the projected cumulative
capitalization of the Clean Water SRF through fiscal year 1998 and
associated loan activity; (2) the relative contribution of the various
components of SRF capitalization for 1990, 1992, and 1996; and (3)
projected cumulative financial assistance provided by the Clean Water
SRF through the year 2026 (in constant 1996 dollars).
SRF CUMULATIVE CAPITALIZATION AND LOAN ACTIVITY--REPORT YEAR ENDING JUNE
30
[In billion of dollars]
------------------------------------------------------------------------
Cumulative
Fiscal year -------------------------------
Capitalization Loans
------------------------------------------------------------------------
1992.................................... 9 7
1993.................................... 11 8
1994.................................... 15 11
1995.................................... 19 14
1996.................................... 22 17
1997 \1\................................ 23 20
1998 \1\................................ 25 23
------------------------------------------------------------------------
\1\ Projected
Note: Dollars not adjusted for inflation
SRF CAPTILIZATION--REPORTING YEAR ENDING JUNE 30
[Percentage of Capitalization]
------------------------------------------------------------------------
Fiscal year
--------------------------
1990 1992 1996
------------------------------------------------------------------------
Interest earnings............................ ....... 1 4
Loan principal repayments.................... ....... 1 5
Leveraged bonds.............................. 14 22 25
State match.................................. 16 14 12
Federal capitalization grants................ 70 62 54
------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] T05AP08.000
Senator Bond. I agree with all of that. But does your
budget not project more money in fiscal year 1999 to go into
the clean water revolving fund?
Ms. Browner. Yes; it does show an increase.
Senator Bond. OK. You are just taking it down this year and
bringing it back up next year. That does not seem to be a
normal phaseout to me.
Ms. Browner. Mr. Chairman, if I might. On the question of
the $100 million, which you have mentioned several times, was
it taken from this fund to fund Superfund? It was not.
If you look at the increases in water across the Agency,
what you see is that we have made some important increases to
provide the water quality necessary to this country. For
example, we have moved money to allow us to deal with the Safe
Drinking Water Act Amendments, the new legislation, to increase
nonpoint-source funding, to do the work with the States on the
total maximum daily loading. What you see are some
redirections.
At the end of the day, I think the question for all of us
is, are we making the most sensible use of dollars in terms of
what the States need to be doing and what we do in partnership
with the States? There are some redirections in our budget,
because we have some new requirements that Congress has
directed us to undertake that we agree with, that we think are
important, and that we had to fund. That is what we did in our
budget.
GPRA: BUDGET PRIORITIZATION
Senator Bond. Moving on to the planning and budgeting area.
NAPA recommended EPA overhaul its budget process to allocate
resources to highest-risk-based priorities. And as I said, Mr.
Hansen testified about EPA's proposed system. He stated ``the
new system would be in place to formulate the 1998 budget.'' Is
it in place? Can you point to some specific examples, how it
impacts the 1998 budget, and does it result in a risk-based
reprioritization of activities across the agency?
Mr. Hansen. Thank you, Mr. Chairman.
Yes, we believe that it has been implemented. Obviously, it
is still in the process of full implementation. However, we
have, in fact, made numerous decisions throughout the Agency's
budget, in preparation for 1998 and will continue to do so.
This is a key part of our effort to be able to set long-term-
priority goals, to be able to have multiyear goals and annual
goals, and to be able to build a prioritization process to
better reflect the very priorities at the highest-risk areas
and the highest areas of need.
This fits very well within that context and the Government
Performance and Results Act [GPRA]. Also, we believe that the
efforts we have underway, comply with GPRA. The Administrator
and I believe these are steps that we ought to be taking with
or without GPRA. This is being accomplished through our new
structure. Sallyanne Harper, our Acting Chief Financial Officer
who is here at the table, has established the process for being
able to plan, analyze, and to hold accountable our systems.
RISK DECISIONS IN 1998 BUDGET
Senator Bond. I will return to Senator Craig, but I have
one followup question on this.
How does your Agency's decision to increase the Superfund
Program by 50 percent and the climate change action plan by 73
percent reflect this budget discipline which was supposed to be
imposed and you said it is imposed on planning, budgeting, and
accountability? Do not the dollars spent on Superfund provide
significantly less opportunity for risk reduction compared to
other EPA programs?
Mr. Hansen. Mr. Chairman, first, regarding Superfund, and
having been one of the authors of the Reducing Risk Report that
came from the Science Advisory Board, this report is oftentimes
one of the things that is referenced in relationship to whether
Superfund is the highest risk.
We have concluded that when one looks at risk, one needs to
look at it both from the standpoint of the citizens who are
directly affected and those who are closest to that site. To
them, it is a very high risk, as opposed to being able to look
across the whole of other environmental priorities. The
commitment we, as an administration, have is an obligation and
a need to be able to move ahead on those very sites that are,
in fact, directly affecting 1 in 4 Americans that live within 4
miles of a Superfund site.
In terms of greenhouse gases and our climate change action
plan, we believe very strongly that the voluntary programs that
are included within a good, nonnormal, command and control,
regulatory, nonregulatory in the traditional sense program
addresses a very real issue that needs to be moved forward.
Consequently, it has. I think many people, certainly, the 2,500
scientists and others would agree is one of the most pressing
of problems and one of the highest of environmental priorities.
Senator Bond. Are you telling me that the risk to the
people living in the vicinity of Superfund sites is a real and
significant scientifically based risk, or is it a perception of
the problem?
Mr. Hansen. Mr. Chairman, of the Superfund sites, 60
percent have documented health effects associated with those
sites and 40 percent have potential health effects associated
with the direct contamination from those sites. So yes, it is
clearly a direct, not a perceived health effect.
Obviously, one must look at each site to determine how
serious the risk actually is. However, there are direct
documented health effects associated with those Superfund
sites.
Senator Bond. Well, I think I would like to see that system
and see how you have----
Mr. Hansen. We would be happy to.
Senator Bond. But I have already asked for the listing of
the project sites. We want to know where there are specific
scientifically identified risks and how you came to those
conclusions and those recommendations.
Mr. Hansen. Certainly.
[Clerk's note.--The information on the Superfund can be
found in the VA-HUD Subcommittee files.]
SALMON, ID
Senator Bond. Senator Craig.
Senator Craig. Mr. Chairman, thank you.
Carol, this is an observation more than it is a question,
because it is a frustration. And it deals with the ozone and
fine particulate matter standards that you are proposing. And I
want to paint a picture for you, because it speaks to the
application of the problem and the need for greater flexibility
than you might have anticipated in some areas.
I was recently in a community in Idaho called Salmon, ID.
It is in Lemhi County. Lemhi County is as big as New Jersey,
Rhode Island, Connecticut, and Delaware put together. And it is
over 85 percent public land. In other words, undeveloped
grasslands and timberlands. About one-half of it is national
forests. This little community once had three sawmills and
three tepee burners--open-air burning--and a burning operation
out at the local city dump. None of those exist any more and
have not existed now for a good number of years.
And yet, under your new PM-2.5, they cannot meet the
particulate standards without investing a tremendous amount of
money--and, to them, a tremendous amount of money--we are
talking of a community of 3,000 people and a county of ranchers
widely dispersed. They cannot meet the standard without the
expenditure of over $500,000. And that would largely go into
the paving of streets and alleys in a city where many of the
streets are gravel and alleys are gravel.
Now, coupled with, is the new management by match--I call
that Bruce Babbitt's new burn policy on forest lands, as
management by match--they are even concerned that they would be
out of compliance at increasing levels over an extended period
of time if the Forest Service actually actively engages in some
reasonable management by fire. And I accept that to some
extent. But without that, by just moving the standards to where
you are suggesting they go--and I am not disputing that--this
city is out of compliance, this little community----
Here is the addition of insult to the injury. I am told--
and I visited with the mayor at length about it--because he
said it this way. He said,
Senator, it is not that we do not want to comply. It is
that I cannot ask my taxpayers to comply. I cannot ask for that
kind of money to do that when we have other critical needs.
Now, this is a community where health is not a factor. The
greatest factor in health is that the nearest hospital of any
high-level medical application is 150 miles away, over a
mountain pass. And their concern about $500,000 expenditure for
these particulate standards is wasteful, when they have lived
all of their lives under these conditions. And, in fact, the
conditions have dramatically improved over the last several
decades because of the existing law.
How do we solve that problem?
Ms. Browner. I apologize. I am not familiar with this
county. I am aware of some counties.
Senator Craig. No; I did not expect you to be. But this is
a typical example of many of the rural environments of the
West, where dust is a normal part of the environment during
certain periods of the year.
Ms. Browner. I agree.
PM-2.5
Senator Craig. And then when you add to it auto traffic on
gravel roads that have not been paved and will never be paved
because it is economically unfeasible to pave them, and then
you put in a rural community environment, we have got some
problems. And then you add, on top of that, in the wintertime,
heating by wood, and you have got bigger problems. Because
wood, in an environment like that, where the forests are next
door, makes all the right sense in the world for a form of
space heating.
Ms. Browner. What I would like to do, with your lead, is to
look at the information we have on this particular area and to
have our air expert sit down with some of your people and the
city or the mayor.
Senator Craig. Sure.
Ms. Browner. We recognize that, in seeking to provide a
level of public health protection for fine particles, PM-2.5 is
tiny. However, it is almost as if we are talking about a new
pollutant. The work that has been done on coarser particles,
such as PM-10, is really work on a different sort of pollutant,
thus PM-2.5 is tiny when compared to PM-10. However, the health
data shows us that PM-2.5 can result in large numbers of
premature death.
In looking at how we will actually reduce the levels of
pollution, we see that when we look nationally, that for about
40 percent of the areas that might not today be able to meet a
PM-2.5 standard, they would be able to do so through
technologies that we have on line. These technologies are
coming into place and some are already in place. For 60 percent
of the areas, we are going to have to work literally area by
area and community by community, to shape the appropriate plans
and the strategies for reducing the pollution levels to meet a
public health standard.
We would be more than happy, we have done this with several
other communities and States already, to sit down and
understand better what are the particular sources or what may
be the sources there, and then to look at what may be the cost-
effective, commonsense strategies.
Senator Craig. Well, it is important to remember in these
contexts, this is a community without smog. It does not exist.
Ms. Browner. Yes; and PM is not smog.
Senator Craig. It is a beautiful, open-air environment of
probably what most citizens of our country, if they walked into
it, would think they are in the wilderness and say, oh, my
goodness, is not this a beautiful area.
Ms. Browner. Yes.
Senator Craig. And yet they still fall out.
Ms. Browner. We are dealing with two different issues here.
I do not believe that we think Idaho has an ozone problem. We
think the concern is, as you stated originally, the fine
particles.
Senator Craig. Yes; it appears to be that would be the
greater case.
Ms. Browner. It is not the smog issue. It is the particle
issue.
Senator Craig. That is right.
Ms. Browner. There is some good news in that, as you say,
you do not have smog and you do not have an ozone problem.
Senator Craig. Yes.
Ms. Browner. I think we would tend to agree with that.
FINE PARTICLES
Senator Craig. This community would rather spend $500,000
on a helicopter for a life flight, so that they could really
deal with human health and safety than to spend $500,000 paving
roads that have been graveled for the last 50 years. They do
not understand the problem. Because a community of that size,
and as poor as that community is, has a choice, with limited
dollars, they have to make some very real tradeoffs at times.
What they are afraid is that they lose that flexibility.
Ms. Browner. If we could just take one more moment, Mr.
Chairman, and ask Mary Nichols, the Assistant Administrator for
the Office of Air, who may know a little bit more about this
particular situation than I know.
Ms. Nichols. Well, I am not familiar with Salmon, ID.
Senator Craig. No; I would not expect you to be.
Senator Bond. Ms. Nichols, would you take a seat and speak
into the microphone so that we can get that recorded. Thank
you.
Ms. Nichols. I am Mary Nichols, Assistant Administrator for
Air and Radiation.
I was just out visiting five Western States, along with the
Director of the Western Governors' Association. I did not get a
chance to go to Idaho.
Senator Craig. Well, you are getting a sense, though, of
our concerns, sure.
Ms. Nichols. I have heard similar comments. Being from
southern California, where we have windblown dust problems, I
am very familiar with this issue, and it is a serious concern.
A bit of good news, perhaps, is that, focusing on fine
particles, which we believe are the ones which are more
directly related to more serious health effects, in fact,
eliminates most of the road dust concern. That is, the smaller
particles generally are caused by automobiles and industrial
pollution rather than by dust.
Senator Craig. Yes.
Ms. Nichols. However, there are areas where it simply is
very difficult to find effective controls for the PM-10. We are
looking, through a Federal advisory committee which
Administrator Browner directed us to impanel, at whether there
are some innovative ways we can implement the Clean Air Act. We
are looking not only to find other technologies but, frankly,
to find other ways to work with communities to develop plans to
address their overall particulate and ozone problems in a more
comprehensive and more cost-effective way.
Some interesting ideas are coming out of that process. We
would be happy to come and talk to your staff.
Senator Craig. I would appreciate that. I mean Salmon is
not unique. It is just a good example of a variety of
communities of that character across the Western States that,
on occasion, in a seasonal way, have problems. They have had
those problems long before the human species existed there. But
we happened along and then we put regulations on top of them.
And then, all of a sudden, those regulations start costing real
money, and in communities where their priorities conflict with
those.
Because they just cannot understand the value of that, when
yes, 30 years ago, at certain times of the year, you had a bit
of dust and you had a bit of smoke, maybe not by their own
doing, but by the doing of Mother Nature or by others. And we
have got to demonstrate some flexibility in those communities.
Because there is no base of economy to justify them spending
that kind of money. Or at least that is their guesstimate now,
based on an early analysis of what this could mean to them.
Ms. Nichols. Right. And we do fortunately have some time to
actually work through those issues and try to get better
information.
Senator Craig. Great. Thank you.
Mr. Chairman, thank you for your patience.
NAPA STUDIES
Senator Bond. Thank you very much, Senator Craig.
Administrator Browner, going back to the NAPA studies,
which I like to do from time to time, that study found that EPA
had no systematic way of performing program evaluations to
determine what programs are accomplishing their stated goals
and objectives, and that it was difficult to make rationale,
informed budget decisions without it. I would be interested to
know what EPA has done to establish a centralized routine of
systematic program evaluation as part of the budget process.
And I would be happy to hear from Deputy Administrator
Hansen. That seems to be in his ball park.
Mr. Hansen. Thank you, Mr. Chairman.
Again, I stress that Administrator Browner and I have felt
that the concepts are contained within our planning, budget
analysis, and accountability office, that they address those
very issues that you have just referenced and that NAPA
originally recommended. These are tremendously important. We
believe that the absolute key to this type of work is being
able to understand exactly what we are delivering in all of our
program areas, and being able to evaluate that, being able to
have that as an element of our budgeting.
We are in the beginning stages of that process. We believe
we have made very real progress. We have additional steps to
take.
CSI AND PROJECT XL
Senator Bond. Thank you.
Let me turn now to project XL and the commonsense
initiative. I expressed my concerns in the opening statement. I
thought you might want to address those and find out what
lessons you have learned over the last 2 years, why there have
been so many problems, what specifically are you doing to see
that the President's stated commitment to alternative
compliance approaches is being carried out, and is there
alternative compliance legislation needed?
Ms. Browner. First, I want to speak to the commonsense
initiative. The work on an industry-by-industry and sector-by-
sector basis has produced some very, very important results. It
has not been without its difficulties, in terms of its history,
the relationships between industry and local communities, State
representatives and others. What we did for the first time ever
was bring everyone together and build a level of dialog, a
level of trust.
I think you had suggested that the automobile and the
petroleum industries had withdrawn from CSI. They have, in
fact, committed to continue in the process. I am not suggesting
that they may not want to revisit that at some point. Again, it
is not without its challenges. However, we are very proud of
the dialog and the work that is being done.
Each of them is different. We took the time and the
resources to bring in an outside evaluator to look at this
program, to review whether or not this was working, what could
make it better and what lessons were learned. The evaluator
found and what the evaluator shared with us and the CSI council
is that, in each instance, the individual sectors believe they
are making progress. No two are alike, but then no two sectors
are alike.
So we are committed to continuing our sector-by-sector
approach, building on the success of the dialogs on the work
heretofore.
In terms of project XL, we are actually doing the difficult
work, on a project-by-project basis, of finding out how to go
beyond current requirements, to actually get better
environmental performance. We have projects that are now up and
running, showing us that you can go further.
I joined Intel in announcing their project. This is a
facility that is literally acres. When we are done and when
Intel and the community groups that are working together on
this project are done, its emissions will be less than 1
neighborhood gas station. This is not a small undertaking.
In terms of legislation, I would encourage you, as I think
you suggest that you are inclined to do, to look to E4E and the
work that Bill Ruckelshaus is doing. We have been extremely
active participants in that process. Fred Hansen, I think, has
attended all of the meetings. I have spoken with Mr.
Ruckelshaus on several occasions. We believe there is a real
sense within that group of how to really fashion any
legislative recommendations that may be forthcoming, and we
would encourage all to await the outcome of that process.
I think they are hoping to wrap up their work in the next
several months. That is the target they are on. I know the last
time I spoke to Bill Ruckelshaus, that was certainly what he
thought was when they could be able to conclude their work.
E4E PROGRAM
Senator Bond. I am very supportive of the E4E program. I
have urged them to go forward. It is not my sense that they are
going to come up with specific legislative proposals, but that
they will come up with general principles. But nevertheless,
whether they come up with proposals or not, and we are most
anxious to see their report, the question to you is do we need
alternative compliance legislation? Right now, you have got the
ball.
Ms. Browner. At this point in time, I do not think we need
alternative compliance legislation, and I will explain why.
Senator Bond. Well, the Amoco, you could not do the Amoco
project in Virginia.
Ms. Browner. Well, Amoco is a good example of the kind of
analysis that you have to go through to understand the
shortcomings of an individual statute. In the case of Amoco, I
think the lessons learned from Amoco are demonstrated in Intel,
where you actually were able to go out and figure out how to do
something to speak to the air issues to get greater
environmental progress, and to provide flexibility in exchange
for that environmental progress. So we learned from Amoco.
I would suggest to you that it is not accurate, and I do
not think you are saying this but I think someone said this,
that somehow or another Amoco shows you that the whole system
is flawed. We learned from Amoco, and we have moved on from
Amoco in a very real and concrete manner.
What I think you did in drinking water in actually looking
at an individual statute, understanding what the goals of that
program are for the people of this country, and how best to
provide appropriate flexibility will at the end of the day be
the best way to deal with these challenges. Each of these
statutes are fundamentally different. They seek to speak and
look to fundamentally different challenges. I think trying to
speak across them will prove to be all but impossible in the
short run, and it may well be that E4E will give us some
guidance and advice on how to do that. However, we will get the
greatest progress in the new generation of environmental
programs and solutions by going into the guts of existing
statutes and working within them to craft the new solutions.
GREEN PROGRAMS
Senator Bond. Well, I do not in any way downgrade or deny
what apparently is and will be happening at Intel. I think that
is great. The fact remains it is one of three out of 50 we were
expecting, and we want to know--if you think there is no
legislation necessary, then I would expect the pace to pick up
very significantly. And I am asking the question do you need
legislation, because something seems to be holding the program
up. That is the reason I asked it.
Let me move now to the green programs. The climate change
action plan was issued in October 1993 to meet the goal of
stabilizing greenhouse gas emissions at 1990 levels by year
2000. As I understand it, the program was designed to reduce
greenhouse gas emissions by 109 million metric tons of carbon
equivalent relative to 1990 levels. Yet EPA has achieved only
.6 MMTCE reduction through 1996. Given that 0.6 out of 109
million goal, why do you think that we can make much more
significant progress? Why should we provide additional
assistance to that plan?
Ms. Browner. When the President announced the
administration's plan, the commitment, and the recognition were
that if we would stabilize in the year 2000 at 1990 levels we
would need a 110 million metric ton reduction. We will not make
that. We will not make that in part because we have had growth.
Thus, we actually need greater reductions than were originally
forecasted. Also, we have not had the financial resources. We
have not had the appropriation levels to allow us to do the
kind of work that would have resulted in greater reductions. It
is just that simple.
We take the money that is appropriated in the Climate
Change Action Plan Program and work in a variety of ways. Many
are the kind of new generation tools that have been encouraged,
that we have been encouraged to utilize in terms of forming
partnerships with businesses and finding more commonsense,
cost-effective solutions to pollution. We use that money to go
out and do that work, and it does result in very real
reductions in the kind of climate change gases and other things
that we are worried about.
Mary, do you have the specific numbers?
Ms. Nichols. This is Mary Nichols again. The most recent
assessment that has been done by the interagency group on this
shows that if the full 1997 enacted levels are maintained that
we would achieve 80 million metric tons by the year 2000. This
is about 75 percent of what was originally projected to be
needed. As the Administrator indicated, our estimates were
wrong, because there has been more growth than was projected.
However, we do project that if the funding that the President
sought was restored that we could make up the 25 million metric
ton shortfall by the year 2005. In other words, we would meet
the goal that we had actually set for ourselves through the
green programs based on what we are actually achieving today in
terms of companies installing energy-efficient equipment.
Senator Bond. But you would agree that to date reduction
has been 0.6 in MMTCE?
Ms. Nichols. Yes; that is just one of the programs of the
total.
Ms. Browner. There are many programs.
Ms. Nichols. I am giving you the totals for the Climate
Change Action Plan Green Program. One of those was the .6. I
frankly cannot remember which one it was.
Senator Bond. We would like to see the analysis.
Ms. Nichols. Sure. We will be glad to provide that to you.
[The information follows:]
Greens Programs: Greenhouse Gases Removed
The Administration's analysis of the full impact of the Climate
Change Action Plan programs, which is being coordinated by CEQ, is
still underway. Comprehensive, draft results will soon be completed, at
which time they will be immediately provided to the Committee. At the
same time, the results will be available for public comment via a
Federal Register notice. It is expected that these results will be
available before the end of May. After receiving comments and
conducting any further analysis, the results will be finalized and
published later this summer in the United States' second submission to
the Framework Convention on Climate Change.
Nevertheless, it is clear that EPA's partnership programs are
successfully overcoming market barriers (such as the lack of reliable
information) to investments in economically attractive technologies
that reduce greenhouse gas emissions. Despite a 40 percent
Congressional budget cut in fiscal year 1996 and fiscal year 1997,
EPA's partnership programs prevented the emission of over 6 million
metric tons of carbon equivalent, or mmtce during the past year, equal
to the pollution from over 3 million cars. In the past year, program
partners and consumers also saved over $750 million on their energy
bills due to CCAP programs, helping to prove in yet another way that
pollution prevention is a contributor to economic growth.
It is the nature of these programs that their benefits will
accumulate rapidly, now that solid foundations have been laid. Just as
the pollution savings last year doubled the savings from the previous
year, the pollution prevention from these programs is expected to
double again in 1998. This is due to the more than 3,000 strong
partnerships that EPA has formed with corporations, small businesses,
universities, hospitals, utilities, and state and local governments.
Senator Bond. We provided 96 million in 1996 and 86 million
in 1997. You say with that we will get 75 percent of the way
toward the goal?
Ms. Nichols. Yes, that is right.
Senator Bond. I would be interested in seeing that, thank
you, if you would provide that analysis.
Ms. Browner. Certainly.
SBREFA
Senator Bond. Madam Administrator, what specifically are
you requesting for any additional requirements or burdens
associated with the Small Business Regulatory Enforcement
Fairness Act, known as SBREFA, or the Red Tape Relief Act.
Ms. Browner. Each of what we would refer to as the large
component programs, such as air, water, waste, pesticides, and
toxic substances, have a responsibility under the law as they
move through a rulemaking to comply with the small business
aspects: bring the panels in where appropriate and work in
partnership with the small business community. So those are
managed in each of the program budgets.
In addition, we have asked our Office of Policy, Planning
and Evaluation to provide an across-the-Agency management of
the requirements under SBREFA to ensure that we are doing
everything that is important, not just in terms of the letter
of the law, but in the spirit of the law. There is included in
their budget a dollar amount of $200,000 or more to provide
that coordination. That is in addition to what is in each
programmatic area.
PEER REVIEW
Senator Bond. Finally, in a recent report GAO was critical
of EPA's implementation of the peer-review policy. GAO
attributed the uneven implementation to inadequate
accountability and oversight to ensure that all relevant
products are properly peer reviewed, and confusion among EPA
staff and management about what peer review is, its importance
and benefits, and how and when it should be conducted.
Ms. Browner, when you came into office you claimed peer
review would be top priority. We agreed with that. You
instituted a peer-review policy. Could you articulate precisely
what the peer-review policy is, why its implementation has been
uneven, why the top science official in the Agency, Dr.
Huggett, was not the responsible official for the Agencywide
implementation, and how will you ensure that adequate oversight
of peer review is exercised?
Ms. Browner. There are generally speaking, two ways in
which peer review is important to the work we do at EPA.
Obviously, within our Office of Research and Development the
sort of traditional scientific analysis research done by the
Agency peer review is extremely important. Under Dr. Huggett's
leadership, that office has installed a peer-review policy that
has been praised by many in the scientific community as taking
our peer review to a new level.
We also do science in our individual program areas. The
Office of Water undertakes scientific analysis in conjunction
with our Office of Research and Development. In some instances
they do science beyond what our Office of Research and
Development might be doing, particularly in the case of an
individual rulemaking or regulatory action. This is true for
all of the large programs such as air, waste, pesticides, and
toxic substances.
In each of those programmatic areas, we have also directed
the development of peer-review programs to ensure that peer-
review panels are used where appropriate. Given the fact that
we have these two general areas where peer review can occur, I
felt it was important to have Fred Hansen provide the
leadership across the Agency to ensure that we were using this
very important tool of peer-review practices. My sense is, and
if I might ask Mr. Hansen to speak more specifically, that when
GAO looked at this what they found is within the Office of
Research and Development a very good program, and a program
that was up and running. GAO also feels that we needed to
similarly bring along the programmatic peer-review programs,
and that is what we have been focusing our efforts on.
I might just point out that in fiscal year 1997 we had 231
panels of scientists reviewing our work. They reviewed almost
3,500 studies, just to show you how many times we are going to
external peer review panels. This is no small undertaking on
our part.
Mr. Hansen. Just briefly, two things. First, we believe
very strongly that if peer review is not done where the science
is actually done we will not have as much engagement in exactly
the best peer review and processes to ensure that the overall
goals are achieved. That is why we believe it is important to
have peer review done in all the places that science is done.
Second, what the Administrator has just indicated has not
happened within the program offices as well as we think is
necessary. In January of this year, to be able to carry out the
Administrator's requirement, I have asked Dr. Robert Nuggett,
Assistant Administrator of the Office of Research and
Development, to do two things. One, provide a level of training
throughout the Agency to ensure that all of our people who are
involved in science understand exactly what it is to be able to
conduct all the details of peer review. Not because they did
not have a general understanding of its process. Two, ensure
that peer review is applied to all products that are worked on
by the EPA, and if there are any deficiencies, that they are
either worked out between Assistant Administrators, between Dr.
Huggett and that Assistant Administrator, or brought ultimately
to me for any resolution.
We take peer review very, very seriously. We think that it
is the backbone of our good science.
CLOSING REMARKS
Senator Bond. Thank you, Mr. Hansen.
Ms. Browner, we will leave the record open. If you have
comments on the many points that were raised and not fully
explored, we will have questions that we ask for you to respond
to and would welcome any comments you have.
In closing, I would note that it appears to me that if you
are really applying a relative risk methodology to the budget,
I just do not believe that Superfund would get a 50-percent
increase. To me, let us be honest, I think this request is
driven not by the merits but more by politics, because while
the Superfund budget would increase dramatically, the clean
water State revolving fund, a program which works well and for
which tens of billions of dollars are needed, would be cut by
$275 million----
Ms. Browner. No; it is $100 million.
Senator Bond. It released funds early in the year. It is
$275 million. It is a cut, in any event.
Ms. Browner. We will agree with you that $100 million was
redirected. We would like to discuss with you the other $175
million, because we do not understand where that number comes
from, with all due respect.
Senator Bond. Well, it is cut. We believe it is cut $275
million.
The GAO has found that Superfund is one of the 25
Government programs which is high risk, subject to fraud,
waste, abuse, and mismanagement. We look forward to working
with you to reform a program which has been criticized for
years, and when we get the reforms enacted I will be happy to
talk with you about it. But as I note, even the States and the
State officials responsible are skeptical that the dollars can
be effectively and efficiently utilized.
Additional committee questions
So we will continue to work on that, and before I close I
ask unanimous consent of all of my colleagues on the committee
to keep the record open to include testimony from the GAO on
Superfund and NAPA related issues.
Hearing no objection, it is so ordered. [Laughter.]
[The following questions were not asked at the hearing, but
were submitted to the Agency For response subsequent to the
hearing:]
Questions Submitted by Senator Bond
SUPERFUND OUTYEAR PROJECTIONS
Question. EPA's budget proposal assumes that 76 percent of the
sites currently in the construction and design phases of the Superfund
``pipeline'' would be completed by 2000, leaving less than 500 sites in
the ``pipeline.'' Yet your outyear budget projections for fiscal year
2000 through 2002 show $1.4 billion a year. Given that the number of
sites left to be cleaned up would be cut in half, why is EPA projecting
$1.4 billion outyear budgets?
Answer. The Agency estimates that approximately 18 fund-lead
remedial action starts will occur after the fiscal year 1998 and fiscal
year 1999 accelerated cleanup initiative is completed in the year 2000.
In addition, the Agency's budget estimates the Superfund program will
list 30 sites per year on the National Priorities List (NPL). In other
words, 30 sites per year are entering the Superfund ``pipeline'' which
will result in more than 600 sites by fiscal year 2001. Resources at
the current fiscal year 1997 level in 2000 and beyond will be necessary
to maintain a steady progress of sites through the entire site
remediation process.
SUPERFUND GAO REPORT ON HIGH RISK
Question. In a February 1997 report, GAO reported that Superfund
was a high risk program--vulnerable to mismanagement, waste, fraud and
abuse. In light of GAO's high-risk designation, how could the Congress
have any confidence that the funds you are requesting would be spent
prudently and effectively?
Answer. GAO's high risk report acknowledges EPA's efforts to
correct past contract management problems and commends those efforts.
Some of the contracts management improvements the Superfund program has
made include: (1) reducing program management costs from a high of 20
percent at the start up of the Alternative Remedial Contracting
Strategy (ARCS) contracts to a national average of 8.4 percent for
fiscal year 1995 and fiscal year 1996, (2) increasing management
emphasis on obtaining independent government cost estimates and
establishing improved cost tracking systems to provide better
historical cost data bases, and (3) instituting improved invoice review
processes. Over the past few years, EPA has focused increased attention
on strengthening its management of Superfund contracts and will
continue to do so in the future.
SUPERFUND GAO REPORT ON CONTRACT MANAGEMENT WEAKNESS
Question. GAO's recent report said ``although EPA has been
addressing the weaknesses in contract management, the agency remains
vulnerable to overpaying its contractors and not achieving the maximum
cleanup work with its resources.'' GAO found that EPA pays its cleanup
contractors a high percentage of total contract costs to cover
administrative expenses rather than ensuring the maximum amount of
available funds is going toward the actual cleanup. What plans does EPA
have to address these contract management weaknesses?
Answer. As discussed in the Agency's response to the GAO's high
risk report, we take exception with many of GAO's findings. Our own
internal regional reviews have shown that the agency has made
significant strides to establish the practice in which independent
government cost estimates (IGCE's) are performed for all work
assignments and sufficient negotiation documentation exists in cases
where costs different from those in the IGCE's are accepted. Additional
actions we are taking in this area include sharing best practices and
expertise in preparing IGCE's among the regions and instituting an
improved cost tracking and reporting system under the Response Action
Contracts (the follow on to the ARCS contracts). In addition, the high
program management percentages cited by GAO were due in large measure
to the lack of work assigned to these contractors in fiscal year 1996.
Fiscal year 1996 was clearly an atypical year due to the budget
situation and it is misleading to make projections based on this data.
We continue to emphasize the need to control and minimize program
management costs under all of our cleanup contracts and to monitor
these costs very closely.
SUPERFUND DEOBLIGATIONS
Question. In testimony provided for the record today, GAO states
that $250 million in unspent obligations are potentially available to
be recovered on over 6,000 completed work orders in the Superfund
program. Once deobligated, these funds could be applied to ongoing and
new cleanup activities. EPA's fiscal year 1997 and fiscal year 1998
projections include only $50 million and $20 million, respectively, in
deobligations. What accounts for the difference between EPA's projected
deobligations of $70 million over the next two years, and GAO's
estimate of $250 million?
Answer. Differences in methodology account for the variances in
EPA's and GAO's estimate of deobligations over the next two year. GAO
assumes that all unliquidated funds in completed ``work orders'' are
available for deobligation. GAO's estimate does not take into account
the fiduciary reserves that EPA and States hold in their contracts to
cover costs associated with contract closeout. EPA's deobligation
estimate assumes that prudent reserves will be maintained to cover
closeout costs. However, the Agency is working diligently to deobligate
inactive funds where appropriate.
SUPERFUND PACE OF DEOBLIGATIONS
Question. Why has EPA been slow to deobligate these funds? Couldn't
your budget request be reduced by enhancing your efforts to deobligate
the full $250 million available?
Answer. The Agency has moved aggressively to deobligate inactive
funds. In 1994, the Agency established a taskforce to promote prompt
and effective deobligation of Superfund funds that had not been fully
utilized. In the three full years of this deobligation effort, a total
of $397 million have been deobligated (fiscal year 1994 $160 million,
fiscal year 1995 $170 million, fiscal year 1996 $67 million). These
efforts will continue in fiscal year 1997 with a special emphasis on
expired contracts and grants. Due to fiscal year 1997 efforts and the
need for fiduciary reserves to cover contract closeout costs, the
majority of the contract dollars identified by GAO will not be
available in fiscal year 1998.
SUPERFUND DEOBLIGATION EFFORT
Question. What level of resources are you devoting to this
deobligation effort, and how much do you need to deobligate the full
amount available?
Answer. The President's budget provides adequate resources to
headquarters and regions to process all appropriate deobligations. The
Agency has established a deobligation task force with representatives
from five headquarters offices and all Regions and issued guidance on
processing deobligations. The task force works with programmatic,
contracting, grants, and finance personnel to process all appropriate
deobligations. Due to the need for fiduciary reserves to cover contract
closeout costs, the Agency does not believe an increase in personnel
would result in deobligation of the full amount identified by GAO.
SUPERFUND CLEANUP: AVERAGE COSTS
Question. EPA has claimed its administrative reforms result in a 20
percent reduction in the cost of cleanups. Yet in the model EPA
developed to support the requested level of resources, EPA used a
pricing factor of the average cleanup cost for fiscal year 1987-95 with
60 percent cost growth. Why would you have assumed such cost growth if
in fact you are seeing 20 percent savings?
Answer. The 20 percent cost savings is based on Record of Decision
(ROD) estimates of construction costs. In calculating the average
Remedial Action (RA) cost, the program applies a cost adjustment, a
cost growth factor. The construction cost estimates in the ROD are made
on average 3 years in advance of actual construction. Cost adjustments
related to new information discovered during the design of the project
and time are reasonable and standard engineering practice. This
adjustment is a fixed percentage and would apply to any ROD estimate.
It has no effect on the cost savings exhibited in the last several
years worth of ROD estimates.
SUPERFUND COST OF CLEANUPS CBO ESTIMATES
Question. CBO tells my staff that the average cleanup cost (``ROD''
cost) for fiscal year 1994-95 was $5.6 million, and applying 20 percent
cost growth would be appropriate, for a total cost of $6.72 million.
Why, then, is EPA assuming a $10 million cost for remedial actions?
Answer. The $10.0 million average remedial action cost figure was
used because it represents the average of ROD estimates plus a cost
growth for ROD's signed post the Superfund Amendments and
Reauthorization Act of 1986. Applying a recent two year average of
estimated remedial action costs would under estimate the resources
required to complete construction at these sites.
SUPERFUND SITE DATA
Question. EPA's budget estimates are based on the number of sites
in the queue and historical cleanup costs, not real data on specific
sites. Why?
Answer. Budget estimates, which are based on real data, are used
because it is difficult to say with certainty 18 months prior to the
beginning of a fiscal year which specific sites will begin
construction. Averages based on historical performance provide
reasonable indicators for resource and time requirements.
SUPERFUND SITE DATA: RISK RANKING
Question. Does EPA have a list of specific projects to be funded in
fiscal year 1998, including a risk-based ranking, an estimated cost for
each, along with a projected start-date?
Answer. The Agency has a list of candidate sites with planned
remedial action starts in fiscal year 1998. These sites have not yet
been ranked using the Agency's risk ranking system. These sites do have
planned start dates and cost estimates. It should be noted that the
cost estimates would be used in generating the average remedial action
cost used for the budget projection. A list and total cost estimate of
the planned projects was provided to the Senate Appropriation's
Committee staff on April 3, 1997.
Question. If EPA does not yet have such a list, how can we be sure
that EPA could actually spend the dollars requested?
Answer. EPA does have a candidate list and a projection for the
cost to complete construction. This list and a total cost estimate was
provided to the Senate Appropriation staff on April 3, 1997. Site
specific cost estimates were not provided due to the procurement
sensitivity of the data.
SUPERFUND RISK-BASED PRIORITY SETTING
Question. Would EPA continue to use its risk-based priority setting
process in Superfund?
Answer. Yes. The Agency intends to continue the risk ranking
process to ensure that the worst sites are addressed first.
Question. Given that virtually all sites ready to go to
construction would be funded, why would this be necessary?
Answer. While it is true that most sites would be funded, it is
important that the Agency continue to address the highest risk sites
first.
SUPERFUND STATE COSTS
Question. States are required to put up 10 percent of the cleanup
cost. Have you checked with the States to determine whether they could
afford their share of the cleanup costs?
Answer. The Agency is continuing to work with the States to address
strategies for cost share on the candidate sites. Possible
considerations, in lieu of lump sum payment, are phased payments and
in-kind services.
superfund fiscal year 1997 projected start dates
Question. EPA projects there will be 58 sites in fiscal year 1997
ready-to-go to construction, but unfunded because of budget shortfalls.
However, about a third of these sites are not projected to be ready
until the fourth quarter. Isn't it true that projected start-dates
often slip?
Answer. While projected start dates can slip, the Agency's best
information indicates that the 58 sites will be ready for construction
this fiscal year.
SUPERFUND 900 SITES COMPLETION SCHEDULE
Question. EPA has indicated the additional funds requested would
enable it to complete 900 sites by the year 2000, instead of 650
construction completes committed to in 1991. Over the life of the
program, there have been about 423 construction completions to date.
How will EPA achieve another 477 completions--more than the total
number completed in 15 years--in less than three years?
Answer. Current analyses of the Superfund site cleanup pipeline
show that 147 sites are in design and 482 sites are in construction.
This provides a universe of 629 sites that are potential candidates to
achieve the 477 completions needed to reach the President's 900
construction completion goal. With the resources requested over two
years (fiscal year 1998 and fiscal year 1999), the Agency will be able
to provide project managers and funding necessary to move these sites
to construction completion.
SUPERFUND ADEQUATE STAFFING
Question. Are there sufficient staff to manage and contracting
capacity to carry out these additional cleanups?
Answer. The President's Budget requests an additional 100 full-time
equivalents (FTE) to support the 900 construction completions goal.
This will provide the necessary staff to support the accelerated number
of cleanups projected. Recently the Agency awarded a new set of
remedial action contracts. These contracts provide ample contract
capacity over the next five years to accommodate the estimated number
of construction projects.
Question. While EPA's budget indicates an additional 130 FTE would
go to Superfund, I understand that the budget is adequate to fund only
44 of those. How can you say you've requested enough staff to oversee a
doubling of the program?
Answer. The Superfund budget supports full funding of all FTE's.
SUPERFUND ATSDR FUNDING
Question. Why isn't EPA requesting increases for the other agencies
who support the Superfund program--such as the Agency for Toxic
Substances and Disease Registry?
Answer. Most of the increases are requested for cleanup activities
that our other Federal agency partners don't perform. However, the
Agency is requesting $6.0 million in funding for the Agency for Toxic
Substances and Disease Registry (ATSDR) to specifically support the
President's 900 Superfund completion goal. ATSDR will address community
concerns regarding how the implementation of cleanup designs affect
their health ad surrounding environment. The other federal agencies do
not play as active a role in remedial site cleanup. Their
responsibilities focus on research, worker safety training, and
emergency response. The President's 1998 budget requests total funding
of $152.1 million for other Federal agencies who support the Superfund
program.
SUPERFUND REDUCED FUNDING AFFECT ON 900 SITES
Question. If the Congress were to provide the $1.4 billion
originally projected for fiscal year 1998, how many ``ready-to-go''
projects would carry into fiscal year 1999?
Answer. The Agency expects to carry over 50 to 55 fund-lead sites
from fiscal year 1997 to fiscal year 1998. Eighty fund lead projects
are planned in the fiscal year 1998 budget. If the Agency's Superfund
budget remains at the $1.4 billion level, it is estimated that over 100
fund-lead sites will carryover into fiscal year 1999.
METHYL PARATHION
Question. What is the status of EPA's efforts to cleanup homes
contaminated by the illegal application of methyl parathion?
Answer. As of April 18, 1997, the Agency was responding to 3,687
homes with reported methyl parathion spraying. The Agency has sampled
2,629 of the 3,687 homes, relocated 503 of the households, totaling
2,239 residents. Of the 2,629 homes sampled, 57 are completely clean
and 195 residents have been returned to their homes. Twenty-five
businesses require cleanup of which 4 have been cleaned.
Question. How much has been expended to date and how much
additional funding will be required in fiscal year 1997?
Answer. To date, the Agency has issued $33.0 million to address the
cleanup of methyl parathion application. The Agency expects to issue
another $32.0 million by the end of the fiscal year.
Question. Some have questioned whether this activity is an
appropriate use of the Superfund budget. Has EPA General Counsel made a
determination on whether such expenditures are appropriate?
Answer. The Agency's Office of General Counsel has concurred on all
the decision documents prepared outlining the Agency's response to the
methyl parathion public health.
METHYL PARATHION DELIBERATE USE
Question. Some Louisiana residents have been accused of
deliberately having their homes sprayed with methyl parathion ``to take
advantage of a federal offer to renovate their homes,'' according to
The Washington Post (March 10, 1997). Is this accurate?
Answer. The EPA Office of Inspector General (OIG) has presented
(April 16, 1997) three cases of suspected fraudulent claims relating to
methyl parathion application to the U. S. Attorney's Office in New
Orleans, Louisiana. The OIG is currently awaiting a prosecutive
decision. There have been several arrests made by the EPA Criminal
Investigations Division regarding the illegal application of this
substance.
Question. How will the costs associated with those emergency
removals be recovered to the Superfund trust fund?
Answer. The costs associated with the emergency removals will
probably never be recovered to the Superfund trust fund. The
individuals suspected of submitting fraudulent claims live well below
the poverty level and are not likely to be subjects of Department of
Justice (DOJ) civil actions. The OIG has been working with Agency
officials to set up controls to identify fraud indicators and is
providing the DOJ with the most egregious case identified to create a
deterrent effect.
EPA-STATE PARTNERSHIP: REGULATORY FLEXIBILITY
Question. In President Clinton's 1996 state of the union address he
said ``We must challenge business and communities to take more
initiative in protecting the environment and we have to make it easier
for them to do it.'' Yet EPA has taken the position that all requests
for state regulatory flexibility projects must meet the criteria for
superior environmental performance. Why? What incentive is there for
attempting innovative regulatory programs if a fundamental requirement
is superior environmental performance--as opposed to simply the most
efficient and effective means of meeting environmental requirements?
Answer. Although significant improvement has occurred over the last
25 years in the U.S. environment, much remains to be done. In
traditional regulatory program areas such as air and water, many areas
of the country do not meet standards, and areas of environmental
concern continue to grow. Given projected population growth and
anticipated economic growth, continuous environmental improvement has
become an approach that many companies and communities endorse--to
ensure a sustainable future. For example, the three companies that have
signed Project XL agreements have identified ``win-win'' solutions for
both the company and the environment, agreements through which an
innovative approach can achieve superior results and also save money
for the company. The Aspen Project, a broad-based consensus effort,
concluded that requiring superior environmental performance in exchange
for regulatory flexibility in Project XL was the best way to achieve
sustainable development.
Many opportunities exist to improve environmental protection
through innovations that are straight forward, technically achievable,
and non-controversial--and most of these innovations will also provide
environmental benefits. In some cases, innovations may be designed
primarily to improve the cost effectiveness of achieving environmental
goals; these projects must ensure there is no adverse impact on
environmental protection, public access to information, and public
access to the decision making process.
EPA-STATE PARTNERSHIP DIMINISHED REGIONAL ROLE
Question. Ms. Browner, two years ago you said ``I think the most
important thing that we can do, and do it immediately, is diminish the
oversight of the regions of the states' actions. We do not need to be
in there second guessing them at every turn.'' Can you tell me how the
regional oversight has been diminished, and how the role of the regions
has changed in the past two years?
Answer. EPA is successfully working with the states to reshape the
federal-state relationship to develop true partnerships between the
federal government and states to provide the best possible
environmental management system. The Environmental Protection Agency is
currently in the second year of working with the states under the
National Environmental Performance Partnership System (NEPPS). NEPPS is
a program that evaluates environmental problems and program needs.
NEPPS Agreements and Grants are based upon state specific measurements
of results. The Performance Partnership Agreements and Grants are
voluntary, and are flexible enough to either encompass a broad range of
environmental programs or they can focus on single programs as defined
by the state.
Regional oversight of a state's environmental programs can be
significantly reduced through NEPPS by the state and the regional
office agreeing on what the state's annual accomplishments should be. A
series of performance measures has been developed by each of the
Agency's programs to assist the regions and states in negotiating
Performance Partnership Agreements. These performance measures were
reviewed by the Environmental Commissioners at their Spring meeting in
March 1997, and received their endorsement. This program is succeeding
in reducing oversight by changing the fundamental relationship between
the EPA Regions and the states from one of federal oversight to a true
partnership.
At last year's EPA-States Meeting, attended by state environmental
commissioners and EPA senior management, and at the last EPA Annual
Planning Meeting, a common theme was the need for more assistance from
regions to states to make a real working partnership effective. The
regions held discussions with states that revealed states and tribes
highly value the technical assistance and applied science capabilities
EPA brings to difficult environmental problems. Many states highly
value EPA's technical, programmatic, scientific, and legal assistance
in dealing with permit review and enforcement in both non-delegated and
delegated programs.
EPA has focused on work-sharing with state and local governments
through several new approaches. In addition to NEPPS, the Agency is
working with states and local governments through such efforts as
Regional Geographic Initiatives, XL, compliance assistance, and
technical assistance. We are trying to maximize state and Federal
resources by dividing the work, moving away from counting
administrative actions, and moving toward using environmental results
as our indicator of progress and success. Our role is to address
problems that state programs cannot or do not have the appropriate
skill-set to handle.
Many geographic, tailor-made solutions are more labor-intensive and
may require more time and resources, especially in the short-term.
According to a report done by ECOS magazine, 23 states reduced their
resources devoted to environmental management from fiscal year 1995 to
fiscal year 1996. In addition, states continue to expect EPA to deal
with federal facilities and emergency response, cross-state boundary
issues, and international issues. States need the talents of many
specialists, who are brought together through project-specific teams.
This is especially true for the regional labs who provide extensive
technical support. States have begun to ask us to help fill their gaps
with technical assistance and direct support.
EPA has reduced oversight where appropriate, maintained oversight
where we are statutorily obligated to do so, and redirected efforts
towards new activities, often at the request of states, tribes,
industry, and the general public. Oversight reduction has been ongoing
for the last few years. Some oversight is and will continue to be
necessary; just as direct federal action will continue to be necessary
in some cases.
It is important to note that while we have indeed shifted resources
to many new activities, we still have activities we are statutorily
required to undertake. We have a legal obligation to ensure national
standards and implement programs the states have elected not to take
on. We also have a unique role with tribes in carrying out our Trust
responsibilities. If we discover that reduced oversight in a particular
state leads to less diligent enforcement, for example, EPA will
exercise the appropriate federal responsibility to ensure a level
playing field across state boundaries and take needed action to remedy
the situation.
NAAQS PARTNERSHIP AIR GRANTS
Question. Ms. Browner, while you have professed great commitment to
the EPA's proposed new standards for ozone and fine particles--claiming
they would result in averting 20,000 premature mortalities--your budget
does not seem to reflect that commitment. EPA's budget request provides
a very marginal--3 percent--increase for air grants to the states. How
can states undertake the multitude of tasks required to implement these
proposed rules with the budget you've requested?
Answer. In fiscal year 1998 much of the work involving the new air
quality standards for ozone and fine particles will remain with EPA.
Development of implementation policies and guidance materials will be a
principal priority of the Office of Air and Radiation for fiscal year
1998. Once the new standards are promulgated, States will have 3 years
to submit their plans addressing how they will attain the new
standards. The due date for these plans is presently anticipated to be
July, 2000.
The initial state need in addressing the new PM fine standard will
be to develop and implement a monitoring network to measure the ambient
levels of fine particles. In EPA's fiscal year 1997 and fiscal year
1998 budget, the Agency has included funds to begin the establishment
of fine particle monitoring networks. Initial efforts are primarily
aimed at laboratory equipment and other infrastructure needs. Once EPA
promulgates a fine particle standard and a subsequent federal reference
method for ambient monitoring, greater emphasis will be placed on the
purchase and siting of monitoring equipment.
We are currently working with the states to examine the states'
total needs for implementing programs to meet these new standards.
NAAQS PARTNERSHIP AIR GRANTS
Question. Ms. Browner, while you have professed great commitment to
the EPA's proposed new standards for ozone and fine particles--claiming
they would result in averting 20,000 premature mortalities--your budget
does not seem to reflect that commitment. EPA's budget request provides
a very marginal--3 percent --increase for air grants to the states. How
can states undertake the multitude of tasks required to implement these
proposed rules with the budget you've requested?
Answer. In fiscal year 1998 much of the work involving the new air
quality standards for ozone and fine particles will remain with EPA.
Development of implementation policies and guidance materials will be a
principal priority of the Office of Air and Radiation for fiscal year
1998. Once the new standards are promulgated, States will have 3 years
to submit their plans addressing how they will attain the new
standards. The due date for these plans is presently anticipated to be
July, 2000.
The initial state need in addressing the new PM fine standard will
be to develop and implement a monitoring network to measure the ambient
levels of fine particles. In EPA's fiscal year 1997 and fiscal year
1998 budget, the Agency has included funds to begin the establishment
of fine particle monitoring networks. Initial efforts are primarily
aimed at laboratory equipment and other infrastructure needs. Once EPA
promulgates a fine particle standard and a subsequent federal reference
method for ambient monitoring, greater emphasis will be placed on the
purchase and siting of monitoring equipment.
We are currently working with the states to examine the states'
total needs for implementing programs to meet these new standards.
NAAQS AIR GRANTS PM FUNDING
Question. In addition, in your agency's proposed fiscal year 1998
budget you have set aside only $10.9 million in grants for state and
local air agencies for particulate matter monitoring, which is
something they'll need to start right away. However, much of that is
simply reprogrammed money--taking funds away from other important air
programs, such as ozone or PM 10 monitoring. Aren't these programs
still required under the Clean Air Act? If so, how are the states going
to pay for them?
Answer. EPA's fiscal year 1998 budget, $10.9 million would provide
for the implementation of fine particle monitoring networks. This
amount is an $8.2 million increase over the amount available for fiscal
year 1997. Of this $8.2 million, $4.0 million would be funds over and
above the total amount appropriated for fiscal year 1997. The
remainder, $4.2 million is reprogrammed from other activities that were
either completed in fiscal year 1997 or can be delayed in order to
expedite the implementation of the fine particle network. Two
activities comprise the $4.2 million. In fiscal year 1996 and fiscal
year 1997, $2.2 million was directed towards the establishment of data
delivery systems that would enhance the transmission of emissions
inventory data from the States into EPA's emission inventory data
systems. With this 2 year effort completed, we are able to redirect
these funds to the fine particle network. The remaining $2 million
comes from the total funds available to the Photochemical Assessment
Monitor Stations (PAMS) program. In fiscal year 1997, $14.7 million was
available for PAMS; for fiscal year 1998, we are able to redirect $2.0
million of those funds to the fine particle network. The $2 million
reduction in PAMS funding is brought about by reducing the sampling
frequency at certain PAMS sites. Reduced sampling frequency saves both
in FTE's as well as reductions in supply costs and equipment
replacement costs. Reducing the sampling frequency while reducing the
total data collected, does not impact the integrity of the data or our
ability to shows trends in air quality levels.
NAAQS AIR GRANTS MACT STANDARDS
Question. One area of great concern is the release of hazardous air
pollutants. For that reason, the Clean Air Act calls upon EPA to
develop a series of standards to curb these emissions--MACT standards.
We understand that you have a MACT Partnership Program under which
state and local air agencies have such expertise. However, if the Clean
Air Act gives the responsibility for developing the standards to EPA,
why is it that under your proposed allocation of air grants to state
and local air agencies for fiscal year 1998 you plan to make these air
agencies use their own grant funds to help you. Since the Act calls
upon EPA to carry out this function, shouldn't the agency use its own
budget for that and leave state and local air grants for other
activities for which state and local agencies are primarily
responsible?
Answer. The Agency does not require states and local agencies to
use their grant funds to help us develop rules but rather offers them
an opportunity to participate in the process. The MACT Partnership
program brings together the knowledge, skills and resources of all
major stakeholders in the development of MACT standards under Section
112 of the CAA. This has been necessary because frequently stakeholders
want issues addressed that go beyond our basic mandate to create MACT
standards (e.g., our efforts to bring emission averaging into the MACT
program or providing alternatives to specific state rules). As a part
of this program, we involve state and local personnel in the initial
thinking and planning about a MACT standard. The state and local
agencies generally want to participate and have agreed that we can
identify an appropriate portion of their grants for this purpose. This
allows them to share data and information among themselves and EPA and
to develop their interest in the completion of a MACT standard, along
side with the industry affected by the standard. The goal is to provide
the best possible ways for state and local interests to be incorporated
into the final MACT standard. This involvement (and the grants) are not
associated with the main work in developing a MACT standard; state and
local personnel decide independently if they want to participate in
such efforts. While we have successfully developed MACT standards that
will assure the reduction in emissions of hazardous air pollutants by
nearly 1 million tons per year, we have many additional such standards
to develop. By providing grant resources for the MACT partnership
program, we ensure state and local agencies can participate in the
development of these standards, an essential aspect of the consensus-
based MACT partnership program.
EPA-STATE PARTNERSHIP OROSLR REORGANIZATION
Question. EPA recently announced it was closing its office of
Regional Operations and State & Local Support. Responsibility for state
and local relations is moved to the Intergovernmental Affairs office.
How will you ensure state and local issues don't get lost among
Congressional relations responsibilities?
Answer. EPA is not closing its Office of State and Local Relations.
The functions performed by this office are vital to the Agency. The
Agency is combining the Office of State/Local Relations with the Office
of Congressional Affairs. A senior level political appointee will head
the state and local relation functions. The Associate Administrator for
Intergovernmental Relations--the most senior person with responsibility
for state and local relations--will report directly to the
Administrator. We expect these changes to improve the relationships
between EPA, the states, and local officials and we fully intend to
actively solicit and consult our state partners.
EPA-STATE PARTNERSHIP NEPPS
Question. In the past two years, EPA has been working with states
to implement a new National Environmental Performance Partnership
System, in which states are to be assessed based on their performance,
not on how many permits they issue or reports they write. In order to
implement NEPPS successfully, states need to shift resources to the
development of environmental indicators.
To what extent has EPA allowed states to ``disinvest'' in
traditional activities such as reporting requirements in order to
redirect resources to the environmental indicators development?
Answer. All of the Agency's Media offices have been encouraged to
develop environmental core measures that move away from traditional
activity measures and in the direction of direct measures of
environmental status/condition. The Offices of Water, Air and
Radiation, Pesticides and Toxic Substances, Solid Waste and Emergency
Response, and Enforcement and Compliance Assurance have completed draft
core measures. The intent is for these core measures, once finalized
and adopted by the Agency, to be used by EPA's regions in negotiating
Performance Partnership Agreements with the states, and to give the
states some idea where EPA is heading so they, in turn, can begin to
develop their own core measures. Once EPA has the core measures in
place--including expanded use of environmental indicators--more
traditional reporting requirements will be significantly reduced.
For example, the Office of Water has developed a set of 18
environmental indicators designed to measure surface water and drinking
water quality nationally. Nine of these indicators are also on the list
of eleven core measures being developed by the Office of Water. In
piloting some of these environmental indicators with states, the Office
of Water agreed in some cases to reduce other reporting requirements to
free up state resources needed to work on the new approach. As more of
the core measures get implemented, and more states start switching to
the new approach, EPA can begin eliminating older reporting
requirements that have been replaced and/or are no longer needed.
To specifically address state reporting requirements, in December
of 1996, EPA convened the State Reporting Requirements Reduction
Workgroup, co-chaired by Michael O'Connor, Commissioner of the Indiana
Department of Environmental Management; Bob Perciasepe, EPA Assistant
Administrator for Water; and Mike McCabe, Regional Administrator of
EPA's Region 3. Nine states are represented on the workgroup: Colorado,
Delaware, Indiana, Maryland, Massachusetts, Missouri, New Jersey,
Oklahoma, and Utah. So far, the workgroup has met twice and heard
presentations from Massachusetts and Florida on how they have worked
with EPA to reduce reporting burdens in their states. The workgroup has
drafted, and is circulating for members' comment, a set of principals
for guiding EPA/State decisions about what should be reported, versus
what reporting can be eliminated. The workgroup hopes to finalize the
principles in the next three months and turn its attention to
implementing them in the fiscal year 1998 National Environmental
Performance Partnership System agreements. In one example of reductions
already achieved, the State of Florida and EPA Region 4 reported
reducing Florida's solid waste and superfund reporting requirements by
50 percent in the process of negotiating Florida's fiscal year 1997
Performance Partnership Agreement. Other examples are being collected
by the workgroup.
EPA-STATE PARTNERSHIP ENVIRONMENTAL GOALS
Question. Have differences arisen between state and EPA
environmental goals? If so, how have they been resolved?
Answer. At this time we know of no significant differences between
EPA and state environmental goals. Most of the differences are in the
approach or program strategy to be used, rather than in disagreement
with environmental goals. The negotiation of Performance Partnership
Agreements resolves differences through joint planning and priority-
setting by state and EPA regional officials, taking into account
national environmental goals, program guidance and individual
performance measures, regional and state analyses of environmental
status and trends, and program performance. Each EPA Regional
Administrator is charged with working with National Program Managers
and state environmental officials to ``harmonize'' state and national
objectives in the Performance Partnership Agreements. States are also
expected to involve stakeholders in the discussion of environmental
goals and priorities.
EPA-STATE PARTNERSHIP NEPPS EFFICIENCIES
Question. Are anticipated costs and other efficiencies being
realized in the new performance partnership grants?
Answer. Since we have not yet completed the first full fiscal year
of implementing Performance Partnership Grants (PPG's), we do not have
much information about efficiencies realized thus far. As a
fundamentally new approach to state grants and state-EPA relations,
many procedural and policy issues emerged during this first year that
had to be resolved. Nonetheless, we made remarkable progress putting
PPG's in place. As of April 1, 1997, EPA had awarded one or more fiscal
year 1997 PPG's to 33 different states; 21 PPG's went to environmental
agencies, 2 to health agencies, and 13 to agricultural agencies.
Although difficult to quantify, all state agencies with PPG's
should be realizing at least some administrative savings. They can now
submit a single grant application combining several programs and are no
longer required to account separately for multiple grants.
The other PPG's are also funding more integrated environmental
protection efforts, involving joint state-EPA goal and priority setting
based on environmental conditions, strategies that address the most
pressing problems, and negotiated performance measures. Only a few
modest resource shifts were made this year. Many state and EPA
officials found the process more difficult than negotiating traditional
grants. However, most believe the benefits of this more comprehensive
and flexible approach are worth the effort and expect PPG's to be
easier in the future.
EPA-STATE PARTNERSHIP CORE PERFORMANCE MEASURES
Question. What is the status of the development of core performance
measures under NEPPS?
Answer. EPA and the states, working together, have defined for each
media program--air, water, waste, toxics, and enforcement--a set of
core performance measures to be used by the regions and the states in
negotiating Performance Partnership Agreements. Core performance
measures are the principle long-term gauge of state and national
progress in protecting human health and the environment. These
measures, supplemented by other data routinely reported by the states,
provide the ``performance'' element in the Performance Partnership
Agreements. EPA and state environmental officials have jointly
developed a framework and a set of definitions for core performance
measures which are compatible with GPRA, and the National Environmental
Goals Report. Each media office has proposed a set of core measures
which track with their program goals and objectives, and are consistent
with the framework and definitions. EPA and the states will continue to
further refine these measures together, moving towards expanded use of
environmental indicators. The framework, definitions, and examples of
the measures are publicly available via EPA's home page.
EPA-STATE PARTNERSHIP NEPPS MANAGEMENT
Question. Given the dissolution of the Office of Regional
Operations and State & Local Support, who will be responsible for
managing NEPPS?
Answer. EPA is currently evaluating options for how the National
Environmental Performance Partnership System (NEPPS) will be managed.
EPA believes that NEPPS is a crucial reinvention program that will
strengthen the state-EPA partnership. A final decision about
organizational placement will be made in the next few months.
PLANNING, BUDGETING, AND ACCOUNTABILITY (PBA)
Question. Can you point to some specific examples of how it [the
proposed planning, budgeting, and accountability system] impacted the
1998 budget? Did it result in a risk-based reprioritization of
activities across the agency, and disinvestments in low priority
activities?
Answer. EPA is engaged in a far-reaching effort to fundamentally
change past approaches to planning, budgeting, performance measurement,
and accountability. Our goal is to make better use of scientific
information in setting priorities, improve the link between long-term
environmental planning and resource management, and implement a new
accountability system to assess accomplishments and provide feedback
for future decisions. This effort will take several years to be fully
in place.
In fiscal year 1998, EPA expanded its GPRA pilot programs designed
to bring together environmental goals and specific desired outcomes.
These programs also serve as the prelude to full implementation of
goal-based budgeting, complete with analytic criteria (including risk)
and accountability measures, for fiscal year 1999. Together with a
strategic plan and an annual performance plan, the Agency will submit a
budget for fiscal year 1999 incorporating the principles and spirit of
the GPRA.
In fiscal year 1999, risk-based criteria, statutorily mandated
tasks, and improved efficiency in government performance will be the
bases for reprioritization of activities across the Agency. EPA will
learn from its fiscal year 1997-98 GPRA pilot programs the best
approaches to evaluating the work we do, providing resources, and
measuring the results.
PBA AFFECT ON FUNDING DECISIONS
Question. How does the agency's decision to increase the Superfund
program by 50 percent and the Climate Change Action Plan programs by 73
percent reflect the budget discipline which was supposed to be imposed
by the new planning, budgeting, and accountability system? Don't
dollars spent in Superfund provide relatively little opportunity for
risk reduction, compared to other EPA programs?
Answer. EPA continues to make fundamental changes to planning,
budgeting, performance measurement, and accountability. As the Agency
fully integrates these changes into the budget process over the next
several years, decisions will be based on priorities at the highest
risk areas and at the highest areas of need. The fiscal year 1998
budget does begin to implement the need for a more risk-based and need-
based budget through the support of the Superfund program and the
Climate Change Action Plan programs.
Superfund sites pose a risk to human health and the environment and
additional funding for the Superfund program offers the opportunity to
address the direct risk for those individuals who live close to a site.
These risks include concerns about exposures from multiple pathways,
multiple chemicals, and non-cancer risks. By increasing funds for
Superfund, the budget supports the commitment to clean up sites for the
one in four Americans who live within four miles of a Superfund site.
PBA STATUS
Question. GAO, in testimony submitted for today's hearing record,
found that the overall framework for the new [Planning, Budgeting, and
Accountability] system has been developed, but critical details are
missing, such as the Integrated Risk Project to rank the relative risk
of environmental problems. When will these missing elements be in
place?
Answer. The Agency is currently evaluating various approaches to
incorporate relative risk analyses into our strategic planning process.
There are several activities underway, including the Integrated Risk
Project of the EPA Science Advisory Board (SAB). However, it is not yet
possible to incorporate any results from the SAB's project as there is
not yet an available public draft of their efforts. The Agency,
however, does plan to consider the methods and results of the
Integrated Risk Project to incorporate into future year planning
processes. Currently, the Agency is using some very preliminary
relative risk analyses as a first step in this initial strategic
planning process. The nature and amount of risk information that is
available varies by program area. Over time, we plan to continuously
improve this information and revise our strategic plans accordingly.
PBA SCIENTIFIC AND ENVIRONMENTAL DATA
Question. GAO also found that EPA faces long-term challenges to
obtain the scientific and environmental data needed to fully support
the new systems. What are EPA's plans to address this issue?
Answer. EPA is committed to developing results oriented performance
measures that will provide relevant information to the public on
protection of public health and the environment. EPA plans to address
the long-term challenges to obtain the scientific and environmental
data by identifying the most important data gaps associated with its
strategic objectives and to invest as needed in gathering and/or
analyzing data required to fill these gaps. Each program office is
expected to invest adequate resources to do this. However, there may be
crosscutting areas where data needs can be met by Agency-wide efforts
to gather and analyze data. EPA is very conscious of the cost of
developing environmental outcome information and the reporting burden
it places on EPA and potentially our partners. Thus, the Agency will
emphasize using existing data collected by EPA, other Federal agencies
and the States to measure the effectiveness of our program activities.
We will seek to acquire new data and information only when it is
critically needed to measure program effectiveness; in so doing, we
will consult with State, Tribal and local governments, as well as the
regulated community, to identify and collect data in the most efficient
manner possible.
center for environmental information and statistics (ceis)
Question. EPA recently announced the creation of a center for
environmental information and statistics. This comes in response to
NAPA's recommendations. NAPA found a lack of adequate, high quality
data on environmental conditions and the need for an independent office
to analyze and disseminate such data. NAPA recommended such a center
conduct a comprehensive assessment to determine what types of
information EPA needs to make good policy decisions, and to identify
what types of information EPA no longer needs to collect.
Answer. EPA agreed with the NAPA findings concerning weaknesses in
the Agency's environmental data quality, and with the NAPA
recommendation to create a CEIS.
CEIS STRATEGY
Question. What is EPA's strategy for the proposed new center, when
will the comprehensive assessment NAPA recommended be conducted, and
how will you ensure that the need for better, more reliable data does
not result in increased reporting burdens on states and the regulated
community?
Answer. The strategy for CEIS operation during the remainder of
fiscal year 1997 is to focus on an ambitious, but achievable agenda
using budget resources redirected from OPPE environmental information
and statistics functions, and to a lesser extent, from certain OARM
data management functions and other parts of EPA. The early CEIS agenda
will include a few, key products that define and illustrate the CEIS
role. Examples include:
--An integrated, multimedia state of the environment report,
addressing environmental issues for which EPA has, or shares
lead federal responsibility and aimed at EPA's historical
audiences for information on environmental quality, status and
trends; and
--A comprehensive assessment of the environmental information needs
of EPA audiences to identify priorities for improving data
quality, integration and access.
The CEIS environmental information needs assessment will also aid
in identifying low priority data collections that become subject to
burden reduction activities under the Agency's BRITE (Burden Reduction
Information Technology Executive task force) program. The AA for OPPE,
working with the CIO, has lead Agency responsibilities for both CEIS
needs assessment and BRITE, thus ensuring close coordination between
the two programs.
CEIS APOLITICAL USES
Question. NAPA said the center ``should be free of political
interference, and should not participate in political advocacy or
regulatory activities.'' Yet the agency has indicated the center will
be used to help implement the President's Right-to-Know initiative--
clearly a very political initiative created at the political levels of
EPA with the White House. Can you assure us the Center will not be used
for political purposes?
Answer. EPA strongly believes that to be successful, both the CEIS
and EMPACT must earn reputations as objective, reliable environmental
information sources, known for the clear presentation of environmental
information, as well as for fair and balanced interpretation and
analysis. The purpose of the President's Right-to-Know initiative,
known as EMPACT (Environmental Monitoring for Public Access and
Community Tracking), is to work with at least 75 major, U.S. urban
areas to provide the public with more timely and accessible,
environmental monitoring information. The motivation for EMPACT is to
improve the science and effectiveness of environmental monitoring. EPA
has also explicitly stated that the objectives for the program include
making environmental data understandable and promoting fair and
unbiased data interpretation. EPA will use peer review of products and
balanced stakeholder involvement in implementing both CEIS and EMPACT
to ensure the credibility of the environmental information they make
available.
CEIS ORGANIZATIONAL LOCATION
Question. Why is the Center under the control of the Policy Office,
rather than the Chief Information Officer, as recommended by NACEPT in
its report on managing information resources?
Answer. The CEIS will enhance EPA's presentation of environmental
information mainly by providing comprehensive, multimedia analysis and
interpretation of environmental quality, status and trends. OPPE is the
natural placement for CEIS by virtue of its long history as EPA's
office for multimedia analysis. Because the CEIS will rely heavily on
the CIO for the information technology and infrastructure necessary to
integrate and manage environmental data, the CEIS will function as an
OPPE/CIO partnership, with the CEIS located in OPPE to advance its
important, substantive analytical role.
CEIS NACEPT REPORT RECOMMENDATION
Question. NACEPT stated that ``integrated information--the
strategic tool for the Agency's new place-based approach--will not be
available unless one individual in the Agency is charged with managing
information resources as their sole responsibility''. Why hasn't EPA
followed NACEPT's recommendation that the CIO be charged solely with
information resources management?
Answer. Long before the passage of the Information Technology
Management Reform Act, EPA named a Chief Information Officer to perform
enterprise-wide information management responsibilities. With the
passage of the new law, EPA has heightened the importance of the Chief
Information Officer by vesting in this position the full authorities of
the new law. The Chief Information Officer has sole responsibility for
the Agency's information management planning process, Strategic Plan,
policy formulation, and architecture. The CIO's authority has been
further strengthened with responsibilities for investment planning and
for reengineering review imposed by the new law.
Within the parameters of this centralized authority, the Chief
Information Officer relies on senior officials in EPA's program and
regional offices to develop and implement information management
programs in support of their environmental statutes and regulations.
This centralized/decentralized operating framework has traditionally
worked well in EPA because it yields centralized authority on policy
and infrastructure requirements, while allowing day-to-day
responsibilities for data systems and management to occur at
operational levels more closely associated with the nature of the
environmental program.
EPA is highly sensitive to the need for more integrated
environmental information highlighted by the NACEPT committee, and its
Chief Information Officer is leading a number of efforts to evaluate
and improve the Agency's ability to deliver integrated information. The
CIO's authority is enhanced by the Agency's Executive Steering
Committee for IRM, which serves as the Chief Information Officer's
board of directors for agencywide information management directions,
cross-media efforts, and IRM investment planning. The Executive
Steering Committee is composed of the senior officials in each of EPA's
program offices, along with representatives from our regional offices
and state environmental agencies. EPA's place-based and community-based
efforts are overseen by the Executive Steering Committee, under the
direction of the CIO. Thus, EPA is moving forward with a clear effort
and management framework for meeting the integrated information needs
identified by NACEPT.
CEIS BUDGET REQUEST
Question. What is the budget request for the Center in fiscal year
1998? When will a center director be named?
Answer. Because the decision to create the CEIS was made after the
fiscal year 1998 President's budget was submitted to Congress, EPA's
budget did not include a specific CEIS budget request. The fiscal year
1998 resource needs for CEIS will be addressed as the Agency works with
Congress to develop EPA's fiscal year 1998 operating plan. EPA will
seek to fund CEIS by redirecting OPPE base resources, and, to a lesser
extent, by redirecting resources from OARM and other parts of the
Agency. Some of the Agency resources redirected to CEIS will include a
portion of those funding EMPACT, to support the important CEIS role in
the EMPACT program. EPA will name a CEIS director before the CEIS
organization plan is finalized in late spring.
PBA PROGRAM EVALUATION
Question. NAPA found that EPA has no systematic way of performing
program evaluations to determine whether programs are accomplishing
their stated goals and objectives. Without this information, it is
difficult to make rational, informed budget decisions. What has EPA
done to establish centralized, routine, systematic program evaluation
as part of the budget process?
Answer. EPA is currently developing a new process to substantially
change the way the Agency makes decisions with regard to planning and
budgeting. This process is driven by a set of environmental goals and
results-oriented environmental outcomes that are associated with these
goals. The process integrates the Agency's planning and budgeting
processes and establishes a program performance evaluation and
accountability system that will ensure compliance with the Government
Performance and Results Act. At the foundation of this planning-
budgeting-accountability process will be clearly identifiable links
between the Agency's goals; objectives for achieving those goals;
performance measures to assess progress in meeting objectives;
activities designed to attain desired environmental outcomes; and
resources used in support of those activities. EPA has formalized these
links by creating the Office of Planning, Analysis and Accountability
(OPAA) within the Office of the Chief Financial Officer.
Two primary responsibilities of OPAA are the development of an
Agency-wide Strategic Plan that incorporates the goals and objectives
we have identified as essential in achieving desired outcomes, and an
accountability system that will enable us to evaluate program
performance and related costs in terms of goals and objectives. This
will be done systematically by focusing on accomplishments relative to
the commitments made in annual performance plans, which will constitute
the body of Agency budget submissions. Annual performance reports will
evaluate environmental and managerial results and relate them to
resources expended, and the results will support future decision-making
on program direction and budgets. In the future, this system is
intended to integrate other ongoing evaluation efforts, including
regular internal program assessments, Federal Managers' Financial
Integrity Act monitoring and reporting, and Agency financial
statements, to provide comprehensive information for management.
project xl and common sense initiative
Question. How will the new Office of Reinvention EPA recently
established improve the effectiveness of Project XL and the Common
Sense Initiative? What specific changes do you envision?
Answer. The Office of Reinvention (OR) will enhance the
effectiveness of Project XL (XL) and the Common Sense Initiative (CSI)
within EPA in four ways:
First, we expect the reorganization to improve the ability of the
Agency to coordinate across the reinvention programs and ensure that
resources are used in the most efficient and effective manner possible.
Second, the true purpose of reinvention is to implement new
approaches to environmental protection. While XL and CSI are different
in their approach to reinvention, common ideas and themes will continue
to emerge. OR will track these ideas, look for the best opportunities
to test and refine them in reinvention programs, and work to
incorporate them into Agency regulatory or policy decisions. The
``lessons learned'' will be shared among the reinvention programs.
Third, establishment of OR will improve the Agency's ability to
make operational and policy decisions that move the XL and CSI programs
forward. As programs with significant implications that cut across
Agency divisions, XL and CSI repeatedly face the difficult task of
facilitating cross-agency decision making on an ad hoc basis. OR will
provide structure and authority to cross-agency actions on reinvention
programs.
Fourth, OR will be involved with other Agency reinvention efforts
such as the Environmental Leadership Program and the One-Stop Reporting
Program. The office will be able to bring the experiences and successes
of these efforts to XL and CSI to foster continuous improvement.
PROJECT XL AND CSI ALTERNATIVE COMPLIANCE LEGISLATION
Question. After the problems you have encountered with Project XL,
why do you not agree that alternative compliance legislation is needed?
Answer. GEMI's critique stated that successful reinvention programs
had common characteristics of clear goals developed with input from
direct participants, the provision of significant flexibility in how to
achieve set ends, and trust among participants. They go on to state
that without statutory provisions, initiatives take a lower priority,
and require consensus-based decisions to be effective. GEMI suggests
that having statutory authority would remedy the lack of these
characteristics in XL and CSI, and would overcome the weak incentives
and risks of litigation of these two reinvention initiatives.
EPA disagrees that legislative action would serve to remedy the
majority of criticisms that have been directed at Project XL or CSI.
These criticisms not easily resolved by legislation. Most suggestions
can be implemented without legislation and some may evolve and change
as our learning in these areas expands. While the characteristics of
clear, shared goals, flexibility to achieve set ends, and trust are
important if reinvention programs are to be successful, legislation is
not required to accomplish any of those criteria.
Both XL and CSI are undergoing substantial efforts currently to
redefine program objectives and goals, with substantial input from
stakeholders of all types. As these dialogues continue, a greater level
of support and an understanding of the expected outcomes of these
programs is developing. This is an ongoing, dynamic process; one that
is necessary at the program level regardless of statutory authority.
EPA has found there is substantial room for flexibility within the
existing framework of our legal authorities.
It is important to recognize that Project XL is not intended to be
an alternative compliance system; rather it is a laboratory within
which we can test new approaches to environmental protection, which if
successful can be used to change and improve our current system. EPA
has not believed it needed separate statutory authority to run a pilot
program of temporary duration (50 projects). Our experience with XL to
date is that we have been able to test the concepts proposed by project
sponsors and still remain within our statutory authorities. Using our
existing statutory framework has important advantages.
--First, it engages the very staff that wrote the rules that are
being challenged in thinking about new ways of doing business.
This is the most effective way to accomplish one of the biggest
goals of reinvention--cultural change. Clearly, the
Administrator has established XL and CSI as Agency priorities.
But it is the rethinking of the traditional approaches as rules
and policies get developed where cultural change and staff buy-
in actually happen.
--Secondly, by conducting pilot projects within the confines of
existing statutory authorities, it is easier to transfer the
successful ideas out of the reinvention programs into that
existing current system in a way that is acceptable to states,
industry, and stakeholders.
Finally, EPA agrees that there is a need to better articulate and
develop incentives for participation of project sponsors in XL.
However, EPA questions the need for legislation to provide those
incentives. EPA will actively be exploring ideas on ways to provide
clear benefits to those who are willing to provide leadership and make
the investments necessary to pilot change in the way we do business.
project xl and csi presidential commissions recommendations
Question. How will EPA see that the recommendations of these
Presidential Commissions are implemented?
Answer. EPA is establishing a new Office of Reinvention which will
be responsible for managing changes to traditional regulatory
approaches. This new office, under the leadership of an Associate
Administrator, will be responsible for ensuring follow-up to the many
policy recommendations from the President's Council on Sustainable
Development, Presidential/Congressional Commission on Risk Assessment
and Risk Management, and other groups. Much of the specific follow-up
work will be done by the line operating programs in the Agency, and it
will be the job of the Office of Reinvention to provide overall
direction and coordination across the Agency.
PROJECT XL AND CSI GLOBAL ENVIRONMENTAL MANAGEMENT
Question. According to a report by the Global Environmental
Management Initiative, called ``Industry Incentives for Environmental
Improvement: Evaluation of U.S. Federal Initiatives,'' EPA's voluntary
programs have not been terribly effective. GEMI looked at CSI, Project
XL, the 33-50 program, and the sulfur dioxide emissions trading
program. With the exception of emissions trading, GEMI found these
programs ``do not address most of the important problems with the
pollution control system nor do they appear to contribute significantly
to improving environmental quality or safety.'' What implications do
these findings have for Project XL and CSI?
Answer. Project XL and the Common Sense Initiative (CSI) were
created in recognition that there are many visions for a future system
of environmental protection, and that different approaches for
exploring these visions make sense. EPA did not identify specific
innovations or outcomes from these reinvention programs, choosing
instead to allow sponsors and sectors the freedom to suggest their own
ideas. It was reasoned that industry, along with stakeholders, would
know where the biggest problems in our current system lie. The GEMI
report voices a criticism of this approach, advocating that EPA take a
more aggressive approach in directing these programs.
In Project XL, there still exists an open invitation for project
proposals, with specific emphases on innovative technology and
pollution prevention. EPA has, however, been working with environmental
policy opinion leaders from states, industry, and environmental NGO's
to strategically identify the types of XL projects that will help us
achieve the desired environmental protection system of the future.
CSI has almost 40 projects in the six participating industrial
sectors. These projects, which have been identified by the external
stakeholders, run the gamut from alternative regulatory systems,
permitting reform, community outreach, and pollution prevention to
reporting reforms and technical assistance. CSI continues to rely upon
the external stakeholders on each sector subcommittee to establish
goals to help direct the efforts of their industrial sector. The CSI
Council works with the sector subcommittees to assure that the
individual sector goals support the vision of the Common Sense
Initiative--cleaner, cheaper, smarter solutions to environmental
management.
EPA is confident that individual XL and CSI projects currently
being implemented and under development do contribute to improving
environmental quality and safety both by producing superior
environmental performance and by testing new approaches to
environmental protection.
PROJECT XL AND CSI GEMI REPORT
Question. GEMI said ``It is difficult to make any non-statutory
program work'' and, ``there is no short-cut, no way around the
difficult task of trying to legislate a better system.'' Has the report
influenced your views as to the need to legislate an alternative
compliance system?
Answer. GEMI's critique stated that successful reinvention programs
had common characteristics of clear goals developed with input from
direct participants, the provision of significant flexibility in how to
achieve set ends, and trust among participants. They go on to state
that without statutory provisions, initiatives take a lower priority,
and require consensus-based decisions to be effective. GEMI suggests
that having statutory authority would remedy the lack of these
characteristics in XL and CSI, and would overcome the weak incentives
and risks of litigation of these two reinvention initiatives.
EPA disagrees that legislative action would serve to remedy the
majority of criticisms that have been directed at Project XL or CSI.
These criticisms not easily resolved by legislation. Most suggestions
can be implemented without legislation and some may evolve and change
as our learning in these areas expands. While the characteristics of
clear, shared goals, flexibility to achieve set ends, and trust are
important if reinvention programs are to be successful, legislation is
not required to accomplish any of those criteria.
Both XL and CSI are undergoing substantial efforts currently to
redefine program objectives and goals, with substantial input from
stakeholders of all types. As these dialogues continue, a greater level
of support and an understanding of the expected outcomes of these
programs is developing. This is an ongoing, dynamic process; one that
is necessary at the program level regardless of statutory authority.
EPA has found there is substantial room for flexibility within the
existing framework of our legal authorities.
It is important to recognize that Project XL is not intended to be
an alternative compliance system; rather it is a laboratory within
which we can test new approaches to environmental protection, which if
successful can be used to change and improve our current system. EPA
has not believed it needed separate statutory authority to run a pilot
program of temporary duration (50 projects). Our experience with XL to
date is that we have been able to test the concepts proposed by project
sponsors and still remain within our statutory authorities. Using our
existing statutory framework has important advantages.
--First, it engages the very staff that wrote the rules that are
being challenged in thinking about new ways of doing business.
This is the most effective way to accomplish one of the biggest
goals of reinvention--cultural change. Clearly, the
Administrator has established XL and CSI as Agency priorities.
But it is the rethinking of the traditional approaches as rules
and policies get developed where cultural change and staff buy-
in actually happen.
--Secondly, by conducting pilot projects within the confines of
existing statutory authorities, it is easier to transfer the
successful ideas out of the reinvention programs into that
existing current system in a way that is acceptable to states,
industry, and stakeholders.
Finally, EPA agrees that there is a need to better articulate and
develop incentives for participation of project sponsors in XL.
However, EPA questions the need for legislation to provide those
incentives. EPA will actively be exploring ideas on ways to provide
clear benefits to those who are willing to provide leadership and make
the investments necessary to pilot change in the way we do business.
STATUTORY INTEGRATION
Question. About two years ago, this Committee directed EPA to
examine options for better integrating its statutory authorities. In
response, EPA established a team to explore options for bringing about
integration. Yet following the establishment of the Enterprise for the
Environment Initiative, EPA decided ``E4E'' would serve as the vehicle
for fulfilling this Committee's request for analysis of statutory
integration. This is not what we intended. When will EPA report to the
Committee on the findings of its statutory integration task force?
Answer. The rationale for having E4E serve as the vehicle for
fulfilling the Committee's request on statutory integration was that it
will be more fruitful to discuss integration of authorities in the
broader context of policy changes being considered by E4E, rather than
have EPA's work on statutory integration stand in isolation from, or
appear to be in competition with, E4E's related work. To do otherwise
would run counter to the Committee's request that the Agency coordinate
with and provide support to E4E, in addition to using it for additional
stakeholder input on improving our programs and authorities. We would
be happy to brief Committee staff on our work on statutory integration,
either before release of the final E4E report, or after Committee staff
have reviewed the E4E product.
GREEN PROGRAMS
Question. EPA's budget request includes a 73 percent increase for
the Climate Change Action Plan--the so-called ``green programs''--for a
total of $149 million. The Green Lights program would more than double
to $52 million. The Green Lights program has been in existence for
about 6 years and there are now over 2,300 partners. The purpose of the
program is to promote the use of energy efficient lighting
technologies. At what point will EPA begin proposing a phase out of
this program due to ``market saturation''?
Answer. The current budget cuts have limited the Agency's ability
to achieve its goal of overcoming the barriers in the marketplace that
will allow the markets themselves to provide greater energy efficiency
and reduce pollution. Because the funding cuts are hindering EPA in its
ability to achieve these market transformation goals, the cuts are also
postponing the point at which EPA will be able to reduce funding for
the programs. The timing of phasing out of all CCAP programs, including
Green Lights, will depend in large part on whether or not full funding
levels are restored in the near term.
The Green Lights program has been extremely successful at
increasing energy savings and pollution prevention, in spite of reduced
funding. The attached chart shows the rapid increase in annual
pollution prevention from the program over time. These program results
are based on detailed reporting from partners on completed projects. As
can be seen in the chart, the program is gaining momentum as its
pollution prevention achievements climb rapidly. This is because, even
though the program is successful, there remains a large untapped
potential. The 6 billion square feet of floorspace owned by the
program's 2,300 partners represents only 7 percent of total U.S.
commercial and industrial floorspace. Although partners are already
preventing over 5 billion pounds of carbon dioxide emissions every
year, significant opportunity remains.
In addition, EPA's commitment does not end with recruiting
partners. In fact, that is just the beginning of affecting real change.
In the Memorandum of Understanding between EPA and its partners, the
Agency agrees to provide technical support as the partners fulfill
their commitments within 5 years of signing. The Agency considers its
growing reputation as a dependable source of unbiased information to be
an essential component of the program's current and future success.
EPA is currently tracking energy efficient lighting product markets
to assist with overall monitoring and evaluation of the Green Lights
program. The Agency is developing a plan to identify criteria by which
decisions can be made for determining the proper exit strategy from the
market. This is consistent with recommendations in a 1997 Office of the
Inspector General (OIG) report.\1\ For the CCAP partnership programs
that were evaluated, the OIG found that the Agency was demonstrating
``good management practices,'' including good planning, progress
evaluation, and program adjustment (p. 11). The OIG also recommended
that management develop plans for evaluating market transformation and
determining when resources should be reduced for individual programs
(p. 31).
---------------------------------------------------------------------------
\1\ EPA Office of the Inspector General, ``Risk Reduction Through
Voluntary Programs,'' Audit Report No. E1KAF6-05-0080-7100130, 3/19/97.
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It should be noted that a significant portion of the increased
funding (i.e., the referenced $52 million) is targeted for the Energy
Star Buildings program (CCAP Action # 1). Launched in 1995, this
important program builds on the success the Green Lights program has
had in developing solid partnerships and establishing EPA's credibility
within the private sector. Beyond lighting, the Energy Star Buildings
program engages partners in a more aggressive and challenging agreement
to improve total energy performance throughout buildings. This can
provide significant pollution prevention benefits. In fact, the energy
used in U.S. commercial and industrial buildings is responsible for as
much carbon dioxide emissions as all of the cars, light trucks, jeeps,
and minivans in the U.S. today. Energy Star Buildings partners can
cost-effectively eliminate about one-third of their energy use and
pollution.
Providing full funding of the CCAP at this time will allow the
buildings programs to expand their partnerships in line with original
expectations. With the additional funding, the Green Lights and Energy
Star Buildings programs will (1) increase recruiting by 100 percent
(focussing on a broader range of sector specific opportunities), (2)
enhance customer support by 100 percent for existing partners so that
they can perform better upgrades more quickly, (3) enhance outreach on
the environmental and economic benefits of improved building
technologies, (4) provide technical information on a broader set of
newer technologies of interest to State and Local governments such as
high efficiency traffic signals, (5) complete more comprehensive
program evaluation efforts, and (6) develop the foundations for
including the design and construction of new commercial buildings
within the programs.
Question. What is the long-term strategy for the green programs?
Answer. Over 2,500 of the world's best climate scientists recently
concluded that the threat of global warming must be taken seriously.
More than 2,400 economists endorse the U.S. taking action to slow
climate change.
--The Intergovernmental Panel on Climate Change (IPCC), drawing on
the work of more than 2,500 scientists, concluded in 1995 that
global temperatures are expected to rise 2 to 6 degrees
Fahrenheit in the next century, and that ``the balance of the
evidence suggests a discernible human influence on global
climate'' that is already apparent.
--The IPCC concluded that greenhouse gas emissions can be reduced by
as much as 30 percent from anticipated future levels by more
fully using cost-effective technologies.
--More than 2,400 economists (including eight Nobel prize winners)
agreed, saying in a statement this year that: ``There are many
potential policies to reduce greenhouse gas emissions for which
the total benefits outweigh the total costs.'' These measures,
they said, ``would slow climate change without harming American
living standards'' and ``may, in fact, improve U.S.
productivity in the longer run.'' (Statement attached).
The recent scientific evidence and the endorsement by over 2,400
economists that many cost-effective policies exist to reduce greenhouse
gasses makes fully funding the Climate Change Action Plan programs more
compelling than ever before because, the CCAP programs are beginning to
do precisely what these experts call for. By providing information,
helping establish markets for new technologies, and promoting new
arrangements for private financing, the CCAP programs are accelerating
the adoption of this money-saving and pollution-preventing technology
by large and small American businesses, schools, hospitals and other
non-profits, and homeowners and consumers.
Recent research at leading centers for economic research
demonstrates that these programs are highly effective. In 1996, a study
by Resources for the Future concluded that, in addition to prices, the
Green Lights program makes a ``significant contribution to the
diffusion of high efficiency lighting in commercial office buildings *
* *.'' \2\ Also in 1996, a study by Stephen DeCanio of the Department
of Economics at the University of California at Santa Barbara concluded
that: ``By speeding the dissemination of information about energy-
saving technologies, programs such as Green Lights can offer win-win
benefits to taxpayers, consumers, and shareholders.'' \3\ Nevertheless,
the programs are being restrained by funding cuts that have limited
their effectiveness.
---------------------------------------------------------------------------
\2\ Morgenstern, Resources for the Future, ``Does the Provision of
Free Technical Information Really Influence Firm Behavior? '' 5/96.
\3\ DeCanio and Watkins, UCSB Department of Economics, ``Investment
in Energy Efficiency: Do the Characteristics of Firms Matter? '' 7/96.
---------------------------------------------------------------------------
Rapid deployment of this energy-efficiency technology will be even
more critical in the future. The U.S. and many other countries will
meet in December 1997 to discuss the next phase of actions under the
Framework Convention on Climate Change. Reflecting the recent
scientific evidence on climate change risks, and because current non-
binding approaches under the Convention are not working to fully
accomplish their goals, more than 100 nations agreed last year that the
new agreement should move from non-binding emissions goals to legally-
binding emissions targets. The U.S. position is that binding emissions
obligations must be set at realistic and achievable levels, with
adequate lead time and flexible implementation tools (emissions
budgets, banking and borrowing, international emissions trading, and
joint implementation). The U.S. position also includes commitments by
developing nations, culminating in binding emissions targets for all
nations.
If binding emissions targets are adopted in December 1997, rapid
deployment of the currently available, money-saving technology to
produce and use energy more efficiently will be more important than
ever. It will be one of the keys to meeting these targets at the lowest
possible cost for the private sector and the U.S. economy as a whole.
Restoring Climate Change Action Plan funding to the President's
request will allow EPA to fully implement its programs to achieve the
highest possible rate of adoption of these technologies by American
firms, non-profit institutions, and individual consumers. But if
funding for the CCAP programs remains at reduced levels, many of these
technologies will remain on the shelf or be adopted by only a fraction
of the potential users. Consumers energy bills and other costs will be
unnecessarily high. The productivity and competitive position of U.S.
businesses will suffer. Americans will lose far more as investors,
employees, and consumers than these programs cost.
[GRAPHIC] [TIFF OMITTED] T05AP08.022
ENFORCEMENT
Question. Despite all the rhetoric about the supposed inadequacy of
EPA's enforcement budget in fiscal year 1996, in the operating plan EPA
actually proposed reprogramming $4 million out of the fiscal year 1996
enforcement budget. Why did EPA cut enforcement? Couldn`t the carryover
have been reprogrammed into other enforcement activities?
Answer. In fiscal year 1996 EPA did not cut Enforcement. The
resource levels provided in the original fiscal year 1996 Operating
Plan fully funded projected Enforcement FTE. The hiring, promotion and
bonus freezes, implemented during the fiscal year 1996 appropriation
process, held on-board levels and personnel compensation and benefits
costs below levels projected in the Operating Plan. The Enforcement
program is especially sensitive to these personnel factors given that
almost 75 percent of the program's budget within the Environmental
Programs and Management appropriation is payroll.
Once the freezes were lifted, the Enforcement program began to hire
additional personnel in areas such as criminal investigation and data
systems support. However despite this activity, actual on-board levels
remained below levels provided in the fiscal year 1996 Operating Plan.
However, in fiscal year 1997 the Agency fully funded the Enacted
Operating Plan level of Enforcement FTE. Despite the many uncertainties
faced in the previous year, the Enforcement program was able to
accomplish its goals and objectives in fiscal year 1996 without the
reprogramming of carryover funds.
ENFORCEMENT: RECORD ENFORCEMENT ACTIONS
Question. According to a February press release, EPA had a record
number of criminal enforcement actions in 1996, despite claiming that
the ``environmental cop was off the beat.'' How did EPA manage to have
record numbers of criminal enforcement actions in fiscal year 1996?
Answer. During fiscal year 1996, EPA was subject to a series of
continuing resolutions which placed the Agency under spending and
hiring restrictions for approximately seven months, including several
weeks in which the Agency was shutdown. During this time, EPA's
criminal program continued to carry out its enforcement
responsibilities. Criminal investigators were ``essential'' employees
under the furlough and resources were provided for basic program
operations throughout the continuing resolutions. However, efforts to
open new criminal cases were limited by available travel resources. The
program focused primarily on cases already in the criminal enforcement
pipeline, in which ``front-end'' investigative activities were
completed in prior years. EPA brought many of these cases to closure in
fiscal year 1996, allowing the Agency to report record numbers of
criminal enforcement actions despite the budget circumstances.
However, EPA staff who work in civil enforcement were more directly
affected by the fiscal year 1996 budget situation. Staff who normally
interact with states on enforcement issues, conduct inspections,
administrative actions, and develop civil referrals, were not able to
carry out their work during the furlough and their activities were
significantly disrupted under the continuing resolutions.
ENFORCEMENT: COMPLIANCE ASSISTANCE PROGRAM
Question. While EPA's overall EPM enforcement budget would increase
7 percent to $237 million, there is no increase requested for
compliance assistance. According to Agency documents:
The enforcement program recognizes that most businesses and
regulated facilities want to comply with the law. Often, however, they
need help with understanding environmental requirements and coming into
compliance with them. This is particularly true of small businesses.
The enforcement program's compliance assistance program helps the
regulated community to understand and come into compliance with the
law.
Why is there no increase in the relatively modest ($20 million)
compliance assistance program?
Answer. In 1998 the Agency's enforcement program will continue to
conduct a broad spectrum of outreach and technical assistance to the
regulated community in concert with the States. By 1998 the ground work
for the Enforcement's Compliance Assistance Program, such as policy and
strategy development, will have been completed and the program will
direct resources at implementation. Also, states are increasingly
providing compliance assistance. All 50 states have a Clean Air Act
State Small Business Assistance Program and many are now expanding into
other media. The Enforcement program is investing additional resources
in 1998 in helping the states develop their compliance assistance
programs.
By 1998 the Agency will have Compliance Assistance Centers up and
running for eight industry sectors. The goal is for these centers to be
self-sufficient.
The compliance assistance tools that the Agency is developing for
use by the industry sectors are building upon themselves. EPA is able
to apply lessons learned in developing tools for one sector to another
sector, producing cost savings. The Agency's approach is to complete
work on a set of sectors before moving onto the next thereby
efficiently utilizing the Agency's resources.
ENFORCEMENT: SBREFA FUNDING
Question. What specifically is requested for the additional
requirements associated with the Small Business Regulatory Enforcement
Fairness Act?
Answer. To support the requirements of SBREFA, the fiscal year 1998
Budget requests three workyears and two hundred thousand dollars for
the Office of Policy, Planning and Evaluation (OPPE).
OPPE projects that there will be fifteen SBREFA panel processes in
fiscal year 1998, which will require approximately 20 FTE in agency
personnel and $125,000 in travel and $150,000 in contract support of
panel requirements.
NAAQS
Question. Last November EPA proposed new standards for ozone and
fine particles which are highly controversial. Recent press reports
have stated that there were deep divisions with the administration over
EPA's proposal. According to one account, OSTP Director Jack Gibbons
called on EPA to delay its ozone proposal, saying EPA should look more
closely at the health benefits from improving compliance with the
current standard. In addition, staff memos at the Council of Economic
Advisors said ``the incremental health risk reduction for more
stringent standards is small, while the cost are high.'' Treasury
Department staff challenged the health benefits. And the Small Business
Administration urged EPA to follow the requirements of the Small
Business Regulatory Enforcement Fairness Act.
Ms. Browner, why did EPA seemingly ignore these significant
concerns from within your own administration? Do you have plans to
address other agencies concerns about the costs and benefits?
Answer. The Clean Air Act requires that EPA establish ambient
standards based on selecting a level that protects the public health
with an adequate margin of safety. While preparation of a regulatory
impact analysis that includes an estimate of the costs and benefits
associated with the proposed standards is part of the review process,
these costs cannot be considered in the final decision on what the
standard should be. EPA's decision is to be based solely on protection
of public health.
In addition, as we move forward on responding to the comments
received on the proposed standards and developing final standards, EPA
is working with all of the other Departments and Agencies to address
their issues and concerns. There are weekly meetings of an Interagency
technical staff work group and of a higher level Interagency policy
work group to have regular discussion of these issues. This process
will continue through until the final standards are issued.
Finally, although the Agency disagrees with the SBA's
interpretation of SBREFA, we are voluntarily complying with all
procedures for consultation with small businesses.
NAAQS SBREFA REQUIREMENTS
Question. When does EPA plan to comply with the SBREFA
requirements, which called for consultation with small businesses on
the costs of the regulation, prior to the proposal of major rules?
Answer. As you know, SBREFA amended the Regulatory Flexibility Act
(RFA) to add a requirement that EPA convene a Small Business Advocacy
Review Panel for any rule that requires preparation of an initial
regulatory flexibility analysis (IRFA) under section 603 of the RFA. As
explained further below, EPA did not convene a panel because EPA
determined that an IRFA is not required for rules like the NAAQS that
do not apply to small businesses or other small entities. As the RFA's
``Findings and Purposes'' section (Public Law 96-354 section 2) makes
clear, Congress enacted the RFA in 1980 out of concern that agencies
were writing one-size-fits-all regulations that, in fact, did not fit
the size and resources of small entities or their relative contribution
to the problem being addressed. To change this practice, Congress
required agencies, when developing a rule, to focus on the small
entities that would have to comply with the rule's requirements and
consider ways of easing or even waiving those requirements as they
would apply to small entities. That purpose cannot be served in the
case of rules like the NAAQS that do not have requirements that apply
to small entities.
As a rulemaking subject to notice-and-comment rulemaking
requirements, the NAAQS proposals are subject to the RFA. The RFA
requires that an agency prepare an IRFA describing ``the impact of the
proposed rule on small entities,'' unless the agency certifies that the
rule ``will not, if promulgated, have a significant economic impact on
a substantial number of small entities'' (RFA sections 603(a) and
605(b)).
At the heart of whether EPA was required to convene a panel prior
to proposing the NAAQS is the question of what ``impact'' an agency
must assess for an IRFA or a certification. Is an agency supposed to
assess a rule's impact on the small entities that will have to comply
with the rule, or the rule's impact on small entities in general,
whether or not they will be subject to the rule? In the NAAQS case, the
question arises because of the Congressionally-designed mixture of
Federal and State responsibilities in setting and implementing the
NAAQS.
NAAQS rules establish air quality performance standards that States
decide how to meet. Under section 110 of the Clean Air Act (CAA), every
State develops a State implementation plan (SIP) containing the control
measures that will achieve the NAAQS. States have broad discretion in
the choice of control measures. In short, it is State rules, not the
NAAQS themselves, that may establish control requirements applicable to
small entities, depending on each State's strategy for meeting the
NAAQS. See Virginia v. EPA, No. 95-1163, slip op. at 20 (D.C.Cir. March
11, 1997), quoting Union Electric v. EPA, 427 U.S. 246, 269 (1976)
(``section 110 left to the states `the power to determine which sources
would be burdened by regulations and to what extent' '').
To properly interpret ``impact'' under the RFA, EPA looked at the
RFA's stated purpose, its requirements for regulatory flexibility
analyses, its legislative history, the amendments made by SBREFA, and
case law. All of these traditional tools of statutory construction
point in one direction--that an agency need only assess the impact of a
rule on the small entities that will be subject to the rule's
requirements, because the purpose of a regulatory flexibility analysis
is to identify what rule requirements will apply to what kinds of small
entities and how those requirements may be eased or even waived for
small entities, consistent with the objectives of the statute
authorizing the rule. Since NAAQS rules do not establish requirements
that apply to small entities, they cannot be eased or waived as they
apply to small entities. They thus do not impose the kind of ``impact''
that the RFA was intended to address.
This interpretation of ``impact'' flows from the express purpose of
the RFA itself. In the ``Findings'' section of the 1980 law enacting
the RFA, Congress expressed concern that agencies were writing rules
with big businesses in mind, but applying those rules uniformly to big
and small businesses (Public Law 96-354, section 2(a)). Congress noted
that it is generally easier for big businesses (and governments) to
comply with regulations, and that small businesses are, therefore, at a
competitive disadvantage in complying with one-size-fits-all rules.
Congress also noted that small entities' relative contribution to the
problem a rule is supposed to solve may not warrant applying the same
requirements to large and small entities alike. In the RFA itself,
Congress therefore stated:
``It is the purpose of this Act to establish as a principle of
regulatory issuance that agencies shall endeavor, consistent with the
objectives of the rule and of applicable statutes, to fit regulatory
and informational requirements to the scale of the businesses,
organizations, and governmental jurisdictions subject to regulation.
[Public Law 96-354, section 2(b).]''
The RFA sections governing initial and final regulatory flexibility
analyses reflect this statement of purpose. RFA sections 603 and 604
require that initial and final regulatory flexibility analyses identify
the types and estimate the numbers of small entities ``to which the
proposed rule will apply'' (sections 603(b)(3) and 604(a)(3)).
Similarly, they require a description of the ``projected reporting,
record keeping and other compliance requirements of the proposed rule,
including an estimate of the classes of small entities which will be
subject to the requirement'' (sections 603(b)(4) and 604(a)(4)). At the
heart of the analyses is the requirement that agencies identify and
consider ``significant regulatory alternatives'' that would
``accomplish the stated objectives of applicable statutes and which
minimize any significant economic impact of the proposed rule on small
entities'' (sections 603(c) and 604(a)(5)). Among the types of
alternatives agencies are to consider are the establishment of
different ``compliance or reporting requirements or timetables'' for
small entities and exempting small entities ``from coverage of the
rule, or any part'' of the rule (section 603(c)(1) and (4)). Regulatory
flexibility analyses are thus to focus on how to minimize rule
requirements on small entities.
Since finding that a rule will not have ``a significant economic
impact on a substantial number of small entities'' exempts a rule from
the requirement for regulatory flexibility analyses, it makes sense to
interpret ``impact'' in light of that requirement. As described above,
regulatory flexibility analyses are to assess how a rule will apply to
small entities and how its requirements may be minimized with respect
to small entities. In this context, ``impact'' is appropriately
interpreted to mean the impact of a rule on the small entities subject
to the rule's requirements.
The Federal courts have so held. In 1986, the United States Court
of Appeals for the D.C. Circuit ``conducted an extensive analysis of
the RFA provisions governing when a regulatory flexibility analysis is
required and concluded that no analysis is necessary when an agency
determines `that the rule will not have a significant economic impact
on a substantial number of small entities that are subject to the
requirements of the rule' '' United Distribution Companies v. FERC, 88
F.3d 1105, 1170 (D.C. Cir. 1996) (citing and quoting Mid-Tex Elec. Co-
op v. FERC, 773 F.2d 327, 342 (D.C. Cir. 1985) (emphasis added by
United Distribution court)). The Mid-Tex petitioners had claimed that
the RFA is intended to apply to all rules that affect small entities,
whether the small entities are directly regulated or not. After
reviewing the requirements for regulatory flexibility analyses, the
Mid-Tex court concluded that ``The relevant `economic impact' was the
impact of compliance with the proposed rule on regulated small
entities. Reading section 605 [the provision exempting a rule from the
regulatory flexibility analysis requirement if the agency certifies the
rule will have no significant economic impact on a substantial number
of small entities] in light of section 603 [the provision governing
initial regulatory flexibility analyses], we conclude that an agency
may properly certify * * * when it determines that the rule will not
have a significant economic impact on a substantial number of small
entities that are subject to the requirements of the rule.'' Mid-Tex,,
773 F.2d at 342.''
Congress let this interpretation stand when it recently amended the
RFA in enacting SBREFA. If it had disagreed with the court's decision
it would have revised the relevant statutory provisions or otherwise
indicated its disagreement when it enacted SBREFA. Since SBREFA's
passage, the United Distribution court has reaffirmed the Mid-Tex
court's interpretation.
In fact, SBREFA reinforces the conclusion that the RFA is aimed at
rules that establish requirements that small entities must meet.
Section 212(a) of SBREFA requires that an agency issue a ``small entity
compliance guide'' for ``each rule * * * for which an agency is
required to prepare a final regulatory flexibility analysis under
section 604'' of the RFA. The guide is ``to assist small entities in
complying with the rule'' by ``explain[ing] the actions a small entity
is required to take to comply'' with the rule (SBREFA section 212(a)).
Obviously, it makes no sense to prepare a small entity compliance guide
for a rule that does not apply to small entities, so SBREFA stands as
further confirmation that regulatory flexibility analyses are intended
to address rules that establish requirements small entities must meet.
Given the Federal/State partnership for attaining healthy air, the
proposed NAAQS, if adopted, will not establish any requirements
applicable to small entities. Instead, any new or revised standards
will establish levels of air quality that States will achieve by
adopting plans containing specific control measures for that purpose.
NAAQS rulemakings are thus not susceptible to regulatory flexibility
analysis as prescribed by the amended RFA. They establish no
requirements applicable to small entities, and thus afford no
opportunity for EPA to fashion for small entities less burdensome
compliance or reporting requirements or timetables or exemptions from
all or part of the rules. Moreover, since NAAQS are not applicable to
small entities, there would be no point in issuing small entity
compliance guides under SBREFA for them. For these reasons, EPA
appropriately certified that the ozone and PM NAAQS rulemaking actions
will not, if promulgated, have a significant economic impact on a
substantial number of small entities within the meaning of the RFA.
Since the Agency certified the proposals, it was not required to
convene a panel for them.
At the same time, EPA recognizes that the proposed NAAQS standards,
if promulgated, would begin a process of State implementation that
could eventually lead to small entities having to comply with new or
different control measures, depending on the implementation plans
developed by the States. Under these circumstances, EPA believes that
the best way to take account of small entity concerns regarding any new
or revised NAAQS is to work with small entity representatives and
States to provide information and guidance on how States can address
small entity concerns when they write their implementation plans. This
approach is sensible and appropriate given that the Clean Air Act does
not allow EPA to dictate how States must regulate to attain any new or
revised NAAQS.
In line with this approach, as part of the Regulatory Impact
Analyses it prepared for the proposed NAAQS, EPA analyzed how State
plans for implementing the proposed standards might affect small
entities. The analyses were necessarily general and speculative, since
they depended on projections about what States might do several years
in the future. Nevertheless, they provide as much insight as possible
at this point in the NAAQS process.
The Agency also took steps to ensure that small entities' voices
are heard and considered in the NAAQS rulemakings themselves. With Jere
Glover, Chief Counsel for Advocacy of the Small Business Administration
(SBA), we convened outreach meetings modeled on the SBREFA panel
process to solicit and convey small entities' concerns with the
proposed NAAQS. Two meetings were held as part of this process, on
January 7 and February 28, with a total attendance of 41
representatives of small businesses, small governments, and small
nonprofit organizations. Both meetings were attended by representatives
of SBA and the Office of Management and Budget (OMB), as well as EPA
staff. A report will be produced based on these meetings to ensure that
small entity concerns are part of the rulemaking record when the Agency
makes its final decision on the proposals.
In light of States' pivotal role in NAAQS implementation, EPA is
also undertaking a number of additional activities to guide, assist and
encourage the States to be sensitive to small-entity impacts as they
implement any new or revised NAAQS. With the Small Business
Administration, EPA is conducting interagency panels to collect advice
and recommendations from small-entity representatives on how states
could lessen the impacts on small entities. If it promulgates new or
revised NAAQS, EPA will issue materials in two phases to help States
develop their implementation plans. In view of States' discretion in
implementing the NAAQS, these materials will mostly take the form of
guidance, which is not subject to the RFA. But regardless of the form
such materials might take, we intend to employ panel procedures before
issuing them for public comment. These procedures will include the
following steps: assessing to the extent possible any potential impact
on small entities of NAAQS implementation by the States; conducting
small-entity outreach on those issues; preparing an interagency panel
report on small entities' concerns and recommendations with respect to
implementation issues; and completing an analysis of any potential
small entity impacts in light of the panel report. The Agency will then
consider whether to change the materials in light of the report.
To supplement the input we receive from the aforementioned panel
process, EPA is augmenting its Federal Advisory Committee Act (FACA)
process to add more small-entity representatives to the subcommittee on
NAAQS implementation. These representatives have formed a small-entity
caucus to develop and bring to the subcommittee a focused approach to
small-entity issues. These new subcommittee members are also part of
the larger group involved in the aforementioned panel process, and we
are encouraging them to work together to share the views of the larger
group with the FACA subcommittee. In this way, EPA hopes to promote the
consideration of small entity concerns and advice throughout the NAAQS
implementation process.
NAAQS CASAC CONCERNS
Question. I understand that EPA's Clean Air Scientific Advisory
Committee is urging EPA to revamp its particulate research strategy,
including putting resources into the issue of whether there is a link
between exposure to fine particles and premature mortality. CASAC
believes EPA's research budget request of $26 million is inadequate.
What are you doing to address CASAC's concerns?
Answer. The Clean Air Scientific Advisory Committee (CASAC)
reviewed two draft documents, ``Particulate Matter Research Needs for
Human Health Risk Assessment'' and ``Particulate Matter Research
Program Strategy'' at a public meeting on November 18 and 19, 1996.
During this meeting a number of constructive comments were provided by
individual CASAC members, and on March 12, 1997 a letter providing
CASAC summary comments was provided to the Administrator. In some areas
the CASAC provided general comments (e.g., use of the risk assessment
framework to identify and prioritize research and allocate resources to
the effort; research resources are insufficient), and in other areas
there was a consensus on specific research priorities (e.g., that
epidemiological research on links between long-term exposure to
particulate matter (PM) and life shortening and other long-term health
effects was among the highest priorities). Beyond a consensus view in
these few areas, however, the opinions of the members varied and the
committee did not achieve a consensus on an overall set of priorities.
The PM research strategy is being revised to incorporate
suggestions provided by CASAC regarding general structural,
presentation, and context issues. The comments of individual members
will be carefully considered and revisions will be made where
appropriate to reflect the many constructive suggestions. More
importantly, the core issue of the document is the prioritization of
research issues and, in the final document, the Agency will incorporate
the consensus recommendations of CASAC regarding highest priority
research areas. Specifically, the Environmental Protection Agency (EPA)
will emphasize: (1) research to elucidate mechanisms of PM-associated
mortality and morbidity to determine the biological plausibility of
effects associated with PM exposures; (2) epidemiological research on
links between long-term exposure to PM and life shortening and other
long-term health effects; (3) research to examine linkages between
health effects and personal exposures to physical-chemical subclasses
of PM; (4) research to refine our understanding of exposure-dose-
effects relationships to particles, alone and in combination with other
air pollutants; and (5) research to provide a better understanding of
personal exposure to PM, especially of individuals thought to be most
susceptible. All these areas were identified in the draft research
strategy, and EPA's research program in these and other areas will
provide a solid basis for the next National Ambient Air Quality
Standards review. Research also will be conducted in other areas, such
as the development of a Federal Reference Method, consistent with the
need to improve the scientific and technical basis for implementation
of PM standards.
Regarding CASAC comments on the level of resources allocated to PM
research, the ORD Strategic Plan identifies PM as one of six highest
priority research areas, clearly underscoring the importance the Agency
places on PM research. The fiscal year 1998 PM total President's Budget
request represents an increase of between 200 and 300 percent above the
fiscal year 1995 PM resources. With the requested fiscal year 1998
resources EPA is in a position to make substantial headway in
addressing critical PM research issues in the next several years, and
the fiscal year 1998 request is consistent with the need to conduct PM
research.
The Agency cannot and does not expect to attack this problem alone.
We are working with other Federal agencies (such as, the National
Oceanic and Atmospheric Administration, etc.) through the Committee on
Environmental and Natural Resources, the private sector (through our
cooperative ventures with the Health Effects Institute and outreach to
industry), and with other countries, such as Canada, the Netherlands,
and other European countries, all of whom have begun to take this
important problem into consideration under new regulations and
guidelines, and have increased their research. With this multi-
participant approach and its own strong research program, EPA can
provide a leadership role to ensure that critical research needs are
met.
COMMUNITY RIGHT-TO-KNOW--KALAMAZOO INITIATIVE
Question. EPA is proposing $35 million for a new ``right-to-know''
initiative. How is this initiative different from the existing Toxics
Release Inventory program?
Answer. The Environmental Monitoring for Public Access and
Community Tracking (EMPACT) program will provide at least 75 of the
largest metropolitan areas (by population) in the U.S. with access to
information regarding local environmental characteristics and relevant
scientific and technical tools to understand and interpret the
information. EMPACT is a program founded on collaboration across the
Environmental Protection Agency (EPA) Program Offices and Regions, as
well as with the United States Geological Survey (USGS) and the
National Oceanic and Atmospheric Administration (NOAA) (partner EMPACT
agencies). EMPACT will: incorporate improved and updated technology
solutions for real- or relevant-time environmental measurement and
monitoring; ensure that the information is useful and timely for
families and communities; facilitate easy public access to
comprehensive environmental data; and provide effective tools for
communicating and interpreting environmental data. The Toxics Release
Inventory (TRI) program is a national data base identifying facilities,
chemicals manufactured and used at those facilities and the annual
accidental and routine releases of these materials. TRI data will be
included in the collections of information provided to EMPACT
communities.
Question. What type of information will be made available through
this new program and how will it be made available?
Answer. There are two distinct tracks for providing information
through EMPACT. One track is the delivery of existing environmental
monitoring information. Currently, the public is presented with a
myriad of conflicting information that is of questionable quality and
clarity and typically dated. The first track of EMPACT will provide the
EMPACT cities with the best available data from USGS, NOAA (partner
agencies in EMPACT) and EPA. Existing, easily understood information
will be disseminated through the Internet. This track will gradually be
phased out, to be replaced with a second track. At this point, EMPACT
agencies will work with communities to identify opportunities to
upgrade existing monitoring and data collection activities and provide
the information in a format that is easily understood. This will result
in the widespread use of real-time measurement and communication
technologies. The experience gained by the EMPACT cities will be
leveraged for the development of a framework that will enable the
transfer of these technologies to other interested cities and
communities.
Question. To what extent has EPA consulted with citizens to assess
the type of information which would be useful?
Answer. During these early planning stages of EMPACT, EPA has
relied on information provided by the Regions relevant to the types of
information that would be useful to the 75 candidate cities. There is
currently under development a formal plan that outlines an approach for
interactions with the citizens, cities and states. The plan will
facilitate consultation with citizens to assess the type of information
which would be useful and desirable.
Question. How will the areas be selected?
Answer. The 75 metropolitan areas have been identified on the basis
of population (source: Census Bureau). In addition, we are exploring
metropolitan areas that are not represented by the top 75 cities.
Question. How will you ensure that the information which is
provided in a context to make it relevant and meaningful?
Answer. A number of partners will be engaged to accomplish the goal
of providing information in a context that is relevant and meaningful.
EMPACT is currently reviewing options for collaborations with the
private sector, focus groups in communities and non-profit
participation.
urban livability
QUESTION. IN THE FISCAL YEAR 1997 BUDGET, EPA PROPOSED A NEW
initiative called ``Sustainable Development Challenge Grants,'' for
which $5 million was appropriated. EPA has requested $15 million in
fiscal year 1998. According to agency material on the program, these
grants ``will be catalysts that challenge communities to invest in a
sustainable future, recognizing that sustainable environmental quality,
economic prosperity, and social equity are inextricably linked.'' What
has been accomplished to date with this program?
Answer. In fiscal year 1996, EPA received over 600 proposals.
Approximately 75 percent of the proposals had an urban focus, 25
percent rural. To date seven projects have received grant funding and
EPA anticipates that three more grants will be awarded shortly.
This year, in addition to completing award of the fiscal year 1996
grants, EPA has prepared a Federal Register notice calling for
proposals for Sustainable Development Challenge Grants. We expect to
solicit proposals in April 1997 with proposals due three months from
the date of publication in the Federal Register. After receipt and
review of the proposals, EPA expects to make grant decisions in October
1997.
URBAN LIVABILITY VS. CHALLENGE GRANTS
Question. In the fiscal year 1997 operating plan, EPA proposed a
new initiative called ``Urban Livability'' and $5.5 million is
requested for this program in fiscal year 1998. ``The program is
designed to provide cities with tools and information to develop
community-based solutions to pressing environmental issues.'' The
challenge grants are to ``catalyze community-based projects to enhance
environmental quality.'' Other than the urban emphasis, how is the new
initiative different from challenge grants?
Answer. The sustainable development challenge grants are
complimentary to the urban livability initiative. The primary activity
within the urban initiative is to identify generic urban environmental
problems. EPA currently plans to use pilot cities (one in 1997 and
three in 1998) as the ``real-world'' basis for the urban initiative. By
bringing together other federal agencies, local governments, and
private sector partners in the pilot programs, together, EPA and its
partners will use either existing tools or develop new tools to propose
solutions that can be replicated in urban areas across the country.
Funds from the grant program can be used to support urban livability
initiatives in pilot areas but also may be used to provide seed money
to encourage community based development of solutions for site-specific
projects that solve environmental problems, encourage economic
development, and foster clean urban environments while removing
barriers to development and economic growth.
URBAN LIVABILITY AND PERFORMANCE PARTNERSHIP AGREEMENTS
Question. Why is yet another initiative necessary? Why not allow
states to fund such projects as part of their performance partnership
agreements, rather than having a new EPA program?
Answer. The urban livability initiative is necessary in order to
develop a unified national program that cities and localities can look
to for a tool bag of strategies and solutions to common urban
environmental problems that can be used in urban areas across the
country. EPA will use a pilot city approach to assist in identifying
the environmental issues and will work hand-in-hand with partners and
stakeholders to develop strategies and tools and to propose solutions
to urban environmental problems while encouraging economic development
and removing barriers to economic development and growth.
EPA will use part of the requested funding to develop the tools and
information needed to carry out the urban livability initiative. EPA
will use the other part of the funding to stimulate state and local
efforts to address urban environmental problems. We expect that State
and local governments will look to the urban livability initiative as a
model and in the future, may use performance partnership grants, other
federal grant funds, and state, local and nongovernmental resources to
carry out urban livability initiatives. In allocating funds to pilot
areas, EPA will give priority to those areas that demonstrate
commitment by targeting other resources.
ADVANCED MEASUREMENT INITIATIVE (AMI)
Question. EPA proposed a new initiative in the fiscal year 1997
operating plan called the Advanced Measurement Initiative. EPA
requested $1 million in fiscal year 1997 and additional $4 million in
fiscal year 1998. The program is intended ``to accelerate the
application of advanced technologies to enhance environmental
measurement and monitoring capabilities,'' such as remote sensing.
What specific roles will other agencies plan in this initiative,
and are they committed to this program?
Answer. A key part of the initiative is to work in partnership with
other agencies that have developed relevant technologies and
demonstrated related applications and techniques. In the first phase of
AMI, EPA, NASA and DOE have held and will hold workshops to assess
environmental needs of the Agency, and to demonstrate applications of
advanced technologies.
AMI will also work with other agencies as sponsors or partners in
pilot applications to identify and potentially adapt technologies. A
significant role of each agency in these partnerships will be to verify
techniques that will produce information that each agency will need,
accept and deem credible. The specific roles and commitments of a
partner agency will depend upon each AMI project.
Question. What will you do with just $4 million to develop these
existing technologies to meet EPA's needs?
Answer. AMI will apply the $4 million and leverage the investment
of other agencies to identify, adapt and apply existing innovative
environmental monitoring and observation tools. EPA will invest
resources to conduct a small number of applications to demonstrate the
technical and institutional uses of these technologies, verify
acceptable methods, and determine lessons to implement other advanced
technologies throughout EPA in the future.
Question. Given the states are responsible for a significant amount
of environmental monitoring, what role will they play in the selection
and prioritorization of projects?
Answer. EPA appreciates that the states are responsible for a
significant amount of environmental monitoring and recognizes that
implementation of advanced technologies and improved techniques will
involve state participation. In the process of project selection, AMI
will include state representatives in the peer review
Question. When do you expect these technologies will be made
available for environmental monitoring?
Answer. The ability to apply advanced technologies depends largely
on two factors: (1) the maturity of the technology, and (2) the ability
of the organization to incorporate the technology into its standard
operating procedures. Each factor has its own development timeframe,
but one may not always want to address both factors in parallel. In
general, AMI does not feel it is wise to tackle institutional issues
before a technology demonstrates a significant potential.
AMI estimates that the projects will involve technical and
institutional issues involving technology verification and acceptance
in approximately 1-5 years. Availability will depend upon the projects
that are selected and the technical and institutional factors involved.
The sooner the technologies are verified and the institutional issues
are resolved to accept information from new sources, the sooner EPA can
expect a proliferation of environmental monitoring technologies from
the private sector.
STAR AWARDS BY STATE AND CATEGORY
Question. Please provide a state-by-state breakdown of STAR awards
by category (focused RFA's, Exploratory Research Grants Program, and
the Graduate Fellowship Program).
Answer. Following are a series of tables which identify the total
STAR Program awards by state for fiscal year 1995 and fiscal year 1996.
The dollar values listed below are total commitments by EPA for new
1995 and 1996 grants, and include future increments of funding. In
addition to the below listing, partner funding of nine jointly-funded
grants increases the funding by approximately $1.37 million. In
addition to the listing below, there are 55 partner-funded grants
resulting from our joint solicitations. The total funding of those
grants is approximately $18.84 million.
RESEARCH FUNDING BY STATE
Question. Please provide a table listing the distribution of all
EPA research funding by state for the two most recent years this data
is available.
Answer.
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996
-------------------------------------------------------
Number Amount Number Amount
----------------------------------------------------------------------------------------------------------------
RFA's................................................... 87 $26,029,758 144 $77,672,873
Exploratory............................................. 87 26,609,795 51 18,849,648
-------------------------------------------------------
Total............................................. 174 52,639,553 195 96,522,621
----------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 1995 RFA award Fiscal year 1995 Fiscal year 1996 RFA award Fiscal year 1996
---------------------------- Exploratory awards ---------------------------- Exploratory awards
State ---------------------------- ---------------------------
No. Funding No. Funding No. Funding No. Funding
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama................................. .......... .............. 1 $118,996 2 $783,779 .......... ..............
Alaska.................................. .......... .............. .......... .............. .......... .............. .......... ..............
Arizona................................. 2 $425,258 .......... .............. 3 1,329,755 2 $793,068
Arkansas................................ .......... .............. .......... .............. 1 538,785 1 481,991
California.............................. 8 1,859,809 15 4,301,399 7 4,795,847 9 3,139,106
Colorado................................ 5 885,616 5 1,223,136 11 7,062,624 3 1,340,300
Connecticut............................. .......... .............. .......... .............. 1 572,710 2 697,735
Delaware................................ .......... .............. 1 334,455 .......... .............. .......... ..............
District of Columbia.................... 5 1,192,341 2 232,227 2 375,000 .......... ..............
Florida................................. 1 407,769 2 478,512 4 2,558,883 .......... ..............
Georgia................................. 4 1,123,855 1 189,104 5 1,934,686 1 264,669
Guam.................................... .......... .............. .......... .............. 1 353,723 .......... ..............
Hawaii.................................. .......... .............. 1 420,636 .......... .............. .......... ..............
Idaho................................... .......... .............. 1 323,920 .......... .............. 1 280,133
Illinois................................ 3 779,964 2 705,442 1 350,000 .......... ..............
Indiana................................. 1 100,000 1 3,000,000 2 1,834,141 1 356,212
Iowa.................................... 1 635,257 4 763,496 5 2,011,271 .......... ..............
Kansas.................................. 1 220,000 .......... .............. 2 804,697 .......... ..............
Kentucky................................ 2 676,200 .......... .............. 1 475,760 1 346,543
Louisiana............................... .......... .............. 1 362,823 .......... .............. 1 165,436
Maine................................... .......... .............. .......... .............. .......... .............. .......... ..............
Maryland................................ 2 1,119,824 1 242,538 7 5,678,816 .......... ..............
Massachusetts........................... 7 2,561,985 6 1,726,798 14 5,965,627 6 2,695,438
Michigan................................ 2 287,802 .......... .............. 5 2,159,811 2 765,794
Minnesota............................... 3 835,000 .......... .............. 5 3,105,350 .......... ..............
Mississippi............................. .......... .............. 3 541,531 2 1,197,259 .......... ..............
Missouri................................ .......... .............. 1 267,000 1 190,000 .......... ..............
Montana................................. .......... .............. .......... .............. 1 329,735 .......... ..............
Nebraska................................ .......... .............. .......... .............. .......... .............. .......... ..............
New Hampshire........................... .......... .............. .......... .............. .......... .............. .......... ..............
New Jersey.............................. 2 549,950 2 668,961 3 1,309,690 .......... ..............
New Mexico.............................. 1 184,998 1 155,609 .......... .............. 1 500,000
New York................................ 5 2,296,666 6 1,834,844 11 4,333,999 1 335,507
Nevada.................................. .......... .............. .......... .............. 1 767,805 1 288,645
North Carolina.......................... 5 1,321,400 3 714,781 15 7,704,339 3 1,138,428
North Dakota............................ .......... .............. .......... .............. 2 485,285 1 374,925
Ohio.................................... 4 1,249,784 4 1,245,662 2 922,347 1 488,000
Oklahoma................................ 1 244,955 .......... .............. 3 836,654 .......... ..............
Oregon.................................. 2 896,975 5 1,372,345 2 1,844,846 2 824,802
Pennsylvania............................ 5 1,241,481 5 1,598,032 8 3,412,653 1 218,643
Puerto Rico............................. .......... .............. 2 477,292 .......... .............. .......... ..............
Rhode Island............................ 1 125,972 .......... .............. 1 165,081 .......... ..............
South Carolina.......................... 1 465,300 .......... .............. 1 484,376 1 372,642
South Dakota............................ .......... .............. .......... .............. .......... .............. .......... ..............
Tennessee............................... 1 139,327 .......... .............. 1 1,697,105 1 359,300
Texas................................... 4 1,580,992 6 1,707,244 4 1,519,918 2 579,170
Utah.................................... 1 330,000 .......... .............. 1 353,103 1 315,706
Vermont................................. .......... .............. .......... .............. .......... .............. .......... ..............
Virginia................................ 3 779,990 2 529,763 1 283,737 3 963,642
Washington.............................. 3 1,351,378 1 259,064 4 6,680,650 2 763,813
West Virginia........................... .......... .............. .......... .............. .......... .............. .......... ..............
Wisconsin............................... 1 160,000 1 401,130 1 463,117 .......... ..............
Wyoming................................. .......... .............. 1 413,055 .......... .............. .......... ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
RESEARCH FUNDING BY STATE
Questions. Please provide a table listing the distribtuion of all
EPA research funding by state for the two most recent years this data
is available.
Answer:
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 awards Fiscal year 1996 awards
---------------------------------------------------------
State No. of No. of
fellowships Total dollars fellowships Total dollars
----------------------------------------------------------------------------------------------------------------
Alabama............................................... ........... .............. ........... ..............
Alaska................................................ ........... .............. ........... ..............
Arizona............................................... ........... .............. 6 $168,160
Arkansas.............................................. ........... .............. ........... ..............
California............................................ 11 $320,326 20 528,984
Colorado.............................................. 5 134,076 10 263,470
Connecticut........................................... 6 192,328 3 102,000
Delaware.............................................. ........... .............. ........... ..............
D.C................................................... ........... .............. ........... ..............
Florida............................................... 2 58,759 3 75,931
Georgia............................................... 1 25,344 2 58,716
Guam.................................................. ........... .............. ........... ..............
Hawaii................................................ 1 29,341 1 19,954
Idaho................................................. ........... .............. ........... ..............
Illinois.............................................. 7 235,212 6 167,952
Indiana............................................... 1 26,192 1 32,090
Iowa.................................................. 2 58,520 ........... ..............
Kansas................................................ ........... .............. 1 31,270
Kentucky.............................................. ........... .............. ........... ..............
Louisiana............................................. ........... .............. ........... ..............
Maine................................................. ........... .............. ........... ..............
Maryland.............................................. 2 57,150 4 118,415
Massachusetts......................................... 5 169,682 10 321,884
Michigan.............................................. 6 167,878 3 127,746
Minnesota............................................. 3 85,260 ........... ..............
Missouri.............................................. ........... .............. 2 53,146
Montana............................................... ........... .............. ........... ..............
Nebraska.............................................. 1 24,310 ........... ..............
New Hampshire......................................... ........... .............. 2 68,000
New Jersey............................................ 2 58,700 1 31,032
New Mexico............................................ 2 48,152 ........... ..............
New York.............................................. 12 348,459 6 190,881
Nevada................................................ 1 23,623 1 25,138
North Carolina........................................ 4 108,420 6 165,608
North Dakota.......................................... ........... .............. ........... ..............
Ohio.................................................. 1 38,405 1 29,302
Oklahoma.............................................. 1 26,742 2 53,163
Oregon................................................ 4 138,881 1 27,047
Pennsylvania.......................................... 5 176,025 ........... ..............
Puerto Rico........................................... ........... .............. ........... ..............
Rhode Island.......................................... 1 26,891 ........... ..............
South Carolina........................................ 2 50,066 ........... ..............
South Dakota.......................................... ........... .............. ........... ..............
Tennessee............................................. ........... .............. 2 60,011
Texas................................................. 6 174,354 4 124,935
Utah.................................................. ........... .............. 1 24,532
Vermont............................................... ........... .............. ........... ..............
Virginia.............................................. 2 53,162 2 53,654
Washington............................................ 1 37,333 3 85,159
West Virginia......................................... ........... .............. 1 29,366
Wisconsin............................................. 3 87,118 1 24,466
Wyoming............................................... ........... .............. 1 24,741
----------------------------------------------------------------------------------------------------------------
ORD GRANTS AND COOPERATIVE AGREEMENTS BY STATE
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996
State -----------------------------------------------
Awards Total dollars Awards Total dollars
----------------------------------------------------------------------------------------------------------------
ALASKA.......................................................... 2 728,146 1 15,000
ALABAMA......................................................... 12 2,718,648 11 3,214,170
ARKANSAS........................................................ 5 641,797 1 75,000
ARIZONA......................................................... 9 1,916,547 4 2,001,427
CALIFORNIA...................................................... 78 17,280,805 44 9,774,089
COLORADO........................................................ 24 4,661,485 17 5,082,973
CONNECTICUT..................................................... 3 278,224 3 310,886
D.C............................................................. 95 18,137,464 68 13,600,494
DELAWARE........................................................ 2 165,836 1 105,489
FLORIDA......................................................... 20 2,984,099 12 2,367,274
GEORGIA......................................................... 23 5,536,950 19 3,317,351
HAWAII.......................................................... 3 245,629 1 140,373
IOWA............................................................ 10 2,281,144 8 1,959,372
IDAHO........................................................... 5 769,249 3 265,400
ILLINOIS........................................................ 14 2,058,854 4 720,236
INDIANA......................................................... 8 1,516,134 5 1,324,533
KANSAS.......................................................... 7 4,844,816 4 1,284,755
KENTUCKY........................................................ 6 11,374,961 4 320,956
LOUISIANA....................................................... 14 5,868,190 7 1,094,240
MASSACHUSETTS................................................... 43 13,281,796 28 5,642,964
MARYLAND........................................................ 14 2,675,171 8 2,960,597
MAINE........................................................... 2 2,667,400 3 277,644
MICHIGAN........................................................ 25 14,600,089 19 5,859,039
MINNESOTA....................................................... 14 2,024,859 8 2,488,114
MISSOURI........................................................ 6 632,727 1 89,000
MISSISSIPPI..................................................... 10 1,322,523 5 901,568
MONTANA......................................................... 2 204,697 44 10,261,042
NORTH CAROLINA.................................................. 79 21,280,549 3 492,094
NORTH DAKOTA.................................................... 2 1,098,183 1 100,135
NEBRASKA........................................................ 2 79,031 14 3,071,019
NEW HAMPSHIRE................................................... 3 499,983 3 418,541
NEW JERSEY...................................................... 17 7,842,262 3 616,669
NEW MEXICO...................................................... 5 569,596 21 2,194,661
NEVADA.......................................................... 8 1,062,743 27 3,154,601
NEW YORK........................................................ 34 4,803,501 5 936,110
OHIO............................................................ 43 7,704,762 14 3,776,980
OKLAHOMA........................................................ 4 666,666 15 2,315,102
OREGON.......................................................... 23 6,175,135 3 322,153
PENNSYLVANIA.................................................... 28 3,979,698 1 133,512
RHODE ISLAND.................................................... 3 724,623 2 690,919
SOUTH CAROLINA.................................................. 2 489,911 14 1,672,581
TENNESSEE....................................................... 6 856,075 1 126,804
TEXAS........................................................... 33 9,259,608 1 54,150
UTAH............................................................ 3 1,030,000 14 2,664,152
VIRGINIA........................................................ 12 1,333,426 4 500,916
VERMONT......................................................... 1 50,846 1 128,930
WASHINGTON...................................................... 19 2,548,920 14 2,664,152
WISCONSIN....................................................... 14 1,610,517 4 500,916
WYOMING......................................................... 2 476,667 1 128,930
-----------------------------------------------
TOTALS.................................................... ...... 68,945,214 ...... 78,335,658
----------------------------------------------------------------------------------------------------------------
EPSCOR AWARDS
Question. Please provide a summary of recent EPSCoR Awards
Answer. The table below summarizes all EPA EPSCoR Awards for fiscal
years 1993 through 1995. Resources appropriated to EPA for the EPSCoR
program for fiscal years 1996 and 1997 will be awarded to new proposals
submitted in response to the 1996 December EPSCoR program announcement.
------------------------------------------------------------------------
EPA funding
Lead institution/participating institutions amount
------------------------------------------------------------------------
Fiscal year 1993
University of Alabama/Auburn University................. $400,000
University of South Carolina/Clemson University......... 400,000
Fiscal year 1994
University of Nevada, Reno/University Nevada Las Vegas,
Desert Research Institute.............................. 394,000
North Dakota State University/University of North Dakota 394,000
University of Puerto Rico/International Institute of
Tropical Forestry...................................... 394,000
University of Idaho/Idaho State University.............. 394,000
University of Kansas.................................... 394,000
Fiscal year 1995
University of Louisville/Eastern Kentucky University.... 326,667
University of Wyoming................................... 326,667
University of Mississippi/Jackson State University...... 326,667
------------------------------------------------------------------------
EPSCOR REPORT
Question. The report accompanying the fiscal year 1997 VA, HUD and
Independent Agencies Appropriations bill directed the EPA to report to
Congress within 6 months on the Agency's Experimental Program to
stimulate Competitive Research. Please provide the Committee with the
status of the report, and indicate any particular challenges
encountered thus far.
Answer. The report to Congress on the Experimental Program to
Stimulate Competitive Research (EPSCoR) program is in the final stages
of review within the Administration. There have been no significant
challenges or problems identified in EPA during the writing and review
process.
EPSCOR NSF MODELING
Question. Last year's Senate report also directed the EPA to model
its EPSCoR program after the National Science Foundation's EPSCoR
program and to coordinate the structure and selection process with the
NSF. Please indicate steps the EPA has taken to coordinate the
structure and selection process of EPA EPSCoR with the NSF EPSCoR. What
Impact has this had on the program? What future steps toward this goal
are expected?
Answer. EPA's EPSCoR program is modeled after the NSF's EPSCoR
program. NSF provided guidance on the development of the Agency's first
planning grants as well as assistance in the preparation of the first
solicitation for implementation proposals. In addition, like NSF's
program, EPA's program consists of two parts, a Strategic Improvement
Plan (SIP) and individual Science and Engineering Environmental
Research (SEER) project proposals designed to advance the state of
knowledge in environmental science and engineering. All applications
received in response to a solicitation are evaluated through a two-
stage, competitive merit-review process. The first stage involves the
evaluation of individual SEER projects for technical merit by science
and engineering peer reviewers. The results of the first stage review
of the SEER's are used by the peer reviewers to evaluate the complete
EPSCoR application which includes the SIP and the corresponding SEER's.
This evaluation becomes the basis for guiding Agency approval or
disapproval for funding decisions on the EPSCoR applications. As a
follow up to this effort, EPA staff have also participated in a number
of NSF's EPSCoR application reviews which has enhanced the Agency's
selection process. In addition, EPA is a member of the EPSCoR
Interagency Coordinating Committee (EICC) which was established by NSF
in July 1992 to coordinate EPSCoR activities of six other federal
agencies. The committee provides a forum which deals with all aspects
of the EPSCoR Program. EPA will continue to work with NSF and the EICC
to develop a sound program to support the EPSCoR states.
EPSCOR FUNDING DISTRIBUTION
Question. Of the total amount of research contracts and grants
provided by the EPA in fiscal year 1995, 8 percent of the funds went to
18 EPSCoR States and the Commonwealth of Puerto Rico combined. For
fiscal year 1994, this number was approximately 6.5 percent.
Given the localized nature of many environmental problems, does EPA
feel this distribution of research funds is sufficient to meet
environmental concerns and solve environmental problems in all regions
of the country? Is this distribution of funds due to a lack of proposal
submissions from the EPSCoR states, or is it due to a significantly
lower success rate for these states?
Answer. EPA's Office of Research and Development (ORD) has
developed a risk-based strategic plan to direct the overall ORD
research program to focus on environmental problems presenting the most
significant risks, but where the uncertainty about the magnitude is
high. All aspects of ORD's research program are focused on these high
risk areas in order to provide significant contributions to addressing
the Nation's environmental problems and to ensure that the results have
the broadest possible application.
We have analyzed the distribution and success rates for
applications submitted to the STAR Program in fiscal year 1996 from
both EPSCoR and non-EPSCoR states. Interpretation of this information
at the state level is very difficult because the applications are
submitted by individuals at different institutions within each state,
and the range of both applications per state and success rate per state
is very large. In fiscal year 1996 a total of 1,950 applications was
received; 324 from 19 EPSCoR eligible participants, with an average of
17 applications/state, and a range 4-41, and 1,626 from 34 non-EPSCoR
states, with an average of 48 applications/state, range 1-166. The
success rate for EPSCoR participants averaged 7 percent with a range
from 0-18 percent, while the success rate for non-EPSCoR states
averaged 10 percent with a range 0-33 percent. Because both the number
of applications per state and the success rate per state varies so
widely it is not possible to determine a difference between the two
groups in fiscal year 1996. Furthermore, as discussed in the EPSCoR
Report to Congress, under the STAR Program in fiscal year 1995 and
fiscal year 1996 the number of awards, the number of states and the
number of institutions have all increased.
STAR PEER REVIEW
Question. Also, last year's Senate report encouraged the EPA, as
part of the STAR Program, to ``give special consideration to proposals
for EPSCoR States that successfully meet the Agency's peer review
requirements and are identified in the Agency's competitive award
process. Will this be reflected in the 1997 Graduate Fellowship awards
and other aspects of the STAR Program?
Answer. In accord with prior guidance from Congress, EPA is working
diligently to improve the quality of its research. We have instituted a
peer review process for the STAR Program that is patterned after that
of the NSF. Consequently, we have made our primary consideration
scientific merit of the application.
During the past two years, ORD has developed a Strategic Plan which
guides decisions about research priorities. Using this plan we focus on
research that deals with environmental issues that pose high risk but
where there is great uncertainty about the magnitude of the risks;
leads to new methods and models that can be used broadly across Agency;
and develops risk reduction and pollution prevention methods where
order-of-magnitude improvements are possible.
Finally, we look at ways in which the STAR Program complements
research that we are doing in EPA laboratories, and the balance of the
STAR Program in terms of distribution of awards by discipline,
geographic area, etc.
As discussed in the previous response and in the EPSCoR Report to
Congress currently under review, the steps we have taken to ensure
impartial peer review and relevancy to the EPA mission have permitted
EPSCoR states to compete effectively for STAR awards.
SBREFA
Question. How has your agency allocated its personnel and financial
resources to meet the requirements of SBREFA?
Answer. The Administrator has delegated agency management of SBREFA
to the Regulatory Management Division in the Office of Policy, Planning
and Evaluation. As required by the Act, the agency has named a Small
Business Advocacy Chair. Additionally, three employees support SBREFA
compliance activities. All program offices have designated personnel as
SBREFA coordinators for their respective offices. The program offices
meet with the Small Business Advocacy Chair regularly to coordinate
SBREFA implementation.
OPPE projects that there will be fifteen SBREFA panel processes in
fiscal year 1998, which will require approximately 20 FTE in agency
personnel and $125,000 in travel and $150,000 in contract support of
panel requirements.
SBREFA PENALTY REDUCTIONS PROGRAM
Question. The law requires agencies that regulate small businesses
to establish a policy or program to provide penalty reductions or
waivers, where appropriate, to accommodate the good faith efforts of
small businesses to comply with agency regulations. What steps has your
agency taken toward instituting such a program? When will this program
be up and running?
Answer. Section 223 requires each agency to develop within one year
of SBREFA's enactment a policy or program providing for reductions or
waivers of civil penalties for violations of statutory or regulatory
requirements by small entities under appropriate circumstances. EPA has
several policies which implement the section 223 requirement. The
Agency's Policy on Compliance Incentives for Small Businesses (Small
Business Policy) and a similar policy aimed at municipalities provide
for civil penalties to be reduced or waived for small entities which
discover first-time violations through on-site, government-supported
compliance assistance programs or self-audits, where the entity
promptly discloses and corrects the violation and meets certain other
criteria. In a statement made on the Senate floor during congressional
consideration of SBREFA, Senator Christopher Bond used EPA's Small
Business Policy as an example of the kind of policy sought by the
section 223 requirement. Vol. 142 No. 46, 142 Cong Rec S 3242 (Friday,
March 29, 1996). In addition to that policy, EPA has issued a final
audit policy entitled ``Incentives for Self-Policing: Discovery,
Disclosure, Correction and Prevention of Violations'' which creates
incentives for all entities, including small entities, to voluntarily
discover, disclose and correct violations of environmental regulations.
SBREFA REG FLEX ACT
Question. Could you share with the committee recent examples of
your agency's compliance with SBREFA will (has) enhanced your agency's
compliance with the Reg Flex Act?
Answer. Prior to the passage of SBREFA, the Agency's reg flex
policy was to perform a reg flex analysis on all rulemakings that were
determined to have any impact on any small entities. With the passage
of SBREFA, the Agency has reviewed guidelines to determine which rules
will have ``a significant impact on a substantial number of small
entities'' and, therefore, will be subject to a reg flex analysis. This
review has established a policy that proposed rules that meet the
``significant impact on a substantial number'' threshold will have a
reg flex analysis performed.
Prior to passage of SBREFA, EPA performed a wide variety of
outreach activities to small entities. SBREFA Sec. 609 amendments
requiring Small Business Advocacy Review Panels have formalized many of
these activities by structuring outreach to small entities in the
rulemaking process. EPA engages in outreach activities on any
rulemaking that may have an impact on small entities. This outreach has
helped determine that, at this time, 15 rules are listed on EPA's
Provisional Panel list for small business input into the rulemaking
process. Our first panel, Non Road Diesel Engines, convened on March
25, 1997. We will convene several more panels in the upcoming months.
The Agency has reviewed existing procedures for compliance with
Sec. 610 of the Reg Flex Act. The Agency has previously performed
Sec. 610 review as part of Sec. 602 Unified Agenda requirements. EPA
will now publish in the Federal Register a separate listing of rules
subject to Sec. 610 review.
SBREFA SMALL BUSINESS ADVOCACY REVIEW PANEL
Question. What process has your agency implemented to determine
whether a Small Business Advocacy Review Panel should be established
prior to publication of a proposed rule?
Answer. The first steps of the process are actually designed to
determine whether a panel must be convened. Unless the Agency certifies
that a rule will not have a significant impact on a substantial number
of small entities, a panel must be convened. Accordingly, the program
office responsible for the rule must identify the rule's potential
impact on small entities as soon as possible, and consider ways of
structuring the rule to avoid any undue burden on small entities. To
the extent the program office is successful in designing the rule to
avoid any significant impact on a substantial number of small entities,
a panel need not be convened.
If it is determined that a rule may have a significant impact on a
substantial number of small entities, the program office will proceed
with the next steps of the panel process, which include identifying and
initiating discussions with representatives of small entities
potentially affected by the rule.
Because of this process, the program office may still learn as a
result of further consultations with small entity representatives or
further analysis that the rule will not have a significant economic
impact on a substantial number of small entities, and thus that neither
an initial regulatory flexibility analysis nor a panel is required.
SBREFA REVIEW PANELS
Question. Have review panels been convened to review any
forthcoming rules?
Answer. We are currently engaged in one panel which involves a
forthcoming rulemaking on Non-Road Diesel Engines, and are beginning a
panel process on the National Ambient Air Quality Standards Phase 1
Guidelines. We will be moving to convene panels on several other rules
in the next few months.
NAAQS PM-10 REQUEST
Question. Could you tell the Subcommittee how much of EPA's fiscal
1998 funding request will be used for PM 2.5 monitoring and how much
will be used for additional PM 2.5 health effects research?
Answer. The Agency has requested the following for PM 2.5
monitoring and research:
[In millions of dollars]
Fiscal year
1998 request
Environmental Program Management Account:
PM 10 monitoring.............................................. 0.1
PM 2.5 monitoring............................................. 1.2
-----------------------------------------------------------------
________________________________________________
Total....................................................... 1.3
=================================================================
________________________________________________
State and Tribal Assistance Grants:
PM 10 monitoring.............................................. 6.6
PM 2.5 monitoring............................................. 10.9
-----------------------------------------------------------------
________________________________________________
Total....................................................... 17.5
=================================================================
________________________________________________
Science and Technology Account:
Generic PM research \1\....................................... 12.6
Specific PM 2.5 research...................................... 8.3
Research grants \2\........................................... 5.7
-----------------------------------------------------------------
________________________________________________
Total....................................................... 26.9
\1\ Generic PM research includes activities that are applicable to both
PM-10 and PM 2.5 pollutants but could not be segregated.
\2\ For fiscal year 1998 research grants have not yet been awarded but
are expected to be predominantly for PM 2.5 research.
---------------------------------------------------------------------------
NAAQS MONITORING AND RESEARCH REPORT
Question. How does the 1998 funding request for PM compare with
amounts expended for PM-10 monitoring and research over the past three
fiscal years? Have any of these monies been expended for PM 2.5
research or monitoring? If so how much?
Answer. The table below shows the Agency's funding request for PM
for fiscal 1998 compared to the previous three years for PM-10 vs. PM
2.5 and for monitoring versus research. We expended funding in fiscal
1995-97 for PM 2.5 monitoring methods development and testing. In
fiscal 1997 the Agency is providing funding to states to begin to
purchase laboratory equipment and other infrastructure needs for
monitoring.
[In millions of dollars]
------------------------------------------------------------------------
Fiscal year
---------------------------------------
1997 1998
1995 1996 estimate request
------------------------------------------------------------------------
Environmental Program Management
Account:
PM 10 monitoring............ 0.4 0.4 0.2 0.1
PM 2.5 monitoring........... 0.4 0.8 1.1 1.2
---------------------------------------
Total..................... 0.8 1.2 1.3 1.30
=======================================
State and Tribal Assistance
Grants:
PM 10 monitoring............ 5.5 5.5 6.1 6.6
PM 2.5 monitoring........... ........ ........ 2.7 10.9
---------------------------------------
Total..................... 5.5 5.5 8.8 17.5
=======================================
Science and Technology Account:
Generic PM research \1\..... 6.4 6.1 8.3 12.6
Specific PM 2.5 research.... 4.3 7.2 7.6 8.3
Research grants \2\......... ........ ........ 3.2 5.7
---------------------------------------
Total..................... 10.6 13.2 19.1 26.6
------------------------------------------------------------------------
\1\ Generic PM research includes activities that are applicable to both
PM-10 and PM 2.5 pollutants but could not be segregated.
\2\ For fiscal year 1995 and 1996, the actual allocation of research
grant resources are included in the figures for PM 10 and PM 2.5
research. For fiscal year 1997 and 1998 research grants have not yet
been awarded but are expected to be predominately for PM 2.5 research.
NAAQS BASIC RESEARCH FUNDING
Question. There has been a realignment of resources in the Agency's
research program over the past few years to enhance the basic research
program, primarily through the STAR initiative. Please outline the
extent to which any and all research performed by the EPA laboratories
in support of NAAQS standard setting for criteria pollutants has
declined in the last four fiscal years?
Answer. The Agency has pursued a balanced research program to
ensure that we take full advantage of the Agency's strong in-house
capability (complemented by the procurement of services from
contracts), as well as engaging university and private sector
scientists through grants and cooperative agreements. This approach is
determined by the research requirements and how to best address those
research requirements. Funding for the National Ambient Air Quality
Standards (NAAQS) by the Office of Research and Development (ORD)
laboratories has remained proportional.
The Science to Achieve Results (STAR) Program reflects the Agency's
commitment of engaging the participation of the nations's best
scientists in the implementation of the Agency's research program.
However, STAR is not a basic research program. Through the STAR
Program, ORD works with the Agency's National Program Managers to
develop the Requests for Applications (RFA's) in particular research
problem areas that are of importance to the Program Offices. The STAR
program supports the Agency's mission.
NAAQS RESEARCH FISCAL YEAR 1997 FUNDING
Question. Describe how the $18.8 million appropriated in fiscal
year 1997 for PM research was allocated between PM 2.5 research and
monitoring.
Answer. The total Particulate Matter (PM) (both PM 2.5 and PM-10)
research budget in the Environmental Protection Agency's fiscal year
1997 enacted budget is $19.1 million. (The $18.8 million mentioned
above refers to the total extramural research dollars in the fiscal
year 1997 budget.) All of these funds are for research.
The total research allotted to PM 2.5 breaks as follows. The PM 2.5
non-grants research portion is $7.6 million, which includes $6.7
million for PM exposure assessment monitoring and PM monitoring
methods, $0.225 million for mechanism and dose work, $0.35 million for
assessments, and $0.3 million for controls. The research grants, which
will predominantly address PM 2.5, will total $3.2 million. However,
the PM-10 research includes research on the total population of PM,
both fine (PM 2.5) and coarse (PM-10), not just coarse PM.
The Agency's Office of Air and Radiation (OAR) conducts specific PM
monitoring and, therefore, these monitoring efforts are not included
within the research budget. In fiscal year 1997, the PM 2.5 monitoring
efforts includes $1.1 million under the Environmental Program
Management account and $2.7 million for State and Tribal Assistance
Grants.
NAAQS FISCAL YEAR 1998 FUNDING
Question. How are the fiscal 1998 funds requested for PM proposed
to be allocated between EPA and the states? How much will go to the
EPA's Office of Air and Radiation and how much will go to the Agency's
Office of Research and Development? Will any of these monies filter
down to state agencies to install PM 2.5 monitoring systems?
Answer. Of the total PM budget for fiscal 1998 budget request of
$73.9 million, $28.5 million is directed to states in assistance
grants, $18.8 million is proposed for the Office of Air and Radiation
(including Regional air activities) and $26.6 million is proposed for
the Office of Research and Development. Of the $28.5 million for state
assistance grants, $10.9 million will be targeted towards establishing
a PM 2.5 monitoring network.
NAAQS PM RESEARCH INCREASES
Question. With respect to PM 2.5 health effects research, one of
the members of the Clean Air Scientific Advisory Committee (CASAC)
stated that EPA would be well advised to embark on a targeted research
effort for PM 2.5. He has suggested a 3.5 year effort funded at a level
of $30 million per year for research only. If the Agency had funding at
this level, what aspects of PM 2.5 health effects research would you
propose to enhance?
Answer. The overarching mission of the Environmental Protection
Agency's (EPA's) particulate matter (PM) research program is to provide
an improved scientific basis for future regulatory decisions concerning
public health risks posed by airborne particles, alone and in
combination with other air pollutants. EPA is finalizing a research
strategy, ``Particulate Matter Research Program Strategy: Health,
Exposure, Assessment and Risk Management Issues,'' targeted to fill
specific knowledge gaps identified in the Air Quality Criteria Document
and subsequent PM Research Needs Document. The areas of research that
need to be addressed to effect these decisions and implementation
activities are as follows: (1) biological mechanisms, including
characterization of particle characteristics, both alone and in
combination with other air pollutants, associated with effects,
dosimetry and other factors affecting susceptibility, and exposure-
dose-response relationships; (2) population exposures to ambient,
indoor and personal PM, especially of important subpopulations (e.g.,
children, the elderly, individuals with pre-existing disease) by
developing and applying improved exposure methodologies and models; (3)
regional and temporal variability in particle characteristics and
toxicity; (4) the morbidity and mortality associated with ``real
world'' short- and long-term exposure to PM and important co-pollutants
such as ozone, through epidemiology, including development of new
methods and evaluation of existing data; (5) atmospheric chemistry of
PM to support fate and transport modeling to support regulatory
implementation; (6) source contributions to ambient PM concentrations
and the availability, performance and cost of risk management options
to meet ambient PM standards; (7) improved particle measurement methods
to characterize atmospheric PM; and (8) consultation and support to
enable state, Regional, and international air pollution control
organizations to perform risk assessments and apply risk management
approaches with less uncertainty. The fiscal year 1998 budget request
of $26.6 million will address these areas.
NAAQS PM 2.5 MONITORING COST
Question. With respect to PM 2.5 monitoring, what is EPA's
estimated costs of installing air quality monitoring systems for all of
the PM 2.5 nonattainment counties identified by EPA in its proposal? At
the rate that the Agency is requesting funds for this fiscal year, how
long do you project that it will take to fund the nationwide monitoring
program?
Answer. EPA's monitoring proposal allows for monitoring coverage in
most metropolitan areas as well as areas that might violate the
standards. The estimated cost of the proposal for installing and
operating this network of 1,200 monitoring sites is $70.8 million over
four years. These costs will be shared by EPA and states. We project
the nationwide monitoring network will be completed in the year 2000.
NAAQS HUMAN HEALTH PROTECTION
Question. Given the paucity of monitoring data and research, what
assurances do we have that the proposed NAAQS standards would be
protective of human health as required by the Clean Air Act?
Answer. With regard to the availability of fine particle monitoring
data, over 20 studies have examined fine particle exposures directly
(using fine particle monitor data, including PM 2.5, from over 50
cities), and showed associations with serious health effects. EPA used
fine PM data from two cities (Philadelphia and Los Angeles) in
performing its exposure and risk assessments. These assessments showed
significant benefits associated with a fine PM standard. These studies
and assessments were submitted to the Clean Air Scientific Advisory
Committee (CASAC) for their review. In its closure letter to the
Administrator on the PM Staff Paper, CASAC noted that there was a
consensus, ``that a new PM 2.5 [PM less than 2.5 microns in diameter]
NAAQS be established, with nineteen [of 21] Panel members endorsing the
concept of a 24-hour and/or annual PM 2.5 NAAQS.'' (Wolff, 1996) This
advice from CASAC reflects the Panel members judgments with regard to
the current scientific basis for making regulatory decisions concerning
PM standards in the context of this review of the standards and their
conclusion that such standards are necessary to protect the public
health with an adequate margin of safety.
NAAQS SBREFA PROCEDURES
Question. Putting aside for a moment our disagreement on NAAQS,
Mary Nichols' February 11 letter stated that ``regardless of the
ultimate composition of the implementation materials [meaning they
would be a mix of rules and guidance], we [the EPA] intend to employ
RFA/SBREFA procedures before issuing any proposed guidance or rules
concerning implementation of revised NAAQS.'' Am I correct in assuming
EPA will comply with the letter and spirit of SBREFA when it enters the
``implementation'' phase?
Answer. Yes, EPA plans to continue to follow both the letter and
spirit of SBREFA as it develops implementation materials. We will
follow SBREFA panel procedures regardless of the form these materials
take. For that portion of the materials that is in the form of
nonbinding guidance, our following of SBREFA procedures is a voluntary
effort going beyond what SBREFA requires, since the RFA only applies to
rules as defined in that act. Our intention is to work with small
businesses to make sure we address their concerns in developing that
guidance, which the States will ultimately use as they develop their
plans to attain the NAAQS. To the extent that the materials include
rules that would have a significant impact on a substantial number of
small entities, our following of SBREFA procedures for those rules will
be in fulfillment of the SBREFA panel requirement. In either case, we
will follow SBREFA procedures to make sure small-business concerns are
addressed as we develop these materials.
NAAQS AND SBREFA
Question. Because it is unclear what portion of implementation will
be issued by rulemaking versus guidance, how can the agency comply with
SBREFA on the one hand and employ ``SBREFA-like'' procedures on the
other?
Answer. For that portion of the materials that is in the form of
guidance, our following of SBREFA procedures is a voluntary effort
going beyond what SBREFA requires, since SBREFA does not apply to
guidance that does not have the force and effect of a rule. It is in
this case that we consider our efforts ``SBREFA-like.'' Our intention
is to work with small businesses to make sure we address their concerns
in developing that guidance, which the States will ultimately use as
they develop their plans to attain the NAAQS.
To the extent that the materials include rules that would have a
significant impact on a substantial number of small entities, our
following of SBREFA procedures for those rules will be in fulfillment
of a formal SBREFA requirement. In either case, we will follow SBREFA
procedures to make sure small-business concerns are addressed as we
develop these materials.
FOOD QUALITY PROTECTION ACT
Question. The recently passed Food Quality Protection Act places
great emphasis on ensuring that the nation's food supply is safe for
infants and children. In fact, the new law requires USDA to collect
data on children's consumption patterns in consultation with EPA so
that your agency can use actual real world information rather than
hypothetical assumptions when assessing risk. For EPA decisions to be
science-based, it is very important that accurate and scientifically
valid data be used.
USDA has requested $6 million in the Administration's budget
request to conduct a new children's food intake survey. What is your
opinion of the need for this survey and what are your plans for
ensuring that EPA and USDA do consult to ensure that the information
collected by the children's survey and USDA's broad Continuing Survey
of Food Intakes by Individuals is accurate and usable to EPA?
Answer. EPA has been and continues to be very supportive of USDA's
programs to improve information on food consumption, particularly
children's consumption patterns. The need to improve dietary
assessments for children was originally identified by the National
Academy of Sciences in its report titled ``Pesticides in the Diets of
Infants and Children''. One of the major needs identified in fulfilling
this goal is better data defining the dietary habits of infants and
children. The major source of food consumption data used by the Agency
to conduct dietary risk assessments is that generated by USDA. In its
efforts to update existing data, EPA will use the Continuing Survey of
Food Intakes by Individuals (CSFII) 1994-1996 survey data to provide
up-to-date information on food consumption, which reflects changes in
eating patterns which have occurred due to population behavioral
changes and changes in ethnic distribution. However, the number of
children sampled in the CSFII 1994-1996 survey is not sufficient to
provide an acceptable projection of children's consumption patterns.
Therefore, EPA has requested that USDA increase the sampling of
children in the CSFII 1994-1996 to increase confidence in the dietary
risk assessments for children.
EPA has already met with USDA--Agriculture Research Service (ARS)
to discuss the number of children in the survey, timing, and the data
collection protocol for the survey. EPA and USDA are committed to
continued communication to ensure that reliable data to assess the risk
of pesticide exposure to children from foods is developed.
The supplementary children's survey is specifically designed to
address the need for greater representation of children in the CSFII
1994-1996. It is critical that this data is collected in a timely
manner using a protocol identical to the one used in the 1994-1996
survey in order to ensure that the data can be combined, increasing our
ability to accurately and defensibly estimate children's exposure.
Failure to adhere to the protocol will jeopardize our ability to use
the combined survey.
The larger data set will greatly improve the predictive power of
the survey as a risk assessment tool. The Food Quality Protection Act
(FQPA) mandates tolerance reassessments for all existing pesticides
within ten years. A timely supplementary survey will permit EPA to use
the data in the particularly complex assessments that EPA will conduct
early in the process, because of the requirement to reassess the
``worst-first.''
According to USDA, ARS intends to begin the supplemental survey in
fiscal year 1998. The results will be available for EPA's use in fiscal
year 2000. USDA's proposed schedule is sufficient to meet EPA's needs.
EPA and USDA staff have also begun detailed discussion of the design of
USDA's next CSFII.
TRI PHASE II AND SBREFA
Question. I am concerned about a rulemaking that is currently at
OMB, TRI Phase II and how the agency may have tried to skirt the
requirements of the Small Business Regulatory Enforcement Fairness Act
(SBREFA) and the Paperwork Reduction Act--both of these were supported
by the President. I understand that this proposed TRI rulemaking was
issued on June 27, 1996--just two days before SBREFA became effective.
It would appear that the agency was trying to avoid some of the
requirements of SBREFA by hastily proposing this rule. For instance,
convening small business panels to discuss the rule. Also, the
Paperwork Reduction Act requires the Agency take all ``practical steps
to develop separate and simplified requirements for small businesses
and other small entities.'' Can you tell me what the agency has done to
comply with both SBREFA and the Paperwork Reduction Act for this
rulemaking?
Answer. EPA's rulemaking record for the TRI Facilities Expansion
Rule (TRI-Phase II) clearly demonstrates that EPA did not ``hastily
propose this rule.'' EPA has been working with TRI stakeholders since
1992 to identify appropriate sectors for inclusion in this core Right-
to-Know Program. A review of EPA's outreach, screening process, and
rulemaking record indicate a thorough and lengthy sector selection
process. EPA scheduled issuance of the proposed rule for TRI Phase II
long before the SBREFA requirements came into effect. TRI Facility
Expansion has been included in the Agencies Annual Regulatory Plan and
Semi-annual Regulatory Agenda as far back as November 1992. EPA
conducted a public meeting on Facility Expansion in May 1992. In the
May 1996 Regulatory Agenda, EPA indicated that the proposed rule would
be issued in May 1996. However, EPA delayed issuance of the proposal to
accommodate additional meetings and stakeholder discussions requested
by various sectors including Chemical Distribution and Hazardous Waste.
EPA issued its proposed rule on June 27, 1996, not to avoid the
requirements associated with SBREFA, but to avoid the delays associated
with repeating its outreach effort. EPA's issuance of this proposal on
June 27, 1996 reflects a balancing of the Agency's commitment to hear
from all stakeholders prior to proposal with its obligation to respond
to President Clinton's August 1995 Directive calling for expedited
expansion of the TRI program.
At proposal, EPA provided a number of alternatives for reporting
and facility coverage for the proposed sectors. As a result, the Agency
did not take a specific position on whether the rule would have a
significant impact on a substantial number of small entities. Instead,
EPA chose to prepare an initial regulatory flexibility analysis and
presented the analysis for public comment in conjunction with the
proposed rule. EPA carefully evaluated and considered all comments that
were provided to the Agency on this issue. EPA believes that its
sensitivity to small business concerns in developing the proposal, its
proposal of alternatives, and other provisions such as small facility
exemptions already built into the program and EPA's commitment to
assist small businesses with their compliance with the program, more
than satisfy the provisions of the Regulatory Flexibility Act (RFA) in
effect at the time of the proposal.
Notwithstanding the Agency's intention to certify pursuant to
section 605(b) of the RFA that the rule will not have a significant
economic impact on a substantial number of small entities, EPA remains
committed to minimizing small entity impacts when feasible and to
ensuring that small entities receive assistance to ease their burden of
compliance. Consequently, in developing the final rule EPA has chosen
to consider all of the elements of a final regulatory flexibility
analysis as set forth in section 604. In addition, as noted above, EPA
will be preparing compliance guides and offering assistance to small
businesses in complying with the rule.
With regard to the Paperwork Reduction Act (PRA), EPA believes that
it has and will continue to work on simplification of reporting
requirements for small businesses and other small entities. EPA has
already provided an abbreviated reporting form for facilities with
relatively low annual reportable amounts, has provided a hotline and
training sessions for technical assistance, is developing sector
specific reporting guidance, and provided facility specific, pre-
printed forms and user friendly software packages. In addition to these
efforts, EPA will convene a stakeholder process to review additional
options to reduce reporting burdens.
Question. What steps have you taken to simplify requirements for
small business and other entities in this rulemaking?
Answer. ``The best available information'' required to be reported
to the TRI, as identified by the Emergency Planning Community Right-to-
know Act (EPCRA), are based on facility specific data. TRI data is
information which some reporting facilities may use to operate in an
efficient and responsible manner. By its nature, some of the
information is simple and straightforward. For many small businesses,
only portions of the form need to be completed. The basic requirement
of the TRI program is that covered facilities submit annual reports on
their releases, management and transfers of listed toxic chemicals to
EPA and their respective States. In comparison to many other regulatory
programs which involve numerous requirements in addition to record-
keeping and reporting, such as meeting performance standards and/or
complying with prescribed management practices, the TRI program
requires only the reporting of information.
Nevertheless, over the course of the Phase II rulemaking, including
development of the proposed rule, EPA has taken a number of steps to
reduce the economic impacts that might be imposed by the rule on both
small and large entities. For the industries EPA proposed to add to the
program, the Agency took steps to eliminate reporting burdens for
distinct facility operations where information was not expected to be
generated. For example, EPA proposed an exemption from reporting for
coal extraction activities by facilities in the coal mining group, SIC
code 12, which simplifies threshold and reporting calculations for
these facilities. EPA proposed this exemption because it concluded that
coal extraction activities are not likely to involve the manufacture,
process, or otherwise use of toxic chemicals above threshold levels,
and thus facilities operating primarily extractive operations would
likely not be filing reports.
In addition to measures such as the examples discussed above, the
rule will incorporate a number of existing features of the TRI program
that are designed to reduce burdens on small entities. The statute
specifically exempts facilities with fewer than ten full-time employees
or the equivalent. In addition, EPCRA only requires reports from
facilities which manufacture or process more than 25,000 pounds, or
otherwise use more than 10,000 pounds, of a chemical in a year.
Further, facilities that would report as released or otherwise managed
less than 500 pounds may take advantage of short-form reporting (TRI
Form A) unless exceeding a 1-million pound alternate threshold for the
manufacture, process, or otherwise use of a listed toxic chemical. The
burden of this short form is only two-thirds that of filing the longer
form R. Moreover, facilities reporting smaller amounts of chemicals may
report in ranges rather than making more precise calculations. These
features of the TRI program have a significant burden-reducing impact
for small entities. For example, there are approximately 9,000 total
facilities in SIC code 5169 (Chemical Distributors) but only 2,800,
have ten or more employees. Of these 2,800 only 720 are expected to
exceed the manufacture, process, or otherwise use threshold for one or
more chemicals. Therefore, TRI, through its `` built in'' small
business exemptions, would exempt over 8,000 or 92 percent of the
Chemical Distributors. Moreover, of the estimated 720 reporting
facilities, some will be eligible for short-form reporting under the
alternate threshold, while others will be eligible for range reporting,
both of which will lower the burden of reporting for the covered
facilities. In addition, EPA has deferred the reporting associated with
this rule until January 1, 1998 to facilitate development of sector
specific guidance and training for small entities.
Question. Did you conduct a regulatory flexibility analysis for
this regulation?
Answer. In accordance with the Regulatory Flexibility Act (RFA) and
the Agency's longstanding policy of considering whether there may be a
potential for adverse impacts on small entities, the Agency has
evaluated the potential impacts of the rule on small entities. At
proposal, EPA chose not to certify that the rule as proposed would not
have a significant economic impact on a substantial number of small
entities. EPA chose to develop an initial regulatory flexibility
analysis for the proposed rule and provided that analyses to the public
for comment. For the final rule, EPA certified that the rule will not
have a significant economic impact on a substantial number of small
entities. While EPA will, therefore, not be required by the RFA to
perform a final regulatory flexibility analysis for the final rule, EPA
has chosen to assess the impact of the rule on small entities, and is
considering all the elements required in a final regulatory flexibility
analysis.
Question. Since there seems to be so many problems with this
rulemaking, why not pull it back and take the time to get the necessary
input from small businesses and follow the SBREFA procedures?
Answer. EPA does not believe that there are significant problems
with this rulemaking. EPA has conducted extensive outreach with the
potentially regulated community prior and subsequent to issuance of the
proposed rule. EPA has considered and evaluated all the issues raised
by commenters and stakeholders. While EPA may not agree with some
conclusions reached by some of the commenters, EPA has explained its
reasoning in response to each of the comments raised. However, not
agreeing with all these commenters or stakeholders does not mean that
the Agency has not considered all comments raised nor does it mean that
there are problems with the rule. As with any rulemaking, there can be
a difference of opinion about various issues. EPA conducted a lengthy
and thorough analysis of many different industry groups. EPA deferred
addition of industry groups where significant questions existed
relating to TRI reporting and EPA carefully weighed the standards
provided in and consistent with the statute in deciding to add the
industry groups included in the final rule. EPA's intentions to expand
industries covered under TRI have been well publicized for many years.
SBA and EPA's Office of Small Business Ombudsman have been informed and
have conducted several meetings where EPA has participated to inform
industry and industry advocates of the Agency's intent and progress.
This action fulfills the President's August 8, 1995, directive to
expedite an open and transparent rulemaking to expand the TRI program's
industry coverage.
TRI PHASE II GAO STUDY
Question. As you know, the conferees in the fiscal year 1997
appropriations bill addressed the concerns about expanding the TRI
program. GAO is currently studying this issue and how the program can
be improved. We do not yet have the GAO report, how many small
businesses would be impacted by this rulemaking?
Answer. Each facility which must file even one report is defined as
an ``affected'' facility. The Agency estimates that the 6,400
facilities affected by the rule, i.e. those which must file even one
report, are owned and operated by approximately 4,800 parent companies.
Of these 4,800 companies, up to 3,600 of these qualify as small based
on the applicable SBA size standards.
Question. Wouldn't it make more sense to wait for the GAO report to
find out how this program is working before doing additional
expansions?
Answer. EPA believes that expanding TRI to include additional
industries actually addresses one of the fundamental recommendations
made in GAO's 1991 report, which found that the TRI program was highly
successful with regard to the chemicals and industries covered at that
time, but should be expanded to cover more chemicals and industries.
EPA agrees with GAO's earlier assessment and believes that this action
will support GAO's recommendation to expand the TRI program to cover
more chemicals and industries.
Question. What is the timing of all future expansions?
Answer. EPA has not established a schedule for any additional
rulemakings that would add industries to TRI. However, EPA requested
comments on industries that were not included in the proposed
rulemaking and committed to considering any comments on those and other
industries at some point in the future. Many comments were received
that requested EPA consider the addition of other industries. EPA
issued an ANPR (61 FR 51322, October 1, 1996) concerning the possible
collection of additional data elements regarding chemical use.
Following a series of public meetings and evaluation of public comment,
EPA will determine whether and how to proceed on that initiative.
TRI PHASE II SBA OBJECTIONS
Question. Last December, Jere Glover, the Small Business
Administration's Chief Counsel for Advocacy, requested that EPA
consider the need to include chemical wholesalers and petroleum bulk
distributors--which are primarily small business facilities that EPA's
own data indicates release fairly insignificant amounts of pollutants.
Apparently OIRA also objects to EPA's rule, having extended its review
of the rule. In light of the objects raised by OIRA and SBA, why is EPA
unwilling to alter a rule that imposes significant impacts on these
small businesses without commensurate environmental benefits?
Answer. EPA does not believe that the addition of the petroleum
bulk distribution and chemical wholesaling industry segments will
impose significant impacts on small business. For many facilities
within these industry groups, EPA believes that estimated impacts may
greatly overstate the level of impacts that facilities will actually
face. Many of the facilities within the affected industry segments
conduct reasonably simple and routine activities which will not require
the facility to calculate all elements for the TRI reporting form, for
which costs are based. Further, EPA believes addition of these sectors
will add significantly to the available public information on the use,
management, and disposition of toxic chemicals and thus EPA believes
addition of these industry segments will contribute significant
environmental benefits. EPA also believes that, based on available
information, facilities within this industry are comparable to
facilities within the current reporting sector and are likely to
provide similar information, thereby furthering the purpose of
community right-to-know. While these industry segments have relatively
high numbers of entities meeting SBA's size standards for small
businesses (up to 500 employees in some cases), some facilities within
these segments manage large volumes of TRI listed chemicals and
mixtures containing TRI chemicals in a manner that may result in
releases and transfers of toxic chemicals and in reports being
submitted to EPA, the states and the public. EPA believes this
information is relevant to the purposes of EPCRA and important for
communities that are trying to assess the impact that industrial
facilities have on their local environment.
TRI PHASE II ADJUSTMENTS
Question. If these facilities released significant amounts of
pollutants, I would be among many members of Congress urging EPA and
the businesses involved to take action to correct the situation. But
Mr. Glover's letter reveals that EPA overestimated the potential
releases from some facilities by a factor of 100 and had ``inexplicable
deleted all records of zero releases from the analysis,'' resulting in
``misleadingly higher average release figures.'' Has EPA taken this
adjustment into consideration?
Answer. Reporting from these industry segments is significant for
community right-to-know purposes given the volume of toxic chemicals
handled and managed by them. Absent addition of these industry
segments, communities may not have any information on the use and
disposition of toxic chemicals of concern to them.
Further, EPA shared the background information for the data
relating to chemical distribution facilities with SBA and engaged in
extensive discussions with SBA; however, EPA does not agree with Mr.
Glover's interpretation of EPA's use of some of the data in question.
EPA did not use the data in question either to identify the chemical
distribution industry as a candidate for consideration, or to select
this industry for addition.
SBA's statement that EPA overestimated potential releases by a
factor of 100 is a reference to a report for a single chemical at a
single facility, which later submitted a revised estimate for that
chemical. This revision was submitted by the facility in December 1996
for 1993 activities. The state currently is investigating the
legitimacy of the revision. However, EPA has already incorporated this
revision into its analyses. EPA has not revised any analyses that
excluded reports of zero releases. However, again because these
analyses were not used in connection with EPA's decision to add the
chemical distribution industry, neither the reports of zero releases
nor the 1996 revision from the facility would affect the bases for
EPA's decision.
information resources management (irm)
Question. How much money is EPA investing in information management
activities? How much is in the program base? How much additional
resources does this budget add? Where are the new resources being
invested?
Answer. In the 1998 President's Budget, EPA is investing $469.6
million in its information management activities. The program base for
information management activities in the Agency's 1997 operating plan
is $463.4 million. EPA is increasing its information management
activities by $6.2 million from 1997 (1.3 percent). The increase
supports the following activities: the President's Community Right-to-
Know: Kalamazoo Initiative; fixing Year 2000 software problem; building
regional capacity to support data sharing/data warehousing with the
states and tribes; and the acquisition and upgrade of the Agency's
personal computers, servers, and storage capacity requirements.
IRM MANAGEMENT
Question. How are the Agency's information resources being managed?
Who is responsible for the overall quality and integrity of EPA's
information resources? How do they discharge this responsibility? Who
decides what goes out on Internet? What standards of quality do they
apply?
Answer. The Agency's Chief Information Officer (CIO) is responsible
for developing the information policies that guide the management of
information resources in EPA. EPA operates in a decentralized
information management model (i.e., each EPA national program office
has budget authority and provides certain program-specific information
management support directly to its operating divisions). Within this
decentralized model, the CIO retains responsibility for developing and
implementing Agency-wide information policies. The CIO is also
responsible for establishing and implementing an Agency IRM strategic
plan and for providing various centralized information services such as
management of EPA's National Data Center.
The CIO executes the information policy function through an Agency-
wide directives clearance process. This process is guided and informed
by EPA's Executive Steering Committee for Information Resources
Management (ESC for IRM). All major Agency programs and functions are
represented on the ESC for IRM. Additionally, the ESC for IRM
membership includes representatives of EPA's Regional Offices and
senior managers of state environmental agencies. Working in conjunction
with the ESC for IRM, the CIO manages and discharges the Agency's IRM
policy and management function, including the development of policies
and standards for data quality and accuracy. Because many Agency
functions rely on high quality scientific data to effectively protect
public health and the environment, EPA's Office Research and
Development is also a leader in developing data quality standards and
practices for the Agency.
The information holdings for the Internet are approved by a
Division Director (usually a Senior Executive Service rank) or higher
(i.e., Office, Deputy Assistant Administrator, or Assistant
Administrator) before they are posted to the EPA Internet site. The
standards used for information released to the Internet are similar to
those required for publication in other formats such as CD-ROMS, paper,
bulletin boards, or fax. The quality of the information or data is
often dictated by the source of the information, be it from a State
Agency or the official submission from a regulated entity. Most of our
national systems have data quality edit checks to ensure some level of
data quality, which varies depending on the data field and the source
of the data element. EPA's programs have an extensive quality assurance
program in the design and extract of its databases to assure that
public databases offer the official data that is contained in our
national systems.
IRM INVENTORY
Question. Does the Agency have an inventory of all the information
resources, public documents and software tools that it has produced,
endorsed or funded?
Answer. EPA's portion of the Federal government-wide Government
Information Locator Service (GILS) provides a high-level inventory of
the Agency's major publicly available information resources. This
inventory is available and easily searchable via the Internet, both
from EPA's website, and from the Government Printing Office's Access
website.
IRM PUBLIC RIGHT TO KNOW
Question. Since the Agency has emphasized the importance of public
right to know, what steps are being taken to obtain an understanding of
the average citizen? How much research and analysis of public
information needs has EPA conducted? How much has it spent on such
efforts? Have those efforts established the priority needs of the
average citizen or have they identified the areas of potential
interest?
Answer. Many of our public right to know efforts have been directed
to the understanding of the average citizen. EPA realizes its customer/
user community is a wide and diverse group of citizens. Much of our
work reflecting right to know efforts have been undertaken with EPA's
State partners. Regional Office staff have also been engaged to discern
what the public wants. Staff, who directly support Freedom of
Information Act requests (FOIA), have been consulted so that right to
know efforts are responsive to FOIA requests. EPA has held
presentations and focus groups with industry and not-for-profit
organizations to hear from them what data is being sought by the
public. Recently, EPA's NACEPT Committee's IRM Subcommittee held public
meetings on the types of information needed by different types of
constituent groups.
In the development and deployment of GILS, EPA held focus group
meetings in various cities in the United States to understand average
citizens' interests and requirements. The meetings included average
citizens as well as environmental and information technology experts.
Six meetings were held, and a survey conducted, at a cost of
approximately $5,000.
This spring and summer, EPA will undertake more directed focus
groups with the participation of major citizen groups, such as
children, students, parents, industry representatives, and researchers
to better understand and hear their needs. Hands on ``lab'' experiences
are being planned to better understand what the citizens want.
Understanding citizen needs is also obtained from direct feedback
to EPA's Internet site. Those comments and feedback submissions are
provided to the data holders and appropriately addressed. User
requirements are part of any system development effort. Having a better
understanding of the citizens' concerns and needs for right to know
have always been part of program office system design efforts. As part
of system life cycle costs, they have been part of system development
efforts that have not been specifically tracked or captured. EPA does
not track the costs of such efforts, but it estimates that it expends a
small but growing percentage of its public access budget on such
research. Constant interaction with the public from the FOIA process
and from our Internet comments and feedback is a vital step in our
process for constant improvement to meeting our customer needs. Focus
group meetings are being conducted in Washington, DC, New York, and
North Carolina. They all involve hands-on observation of users from ten
distinct user communities. The total cost is approximately $105,000.
PAPERWORK REDUCTION ACT
Question. What is the current OMB estimate of paperwork burden
imposed by EPA reporting requirements? What steps will EPA be taking to
reduce burden as required by the Paperwork Reduction Act (PRA)?
Answer. As of March 31, 1997, the estimate is 105,664,834 hours. To
comply with requirements of the Paperwork Reduction Act (PRA) and a
January 13, 1997 directive issued by the Office of Management and
Budget (OMB), EPA recently completed a thorough review of its
information collections with the objective of reducing paperwork burden
in the aggregate by 25 percent over three years. On April 14, the
Agency submitted to OMB a comprehensive burden reduction plan.
As the plan indicates, EPA's information collection and
distribution functions are going through a period of significant
change. The Agency is committed to improving data collection, making it
more useful to the Agency's many constituencies, and thus allowing
information to serve as a more powerful tool for protecting the
environment. This commitment is reflected in three different but
related activities currently underway.
First, the Agency is in the process of reducing the paperwork
burden that was in place as of October 1, 1995. By October 1, 1998, EPA
expects to reduce its October 1, 1995 paperwork burden, by 21.8 million
hours, or 21 percent of its baseline burden inventory. However the
reduction is offset by 30.3 million hours of new rule requirements
coming on line during that period of which the agency is projecting an
additional reduction of 4.1 million hours. Of the twenty-one
collections with burden hours greater than one million, sixteen will
have significant reductions during the three years covered by the plan,
and two additional ones are scheduled for reductions in 1999 or 2000.
All-in-all, EPA projects its 10/1/98 burden will rise to 108.5 million
hours, from its 10/1/95 baseline of 104 million hours.
Many of the new rules involve information requirements that enhance
a community's right-to-know. Right-to-know information is environmental
information presented directly to the public, enabling citizens and
communities to make informed environmental decisions and providing a
strong incentive for businesses to improve environmental management
practices. EPA now has about 15 right-to-know collections, including,
for example, drinking water notifications, reporting on releases and
transfers of toxic chemicals, and disclosures by home sellers of lead-
based paint hazards.
Under the Paperwork Reduction Act of 1995, ``third-party''
information, a large subset of this community right-to-know
information, must be counted as ``burden'' within the Agency's
information collection budget, even though this information is never
actually ``collected'' by EPA. By the end of fiscal year 1998,
community right-to-know information will total at least 26.7 million
hours, or nearly 25 percent of EPA's total burden.
The third way that EPA's information collection and distribution
efforts are changing is through a senior level Burden Reduction and
Information Technology Executive (BRITE) task group. The Agency is
looking comprehensively across programs and fundamentally rethinking
why information is collected, how, and from whom, and then identifying
ways to improve the process from the ground up. In particular, through
the BRITE process the Agency is (1) looking at ways to introduce and
expand the use of electronic recordkeeping and reporting, and (2)
studying different ways to improve the efficiency of EPA's information
collection system.
Because many major environmental programs involve compliance roles
for both EPA and States, a complex mosaic of information collection
responsibilities has developed over time. Therefore, a recurrent theme
in EPA's burden reduction effort is partnership with States in
implementation of reporting innovations. Coordinated State-EPA action
is essential for successful implementation of reporting reform, and EPA
is fully committed to this continuing deliberative process.
Question. Is EPA prepared to offer legislative proposals to modify
existing environmental statues where needed to meet the PRA targets?
Answer. EPA has not identified any specific legislative proposals,
but will continue to look at this option as it identifies further
burden reduction opportunities.
IRM REPORTING EFFICIENCY
Question. Will EPA's burden reduction strategy include efforts to
reduce duplication between EPA programs?
Answer. Yes, EPA has initiatives underway to improve system
efficiency in collecting, managing and sharing environmental
information. EPA's Locational Data Improvement Project and Key
Identifier Initiative will consolidate information about facilities
into one standard set of data common to all programs. Through the One
Stop Reporting Initiative, EPA is working with States to develop a
coherent overall environmental reporting and data management system
that effectively serves all stakeholders (the public, regulators, and
industry). This involves, in part, eliminating redundancies among
environmental information collections at all levels of government, as
well as streamlining and improving processes for more efficient
information management.
Question. Will it include efforts to adjust reporting obligations
based on a company's good compliance record?
Answer. Yes, EPA is investigating further opportunities to build
upon the successful approach adopted by the Office of Water for the
Discharge Monitoring Report. On April 16, 1996, EPA issued Interim
Guidance for reducing the frequency of monitoring and reporting by
permittees under the NPDES program. Under this guidance, any facility
that can demonstrate an excellent compliance history, and an ability to
reduce pollution beyond requirements in existing permits may qualify
for reduced paperwork burden. Further reductions may be granted for
facilities that also increase their levels of ambient monitoring and
share this information with other stakeholders. EPA estimated this new
approach will result in a 26 percent reduction in burden, or 4.7
million burden hours, when the program is fully implemented.
IRM DATA SECURITY
Question. What steps is EPA taking to make sure that increased
public access will not compromise important trade secrets? What steps
are you taking to build ``firewalls'' between public data readily
available to on-line access and trade secret data that EPA is obligated
to protect? Computer networks now allow competitors around the world to
put together pieces of ordinary data to reveal trade secrets about how
products are made: what steps are you taking to prevent this problem?
How are you working with other agencies, such as the FBI, on preventing
the use of public data to conduct economic espionage?
Answer. EPA does not post confidential business information (CBI),
as defined by regulation, on the public access Internet server.
Databases that are publicly available are screened for CBI information
and those data elements that are CBI are not modeled for the database
that would be released to the Internet. Thus, the database copy on the
Internet does not contain such sensitive data or information.
Another important category of data is enforcement sensitive
information. The Office of Enforcement and Compliance Assurance
provides technical assistance in screening the databases offered on the
Internet for enforcement sensitive data fields. These data elements are
not part of the database that is Internet-available.
While economic espionage is of great concern to EPA, EPA has not
worked with other federal agencies, such as the FBI, on this particular
issue. EPA is currently discussing how to handle economic espionage
problems and concerns with different and diverse industry groups.
IRM MISUSE OF ENVIRONMENTAL DATA
Question. If EPA is made aware of the misuse or the
mischaracterization of environmental data by third parties, what steps
is EPA prepared to take to stop such behavior and prevent its
reoccurrence in the future?
Answer. The misuse and mischaracterization of environmental data by
a third party is difficult to control. EPA has its own Internet site
with proper security and controls. Our Internet site with the domain of
``www.epa.gov'' gives the public the assurance that the information
found from our registered site is the government's information. EPA
takes great effort to provide descriptions of the purpose and intent of
data releases on the Internet. EPA's data holdings and information
offerings provide an explanation as to what the data represents; from
whom and when this information was obtained or released. Providing a
thorough description of EPA data and information offerings in the form
of data dictionaries and registered records is another of EPA's efforts
to protect the misuse of environmental data.
Without examples of specific data misuse, it is difficult to answer
precisely what actions the Agency would take to alleviate the problem.
It is in EPA's best interest to provide a level, fair, and objective
information base for the use of environmental information by any and
all parties who are trying to protect the environment and public
health. EPA's users are many and quite diverse. It is EPA's intent to
provide all parties with complete and accurate environmental
information on the Internet. Of course, ultimately citizens are free to
provide their interpretations of EPA's data. When EPA is aware of any
egregious misuse of its data, it attempts to provide clarity in
appropriate forums.
IRM AND STATE-MANAGED DATA
Question. Since most environmental data collected under EPA
programs is assembled by state governments, should the principal
decisions about what to collect and how to manage the data be made at
the state level? Should EPA be the principal data manager or one of
several users of state-managed data?
Answer. The decisions about what environmental data to collect are
shared between EPA and the states. Data to document compliance with
Federal regulations and to ensure accountability under EPA-state
delegation agreements are logically defined by EPA. The states, the
regulated community and the public are consulted by EPA in defining
these requirements. The states are also consulted on the methods for
aggregating and reporting data to EPA. In addition to EPA-mandated
reports, a few states require reports that go well beyond Federal law.
Finally, the states both define and finance a large portion of all
ambient environmental monitoring.
Most data obtained from those subject to environmental regulations
are collected by states operating under delegated agreements with EPA.
The principal exceptions are the Toxic Release Inventory and the
Biennial Report under the Resource Conservation and Recovery Act. For
this reason, decisions about data management are increasingly being
made by states within the framework of the minimum Federal requirements
established by EPA. The expanding role of the states in data management
reflects both changes in information technology and an increase in the
resources and management attention that the states devote to data
management. This trend also reflects EPA efforts to strengthen its
partnership with states in this area.
EPA's One Stop Reporting Program is developing new data sharing
partnerships with states that have a demonstrated commitment to
comprehensive data management reforms. The One Stop program emphasizes
data sharing based on common data standards and appears to offer
increased efficiency to both the states and EPA. Both EPA and the
participating states believe that this approach will also reduce the
reporting burden on industry and enhance public access to environmental
information.
In fiscal year 1996, EPA selected five states to receive $500,000
One Stop Reporting grants: Massachusetts; New Jersey; Missouri; Utah;
and Washington. In a highly competitive process that attracted
applications from 31 states, EPA has just selected an additional eight
states to receive similar grants in fiscal year 1997: Pennsylvania;
West Virginia; Georgia; Minnesota; Mississippi; Texas; New Mexico; and
Oregon. Each One Stop state agrees to adopt data management reforms
including the integration of data around common data standards,
reduction of reporting burden, enhanced public access, inclusive
stakeholder participation, strengthened accountability for data
management, and over the long term, universal access to electronic
reporting.
The priority states now assign to data management and data sharing
is evident in the portion of total reform costs being financed by the
One Stop states. Although figures vary widely, the typical One Stop
state is investing $2 to $3 million dollars of state funds annually
whereas the Federal contribution is a one-time grant of only $500
thousand.
NRC ADDITIONAL NPL SITES
Question. It has come to the Committee's attention that EPA is
proposing to place tens or perhaps even hundreds of additional sites on
the NPL if those sites are cleaned up under the jurisdiction of the
Nuclear Regulatory Commission (NRC) to NRC's recently developed
radiological clean up standards. These facilities include universities
and research organizations with small reactors, radiopharamaceutical
manufacturers, nuclear power plants, large teaching organizations and
biotechnology companies. It is my understanding that EPA is under no
statutory obligation or judicial directive to issue its own regulations
in this area. Could you please describe for the Subcommittee, NRC's
response to EPA's proposal to place its licensees on the Superfund
list.
Answer. While EPA is not required to set clean-up standards under
the Atomic Energy Act (AEA), EPA has clear authority to establish
generally applicable cleanup standards and to provide guidance for
Federal agencies. NRC and the Department of Energy (DOE), under the
AEA, must ensure, through licensing requirements and other
restrictions, that activities at regulated facilities do not exceed
EPA's generally applicable standards. At this time, EPA is coordinating
development of cleanup standards with DOE and NRC. However, given NRC's
proposal to promulgate a rule less protective than what EPA would
prefer, EPA may reconsider its policy under a separate statute (CERCLA)
of not listing NRC sites on the Superfund National Priorities List
(NPL).
EPA did work extensively with NRC during the development of NRC's
standards. NRC's proposed rule was considered by EPA to be adequately
protective of human health and the environment. Throughout the
rulemaking process, EPA indicated to NRC that a dose limit of higher
than 15 millirem a year (which EPA estimates corresponds to a risk of
approximately 3.010-4), and the absence of requirement to
protect groundwater that could be used as drinking water, might not be
considered protective. EPA did not know that NRC intended to make
changes from its proposal until November, 1996. EPA's concerns were
heightened in April upon review of NRC's draft proposed rule which
includes an ``alternative criteria'' that would allow the dose limit at
some sites to be as high as 100 millirems per year (which EPA estimates
corresponds to a risk of approximately 2.010-3).
The number of NRC licensee sites that could be added to the NPL is
dependent upon many factors including the degree of risks posed by the
site and State concurrence on listing. A precise determination of the
number of sites that could be listed cannot be determined at this time.
The probable universe from which the sites which could be listed are as
follows:
Total Large NRC Sites \4\ : 275
---------------------------------------------------------------------------
\4\ U.S. EPA Sites Report, July, 1996, unpublished.
---------------------------------------------------------------------------
--Estimated number of large NRC licensee sites.
--These are sites associated with nuclear fuel cycle and rare earth
extraction.
Large NRC Sites Not on the Site Decommissioning Management Plan
(SDMP) \5\ : 240
---------------------------------------------------------------------------
\5\ EPA expects that only a small fraction of these sites would be
listed on the NPL.
---------------------------------------------------------------------------
Large NRC Sites on the SDMP: 35
SDMP sites that are on the NPL: 3
Other Sites on the SDMP \6\ : 51
---------------------------------------------------------------------------
\6\ U.S. Nuclear Regulatory Commission. November 1995. Site
Decommissioning Management Plan. NUREG-1444 Supplement 1. Office of
Nuclear Material Safety and Safeguards. Division of Waste Management.
---------------------------------------------------------------------------
--The draft NRC decommissioning rule dated March 28, 1997 page 31,
discusses a list of sites that may have ``extensive soil
contamination (albeit at relatively low levels) and have been
placed in the Site Decommissioning Management Plan.'' NRC
indicates that these sites warrant specific attention regarding
their decommissioning.
NRC ADDITIONAL SITE CLEANUP
Question. In your Superfund budget request--is the cost of cleaning
up these additional sites included in the budget request?
Answer. As the final resolution of the issue between EPA and NRC is
uncertain, no change in budget priorities has been made to prepare for
EPA response at these sites. If NRC finalizes the regulation in its
current form, EPA would reconsider listing these sites. However, it is
premature to assume that EPA must now absorb this additional workload,
pending actual finalization of the regulation.
NRC DUPLICATIVE REGULATORY SITUATION
Question. In this era of shrinking federal budgets, agencies are
being asked to do more with less. In light of NRC's oversight and
separately implemented cleanup program for these sites, do you believe
the cost and inefficiency of this duplicative regulatory situation can
be justified?
Answer. EPA is committed to ensuring that cleanups are protective
of human health and the environment. Under CERCLA, EPA may choose not
to respond to certain types of releases if existing regulatory or
authority under other Federal statutes provides for an appropriate
response. In its current form, the NRC regulation may not be adequately
protective of human health and the environment, forcing EPA to
reconsider its policy of exempting NRC sites from listing on the NPL.
We hope that NRC will recognize the inefficiency that might occur
and promulgates a standard that provides the public with the same level
of protection from radiation that the public receives from other
chemicals.
PULP AND PAPER INDUSTRY CLUSTER RULE
Question. As proposed in 1994, the new water and air standards for
the pulp and paper industry, known as the Cluster Rule, would have had
a devastating affect on this important U.S. industry. As a consequence,
many members of Congress wrote to you and your staff to express very
serious and specific reservations. As I understand it, the agency may
be moving to address these concerns, but a firm date for promulgation
never seems to be forthcoming. In view of the fact that the U.S. pulp
and paper industry's capital planning is being held hostage to this
rule, can you give us some idea of why promulgation has been delayed so
long and when we can hope to see the rule finalized?
Answer. This regulation is the first one of its kind to integrate
analyses of technologies to control both air and water pollution. It is
also the first to consider an incentives program to encourage mills to
go beyond the requirements of the Federal regulations and commit to
improvements toward a low-flow, minimum impact mill of the future.
What you describe as a significant delay in our schedule to
promulgate the rule is largely the result of two factors: (1) our
ground-breaking efforts, involving extensive stakeholder participation,
to build an incentives program using existing authorities that will be
a powerful impetus to continuous environmental improvement, and (2) the
reiterative analytical process that is necessary to consider the
combined effects of the air and water rules. While this approach has
resulted in a longer developmental process, EPA is optimistic that the
lessons we are learning through this process will serve us well through
this rulemaking and future ones. EPA expects to transmit the rule for
OMB review in early May 1997.
pulp and paper industry cluster rule participation
Question. I understand that in a July 1996 Federal Register notice,
you indicated that EPA was considering offering regulatory incentives
for mills willing and able to go beyond the requirements of the final
cluster Rule. I applaud this approach and hope that the final rule will
contain a program that provides meaningful rewards for companies
willing to make the kind of large investments contemplated by your
original proposal. Since this is precisely the kind of regulatory
reform initiative many of us support, please share your latest thinking
with respect to ways in which you will make this program attractive
enough to gain the widest participation possible.
Answer. It is our firm belief that many mills are interested in
improving their environmental performance. Our main goal in the
incentives program is to provide the necessary flexibility, in the form
of additional time, for mills to plan for and install improved
pollution prevention technologies. In addition, we are exploring a
variety of rewards for mills that achieve standards beyond baseline
BAT. These incentives include public recognition and consideration of
their advanced performance in our routine permitting and compliance
monitoring. We believe many mills will choose to pursue the flexibility
offered in this package.
pulp and paper industry cluster rule incentives
Question. I think it is critical that the final rule contain a
meaningful incentives program. Do any of your problems stem from
hesitation regarding the authority you have to offer such incentives?
Answer. We believe we have the statutory authority to provide an
effective incentives program. We have explored the mix of options
available for using regulations, policy and guidance to provide the
strongest incentives program without tying the hands of the States who
are our co-regulators. We are currently working out the final details
of this incentives program.
______
Questions Submitted by Senator Shelby
FQPA OFFICE OF MINOR USE
Question. Will the FQPA mandated Office of Minor Use be in place by
September 1997?
Answer. Yes, section 31(a) of FIFRA, as amended by FQPA, requires
EPA to ``assure coordination of minor use issues through the
establishment of a minor use program within the Office of Pesticide
Programs.'' The Agency has been coordinating minor use issues for many
years. To implement FQPA, EPA's Office of Pesticide Programs is
developing an organized unit which will include a home for the minor
use program. The program will establish policies and coordinate all
minor use pesticide issues within EPA, with other agencies and with all
interested parties.
FQPA MONITORING
Question. What distinction does EPA make when monitoring
domestically manufactured products as compared to imported products?
Answer. EPA makes no distinction between domestic and imported
pesticides. They must all be registered with EPA and comply with
identical sets of requirements. All registrants of pesticides subject
to FIFRA, whether manufactured domestically or outside of the United
States, must report to EPA the types and amounts of pesticides
produced, sold or distributed, beginning 30 days after production
begins and annually thereafter. All products must be registered by EPA
for their specific use before they can be legally applied, and must
have an established tolerance or exemption from tolerance if used on
food or feed commodities. FDA and USDA monitors pesticide residues on
foods for both domestic and imported commodities. Any food found in the
U.S. with illegal pesticide residues would be declared adulterated and
subject to seizure by FDA.
FQPA FOREIGN DATA
Question. Is EPA willing to accept data collected and verified in
other countries when registering a domestic product? For instance,
conditions, trials and field work on Canadian canola, peas and lentils
is very similar to the U.S. situation.
Answer. EPA has reviewed and accepted data generated in other
countries to support some registration decisions. EPA will continue to
do so provided those data are collected under conditions similar to
those in the U.S. and as long as they meet U.S. standards. EPA will
continue to work with Canada to harmonize pesticide registration data
requirements so our farmers have similar pest control tools and are not
at a competitive disadvantage.
FQPA SECTION 18 EMERGENCY EXEMPTIONS
Question. Section 18's (Emergency Exemptions) are of vital
importance to production agriculture. Are the timely issuances of
Section 18's a high priority for agency resources both during and after
final implementation of the Food Quality Protection Act (FQPA)?
Answer. Making timely decisions on emergency exemptions has been
and will continue to be a high priority for EPA. In fact, the first
decisions which were reviewed and completed under the new requirements
of the FQPA were emergency exemptions. EPA remains committed to making
timely decisions on emergency exemptions even though the resources and
complexities involved with these decisions has substantially increased.
FQPA SECTION 18 LEVEL OF REVIEW
Question. Given the stress on agency resources being created by the
implementation of the FQPA, does the agency now require the same level
of review for Section 18's as for full registrations? If so, why is
this being done since Section 18's result in diminished exposure and
are time limited tolerances?
Answer. Emergency exemptions involving food uses have always
required a significant level of review. Section 18's are primarily only
allowed when progress can be shown toward a full Section 3 registration
and the safety finding of ``no unreasonable harm'' can be met. EPA has
always used the toxicological and environmental fate data submitted for
the Section 3 to help make the Section 18 decision. FQPA did not change
the provisions of FIFRA Section 18's or the need for quick responses.
The additional effort for FQPA is that today we must make and publish a
formal tolerance determination.
Section 18's do not result in diminished exposure, only in a
shorter time span of exposure. Conceivably, many people may be exposed
for several years to pesticides permitted under emergency exemptions.
For example, if a Section 18 pesticide is used on corn, people eating
that corn will be exposed for a shorter time frame but it would be the
same level of exposure. Therefore, EPA must still consider all of the
toxicological endpoints of concern, the amount of exposure and what the
potential risk is to each exposed populations (i.e., adults, children,
etc.). As a petition to address an emergency situation, the difficulty
sometimes is that EPA must make a decision in an accelerated time frame
(the target is fifty days but some situations require EPA to respond
within a few days).
FQPA NEW PRODUCT AND NEW USE REGISTRATIONS
Question. If the agency is giving up high priority to Section 18's
and also using up resources for a complete level of review, is this
decision resulting in a slow down of new product and new use
registration? If so, is this wise since new and safer products could,
therefore, be delayed for market use?
Answer. New active ingredients and ``reduced risk'' chemicals
continue to receive a high level of priority. While the Agency
experienced an initial slow down in the 3 months following passage of
the FQPA, EPA has recently approved a significant number of Section
18's and new active ingredient registrations. Because these actions are
given high priority, EPA does not expect that new and safer products
will be delayed in getting to market. In fact, in the first six months
of fiscal year 1997, EPA has made more decisions on new active
ingredients then the historical average.
Additionally, prior to FQPA, the Biopesticide and Pollution
Prevention Division (BPPD) was created to focus their efforts on safer
biopesticides and biopesticides in general. Their processes were well
implemented prior to FQPA, therefore, there was very little if any slow
down in their new product and new use registrations due to FQPA. BPPD
has registered 10 new biological active ingredients (AI's) under FQPA,
one of which is BT corn, and will register an additional 6-8 new AI's
in the next six months.
FQPA PRIORITIZATION TOP FIVE PRODUCTS
Question. By forcing companies to prioritize only their top five
products due to agency resource problems, isn't the agency adversely
impacting the marketing of new active ingredients and new label for
existing products for minor uses?
Answer. EPA established the priority setting policy a year prior to
passage of FQPA. It does not limit the number of applications which can
be submitted, rather, it helps industry identify which applications are
of greatest importance to them and to consumers. The purpose of the
policy is to align Industry priorities with EPA's workload, and has
proven to be an important management tool. EPA believes the priority
planning system has enabled the agency to better manage the resources
and, in fact, has increased the number of registration decisions for
new uses and active ingredients. The priority setting process does not
impact the approval of new pesticides because registrants have never
had applications for more than two or three new pesticides pending at
one time. Thus, each company always can make new pesticides their top
priority with room for other applications as well. Likewise, many minor
uses are considered priorities in the que. Further, EPA makes IR-4
minor use tolerance petitions a high priority for review.
FQPA DEFAULT TOLERANCES
Question. In considering whether to establish a tolerance, in
absence of data on aggregate exposure to a pesticide residue, the
agency has indicated it will create artificial percentages to represent
aggregate exposure. This appears to be inconsistent with Section
405(b)(2) (C) and (D) of the FQPA statute. Under the FQPA, an
adjustment for aggregate exposure appears to be warranted only when
there is ``available information'' which evidences a need for an
adjustment.
If the agency is spending time on the development of defaults in
the absence of information, this would appear to be another reason for
an overload of the agency resources resulting in delays in moving
products to the market. It may also result in a system which may be at
odds with the law. Has the agency given consideration to this problem
and why has it continued to use theoretical defaults in the absence of
``available information?''
Answer. EPA bases all determinations on available information. We
have an obligation to use the best scientific methodology in evaluating
the non-food exposures when considering a pesticide for registration,
an emergency exemption or reregistration. EPA employs default
assumptions only when information regarding the exposure to the
pesticide is incomplete. If EPA knows that a pesticide has non-food
exposures, we believe that it would be inappropriate to act as if such
exposures are not occurring simply because we don't have rigorous data
to calculate the precise level of exposure. Instead we will use
protective but defensible estimates of such non-food exposures in our
assessments.
For example, if EPA has information showing a pesticide is
registered for use in and around the home, EPA believes that
``available information'' shows that residential exposure is occurring.
In the absence of residential exposure data for the exact pesticide
being evaluated, EPA will attempt to estimate exposure using available
data. In many instances, for residential exposure, EPA scientists will
use residential exposure data from other similar pesticides and
calculate a reasonable exposure value from that data.
EPA will work to review all available information to refine our
risk assessments, which could, in fact, lower our exposure estimates
and allow the approval of additional uses. This approach may be helpful
in areas where complete data have not been submitted.
Given the requirements of the law, not using some reasonable value
representing our best scientific judgement would result in indefinite
denials of applications while precise data were generated, a process
which in many cases could delay decisions for a period of many months
or years.
ENVIRONMENTAL SELF-AUDIT LAWS
Question. Alabama currently has legislation before the State House
and Senate regarding environmental audit laws. As you are aware,
environmental audit laws, which have been adopted in 20 states and are
before 19 state legislatures, help determine the status of a company's
compliance with federal, state and local regulations. The audits
generally serve as a basis for corrective actions, remedial programs
and lead to an improvement in environmental practices. Realizing that
budgets stretch only so far and the funds for inspection and audits are
limited, states should be praised for creating a process that
encourages companies to implement self-audits and then any corrective
problem.
While recently EPA has taken small measures to recognize the value
of environmental audits, why isn't your agency more supportive of the
states efforts?
Answer. EPA supports environmental self-auditing and has an
incentives policy of its own to encourage auditing and other forms of
self-policing. Nonetheless, EPA opposes audit privilege and immunity
legislation. Audit privilege invites secrecy, instead of the openness
needed to build public trust in industry's ability to self police. EPA
believes that audit privilege greatly complicates criminal and civil
discovery, and frustrates public access to information. While EPA
supports penalty mitigation as an incentive for voluntary disclosure
and correction of violations, EPA believes that to immunize serious
violations discourages companies from making the investments in
pollution control necessary to prevent such violations. These are among
the reasons that audit privilege and immunity laws are strongly opposed
by law enforcement, state and local officials, citizens, and public
interest groups.
Question. Isn't one of the purposes of early detection compliance
with the law?
Answer. Yes. EPA's Self-Policing Policy, ``Incentives for Self-
Policing: Discovery, Disclosure, Correction and Prevention of
Violations,'' issued on December 22, 1995, encourages early detection
of environmental problems and their prompt correction. Unlike many
immunity laws, EPA's policy encourages a high standard of care to
prevent environmental problems from occurring in the first instance and
to ensure that those who comply in a timely manner are not
competitively disadvantaged by those who do not.
Question. Why is early detection of environmental hazards bad?
Answer. Early detection of environmental hazards is good in that it
allows facilities to remediate any environmental damage sooner than if
the facility waits until the hazard is discovered by a regulatory
agency or the public. That's why EPA's Self-Policing Policy encourages
early detection and correction of environmental hazards in exchange for
reduced penalties.
Question. Why wouldn't the EPA support creative innovative state
programs that promote compliance with the law and early detection of
possible environmental hazards?
Answer. EPA does support state programs that promote compliance
with the law and early detection of possible environmental hazards. EPA
opposes certain state audit privilege and immunity laws precisely
because they do not promote compliance with the law, but instead
interfere with law enforcement and with the public's right to know.
As an alternative to audit privilege, EPA supports efforts by state
environmental agencies, such as Pennsylvania and Florida, to develop
penalty mitigation policies with criteria for self audits that are
consistent with EPA's. Indeed, the EPA has encouraged the development
of policies that offer penalty mitigation incentives for environmental
auditing. EPA's Self-Policing Policy is working well to encourage
environmental auditing and voluntary compliance without the adverse
consequences to law enforcement and the public's right to know of a
privilege and immunity bill. As of April 1997, 120 companies had
disclosed violations at more than 400 facilities under the federal
policy, proving that environmental auditing can be encouraged without
blanket amnesties or audit privileges.
Moreover, federal laws and regulations establish clear standards
that states must meet to obtain approval to administer federal
environmental programs. To meet the minimum federal requirements for
adequate enforcement authority for program approval, states with audit
laws must retain the ability to obtain penalties and injunctive relief
for violations, as well as the ability to obtain information needed to
identify violations or determine compliance status. In analyzing the
impact of state audit laws, the EPA stands ready to consult with state
officials to ensure the adequacy of enforcement authority in federally-
approved state programs. In working with the states, the EPA relies on
a policy issued February 14, 1997, ``Statement of Principles, Effect of
State Audit Immunity/Privilege Laws on Enforcement Authority for State
Programs,'' which articulates the minimum requirements for adequate
enforcement and information gathering authority for the purpose of
approving programs in states with audit privilege or immunity laws.
Question. It seems as though EPA's stance on this matter promotes
an adversarial relationship with the very states and business that are
attempting to comply with your agency's regulations. Why?
Answer. Recently, Administrator Browner met with representatives
from several states and had a very positive discussion regarding EPA's
concerns with audit privilege and immunity statutes. Since then, EPA
has met with the states of Texas and Michigan to work out changes to
those audit privilege and immunity statutes that would enable the
states to meet Federal legal requirements. EPA is ready and willing to
meet with any other states to discuss amendments to existing or pending
audit statutes for that purpose.
______
Questions Submitted by Senator Craig
WIPP SAFETY
Question. If WIPP is deemed to be acceptable, will it be safer to
store waste at WIPP or where it is currently being stored?
Answer. The waste is currently being stored primarily at ten sites
throughout the country and, at present, poses no immediate threat to
public health. However, the dangers with the type of waste
(transuranic) proposed for disposal at the Waste Isolation Pilot Plant
(WIPP) is that it is radioactive and will be for tens of thousands of
years.
Leaving the waste stored above ground will subject the waste
containers to degradation from the weather, as well as leave them
vulnerable to natural or other disasters. The current method of storage
for transuranic waste is a medium-term fix, not a long-term solution.
The advantage of a facility such as the WIPP is that, if it is proven
to comply with the U.S. Environmental Protection Agency's (EPA's)
disposal regulations, the facility would provide long-term protection
to public health and the environment.
WIPP COST
Question. What has been the cost to the federal government to date
and what is the status of construction at WIPP?
Answer. EPA defers to DOE for information regarding both the total
cost of the WIPP facility and the status of construction.
WIPP COST OF REVIEW
Question. Do you have adequate resources to conduct a review of the
application? What additional resources do you need, if any?
Answer. Yes, EPA has adequate resources to conduct the review of
the application in a timely manner. No additional resources are needed.
WIPP COMPLETENESS REVIEW
Question. What is the process of the review you are conducting or
will conduct, and what is the schedule to complete this review?
Answer. The WIPP Land Withdrawal Act (LWA), as amended, requires
that EPA make a determination as to whether WIPP meets the Radioactive
Waste Disposal Regulations at 40 CFR Part 191. The LWA requires that
EPA make this determination by rulemaking under Section 553 of the
Administrative Procedures Act (APA). EPA is currently proceeding with
rulemaking activities in accordance with the provisions of the WIPP
Compliance Criteria at 40 CFR Part 194.
The Agency is taking every step to facilitate the certification
decision. We are reducing the complexity and amount of time required
for internal Agency review of the certification decision, and would
like to expedite the time required for interagency review. We estimate
that once DOE has provided all the required information identified in
our March 19, 1997 letter to the Department, the Agency will produce a
final certification decision within a minimum of 10 months. The
expected certification decision of the DOE WIPP application is
currently April 1998. This date is subject to change depending, in
part, on the planned DOE delivery to EPA of the confirmatory
verification test of the performance assessment by early July, 1997.
It is the Agency's goal to make a technically and legally
defensible decision since it is likely that any decision will be
subject to litigation. If EPA's final determination is not legally
defensible, and it is overturned in court, the possibility of WIPP
opening could be significantly delayed.
WIPP COMPLETENESS REVIEW START
Question. Is there any prohibition as to when you can begin your
evaluation of the Completeness Certification Application in 40 CFR
194.1?
Answer. There are no prohibitions identified in 40 CFR 194.11
[Section 40 CFR 194.1 identified in the question addresses the purpose,
scope and applicability of the 194 regulation, while 40 CFR 194.11
addresses completeness and accuracy of compliance applications]
regarding when EPA can begin review of completeness following DOE's
submission of the WIPP Compliance Certification Application (CCA). In
fact, the Agency began review of the CCA immediately following receipt
of the CCA on October 29, 1996. The Agency informed DOE on December 19,
1996, that additional information was required for a complete
application. Since that time, the Department has periodically provided
information to fulfill that request. The Agency received the last
installment of information on that request and, as promised by
Administrator Browner, will make a completeness determination in May,
1997.
WIPP CERTIFICATION EVALUATION
Question. How would you characterize EPA's evaluation for
certification--is it a technical review of the application?
Answer. EPA is conducting a technical review of DOE's application.
This review is designed to determine whether DOE has demonstrated a
reasonable expectation of compliance with the disposal standards in 40
CFR 191. Reasonable expectation is demonstrated by compliance with the
criteria identified in 40 CFR 194.
WIPP APPLICATION COMPLETION
Question. The application was filed at the end of October, 1996. To
date, your reviews of the application have not been for the purposes of
certification but for purposes of determining whether the application
is complete--is that correct? What is the definition of complete and is
that consistent with the definition found in 40 CFR 194.1?
Answer. No. EPA has conducted both its technical and completeness
reviews simultaneously and has been doing so since receipt of DOE's
application on October 29, 1996.
A complete application, as defined in EPA's Compliance Application
Guidance (EPA 402-B-95-014), is one which addresses each of the
requirements of 40 CFR 194 in such a manner as to warrant further
scrutiny, so that EPA, DOE, and the public do not invest major
resources in a rulemaking proceeding for an incomplete document. A
completeness determination is a preliminary step in a more extensive
administrative process and is consistent with the process identified in
40 CFR 194.11 [as previously noted, 40 CFR 194.1 addresses the purpose,
scope and applicability of the 194 regulations, while 40 CFR 194.11
addresses completeness and accuracy of the application].
WIPP REVIEW COMPLETION SCHEDULE
Question. Would EPA please provide the Subcommittee with its
schedule for a timely completion of review of the WIPP application
within the next two weeks?
Answer. The Agency is taking every step to facilitate the
certification decision. We are reducing the complexity and amount of
time required for internal Agency review of the certification decision,
and would like to expedite the time required for interagency review.
EPA would like to publish a proposed rule approximately 2\1/2\
months after DOE submits all the information EPA requested to fulfill
the requirements of 40 CFR 194 (as identified in the March 19, 1997
letter from EPA to DOE). Following proposal, a four month public
comment period will begin as required by 40 CFR 194. Upon completion of
the public comment period, EPA will need a minimum of 3\1/2\ months to
accomplish an expedited rulemaking process including responding to
public comments, completing the technical support, drafting the final
rule and completing the intra and interagency review. In total, it will
take the Agency a minimum of 10 months to complete the final
certification decision once DOE has submitted the required information.
The expected certification decision of the WIPP application is
currently April, 1998, although subject to change depending, in part,
on the planned delivery to EPA of the confirmatory verification test of
the performance assessment by early July, 1997.
WIPP INFORMATION FROM DOE
Question. Does EPA recognize a difference in the review process
between requests to DOE for information related to a completeness
determination and other additional requests for information which are
for technical sufficiency or of a general nature?
Answer. Yes. The Agency has specified the difference in its letters
to the Department. The Agency sent a letter to DOE on December 19,
1996, which identified areas of completeness and technical sufficiency;
it also identified areas where necessary supporting documentation to
demonstrate compliance with the regulatory requirements of 40 CFR 194
was lacking. Enclosed with the letter were separate attachments for
items of completeness and technical sufficiency. The December 19, 1996,
letter was the only one which identified additional information needs
related to completeness.
WIPP COMPLETENESS DETERMINATION
Question. Is EPA's failure to issue a completeness determination
based on requests for information of technical sufficiency?
Answer. No. It is based solely on those items identified in the
December 19, 1996, letter where additional information is required for
purposes of completeness.
WIPP REVIEW: REASONABLE EXPECTATION STANDARDS
Question. Does your review conform to the reasonable expectation
standards contained in 40 CFR 191 and 194? Please be specific as to how
this might relate to any requests for additional information relating
to parameter evaluations, parameter variance determination and
confirmatory performance assessments.
Answer. Yes. Regarding the parameter values chosen by DOE, EPA
reviewed the available record on all of the approximately 1,500
parameters used in the WIPP performance assessment. Section 40 CFR
194.23 requires, among other things, for ``detailed descriptions of
data collection procedures, sources of data, data reduction and
analysis, and code input parameter development.'' From our review, EPA
identified 58 parameters which could have a significant impact on the
results but the supporting data could not be found, the data did not
support the values chosen, or the connection between the data and the
chosen value was unclear. Questions about the values chosen for many of
these parameters were also raised by DOE's own peer review groups, the
National Academy of Sciences, the Congressionally appointed
Environmental Evaluation Group and public commenters.
EPA has asked DOE to resolve the discrepancies between the
information available in the record and the parameter values chosen.
Where that cannot satisfactorily be accomplished, EPA will evaluate the
data and provide parameter value(s) to DOE. The parameter variance
determination was one tool which EPA used to determine whether each of
those 58 parameters did indeed play a significant role in the results.
If the results showed that a parameter did not play a significant role
in the results, that parameter was dropped from consideration. EPA has
already provided DOE a partial list of parameter values in an April 17,
1997, letter. Since this exercise has resulted in changes to some of
the parameters which play a significant role in the results of the
performance analysis. EPA has requested a confirmatory verification of
the performance assessment to be completed by DOE using the parameter
values which EPA believes more adequately reflect the available data.
As stated earlier, EPA's goal is to make a final determination
which is both technically and legally defensible.
WIPP AND SANDIA NATIONAL LABORATORY COMPUTER COSTS
Question. Is EPA planning to duplicate all of the computer codes
developed by Sandia National Laboratory? Will you use these codes to
determine whether or nor the ultimate findings made by DOE are
supportable?
Answer. No. EPA has not, nor does it plan to duplicate any of the
computer codes developed by Sandia National Laboratory.
EPA has and will conduct exercises to verify that the computer
codes developed by DOE produce reasonable and stable results. This is
accomplished through benchmarking of the DOE codes against existing,
commercially available codes used for similar purposes.
TECHNOLOGY NEUTRAL RECORDS OF DECISION
Question. I understand the Department of Energy's Environmental
Management Program is proposing to perform Superfund Records of
Decision that are technology neutral. This approach is proposed so that
private industry can bring competitive technologies to bear on DOE
problems, based solely on the required cleanup end state for the site.
Given EPA's promotion of consensus-based remedy selection, could
you comment on how you think the public and state regulators would
respond to technology neutral RODS? Has DOE requested EPA comment on
this approach? What is your response to a technology neutral ROD
approach?
Answer. The Agency is not familiar with the term ``technology
neutral'' ROD's. However, your explanation of the concept of signing
ROD's that rely on performance of a remedy is quite challenging and on
the surface may seem deceptively easy. What follows are some issues
that any performance-based ROD process would need to address.
The circumstances found at Superfund sites vary, both in the
characteristics of the contaminants and in the different trade-offs
that accompany any technology applied at the site. Such trade-offs can
include different possible uses of the land after cleanup, different
levels of emissions during cleanup, different time frames to complete
cleanup, different levels of long term reliability and maintenance, and
different costs. Each of these factors, along with others, is
considered during the selection of remedy process identified in the
National Contingency Plan. Equally important is the NCP's open
decision-making process that incorporates community views. The Agency
has learned that full involvement of the community in making decisions
at sites leads to a successful, supported cleanup. It is this
involvement that would have to be incorporated into any consideration
of this concept in the long run.
However, there are opportunities for flexible approaches (e.g.,
treatment that offers similar performance relative to most NCP
criteria) that should be considered within the context of an open
consensus based decision making process.
Selecting only end-of-the-line performance in a remedy would appear
to bury many of the important lessons we have learned over the past 15
years. For example, in 1991 the Superfund program began a series of
program reforms, one of which directly relates to the concept you set
forth. The reform called for treatability studies, which review the
capability of new, innovative technologies to accomplish a hazardous
waste cleanup, to be conducted prior to selection of a remedy. The
reform addressed citizen concerns about technology selection after a
ROD is signed. We have learned that it is most efficient and cost
effective to ``compete'' new technologies in advance of signing a ROD.
More recently, EPA issued a presumptive approach for cleanup of
ground water contamination in fiscal year 1996. This approach calls for
developing a complete response to contaminated ground water based on
incremental results (i.e., performance) of technologies put in place.
This approach provides an iterative process for response that ensures
both protection of human health and the environment and is a cost
effective, appropriate response to ground water contamination at sites.
While DOE and EPA staff apparently have had some preliminary
limited discussions, DOE has not formally requested EPA comment on this
approach at this time.
TECHNOLOGY DEVELOPMENT
Question. The Department of Energy's Environmental Management
Technology Development Program has a new technology development
initiative to advance implementation of recently developed and
demonstrated cleanup technologies. Is your agency working with the DOE
to ensure the deployment benefits are passed on to DOD and private
sector cleanup sites?
Answer. Yes, EPA is working with DOE to coordinate the deployment
of new technologies. EPA is participating as a member of DOE's
Environmental Management Advisory Board-Technology Development and
Transfer Committee. EPA also participates with DOE, DOD, and other
federal agencies in the Federal Remediation Technologies Roundtable.
The Roundtable was created to exchange information on site remediation
technologies, and to consider cooperative efforts that could lead to
greater application of innovative technologies. These collaborative
efforts have led to technology development and demonstration
partnerships with industry and a unified federal approach to assessing
and documenting technologies.
Question. What is your agency doing to encourage the use of
innovative and alternative technology in the cleanup industry?
Answer. EPA is actively involved in encouraging the use of
alternative and innovative technology. Under the Office of Solid Waste
and Emergency Response (OSWER), the Technology Innovation Office
operates to reduce barriers for new treatment and site characterization
technologies. The use of innovative treatment technologies has
increased over the past several years and in the Superfund program,
approximately one-third of the treatment technologies chosen for source
control may be considered as innovative.
OSWER is assisting private developers by publishing market studies
and hosting marketplace conferences (in cooperation with DOE and other
agencies) to better define the near-term demand for innovative
technologies. To inform site managers about current technology
capabilities, OSWER has developed two computer-based systems with
information about vendors who supply treatment, as well as
characterization and monitoring technologies, to the marketplace. The
data bases allow site managers to identify potentially applicable
technologies and the vendors who supply them. OSWER is also sponsoring
an American Academy of Environmental Engineers project to publish peer-
reviewed design manuals to give consulting engineering firms access to
state of the art information on the applicability of technologies to
various contamination problems. In an effort to pool risks associated
with technology development, OSWER and EPA's Office of Research and
Development are jointly leading an effort with other agencies and
several Fortune 500 companies to jointly develop and evaluate treatment
technologies. The Remediation Technologies Development Forum (RTDF)
harnesses the intellectual and financial resources of the agencies and
companies to develop technologies of mutual interest. This pooling of
effort reduces the financial burden and risk of technology research on
any one organization. EPA leads another collaborative effort to
evaluate characterization and monitoring technologies. The Consortium
for Site Characterization provides developers with an independent
evaluation of their technology's performance. The RTDF and Consortium
efforts will accelerate the evolution of new methods and their
acceptance by federal and state regulators as well as technology users.
EPA's Superfund Innovative Technology Evaluation (SITE) program has
been evaluating new treatment technologies for over a decade. Under
SITE, the agency enters into cooperative agreements with vendors to
demonstrate and evaluate technology performance.
OSWER has issued a policy directive affirming our commitment to
technology innovation. The directive provides additional flexibility to
support the development, demonstration, and application of treatment
technologies, particularly those which address groundwater
contamination and those which involve potential cost saving by treating
wastes in situ. We also see the potential for significant benefits in
productivity and cost savings through increased use of field
measurement and monitoring methods. Our policy directive supports
broader use of such approaches. We also hope to bring our increased
regulatory flexibility together with desirable attributes of federal
facilities to act as test beds for innovative technology development
and demonstration.
EPA produces a vast amount of information describing markets and
assessing new treatment and site characterization technologies. The
Technology Innovation Offices's homepage at HTTP://CLU-IN.COM is
dedicated to the exchange of information related to new technologies
for soil and ground water cleanup.
Question. Would a centralized national effort to demonstrate
deployability of new cleanup or monitoring technology be a worthwhile
goal for the country?
Answer. At the present time, there are several different agency
efforts to demonstrate and promote new cleanup and monitoring
technology. Many of these efforts currently involve extensive
coordination among federal agencies. A summary of these programs may be
found in the Roundtable publication, Accessing the Federal Government:
Site Remediation Technology Programs and Initiatives. An advantage to
having separately administered efforts is the ability of the sponsoring
agency to tailor their program to their own particular cleanup needs
while avoiding the possibility of a bottleneck which could result from
a centralized effort.
CLEANUP CONTRACTOR LIABILITY
Question. Should a contractor's liability be based on the
consequences of their performance? In other words, should the
contractor be held to a professional standard of negligence rather than
one of strict, joint and severable liability?
Answer. Under current law, response action contractors are uniquely
situated, in that they are not liable under CERCLA unless the release
is caused by conduct of the response action contractor that is
negligent, grossly negligent, or which constitutes intentional
misconduct. 42 U.S.C. Sec. 9619(a)(2). EPA has not proposed any
deviation from this standard.
cleanup contractor liability orphan shares
Question. Who should hold the liability for hazardous waste
generation and orphaned sites for government-owned and operated
facilities, the government or the operating contractor?
Answer. The Federal government is responsible for compliance and
cleanup at Federally owned facilities so these are not ``orphan
sites''. Where EPA has authority under a given statute to initiate an
enforcement action against an owner or operator at a Federal facility
and the contractor fits the statutory or regulatory definition of an
operator, EPA can hold Federal agency, the contractor-operator or both
liable. Determinations whether to hold the Federal agency or the
contractor-operator liable are made by EPA regional offices based upon
site-specific factors, such as whether the contractor is believed to
have contributed to the contamination at the facility.
EPA's policy on contractor vs. government agency liability is
described in a document titled ``EPA Enforcement Policy for Private
Contractor Operators at Government-Owned/Contractor-Operated (GOCO)
Facilities'', issued January 7, 1994. A copy is attached.
SUPERFUND REAUTHORIZATION
Question. I congratulate you for the well-intentioned
administrative reforms you have sought to implement in the federal
Superfund program, and also for your public statements about the need
for fundamental statutory changes to increase the pace of cleanups.
According to engineering and construction firms engaged in
environmental remediation work around the country, the pace of cleanups
has slowed significantly during the lengthy, ongoing debate over
comprehensive reauthorization legislation.
The administration proposed a $650 million increase for the
Superfund program in its fiscal year 1998 budget request yet has not
seen fit to offer comprehensive reauthorization legislation during this
Congress.
What assurance can you provide that the Administration will work
with Congress to enact comprehensive reauthorization legislation before
the end of the current fiscal year?
Answer. Over the past several weeks, Senate Committee staff, the
Administration, and a broad based group of stakeholders have been
involved in extensive discussions of the issues and concerns
surrounding reauthorization of the Superfund law. These discussions are
intended to build a common understanding of the issues that require
legislative action. During this time, I have met with several members
of the Environment and Public Works Committee to stress the importance
of enacting Superfund reauthorization quickly. In the House, similar
discussions to identify issues that may require legislative action are
underway.
I am encouraged by the discussions to date, and have directed EPA
staff to continue to build the kind of consensus-based agreement that
is a requisite to revision of this law. It is the responsibility of
Congress to move legislation forward, so I am not in a position to
ensure enactment of legislation this year. We remain committed to
working in a bipartisan fashion with Congress and Superfund
stakeholders in good faith efforts to develop responsible legislative
reform of Superfund this year. That reform must continue to build upon
the successes of the current Superfund program and be rooted in common
sense.
______
Questions Submitted by Senator Bennett
PRICE COALBED METHANE PROJECT EIS NEPA OVERSIGHT
Question. What is EPA's role in the administration of the National
Environmental Policy Act?
Answer. The Environmental Protection Agency (EPA) has two major
roles in the administration of the National Environmental Policy Act
(NEPA). The first role is mandated by section 309 of the Clean Air Act,
and requires EPA to review certain federal actions including all
environmental impact statements, comment to the lead agency in writing,
and make the comments available to the public. It further directs the
Administrator of EPA to refer to the Council on Environmental Quality
(CEQ) any `` * * * legislation, action, or regulation * * * '' that the
Administrator determines to be `` * * * unsatisfactory from the
standpoint of public health or welfare or environmental quality * *
*.''
The second role played by EPA is under a memorandum of
understanding with CEQ whereby EPA is responsible for accepting
environmental impact statements for filing from federal agencies and
publishing each week in the Federal Register a Notice of Availability
that starts the official comment period for the documents.
Question. What is the relationship between EPA and CEQ with regard
to NEPA oversight?
Answer. The Environmental Protection Agency (EPA) and the Council
on Environmental Quality (CEQ) have worked closely together through the
years in the overall administration of the National Environmental
Policy Act (NEPA). CEQ is responsible for NEPA oversight and for
issuing regulations and guidance to federal agencies to support their
compliance with the Act. EPA is responsible for reviewing individual
projects subject to the environmental impact statement requirements of
NEPA and, where necessary, referring environmentally unsatisfactory
projects to CEQ. The two agencies coordinate their activities to avoid
duplication of effort while working to protect the environment from
unanticipated adverse impacts from federal actions.
Question. Which agency is ultimately responsible for the
administration of NEPA?
Answer. The Council on Environmental Quality is ultimately
responsible for the administration of NEPA.
PRICE COALBED METHANE PROJECT EIS EPA COMMENTS
Question. Is it routine for EPA to comment on the substantive
aspects of Environmental Impact Statements prepared by other agencies?
Answer. It is routine for EPA to comment on the substantive aspects
of environmental impact statements (EIS's) prepared by other agencies.
Section 309 of the Clean Air Act directs the Agency to do so, to
comment in writing on the EIS's, and to make those comments public.
When we believe that a project is so environmentally unsatisfactory
that it is a candidate for referral to the Council on Environmental
Quality, we comment to that effect when we review the draft EIS to
ensure that the responsible federal agency understands our concerns
about the project.
PRICE COALBED METHANE PROJECT EIS UTAH WILDLIFE
Question. What sources of information did EPA rely on to base its
comments on the management of wildlife in Utah?
Answer. Sources of information used by EPA included the concerns
raised in the draft environmental impact statement (DEIS) prepared by
Bureau of Land Management, telephone conversations with the Utah
Division of Wildlife Resources (UDWR) staff, and the Utah Division of
Wildlife Resources' draft comments on the DEIS. The EPA lead reviewer
believed that the comments raised valid concerns, and EPA's comments
supported the UDWR's concerns.
PRICE COALBED METHANE PROJECT EIS WILDLIFE EXPERT
Question. Please identify the wildlife expert employed by EPA which
provided the information by which Ms. Campbell relied upon to make the
assertions in the December 30 letter.
Answer. The potential for significant impact to wildlife in the
project is discussed in the draft environmental impact statement
(DEIS). After reviewing the document, Mike Strieby, the EPA Review Team
Leader, contacted the Utah Division of Wildlife Resources (UDWR) to
discuss concerns raised by review of the document, since the Gordon
Creek Wildlife Management Area is managed under an existing Habitat
Management Plan approved by the UDWR Habitat Council. The management
goals under this plan, jointly administered by UDWR and the Bureau of
Land Management (BLM), are `` * * * to manage habitats for optimum
numbers and diversity of wildlife species with special emphasis on
deer, elk, and moose, and to allow regulated public access for
consumptive and nonconsumptive uses that do not unduly impact habitat
or wildlife during crucial periods'' (page 3-42, DEIS).
EPA requested a copy of UDWR's comments and, based on discussion
with UDWR, review of its draft comments, and EPA's own review of the
draft EIS, the Lead Reviewer for EPA concluded that the Price Coal Bed
Methane project goals conflicted with the Habitat Management Plan for
the same area. UDWR in its January 2, 1997, letter to BLM also made
this same point.
Question. Were comments or suggestions provided to EPA by other
agencies or commissions of the federal government regarding the impacts
of the Gordon Creek Wildlife Management Area prior to December 30,
1996?
Answer. Neither comments nor suggestions were provided to EPA by
other agencies or commissions of the federal government regarding the
impacts of the Gordon Creek Wildlife Management Area prior to December
30, 1996.
Question. Did EPA seek or receive information from any nonprofit or
private organization regarding the DEIS and the impacts on wildlife?
Answer. EPA did not seek information from any nonprofit or private
organization during its review of the draft EIS. Unsolicited comments
were received from the Moab Sportsman's Club concerning wildlife
impacts. These comments were consistent with the concerns expressed by
the Utah Department of Wildlife Resources; they were not specifically
used in EPA's review.
PRICE COALBED METHANE PROJECT EIS WILDLIFE MANAGEMENT
Question. How long has EPA been responsible for wildlife
management?
Answer. In the review of environmental impact statements, EPA
examines the analyses in the document and comments in its areas of
jurisdiction and expertise, as directed by the Council on Environmental
Quality's NEPA implementing regulations. More broadly, section 309 of
the Clean Air Act directs EPA to review the document to determine
whether it is unsatisfactory from the standpoint of public health or
welfare or environmental quality. EPA considers terrestrial and aquatic
habitat concerns to be important elements of environmental quality, and
consequently does include comments on habitat issues in its comments.
The comments, however, are advisory in nature and EPA cannot
unilaterally require another federal agency to follow its
recommendations concerning wildlife management. EPA does believe,
however, that its concerns should be addressed for the public record in
the final EIS.
Question. Does EPA have statutory authority to supersede wildlife
management practices and/or the recommendations of states?
Answer. EPA does not have direct statutory authority to impose
wildlife management practices on federal agencies or states.
PRICE COALBED METHANE PROJECT EIS CATEGORY RATING
Question. I understand that EPA has procedures to evaluate the
adequacy of information in EIS's and a category rating system. Where is
that system described?
Answer. The category rating system is described in EPA's ``Policies
and Procedures for the Review of Federal Actions Impacting the
Environment,'' which was published on October 3, 1984. This document
was a revision of the original ``Environmental Review Manual'' dated
March 1, 1975.
Question. What are the categories?
Answer. The rating system used in the review of draft environmental
impact statements (DEIS's) is an alpha-numeric system that rates both
the environmental impact of the action and the adequacy of the impact
statement. The categories for environmental impact are (1) LO (Lack of
Objections), (2) EC (Environmental Concerns), (3) EO (Environmental
Objections), and (4) EU (Environmentally Unsatisfactory). The
categories for document adequacy are ``1'' (Adequate), ``2''
(Insufficient Information), and ``3'' (Inadequate). Ratings that
include an ``EU'' on project impact or ``3'' on document adequacy are
candidates for referral to the Council on Environmental Quality if the
final EIS does not demonstrate that the project will not be
unsatisfactory from the standpoint of public health or welfare, or
environmental quality.
PRICE COALBED METHANE PROJECT EIS EPA AUTHORITY
Question. What is the basis of EPA authority to rate an EIS
prepared by another agency as adequate or inadequate?
Answer. Section 309 of the Clean Air Act directs EPA to review and
comment in writing on the environmental impact of projects subject to
the environmental impact statement (EIS) requirements of the National
Environmental Policy Act (NEPA), and to make those comments public at
the conclusion of the review. It further directs the Administrator to
refer to the Council on Environmental Quality any proposed projects
when the Administrator determines that the proposed project is
unsatisfactory from the standpoint of public health or welfare or
environmental quality.
EPA provides a rating to the lead federal agency which summarizes
EPA's level of concern. The EPA review is primarily concerned with
identifying and recommending corrective action for the significant
environmental impacts associated with the proposal. Review of the
adequacy of the information and analysis contained in the draft EIS's
is done to support this objective.
PRICE COALBED METHANE PROJECT EIS OEPR
Question. What is the Office of Ecosystem Protection and
Remediation? What is the mandate of this office? What is its annual
appropriation? How many FTE's are employed by this office?
Answer. The Office of Ecosystem Protection and Remediation was
formed as part of Region VIII EPA's reorganization in October of 1995.
Parts of the previous Hazardous Waste Management Division and the Water
Management Division were reorganized to form this new office. The new
organization moved away from a statutory/media organization to a
functional/strategic principle structure based upon EPA's July, 1994
Five Year Strategic Plan. The guiding principles behind the
reorganization included:
--Ecosystem Protection
--Pollution Prevention
--Partnerships with State, Tribal, Federal and Small/Regulated
Communities
--Improved Science
--Multi-Media/Sector Strategies and Results
--Enhanced Communication and Public Involvement
--Enhanced Regional Strategic Planning and Implementation
--Reinventing Management.
The Office of Ecosystems Protection and Remediation is responsible
for the identification, characterization, and remediation of
contaminated areas and sites under CERCLA authorities. This
organization is also the focal point for ecosystems protection
coordination and priority setting in the Region. Included in the
ecosystems protection activities, are mine waste, NEPA, community based
environmental protection, wetlands, water quality standards, non-point
source, total maximum daily loads, stormwater permitting, watersheds,
Clean Lakes, salinity, water quality monitoring, groundwater
activities, source water protection for drinking water, and whole
effluent toxicity.
Of the funds that Region VIII received in the fiscal year 1997
enacted operating plan, $32,978.2 thousand was provided to the Office
of Ecosystem Protection and Remediation to manage on behalf of the
Regions. These ``extramural'' funds are for the following purposes:
Dollars in
thousands
Superfund Site Response & Technical Enforcement Budgets....... $11,011.4
Superfund Site Specific Response Funds........................ 10,034.2
Oil Spill Funds............................................... 205.5
Regional Geographic Ecosystem Protection Initiatives.......... 870.3
Regional Wetlands Program Funds............................... 34.4
Non-point Source/319 State Grants............................. 8,564.6
Water Quality Management Cooperative Agreements............... 729.6
Wetlands State/Tribal Grants.................................. 1,528.2
Of the above amount, $11,727.1 thousand has been provided
to the Ecosystem Protection Program to manage on behalf of the
Region. These funds are:
Dollars in
thousands
Regional Geographic Ecosystem Protection Initiatives.......... $870.3
Regional Wetlands Program Funds............................... 34.4
Non-point Source/319 State Grants............................. 8,564.6
Water Quality Management Cooperative Agreements............... 729.6
Wetlands State/Tribal Grants.................................. 1,528.2
Region VIII is allocated 616 FTE in fiscal year 1997, of which
155.7 are allocated to the Office of Ecosystem Protection and
Remediation. The Ecosystem Protection Program received 49.2 of the
155.7 FTE.
PRICE COALBED METHANE PROJECT EIS OEPR MANDATE
Question. Does EPA's Office of Ecosystem Protection and Remediation
share a similar mandate within other federal agencies?
Answer. The Region is not aware of another federal agency organized
similarly, although our Regional structure is similar to a number of
other EPA Regions. The United States Forest Service, and the Bureau of
Land Management, however, do look at problems with managing their lands
in a holistic fashion and thus use an ecosystem scale to frame their
decisions. EPA Region VIII in organizing the Ecosystem Protection
Program recognized that environmental problems are often multi-media in
nature, and set up a structure with staff trained in many different
media programs that could respond to the complex environmental problems
that exist in communities today.
PRICE COALBED METHANE PROJECT EIS ECOSYSTEM PROTECTION
Question. Please define ecosystem protection.
Answer. EPA encourages ecosystem management and economic
development that promotes the health and productivity of natural
systems. Ecosystem protection is the use of our statutory mandates to
maintain those ecological functions and processes that are vital for
ecosystems and the services that they provide to humans. This
protection is focused on specific geographic areas with an emphasis on
coordination among federal, state, tribal and local agencies.
Question. Describe the role of the states in providing protection
to ecosystems.
Answer. States have an important role in ecosystem protection
through management of the lands and programs under their control and
implementation of their statutory authorities.
Question. Does EPA ecosystem protection supersede the role of the
states or other federal agencies such as the National Park System, the
U.S. Fish and Wildlife Service or the Bureau of Land Management?
Answer. The success of ecosystem protection ultimately depends on
the cooperation among all the stake-holders. Consequently, EPA's
efforts do not supersede the role of other state or federal programs
and, in fact, complement those protective actions.
______
Questions Submitted by Senator Leahy
SAB MERCURY REPORT
Question. If the Science Advisory Board recommends that the mercury
report be released, will the EPA release it?
Answer. The EPA is committed to fulfilling the requirements of the
Clean Air Act and to providing Congress with the information it has
requested by submitting the Report to Congress on Mercury. If the
Science Advisory Board (SAB) is in agreement with the science of the
Mercury Study, then the EPA is prepared to make the necessary
revisions, obtain the required Administration clearance and release the
report.
Question. After that recommendation, what steps need to be taken
before the report is made final?
Answer. First, the comments and suggestions made by the SAB will be
reviewed by EPA staff scientists responsible for the study. They will
assess the effort needed to respond to the comments and provide EPA
management with a summary of the required analyses, a technical plan to
complete such analyses, an estimate of resources and a schedule.
Depending on the extent of the SAB comments, the revisions may need to
be reviewed by a sub-group of SAB committee members if the committee
members request such a review. After final revisions and internal EPA
clearance, the report will be submitted to the Office of Management and
Budget (OMB). The OMB will then coordinate a Federal interagency
review, which for this report has typically involved about twelve
Departments or agencies. The report will likely be revised a final time
in response to the interagency review, cleared by OMB and then
submitted to Congress.
Question. During the February meeting of the SAB mercury review
panel, several of the questions that EPA initially raised in referring
the study to the SAB were addressed, what remaining questions remain
for the SAB to reach conclusion on?
Answer. The EPA posed about 40 detailed questions, which covered a
wide variety of scientific issues, to the SAB review committee. The SAB
panel was very diligent in its review and discussed all of these
questions during the 2-day February 1997 meeting. Thus, EPA believes
that of the initial charge, there are no remaining questions for the
SAB to reach conclusion on. However, EPA is still waiting for the
written SAB response presenting their assessment.
In addition, there was a second charge also posed to the SAB which
asked for their help in convening an independent review panel to assess
data which will be forthcoming from two ongoing studies of human
exposure to mercury through fish consumption. However, this effort will
not take place until sometime in the future, at which point EPA will
again seek the advice of the SAB.
AIR QUALITY REGULATION OF UTILITIES
Question. In Assistant Administrator Mary Nichols's March 28, 1997
letter to Representative Markey, EPA stated that ``if environmental
control costs are not appropriately internalized in the cost of
electricity generation, retail competition could result * * * in
increases in overall emissions.'' The letter goes on to recommend a cap
and trade system where it is necessary and appropriate to protect
public health and welfare. What steps has EPA taken to implement such a
system?
Answer. EPA is working with regional bodies such as the Ozone
Transport Commission (OTC) and the Ozone Transport Assessment Group
(OTAG) to facilitate cap and trade approaches which offer flexible,
low-cost approaches to emissions reduction. EPA assisted the OTC in the
development of a model NOX cap and trade rule for that 13-
state region. Moreover, at the request of the OTC, EPA is modifying its
Emissions Tracking System (ETS) and Allowance Tracking System (ATS)
software to accommodate the OTC's need for seasonal data on
NOX emissions from electric power plants and other large
industrial combustion sources to record NOX allowance
trades. EPA has also encouraged states to adopt a cap and trade
approach for NOX emission reductions in the 37-state OTAG
region.
EPA is committed to reducing long-distance transport of
NOX, which contributes to exceedences of the public health
standard for ozone in downwind areas. On April 16, 1997, EPA Assistant
Administrator Mary D. Nichols wrote to OTAG Chair Mary Gade stating the
Agency's preliminary conclusion that at least 26 states will be
required to make NOX reductions because of their
contributions to pollution transport. EPA intends to address this
matter in a formal rulemaking after we receive OTAG's technical
analyses and final recommendations, which are scheduled to be completed
in June of this year. Through SIP calls, EPA can establish a maximum
amount of NOX emissions for each of the states that
contribute to pollution transport. We can, and will, strongly recommend
to those states that they meet their statewide limits through a
coordinated, regional cap and trade mechanism. We believe states will
find such a mechanism attractive because of its flexibility and cost-
effectiveness. While we can recommend a particular implementation
approach, EPA cannot require states to employ it. As long as states
achieve the necessary emission limits, states have the discretion to
choose the specific means of implementation.
Question. What areas of the country do you foresee as being
impacted to the extent necessary to implement a cap and trade system to
protect public health?
Answer. EPA notes that the 48 contiguous states are already subject
to a market-based cap and trade system for sulfur dioxide under Title
IV of the Clean Air Act Amendments of 1990. EPA believes that this same
area could be affected by a cap and trade system for pollutants such as
NOX. A nationwide cap and trade system for NOX
emissions would reduce background levels of NOX
(facilitating attainment and maintenance of the ozone standard) and
would provide a level playing field for all power plants.
Question. What other market-based alternatives are there to address
the competitive advantage of older, higher emitting power plants?
Answer. The problem of older, higher emitting power plants could be
addressed through a uniform emission limit that is fuel-neutral and
output-based. Market forces would help to determine the mix of
compliance strategies chosen. However, because such an approach would
apply uniformly to all power plants without regard to differential cost
effectiveness, EPA believes that such an approach would be less cost-
effective than a cap and trade approach for the same degree of emission
reductions. With regard to cap and trade, there are a number of
possible variations in approach. Allowances could be distributed either
through an allocation process or through an auction. If allowances are
allocated, the allocation could be made in a variety of ways. For
example, allocations could be made according to historic emissions or
according to a performance standard that applies equally to all
sources.
Question. Are there current estimates of how much ozone, fine
particulate, mercury, and other pollution would be reduced if these
power plants were required to comply with new source performance
standards upon reaching a certain age, say 30 or 35 years?
Answer. The Agency has not conducted an analysis of reductions in
ozone, fine particles, and mercury if power plants were required to
comply with new source performance standards upon reaching a certain
age. However, under EPA's Clean Air Power Initiative (CAPI), the Agency
projected large reductions of ozone, fine particles, and mercury from
electric power plants using a cap and trade approach.
Question. Finally, what recommendations did the EPA make to the
Department of Energy in crafting the Administration's utility
restructuring legislation?
Answer. In response to a congressional request, EPA recently
indicated that the Clean Air Act and other statutes provide Federal and
State regulators with considerable authorities designed to address the
environmental problems contributed to, or caused by, electric
generating plants, but that because these authorities are not
integrated to address the many environmental problems related to the
electric power generation industry, they are not as economically
efficient as they could be, and they create unnecessary levels of
uncertainty which are bad for industry and government alike. EPA has
indicated to DOE that it strongly supports increased competition in the
electric generation sector. We believe that the economic benefits of
competition can be achieved along with protection of public health and
the environment and that in the long run competition will be good for
both the environment and the consumer. EPA recommended the following
legislative principles to ensure that the transition period will not
result in unacceptable environmental degradation:
Emission Caps.--For a competitive electric market to work
efficiently, we need to internalize the cost of pollution from this
sector. We believe that this can best be accomplished with legislative
language that gives us the specific authority to cap utility emissions
at levels that will adequately protect public health and welfare. This
provision is important to our current efforts to meet ambient air
quality standards and toxics loadings, but will be equally important to
any future requirement to limit carbon dioxide emissions under a global
climate change agreement.
Consumer Information.--In a competitive market, consumer
information is essential to informed choice and an efficient
marketplace. EPA believes that the environmental characteristics of
electricity generation should be clear and publicly available.
Energy Efficiency.--The new market must support and recognize the
economic and environmental benefits of energy efficiency and demand
side management. EPA favors a mechanism which ensures the viability of
this important resource.
Renewable Energy.--A healthy renewable energy sector must be
maintained in the United States to meet both our environmental and
energy security needs. A market for clean power is essential for the
future.
Federal Power Act.--EPA believes that the FERC, in regulating
interstate power markets, should include environmental impacts along
with other economic considerations.
Stranded Cost Recovery.--With respect to stranded cost recovery, we
believe that States should be discouraged from allowing ratepayer
subsidies that would prolong the lives of inefficient, dirty generating
plants that could not survive without those subsidies in a competitive
marketplace.
AIR QUALITY FERC OPEN ACCESS RULE
Question. When the Administration concluded last year that utility
restructuring would not result in an increase in air pollution, it
assumed that new regulations for ozone and particulates would be in
place. If opponents of the proposed regulations succeed in derailing
these standards, will the environmental impact of competition in the
utility industry conducted for the FERC ``open access'' rule be
reviewed?
Answer. While the OTAG process is taking longer than expected,
OTAG's final analysis and recommendations are expected in June 1997.
EPA is committed to moving forward with a rulemaking to address
pollution transport related to ozone after we receive OTAG's analysis
and recommendations. Reduction of precursor transport is likely to be a
major strategy for implementation of a fine particulate standard, if
promulgated. EPA believes that the potential exists for emissions to
increase as a result of industry restructuring if actions are not taken
to reduce emissions of NOX and fine particulate precursors.
AIR QUALITY CEQ COMMITMENTS
Question. When the ``open access'' rule was made last year, the
Administration delayed actions to mitigate potential air pollution
increases from utility restructuring by deferring to the Ozone
Transport Assessment Group (OTAG). The Council on Environmental Quality
committed EPA to a series of actions if the OTAG process fails.
Although OTAG has produced valuable analytical work on ozone transport,
it does not appear to be approaching consensus on mitigation actions.
What specific plans, separate from the OTAG process, do you have to
meet the commitments made last June by CEQ to protect against these
increases?
Answer. At this time EPA remains hopeful that the OTAG process will
reach a consensus on a solution to the NOX transport
problem. In the meantime, as indicated in answers to earlier questions,
EPA has assured the OTAG states that the agency will issue a rulemaking
on ozone transport this summer after receiving OTAG's final
recommendations. In the event that the OTAG process does not achieve a
consensus solution, FERC has committed to initiate a notice of inquiry
into potential mitigation measures related to its open access rule.
Moreover, should EPA find it necessary to impose federal implementation
plans (FIP's) to address the NOX transport problem, FERC has
agreed to undertake a rulemaking on mitigation strategies.
AIR QUALITY ACID RAIN REDUCTIONS
Question. Under the clean air sub-goal of controlling acid rain, a
25-40 percent reduction is sought in the eastern U.S. by 2005. What is
the current level of reduction since 1980?
Answer. A recent wet deposition trend analysis indicated that wet
sulfur deposition (``acid rain'') decreased 10 to 25 percent in 1995
over large areas of the eastern U.S. as compared to the 1983 to 1994
trend line. These decreases are considered substantial in magnitude and
spatial extent. Another analysis which examined dry deposition data
indicated that dry sulfur deposition decreased by 30 percent in the
eastern U.S. between 1989 and 1995.
Question. What areas of the eastern U.S. have seen the greatest and
least reductions?
Answer. With implementation of Phase I of the Acid Rain Program,
Northern New England and the Mid-Atlantic region saw the largest wet
sulfur deposition reductions in 1995, between 20 and 25 percent from
the 1983 to 1994 trend line. 1995 data showed the largest decreases in
and downwind of the Ohio River Valley. Wet sulfur deposition increased
by 7.5 percent in the western U.S. Wet nitrogen deposition increased
slightly by almost 5 percent in the eastern U.S. and increased by
almost 4 percent in the western U.S. Another analysis indicated that
dry sulfur deposition was reduced by 30 percent in 1995, relative to
1989 levels; results were similar across the eastern U.S.
Question. How do the EPA activities to reach the 2005 goal account
for potential increased demand for electricity under utility
restructuring?
Answer. Because sulfur dioxide emissions are capped by Title IV of
the Clean Air Act Amendments of 1990, any increase in electricity
demand would not affect total SO emissions in the long term.
Any increase in electricity generation would need to be offset by
sources reducing their in emission rates to meet the Title IV
SO cap.
noX fiscal year 1998 funding
Question. In the fiscal year 1998 request, an additional $681,000
is requested to address NOX issues in the Northeast. Where
will these funds be allocated?
Answer. The Agency has requested an increase of $414,620 to address
NOX issues in Northeast. This money will support salaries
for 2 EPA employees in Headquarters and 3 employees in the Regions. The
remaining of $181,780 covers increased workforce costs in the base.
Question. What activities will be undertaken with these additional
funds?
Answer. These funds will be used to continue development and
implementation of an emissions tracking system and an allowance
tracking system for the Ozone Transport Commission's (OTC)
NOX budget program. The NOX budget program is the
result of a collaboration between interested states in the Northeast to
reduce NOX from stationary sources using a cap and trade
approach. EPA has offered to track NOX emissions and
allowances for the OTC by modifying and expanding the existing Acid
Rain data system used to track sulfur dioxide allowances and nitrogen
oxide emissions.
SAFE DRINKING WATER ACT NATIONAL MEETINGS
Question. In the fiscal year 1998 request under the Safe Drinking
Water Act amendments of 1996, new prevention approaches, EPA states
that the Agency plans to hold national meetings in 1997 to scope out
partnership duties and to identify current and new operator training
and certification programs. How many of these meetings will be in the
Northeast and what locations and dates is EPA considering?
Answer. The Agency has already formed its operator certification
partnership and has held one meeting in Washington, D.C. on March 25
and 26, 1997. Another meeting has been scheduled in Washington, D.C. on
June 5 and 6, 1997. The partnership will decide at the end of this
meeting when and where the next meeting should be held. In establishing
the partnership, the Agency has tried to obtain representatives from
various interests and from different geographic locations, including
one member from the Northeast.
The partnership will provide advice to the Agency, through the
Drinking Water Advisory Council, as it develops information and
guidelines to meet new Safe Drinking Water Act requirements. A draft of
the guidelines will be circulated widely for comment before it is
finalized. We have not made any definite plans to hold stakeholder
meetings to review the guidelines as yet, however, if we do so, we will
consider holding a meeting in the Northeast.
SAFE DRINKING WATER ACT STATE SOURCE WATER
Question. The 1996 SDWA amendments also expanded authorization for
source water protection. When will EPA guidance for this program be
made available? Which states have used 1997 state revolving funds for
state source water assessments? Under the current program or under the
1996 amendments will states be able to use SDWA funds to purchase land
or easements for source water areas? Are there areas where this has
already been done? What is the process for using SDWA funds for this
type of activity?
Answer. The draft guidance for State source water assessment and
protection programs, which was developed in consultation with many
stakeholders, was released by EPA on April 4, 1997 to the public. As
part of its ongoing discussions, EPA will convene a meeting of New
England States on May 28th in Worcester, Massachusetts and May 29th in
Concord, New Hampshire. We plan to publish the final guidance on or
before the statutory deadline of August 6, 1997.
In the final Drinking Water State Revolving Fund (DWSRF)
Guidelines, EPA strongly encouraged States to determine the level of
activities that needed to be undertaken in order to complete source
water assessments in the State, and then utilize necessary funds, up to
10 percent from the 1997 DWSRF capitalization grant. The most recent
survey of States in April 1997 showed that approximately three-quarters
of the States plan to use funds for source water assessments. As EPA
reviews the State capitalization grant applications, States' actual use
of the assessment set aside will be tracked and EPA will ask States
that do not intend to use the set-aside to demonstrate how they intend
to meet the requirement to complete their source water assessment
programs.
Under Section 1452(k)(1)(A)(I), States may make loans to public
water systems to ``acquire land or a conservation easement from a
willing seller or grantor, if the purpose of the acquisition is to
protect the source water of the system from contamination and to ensure
compliance with national primary drinking water regulations.'' The
final DWSRF Guidelines provides the States with the flexibility to use
loan repayments from land acquisition and source water projects for
future projects of a similar nature if the State so chooses, or the
State may direct these repayments into the DWSRF project fund. This
flexibility would allow States the option to develop a long-term
program to fund land acquisition and source water projects.
To date, no DWSRF funds have been used for land acquisition or
conservation easements, or source water projects. Only one State,
Georgia, has received its capitalization grant. Georgia's intended use
plan (IUP) indicated that it will use 6 percent of its capitalization
grant for source water assessments, but no fiscal year 1997 funds are
planned for source water protection loan activities. Prior to the SDWA
Amendments of 1996, public water systems purchased land and easements
in order to protect source waters. For example, Seattle, Washington,
and Portland, Oregon purchased the entire watershed that supplies water
to their public water system.
Prior to awarding DWSRF funds under Section 1452(k)(1)(A)(I), EPA
must approve a State's capitalization grant, which includes the
Intended Use Plan (IUP), and the State must develop a workplan which
provides specific details on how the State will use these (k)(1)(A)(I)
loans. Once a State has an approved workplan, it may make the loans to
public water systems consistent with the IUP and work plan, and as
permitted by State law, regulations and procedures.
BROWNFIELDS INITIATIVE IN RURAL AREAS
Question. The Administration requests a significant funding
increase for the Brownfields initiative in fiscal year 1998. How much
of this funding increase is targeted towards rural Brownfields sites?
Where are these located and what type of industry is involved? Has the
EPA worked with the U.S. Forest Service to identify potential
Brownfield pilot sites in the Northeast?
Answer. The selection process for the Brownfield assessment pilots
is competitive, based on an objective set of criteria. The funding
increase for the Brownfield initiative in fiscal year 1998 does not
have a targeted amount that will go toward rural Brownfield sites.
There are currently 14 rural and small town pilots, which have
populations of less than 50,000, of the existing 78 pilots. They are
located and have the following types of industry involved:
--Burlington, VT (Commercial and Industrial)
--Bonne Terre, MO (Mining)
--Cape Charles, VA (Eco-Industrial Park)
--Concord, NH (Railyard, Maintenance Sheds, Gas and Steam Plants, and
Factories)
--Chippewa County, MI (Former DOD Base)
--Emeryville, CA (Widespread Groundwater Contamination, source
unknown)
--Murray City, UT (Smelter)
--Panhandle Health District, ID (Smelter)
--Lima, OH (Industrial Park)
--Prichard, AL (Volatile Organic Carbon in Drinking Water and
Semivolatile Organic Carbon in Soil)
--Navajo Nation, AZ (Wood Processing)
--Phoenixville, PA (Iron and Steel)
--West Jordan, UT (Mining, Smelting, Sugar, Copper, Lead, Zinc, and
Silver Industries)
--Rome, NY (Lead in Soil and Chlorinated Solvent in Groundwater).
EPA is in the process of forming a Partnership Agenda with other
Federal Agencies. The U.S.D.A. and Forest Service have participated in
our meetings and contributed to the Agenda. The Forest Service is
currently working with the Cape Charles, VA Brownfield pilot. The
National Park Service's Urban Resources Program is meeting with EPA
Region 9 to identify potential links with Brownfield pilots.
LAKE CHAMPLAIN ACTION PLAN
Question. In two recent letters on implementation of the Lake
Champlain Action Plan, EPA has committed itself to implement the
pollution prevention and restoration plans. The July 22, 1996 letter
from Assistant Administrator Perciasepe mentioned ``significant
resources that can be devoted to the special problems faced by Lake
Champlain.'' What programs has EPA used to target problems in Lake
Champlain?
Answer. The Agency continues to be a partner in the Lake Champlain
Basin Program, and, in cooperation with the States, has used a variety
of programs to support activities in the Basin through technical
assistance, grants for base State programs, and targeted project
grants. The programs that have supported activities are: the Clean
Water Act (CWA) including State Revolving Fund (Title VI), Construction
Grants (Title II), Nonpoint Source Grants (Section 319), Wetland
Program Grants, Pollution Control Grants (Section 106), Water Quality
Cooperative Agreements and Appropriation earmarks.
Question. Over the past five years, how much funding has gone to
Lake Champlain though these programs?
Answer. Since fiscal year 1993, over 60 million dollars has been
provided through these programs to support work in the Lake Champlain
Basin.
Question. Of that funding, which funds were through state revolving
funds or state delegated programs?
Answer. Over the past five years, $41 million has been provided
through the Clean Water State Revolving Fund to support programs in the
Lake Champlain area. While not included in the figure above,
substantial resources from the Clean Water Act, Section 106 Pollution
Control grants have benefitted the Lake through base program permitting
and enforcement.
LAKE CHAMPLAIN MANAGEMENT PLAN ANNUAL FUNDING
Question. If EPA were to create a dedicated Lake Champlain
initiative to address the actions identified for EPA participation in
the Lake Champlain Management Plan, what level of annual funding would
be required and which EPA programs would be drawn upon?
Answer. EPA will continue to support water quality protection
efforts in the Lake Champlain Basin, including providing active
participation on the management conference and working with the States
to direct available grant funds to activities in the Basin as
determined by State priorities. EPA participation in the Plan will
continue to involve technical staff support and support to State
agencies through available water quality grant programs such as the
Nonpoint Source Grant program, the Clean Water State Revolving Fund,
Wetlands Program grants, and Water Quality Cooperative Agreements.
NATIONAL INVASIVE SPECIES ACT OF 1996
Question. In his July 22, 1996 letter, Mr. Perciasepe also
mentioned EPA's support of the National Invasive Species Act of 1996.
With the passage of NISA, what activities is EPA undertaking to address
invasive species?
Answer. EPA is one of the participating agencies serving on the
Aquatic Nuisance Species Task Force. The Task Force is responsible for
coordinating inter-governmental actions to reduce the risks from
nuisance species. Much of the task force work has focused on control of
ballast water and review of control programs for nuisance species
(e.g., round goby, ruffe).
Various EPA programs are addressing invasive species. A number of
EPA's Regions are involved in inter-agency working groups within their
regions to address nuisance species in the context of NISA. EPA's
Office of Research and Development has developed risk assessments for
nuisance species as part of their effort to develop ecological risk
assessment guidelines for biological agents. NISA Sec 1202(I)(2) calls
for EPA, in conjunction with NSF and the Task Force, to develop an
annual call for research proposals to study dispersal containments for
nuisance species.
The Chesapeake Bay Program has completed an Implementation Plan for
managing the introduction of non-indigenous aquatic species. The plan
is intended to minimize the economic and/or ecological risks associated
with first time introduction of non-indigenous aquatic species. In the
Great Lakes, EPA has begun a project that will focus on prevention and
control, ecological impacts, geographic extent, and information/
outreach. The Gulf of Mexico Program will be initiating a strategic
assessment process to evaluate the effectiveness of current programs
and the needs of program shareholders to reduce and prevent the
introduction of undesirable, non-indigenous species (including ballast
water). The Gulf Program will support through financial and technical
assistance Gulf state and local efforts to reduce and prevent the
introduction of undesirable, non-indigenous species (including ballast
water). EPA chairs the Washington State Exotic Species Work Group which
has developed an Implementation Plan for addressing marine exotic
species in Puget Sound. The Agency is also working closely with the
British Columbia Exotic Species Work Group in developing a similar
implementation plan.
Question. Has EPA identified funds within the Clean Lakes program
to address this issue?
Answer. The Clean Water Act (CWA) Section 314 Clean Lakes program
has not been funded for several years. EPA has encouraged States in its
Nonpoint Source Program guidance to use Section 319 Nonpoint Source
grants to fund eligible watershed management activities that might have
been funded in previous years under Section 314.
LAKE CHAMPLAIN PROJECTS FUNDING
Question. What other lakewide projects were funded in the fiscal
year 1997 budget or the fiscal year 1998 request?
Answer. Our 1998 request does not include targeted funding for
lakewide projects, though our request includes a number of State grant
programs (such as Nonpoint Source, Wetlands Program, and Water Quality
Cooperative Agreements) under which such projects can be funded at the
State's discretion. In addition, activities included in a state's
Nonpoint Source Plan are eligible for funding under the Clean Water
State Revolving Fund. Our 1997 request, likewise, did not include
targeted lake projects, though the appropriation included earmarks
(along with the earmark for Lake Champlain) for Five Island Lake, Lake
Hollingsworth, and for Skaneatles, Owasco and Otisco Lakes.
Question. What EPA programs were they funded under?
Answer. These projects were not funded under existing EPA grant
programs, but rather were explicitly directed in the 1997 Appropriation
conference report.
GREAT WATER BODIES
Question. In the fiscal year 1998 request, $37 million is requested
for the Great Water Bodies program component. What activities are
conducted under this program and where are funds allocated?
Answer. The Great Water Bodies program component, within the Office
of Water, is comprised of the Chesapeake Bay Program Office, the Great
Lakes National Program Office and the Gulf of Mexico Program Office.
The Chesapeake Bay Program Office (CBPO): The Agency requests a
total of $19,683,000 and 16.8 total workyears in 1998 for the
Chesapeake Bay Program. The Chesapeake Bay Program (CBP) will develop,
implement and monitor interstate management plans for pollution
prevention and control activities to improve the water quality habitat
in the Bay Region. This will be accomplished by integrating efforts for
addressing point and nonpoint sources of pollution from air, water and
land-based sources through the watershed and airshed approach and by
coordinating with both state and Federal natural resources agencies,
local governments, land managers and various stakeholders.
The CBP will evaluate, and communicate the progress of these
interstate plans by using quantifiable environmental goals and
indicators for the nutrient, toxics, habitat, living resources and land
stewardship aspects of the program. New efforts, and possibly
corrective measures, will likely be implemented based on the results of
the 1997 Nutrient Reduction Strategy Reevaluation, and its
recommendations for achieving the year 2000 nutrient reduction goal.
Recommendations will be made to the Chesapeake Executive Council for
new or refined goals and strategies to improve water quality and living
resources conditions of the Bay. Expanded public awareness programs and
public access to Bay restoration information will be a major focus.
This will be accomplished through regular public reports, continued
maintenance of Internet information resources, and the maintenance of
the Chesapeake Information Management System in accordance with a
directive of the Chesapeake Executive Council. These communications
will be aimed at providing information on the State of the Bay and what
citizens can do to reduce pollution at the source.
The CBP will work directly with state and local governments to meet
the commitments of the ten tributary strategies for nutrient reduction
adopted from 1994-1996. Increased efforts will be made to further
involve and expand the role of local governments in the CBP. Some of
these efforts will be aimed at improving nutrient reductions at
Publicly Owned Treatment Works (POTW's). Implementation of nonpoint
source projects on farmlands and urban areas will continue to yield
nutrient reductions meant to meet tributary specific and Bay-wide
environmental goals. New technologies and approaches will be supported
for point and nonpoint source controls to close the gap between goals
and current progress. In addition, efforts will focus on linking air
deposition sources of nitrogen and toxics pollution to the health of
the Bay and developing cost effective control strategies.
EPA will continue to address the commitments of the Chesapeake Bay
Basinwide Toxics Reduction and Prevention Strategy of 1994. The 1998
obligations include: implementation of management actions (reduction,
prevention, protection, assessment) for designated geographical areas;
revision of the basinwide toxics loading and release inventory;
establishment of reductions goals for atmospheric deposition, urban
stormwater, and acid mine drainage loadings to the Bay; establishment
of water quality and/or sediment quality criteria for the designated
Bay Toxics of Concern; implementing Business for the Bay, a pollution
prevention program; and reporting progress on implementing the
Strategy.
By funding identified fish passage projects, CBP will work to
achieve the five and ten-year goals for stream miles opened to
migratory fish. Efforts will be increased to ensure that the 1998 goal
of the reopening of 582 miles of migratory fish spawning habitat will
be met. Most of these projects will include funding from both private
and public sources. In addition, wetlands, stream and forest
restoration, oyster reef habitat restoration and the implementation of
a riparian forest buffer policy will yield progress toward restoring
critical habitat in the basin.
The Great Lakes National Program Office (GLNPO): The Agency's Great
Lakes program includes $13,326,400 and 46.2 workyears in the Great
Lakes National Program Office. EPA's Great Lakes Program utilizes a
multimedia approach to Great Lakes ecosystem management, emphasizing
geographic targeting, risk-based prioritization and coordinated
cooperative efforts on the parts of states, tribes, other Federal
agencies, industry, non-governmental organizations, and Canada. The
Program monitors Lake ecosystem indicators; manages and provides public
access to Great Lakes data; helps communities address contaminated
sediments in their harbors; supports local protection and restoration
of important habitats; promotes pollution prevention through activities
and projects such as the 1997 Canada-U.S. Binational Toxics Strategy;
and provides assistance to implement community-based Remedial Action
Plans (RAP's) for Areas of Concern and for development and
implementation of Lakewide Management Plans. Fiscal year 1998 Lake
indicator activities will include reporting results of modeling
scenarios from the monitoring of Lake Michigan air, water, sediments,
and biota (the Lake Michigan Mass Balance Study), supporting the Great
Waters provision of the Clean Air Act and Sec. 118 of the Clean Water
Act. This will enable the Agency and its partners to determine how to
further reduce Great Lakes pollutants. Principal LaMP and RAP
activities will include implementation of remedial actions to address
toxics in targeted Areas of Concern and other priorities under the
LaMP's for Lakes Ontario, Michigan, Erie, and Superior.
The Gulf of Mexico Program Office (GMPO): The fiscal year 1998
allocation for the Gulf of Mexico Program within the Coastal
Environmental Management (CEM) program element is $4,292,300 and 13.8
workyears. The Gulf of Mexico Program priorities are to protect the
Gulf of Mexico from the deleterious effects of nutrient enrichment;
reduce adverse health effects resulting from the consumption of raw
shellfish harvested from the Gulf of Mexico; protect and restore
essential Gulf of Mexico habitats; reduce the ecological and economic
impact on living resources in the Gulf of Mexico by reducing/preventing
the introduction of undesirable, nonindigenous species; improve the
ability of the American public to participate in the protection of
public health and the environment by increasing the quality and
quantity of general environmental education, outreach, and data
availability programs.
In fiscal year 1998 the Gulf of Mexico Program will establish a
quantitative goal for nutrient loadings from the Mississippi River
Basin into the Gulf of Mexico through a broad-based, shareholder
process. Activities to support this objective are to provide support to
the states of Louisiana and Mississippi in monitoring nutrient loads
from major tributaries and sources and in implementing innovative,
prevention approaches to reduce nutrient loading to surface waters; to
coordinate nutrient modeling efforts among state and federal agencies
and develop the modeling/decision support capacity to target future
actions and report environmental progress; and to support targeted
state and federal education and communication efforts to foster
voluntary actions by industries and landowners to reduce nutrient
pollution.
By fiscal year 2005, the Gulf of Mexico Program will reduce adverse
health effects resulting from the consumption of raw shellfish
harvested from the Gulf by increasing the number of shellfish beds
available for safe harvesting by 10 percent in five coastal estuaries.
Activities in fiscal year 1998 will include: Barataria-Terrebonne,
Louisiana and Mobile Bay, Alabama shellfish growing water restoration
implementation plan completion and project implementation started;
shellfish assessment planning and implementation for three additional
Gulf estuaries will be initiated, one for each year fiscal year 1999,
fiscal year 2000, and fiscal year 2001.
By 1999, the Gulf of Mexico Program will establish the scope of
efforts and quantitative goals for the protection and restoration of
essential habitat. Activities in fiscal year 1998 will include to
initiate a strategic assessment process to evaluate the effectiveness
of current programs and the needs of Program shareholders to protect
and restore essential habitat; to support through financial and
technical assistance Gulf state and local efforts to target specific
habitat areas for protection and restoration.
By 1999, the Gulf of Mexico Program will establish the scope of
efforts and quantitative objectives for the reduction and prevention of
impacts resulting from the introduction of undesirable, nonindigenous
species. Activities in fiscal year 1998 are to initiate a strategic
assessment process to evaluate the effectiveness of current programs
and the needs of Program shareholders to reduce and prevent the
introduction of undesirable, nonindigenous species (including ballast
water); to support through financial and technical assistance Gulf
state and local efforts to reduce and prevent the introduction of
undesirable, nonindigenous species.
By 2005, the Gulf of Mexico Program will provide effective
communications of Gulf-related environmental issues and activities to
every Gulf coastal county and parish. Activities in fiscal year 1998
are to develop and distribute environmental curricula support programs
for primary and secondary school systems; to support state and
community-led environmental information centers in each of the five
Gulf states; to develop more effective community access to Gulf marine
research and science through the Gulf Information Network.
LIVING MACHINE: WASTEWATER TREATMENT
Question. Last month EPA released a report to Congress on the
``Living Machine'' Wastewater Treatment Technology. Do you believe that
the 11-week period of observation at the Maryland facility which was
used as the basis for this report, is representative or typical of the
long-term performance of the facility? Might an analysis during a more
stable period of the plant's operation have yielded different results?
Answer. The 11-week independent testing period at the Frederick,
MD, facility was scheduled to be run during a period of steady-state
operating conditions while the facility ran at design capacity flow
rates. The disruption in performance that resulted from the switch in
chemical usage was discussed in detail in the Interim Report issued on
the Frederick, MD, project in September 1995 (EPA 832-B-96-002) and was
also summarized in our recent Response to the Appropriations
Subcommittee.
While the project steady-state operations and performance during
the 11-week test period were disrupted somewhat by a switch from
acetate to methanol as a carbon source for denitrification, this impact
was not significant. It had no apparent effect on the follow-on 3-week
evaluation of the treatment performance of treatment trains with vs
without the floating vegetation cover on the open tanks. When the data
generated during the test period were plotted in our Response, along
with the data generated by the grantee, the performance levels were
very close prior to and after the period of disruption.
The cause of the disruption in performance was taken into account
when EPA developed our findings--that the AEES ``Living Machine'' has
the potential to produce an effluent with: 5-day biological oxygen
demand (BOD5) <10mg/1, Total Suspended Solids (TSS) <10mg/1,
Ammonia >1mg/1, Nitrate-Nitrogen (NO3) >5mg/1, Total
Nitrogen (TN) <10mg/1, and fecal coliforms <200 cfu/100ml--which would
satisfy all of the specified treatment goals for the Frederick, MD,
project, except Total Phosphorus (TP). As a result, if the testing had
occurred during a more stable period of plant operations, the Agency
doubts that the final conclusions drawn from the results of the testing
would have been any different.
LIVING MACHINE: ACCURATE REPORTING
Question. The report states that the Maryland Living Machine ``did
not meet any of its treatment goals during the study period, with the
exception of TSS.'' Wouldn't a more accurate reporting of the facility
be that except for the 11-week period during which EPA studied, the
plant reliably met its goals for BOD, COD and TSS in its final year of
operation?
Answer. The Response to Congress on the AEES ``Living Machine'' as
well as the earlier Interim Report on the Frederick, MD, facility
stated that during the 11-week independent testing period, the facility
``did not meet any of its treatment goals during the study period, with
the exception of TSS'' because this is a matter of fact relative to the
11-week testing period. Since the Interim Report only addressed the 11-
week testing period results and was drafted in 1995, it could not
address the facility's performance during its final year of operation.
Still, this report concluded that the AEES ``Living Machine'' has the
potential to produce an effluent with: BOD5 <10mg/1, TSS
<10mg/1, Ammonia <1mg/1, NO3 >5mg/1, TN <10mg/1, and fecal
coliforms <200 cfu/100ml--which would satisfy all of the specified
treatment goals for the Frederick, MD, project, except TP. While the
final version of the Response to Congress also makes a similar
statement about the 11-week testing period performance, the report
clearly states in the conclusions that the ``Living Machine,'' in the
present configuration, can reliably meet process goals for removal of
BOD5, TSS, and Ammonia, can produce an effluent with fecal
coliforms at <200 cfu/100ml, and has the potential to achieve target
removal requirements for nitrate and total nitrogen. The report also
presents graphics demonstrating this fact for the Frederick, MD,
system's final year of operation. No original target COD goals were
established by the grantee for the Frederick, MD, facility.
LIVING MACHINE PEER REVIEW
Question. Because of the anomalies that existed during the 11-week
study period, a peer review of the report might provide further insight
into the reliability of the data and its interpretation. Will you agree
to have the report peer reviewed?
Answer. The Interim Report on the Frederick, MD, facility which
reported the results of the EPA 11-week independent testing effort was
both formally and informally peer reviewed. Input provided by our
reviewers was carefully addressed in putting together the final version
of the ``Interim Report'' that was published and has been circulated to
interested parties. The report and peer review procedures we employed
were subjected to a detailed audit by the Agency's review of our peer
review processes earlier this year. The Response to Congress report was
intended to provide EPA's response to questions regarding the status of
the four demonstration projects and future funding recommendations. It
relied heavily upon the earlier, peer-reviewed ``Interim Report on
Frederick, MD, Facility'' and data supplied by the grantee in progress
reports. The Agency felt it was not necessary to subject the Response
to Congress report to formal peer review, but did seek informal review
by EPA Headquarters, the EPA/ORD-Cincinnati laboratory, EPA Regional
staff, and the grantee prior to finalizing the document.
LIVING MACHINE UPDATES
Question. The report includes information from the first four
months of steady-state operations at the South Burlington Vermont
Living Machine. Although already reflecting improved performance, the
numbers do not show the degree of stability that has been achieved
since that time. Despite the cold Vermont winter, the Living Machine
has met every target in the last few months. Does EPA intend to supply
Congress with updates to this report that describe the ongoing
improvements to effluent treatment?
Answer. EPA currently intends to prepare a final report in the form
of an Emerging Technology Assessment of the AEES ``Living Machine'' and
related technologies based upon all of the data generated by the four
demonstration projects, as well as from previous pilot-scale projects,
vendors, and other sources. The Agency plans to have a draft of this
document available by the end of September 1997. The document will be
thoroughly peer reviewed and opportunities will be provided for input
and comment by all interested parties. Copies of this document will be
provided to Congress.
LIVING MACHINE WASTEWATER TREATMENT INTANGIBLES
Question. In determining the cost/benefit of EPA regulations and
standards the Agency must often weigh intangibles such as quality of
life, and improved health. The Living Machine has intangibles of its
own that do not appear to be addressed in the report. Operating a
wastewater plant which uses fewer chemicals than standard plants and
incorporates natural biological decay processes is more environmentally
friendly and raises awareness about the issues of waste treatment
facing communities. The South Burlington plant in particular has
developed an extensive educational program which has introduced school
students from throughout the area to the problem of waste management.
Students have gone on to conduct experiments of their own using mini-
Living Machines which they take back to their classrooms to study.
Shouldn't EPA incorporate these qualities into its analysis of the
Living Machine, as it does when weighing the benefits of regulatory
policies? What other steps is the Agency taking to raise awareness
about waste management, and could the Living Machine be incorporated
into those activities?
Answer. The Agency is requesting that the grantee provide better
documentation of the additional values as a part of their efforts to
document the benefits of the technology.
Claims made by the developers of the AEES ``Living Machine''
technology that the technology cleans wastewater to advanced treatment
standards using ``natural solar powered greenhouse based technology
without chemicals'' were addressed in the Response to Congress report
as misleading--the available data indicates that these systems use
about the same mechanical energy sources (at the same levels) and the
same chemicals as many of the conventional biological wastewater
treatment systems. In addition, EPA found that the sludge volume
produced by these systems appears to be only slightly less than a
conventional extended aeration treatment process which is inconsistent
with earlier claims made in promotional materials about the technology.
However, EPA agrees that the environmentally friendly atmosphere
created as a part of the AEES ``Living Machine'' and related
technologies offer special opportunities for interface with the public
about issues associated with wastewater management. While the Agency's
efforts to date have focused on evaluating the treatment performance of
the technology, we hope to see our grantee more fully explore and
document these opportunities as part of their project documentation.
Based in part on this information, to the degree possible, EPA will
attempt to address this issue in our Emerging Technology Assessment
Report.
EPA has developed numerous materials (fact sheets, primers, videos,
technical reports, etc.) as well as worked closely with groups such as
the Water Environment Federation, the National Small Flows Clearing
House, the National Water Research Institute, the National Academy of
Sciences, universities, and others to address a wide variety of waste
management issues and outreach materials. Once the Agency has
adequately documented the actual performance capabilities of the AEES
``Living Machine,'' we will be able to appropriately represent this
alternative approach to wastewater treatment in future editions of
these materials.
LIVING MACHINE SUPPLEMENT
Question. The Massachusetts Foundation of Excellence in Marine and
Polymer Sciences has provided EPA with more updated figures on the cost
of building and operating a Living Machine. While I understand that EPA
has not yet had the opportunity to analyze this new data, I believe
this information could provide valuable insight into the comparative
costs of operating a Living Machine versus a conventional system.
Considering the developments in the performance of the South Burlington
plant and the new information on operating and construction costs, I
think that a supplement to the report would be appropriate and helpful
for the most accurate understanding of this technology when EPA has had
an opportunity to properly review the new data. Will you provide such a
supplement to the recipients of the original report when the more
recent data has been reviewed?
Answer. The supplemental cost data provided by the Massachusetts
Foundation of Excellence in Marine and Polymer Sciences (MFEMPS) was
not adequately documented to allow a detailed evaluation. MFEMPS has
agreed to provide us with a more detailed basis for the cost savings
that they have projected as well as schematics to help facilitate a
detailed evaluation. MFEMPS is proposing to have a cost evaluation
conducted by one of its Technical Advisory Group members who is well
respected within the wastewater treatment industry. The Emerging
Technology Assessment Report will include an independent cost
evaluation section prepared by personnel with an extensive background
in both conventional and natural treatment systems and in conducting
cost evaluations of wastewater treatment alternatives. The Agency has
suggested to MFEMPS that these two cost evaluation efforts be closely
coordinated if not merged. Copies of the Emerging Technology Assessment
Report with the cost evaluation section will be provided to Congress.
______
Questions Submitted by Senator Lautenberg
ATSDR FUNDING
Question. Ms. Browner, as you know there has been considerable
criticism by my colleagues that Superfund sites are not a significant
health risk. The work and evaluations by ATSDR have proven those
allegations to be false. But despite the proposed increase in funding
for Superfund, the non-EPA programs funded out of Superfund, NIEHS,
ATSDR, and Justice, receive essentially no increase or decreases. ATSDR
has been doing risk assessments and health studies at Superfund and
non-Superfund sites including Hoboken and Toms River, New Jersey. It
does not appear that ATSDR can keep up with its workload or its ability
to fund state programs on critical environmental health issues. Without
additional funding, most of the state health departments that depend
for site epidemiological work may be cut off. Why does the
Administration not fund this program to a level more commensurate to
its importance to public health?
Answer. ATSDR is a valuable partner for EPA at priority Superfund
sites--particularly at sites moving into the remedy selection/
construction phase. The fiscal year 1998 Budget provides $64 million
for ATSDR which is a $6 million increase over the fiscal year 1997
request. As stated, ATSDR's assessments can, and are, used to
effectively communicate the risks and threats being addressed by
Superfund cleanups. However, our investments must focus on our efforts
to actually remove the threats we know to exist at the Nation's worst
sites. Notwithstanding ATSDR's importance to safeguarding public
health, EPA needs the additional funding to meet its construction
completion goals which will prevent populations from exposure to
hazardous waste.
ATSDR FUNDING: IMPACT ON STATES
Question. How many states will have their grants lowered or
discontinued under the President's proposal?
Answer. EPA does not provide direction to ATSDR on state supported
public health programs. Nevertheless, EPA has provided ample funding to
ATSDR in fiscal year 1998 to continue providing steady support for
state sponsored public health activities.
NIEHS FUNDING
Question. One of the major criticisms of Superfund, is the high
cost of technology needed for remedial actions. There has been research
on innovative technologies that have significantly brought down costs.
For instance, the National Institute of Environmental Health Sciences,
NIEHS, through UC-Berkeley developed and tested a stream injection
technology for removing solvents and liquid from soils that is 60 times
more efficient than pump and treat methods. Despite this work and other
work around the country funded by NIEHS, the President's request is a
$7 million cut at the same time Superfund's budget increases $700
million. What was the rationale for cutting this program?
Answer. NIEHS conducts valuable basic research on the effects of
hazardous waste on human health. However, the President has committed
EPA to achieve cleanup results at NPL Superfund sites. In fiscal year
1998, the Superfund program funding must focus on the physical
construction of cleanup remedies at hundreds of waste sites around the
country. Currently the program has 490 sites with construction underway
and more than 880 sites have final remedy decisions signed. Superfund
resources are being focused to achieve the maximum number of site
cleanups to protect as many people as possible from the health effects
of exposure at Superfund sites.
The President's request of $48.5 million is consistent with past
requests. It supports both the basic research program ($25.5 million)
and the worker safety training ($23.0 million).
SUPERFUND FISCAL YEAR 1998 REQUEST
Question. Senator Chafee has gone on record opposing the increase
in Superfund spending. Why do you think the increase is appropriate and
necessary now?
Answer. Through a progression of events including program
maturation and administrative reforms to speed up our process, we now
find ourselves in a situation where more projects are ready to begin
cleanup than we are able to fund. Our projections indicate that unless
the Superfund budget is increased, our existing backlog of projects
awaiting cleanup funds will grow.
SUPERFUND SITE CLEANUP
Question. How many sites are ready for cleanup now that you
couldn't fund if Superfund were flat-leveled at fiscal year 1997
funding level?
Answer. Under the risk-based prioritization of sites, the Agency
ranked 65 fund lead sites which are, or will be, ready for funding
during fiscal year 1997. Of this, seven have already been funded and 2-
3 more sites are expected to be funded in priority order. This will
leave approximately 55 sites unfunded at the end of fiscal year 1997.
The backlog of sites is expected to continue to grow in future years if
budgets are maintained at current funding levels. The fiscal year 1998
budget includes the $650 million needed to address this backlog and to
accelerate sites to construction completion by the end of calendar year
2000. If we do not receive these funds, over 100 fund lead sites which
would have otherwise started their final phase of cleanup will not be
funded in fiscal year 1998 (the backlog would be expected to grow from
55 sites to over 100). Additionally, the Superfund program would not be
able to attain the 250 site completions that the two-year ``900 Sites''
investment would fund and most of the 55 ranked projects unfunded at
the end of fiscal year 1997 would not be completed. Each project start
and completion not funded represents at least one community not
protected or risks to public health and the environment not addressed.
RESEARCH LAB: EDISON, NEW JERSEY
Question. I understand that the Administration considered funding
to build a modern laboratory in Edison, New Jersey to perform critical
environmental analysis for Region II. As you know, my state has the
largest number of Superfund sites as well as other serious air, water,
and waste problems. I feel that it is vitally important that the
scientists in Region II have modern equipment and facilities with which
to assess these problems. Do you agree?
Answer. EPA strongly supports the construction of a modern
analytical laboratory at the Edison Facility. This project has been,
and continues to be, a top priority for the Agency and ranks high
within its master plan.
LEAKING ABOVE GROUND STORAGE TANKS: REGULATION
Question. In the conference report which accompanied the VA, HUD,
and Independent Agencies Appropriations for fiscal year 1997, the
conferees recognized that leaking above ground storage tanks storing
petroleum or petroleum products can pose a serious threat not only to
communities neighboring these tank farms, but also to the ground water
underneath and surrounding these facilities. Furthermore, the conferees
expressed their concern that EPA has yet to take substantive action on
recommendations made by the General Accounting Office in two reports
regarding the safe regulations of these tanks.
Ms. Browner, can you please elaborate on what the Environmental
Protection Agency has done to address the gaps identified in these two
GAO reports? Specifically, what action has EPA undertaken to enhance
the regulation of these tanks in the area of secondary containment,
overfill protection, testing, inspection, compatibility, installation,
corrosion control, and structural integrity of petroleum tanks in
excess of 42,000?
Answer. Part 1. GAO Recommendations. EPA has begun to implement the
1989 GAO recommendations, and has made great progress on such
implementation, notably with training activities, but also in all other
areas. Specifics follow:
Actions to Strengthen the Inspection Program. EPA has completed its
survey of approximately 30,000 facilities, has analyzed the results and
is currently issuing the results of the survey. The information from
the survey will be used for a number of purposes including assistance
in targeting high risk facilities for inspections within our existing
targeting process, and risk-based rulemaking.
Developing Instructions to Perform and Document Uniform
Inspections. A workgroup with representatives from EPA Regions and
Headquarters oil program and compliance offices developed a
comprehensive Inspector Training course with the goal of achieving
national consistency in the inspection, documentation, and enforcement
of the prevention and response requirements of 40 CFR part 112. The
material developed for the Inspector Training course includes national
checklists and procedures for documenting inspection results. There are
checklists for prevention and response requirements that include
flexibility for regional conditions and various types of regulated
facilities. The course also includes a national approach to target
inspections.
Better Training for Inspectors. EPA Order 3500.1 establishes the
basic training requirements to ensure that inspectors are properly
trained to conduct themselves in a safe and professional manner and
build enforcement cases. The order requires three types of inspector
training: Occupational Health and Safety Curriculum (OSHA) training
levels appropriate to hazards encountered; Basic Inspector Curriculum
for instruction in litigation, entry and information gathering tools,
evidence, records review for compliance inspections/field
investigations; and, Program Specific Curriculum with specific training
in the legal, programmatic, and technical subjects for 40 CFR part 112.
In addition to the requirements for the hours and courses described
in the above inspector training, all new inspectors must complete a
number of facility inspections with a trained inspector prior to
conducting inspections alone. The number of inspections is related to
the various types of facility types in a Region and the type of
inspections being conducted.
The course has been taught in EPA Region VIII and will be given in
selected Regions to accommodate attendance by surrounding Regions.
Depending on funding, EPA plans to conduct three or four Inspector
Training courses a year until all inspectors are trained and then
conduct the course on a periodic basis as needed.
Part 2. The Cooperative Program. In addition, EPA is preparing to
publish in the Federal Register a proposal to implement an Oil
Cooperative Program. Instead of a traditional regulatory approach, EPA
will recommend, as a first step, the initiation of a public process to
develop a voluntary action or cooperative program, i.e., the Oil
Cooperative Program. In this program, aboveground storage tank (AST)
facility owners and operators would take action to implement applicable
industry standards where no regulations exist to achieve program goals.
The program goals for companies participating in the Oil Cooperative
Program include one or more of the following: (1) adopting appropriate
prevention standards and upgrading equipment as necessary; (2)
monitoring and/or implementing leak detection to identify new leaks;
(3) addressing known contamination and implementing steps to minimize
off-site migration (which may involve appropriate aspects of risk-based
corrective action); and/or (4) reporting actions underway to address
contamination to appropriate government agencies. The Agency favors a
cooperative, rather than a regulatory approach at this time in order to
provide greater flexibility in addressing contamination at the vast
range of oil storage facility types, sizes, and locations. A
cooperative program could focus more directly on facilities that pose
the greatest threat to public health and the environment.
Factors that support the development of a cooperative program
include: (1) the universe of large AST facilities is easily defined and
represented by several large trade associations; (2) the Cooperative
Program is consistent with the Agency's goal of developing and
promoting innovative approaches to achieve environmental goals; (3)
clear, achievable goals are apparent (i.e., to clean up contamination
and prevent future release); (4) flexible approaches are available to
address the problem, thus allowing participants to implement the
Program in a tailored manner appropriate to their circumstances; (5)
EPA is committed to providing technical assistance; and (6) there are
established industry and State practices and standards that can be used
as a basis for constructing a comprehensive program.
In keeping with the Agency's initiatives to develop innovative,
common-sense approaches to environmental problems, a cooperative
prevention and cleanup program can be an important first step in
addressing the environmental problem presented by contamination from
AST facilities. Industry representatives have expressed their support
for such a program as a more cost-effective, flexible alternative than
traditional regulation. EPA believes it will be successful, provided
that it has the full commitment of those involved.
leaking above ground storage tanks: voluntary
Question. In EPA's 1996 Report to Congress under section 4113(a) of
the Oil Pollution Act of 1990, the ``EPA Liner Study,'' EPA recommended
a voluntary rather than a regulatory program to prevent leaks from
above ground petroleum storage tanks and their piping. It is my
understanding the Agency considers this voluntary program an initial
step toward alleviating the public and environmental risks associated
with these types of leaks.
Ms. Browner, what measures will EPA use to assess the success or
failure of this voluntary program?
Answer. EPA plans to develop these measures in consultation with
stakeholders.
Question. What are the specific goals of the program?
Answer. The goals for companies participating in the Oil
Cooperative Program include one or more of the following: (1) adopting
appropriate prevention standards and upgrading equipment as necessary;
(2) monitoring and/or implementing leak detection to identify new
leaks; (3) addressing known contamination and implementing steps to
minimize off-site migration (which may involve appropriate aspects of
risk-based corrective action); and/or (4) reporting actions underway to
address contamination to appropriate government agencies.
Question. What action will EPA take should the voluntary program
not achieve its goals?
Answer. We believe that a cooperative approach is the appropriate
first step towards addressing potential risks from AST facilities. I
would also add, however, that while we are very hopeful that a
voluntary approach will succeed, this approach does not preclude
development of a regulatory program in the future if warranted. We
believe that our risk-based cooperative approach is the most
appropriate course of action at this time because it will allow us to
gather the information we need to determine if additional measures,
such as regulation, are necessary. A cooperative approach also comports
with our overall Agency focus on promoting innovative, common-sense
approaches to environmental problems through cooperative initiatives
with regulated industries.
Question. Finally, what strategies does EPA intend to take to
prevent leaks from above ground petroleum tank facilities which do not
participate in the voluntary program?
Answer. To prevent leaks from facilities that do not participate in
the Program, EPA will pursue strategies designed to provide incentives
for those facilities to voluntarily take action to prevent leaks.
Incentives might include public recognition, technical assistance and
cost savings, and reduction of liability.
______
Questions Submitted by Senator Harkin
OZONE TRANSPORT ASSESSMENT GROUP (OTAG)
Question. Since its first meeting in May, 1995, Iowa has been a
member of the Ozone Transport Assessment Group (OTAG). This consortium
of 37 states, in addition to industries, utilities and
environmentalists was created to address the difficult problem of ozone
transport at a regional level. I recognize the difficulty many states
have in complying with the ozone standards in the 1990 Clean Air Act
and understand the frustration they face knowing that many of their air
problems are beyond their control due to pollutants being transported
from other states. However, I am also concerned that the northwestern
OTAG states, including Iowa, may be unfairly required to implement
stricter air pollution controls which would have very little, if any,
positive effect on nonattainment areas.
I understand that the Alpine Geophysics model shows that the five
northwestern OTAG states do not contribute significantly to the ozone
transport problem. Is that true?
Answer. EPA intends to base any ``significant contribution''
decisions for the OTAG states on a weight-of-evidence analysis of all
modeling and monitoring information. The Alpine Geophysics model is
only one piece of information for consideration.
Based upon all of the technical materials presented to date,
including the first two rounds of OTAG modeling, on April 16, 1997, EPA
formally notified the OTAG that our preliminary view of the available
data do not appear to support the need for additional emission
reductions for several states. These are Arkansas, Florida, Iowa,
Kansas, Louisiana, Minnesota, Nebraska, North Dakota, Oklahoma, South
Dakota, and Texas. Of course, EPA intends to fully evaluate additional
OTAG information from subsequent modeling runs as well as respond to
final OTAG control recommendations.
OZONE IOWA SPECIFIC
Question. Do you know of any model, which looks at Iowa as a whole,
shows the state adding to the ozone transport problem of the eastern
states?
Answer. The modeling performed by Alpine Geophysics included Iowa
``as a whole'' along with four other states. The results indicate
contributions to ozone in ``downwind'' states of up to 2-3 ppb. To our
knowledge, there is no modeling that looks at Iowa alone.
ozone transport federal register notice
Question. Although the OTAG process will not be completed until
this summer, the EPA has announced that later this month it will
publish a notice in the Federal Register notifying states of its
intention to implement new clean air regulations. Why has EPA decided
to do this instead of waiting a few extra months for OTAG to complete
its work? After so much energy, time, and federal money was expended on
the OTAG process, doesn't it seem appropriate to wait for the group's
results before issuing new proposed regulations?
Answer. In an April 16, 1997, letter from Mary Nichols, Assistant
Administrator for Air and Radiation, to Mary Gade, Chair of Ozone
Transport Assessment Group (OTAG), EPA announced a revised schedule for
taking rulemaking action. Based upon the excellent progress that the
OTAG has made to date, the EPA has decided not to publish a notice this
spring notifying states of planning deficiencies. Because OTAG's
schedule for completing their work is consistent with the timeframe for
the planned EPA actions, EPA believes it makes sense to condense the
two-step proposal process we had planned into a single notice this
summer in order to take maximum advantage of OTAG's technical work and
its deliberations. The states and other stakeholders have been working
very hard to complete their technical analyses of the impacts of ozone
transport as well as solutions for mitigation. These analyses are the
best that have been done in this country.
OZONE TRANSPORT STATES
Question. Requiring ``transport'' states to comply with new
regulations may also be premature. Under Phase I of the Clean Air Act,
states with the worst air problems were supposed to establish plans
determining how they would address their air problems. These states
have not met this obligation. It is not until Phase II that
``transport'' states, such as Iowa, were supposed to be discussed. What
are your thoughts on beginning Phase II before Phase I was completed?
Answer. The EPA presumes that Phase I and II refer to the steps for
SIP development described in Agency policy guidance issued on March 7,
1995. This established an alternative 2-phased process which provided
ozone nonattainment areas flexibility in the attainment planning
efforts for the most polluted areas of the Eastern U.S. The policy
called for the establishment of a collaborative process among States,
known as Ozone Transport Assessment Group (OTAG), to assess ozone
transport and develop regional solutions. Under phase I, states were to
submit rules to ensure that their areas were making progress toward
attainment. The full attainment plans are due under phase II which is
currently reaching completion. Thus EPA is not beginning Phase II
before completing Phase I. The EPA intends to wait on the OTAG
information and recommendations before taking any action. As previously
stated, it is questionable whether ``western fringe'' states such as
Iowa will be involved in any control efforts.
OZONE FREE STATES
Question. Shouldn't states like Iowa and the other ``ozone-free''
states be logically exempted from the new clean air guidelines since
they would not significantly help the eastern states but would under
the regulation bear a significant regulatory cost?
Answer. Before making decisions on how best to deal with this major
air pollution issue, Ozone Transport Assessment Group (OTAG) and the
Environmental Protection Agency (EPA) believe it is important to
understand and characterize as accurately as possible the extent and
impact of transported ozone and its precursors throughout the eastern
United States. The OTAG air quality modeling system provides the most
complete, scientifically credible tools and data available for the
assessment of interstate transport. The OTAG modeling domain, which
includes 37 States and the District of Columbia, was based upon
technical considerations such as the need to include major emission
sources that might affect high ozone formation and transport in the
East. Inclusion of Iowa and the other four States who label themselves
as ``ozone-free'' States (North Dakota, South Dakota, Minnesota, and
Nebraska) in this OTAG study region does not automatically mean that
these States will need to implement additional control measures as part
of the regional strategy to mitigate ozone transport. Only those States
that significantly contribute to nonattainment, or interfere with
maintenance, of the ozone standard downwind will be required to reduce
emissions.
In an April 16, 1997 from Mary Nichols, Assistant Administrator for
Air and Radiation, to Mary Gade, Chair of OTAG, EPA provided its
preliminary assessment, based on OTAG data and other information, of
which States will need to make additional reductions in ozone
precursors in order to reduce regional ozone transport. In regards to
Iowa, North Dakota, South Dakota, Minnesota, Nebraska, and 6 other
States, EPA's preliminary view is that the OTAG data do not appear to
support the need for additional reductions. However, we believe that it
is necessary to evaluate additional information, and more appropriate
to wait for final recommendations from OTAG, in order to determine if
additional emissions reductions will be needed from these States to
address ozone transport.
SMALL BUSINESS ENVIRONMENTAL ASSISTANCE
Question. Small business plays a vital role in our economy, and are
subject to a multitude of environmental regulations. Small businesses
have the smallest capacity to comprehend complex rules and to determine
least cost methods to meet those requirements. EPA is beginning to move
in the right direction by working to simplify regulations so small
businesses can better work with them and to providing assistance
through programs such as each state's Clean Air Act Small Business
Assistance Programs. However, many additional entities are involved
such as Small Business Development Centers and NIST Manufacturing
Extension Programs.
The Small Business Pollution Prevention Center at the University of
Northern Iowa has developed ways to work cooperatively with a variety
of others which try to reduce a pollution generated by small business.
The center performs a combination of roles such as producing easy to
understand cook book type guides for specific processes and industries
targeting those involving a large number of small operators and which
generate significant wastes such as dry cleaners, printers and vehicle
maintenance facilities as contemplated in the Small Business Regulatory
Enforcement and Fairness Act.
Question. I would appreciate your views on the needs for centers
such as the one that exists at the Small Business Pollution Prevention
Center at the University of Northern Iowa and the role that it plays in
translating EPA requirements into a form understandable to small
businesses and communicating back to EPA about the difficulty that
businesses face in meeting specific EPA requirements?
Answer. The Iowa Center as well as other organizations such as the
Northeast Waste Management Officials Association, and the Solid and
Hazardous Waste Education Center at the University of Wisconsin play a
valuable role in developing state-specific compliance and pollution
prevention guides that complement the federal compliance guides that
are being developed by the Office of Compliance. EPA sees such state
organizations as the appropriate providers of site-specific and/or on-
site assistance to small business. The larger state organizations such
as Iowa's have also played an important role in developing tools and
guides that other organizations within a given state and across state-
programs can use. Our goal is to make it easier for state and regional
centers to supplement plain-language guides and other compliance
assistance tools for federal rules with similar information on state
rules.
In addition, we see an important need for our work to feed and
encourage cooperation between the broad and growing range of state and
local service providers such as the state Clean Air Act Section 507
Small Business Assistance Programs, the Small Business Development
Centers, the NIST Manufacturing Extension Partnerships, the regulatory
agencies and the state pollution prevention programs.
The EPA's Small Business Ombudsman's Office has found the Iowa
Waste Reduction Center to be very effective in carrying out an outreach
program to inform and assist small businesses to understand and comply
with environmental regulatory requirements. The Center not only offers
advice and information but, if necessary, offers ``hands on''
assistance to bring about voluntary compliance. It also promotes and
advocates pollution prevention policies that help alleviate future
environmental degradation problems.
Over the past five years, the Ombudsman has awarded annual ``Peer
Match'' grants to the University of Northern Iowa for the Waste
Reduction Center to familiarize other State assistance programs with
its successful operating procedures. This involved hands-on training at
the Center in Iowa, as well as, Center personnel traveling to ``Peer
Match'' States to provide on-site assistance. Our evaluation reports
indicate that the ``Peer Match'' assistance was most beneficial in
helping other States develop effective programs.
In addition, the Agency's Small Business Ombudsman awarded a grant
to the Waste Reduction Center to develop Environmental Auditing
Assessment Guidance material for small businesses to use in reviewing
their environmental compliance requirements. We have been most pleased
with the professional treatment given to this undertaking. Good, sound,
self-initiated environmental auditing programs will lead to additional
voluntary compliance, as well as a greater sensitivity to environmental
problems and issues.
SMALL BUSINESS POLLUTION PREVENTION CENTER
Question. One example of a feedback mechanism relates to the Center
informing EPA of the difficulty that service stations had in handling
used oil filters. Happily, EPA changed its rules in this area. These
seemingly narrow issues are exactly what can both create consternation
in small business people and add to their cost. Shouldn't EPA be doing
more to create centers like the one at the University, to strengthen
those that already exist and to actively seek feedback to find easier
ways to meet environmental objectives at lower cost?
Answer. There is an important distinction between the national
Compliance Assistance Centers program that EPA's Office of Compliance
is supporting and the state-programs such as the Iowa Waste Reduction
Center. The Office of Compliance has supported the establishment of
four national compliance assistance centers for the metal finishing,
auto service and repair, printing and agriculture sectors. These
centers are communications-based rather than physical locations and
serve the entire nation rather than a particular state or region. These
national Centers provide readily accessible information on federal
regulatory requirements to small businesses via the Internet and toll-
free numbers. They complement and support programs such as the Iowa
Waste Reduction Center in two important ways:
--They complement the on-site and state-specific work that Iowa
conducts by providing a place for small businesses to get ``the
basics'' on federal regulatory requirement as well as by
alerting small business to the additional services of state and
local programs; and
--They support state programs such as Iowa's by providing easy access
to sector-specific compliance assistance tools they can use in
their own work with small businesses. EPA is expanding its
support of national Centers, based on industry demand, to
establish Centers for the printed wiring board manufacturing,
chemical manufacturing, local government and transportation
sectors.
In addition, EPA has several grant programs that support programs
like the pollution prevention program at the University of Iowa. These
include the Pollution Prevention Incentives to States Grants, which has
been in existence since 1990 as well as some newer efforts.
The Office of Compliance now uses a portion of the TSCA Enforcement
Grants funding to support state operation of comprehensive compliance
monitoring and assistance program on a facility-wide and industry
sector basis. Most recently, EPA is in the process of distributing
funding pursuant to Section 215 of SBREFA. Under this project $1
million will go to the states to develop compliance guides and tools
that integrate state and federal rules to enhance a small businesses
understanding of their total regulatory requirements.
small business compliance assistance center funding
Question. I am pleased that EPA recently designated a painting and
coating compliance assistance center at the University of Iowa to work
on that process which is used by many industries. It was unique in that
it targeted a process rather than a specific industry. However, don't
you believe that, given the size of the area involved, additional
funding would be appropriate, comparable to the industry specific
compliance assistance centers?
Answer. We funded a project at the University that would develop
various tools for technical assistance providers to use in their
client-relationships with painting facilities. The Office of Compliance
(OC) has an existing Metal Finishing Resource Center that has been
expanded to serve the organic coatings side of that industry. This
Center will work very closely with the University of Iowa and plans to
assist in the development and distribution of Iowa's products.
While the Compliance Assistance Centers that OC supports do
distribute tools for technical assistance providers this is just one of
their functions. The OC program has supported the development of
communications-based centers (e.g. via the Internet or toll-free
numbers) that do several key things:
--Provide easy access to federal regulations, interpretations and
guidance.
--Distribute compliance tools that can be used directly by small
businesses or by those assistance providers that serve small
business.
--Develop process-specific training modules to improve assistance
providers understanding of the industries they serve.
--Enable information exchange among businesses through ``chat rooms''
and ``on-line conferences.''
--House databases of technologies and pollution prevention ideas.
--Provide easy access to vendors, state and local assistance
providers and other resources for additional compliance
assistance.
POLLUTION PREVENTION AND FEDERAL GOVERNMENT
Question. Pollution Prevention is vital to ensuring the health of
our nation's citizens, in protecting the environment and in saving
dollars, especially by avoiding the cost of waste disposal and future
environmental cleanups. As you know, pollution prevention involves
reducing, avoiding, or eliminating the use of toxins and the generation
of hazardous waste and pollution at the point of production itself. The
best way to avoid harming the environment is to prevent pollution
before it is created.
As President Clinton pointed out, the federal government should set
the example for the rest of the country in applying pollution
prevention strategies in order to protect our health and the
environment
Pollution prevention should be a key element of good government.
Federal Agencies should find ways of using more environmentally
friendly products and methods in order to save tax payer dollars.
Often, with a relatively small investment now, the federal government
can avoid having to pay far higher costs of cleaning up the environment
and meeting environmental compliance rules in the future.
Question. Which federal agencies and facilities have complied with
the deadlines of Executive Order 12856, which requires each federal
agency and facility to establish a pollution prevention plan?
Answer. Executive Order 12856 directs that all Federal agencies
with facilities meeting any regulatory threshold for reporting under
EPCRA (``covered facilities'') to develop a strategy for implementation
of the Executive Order. Seventeen Federal agencies meet the threshold
provided by Executive Order 12856 and have prepared formal pollution
prevention strategies. In a document entitled ``Meeting the Challenge:
A Summary of Federal Agency Pollution Prevention Strategies,'' EPA has
compiled agency strategies and prepared an overview of each agency's
commitment to the various provisions of the Executive Order.
The Executive Order also directs that covered facilities prepare
pollution prevention plans for implementing agency strategies and
provisions of the Order at the facility level; these plans were to be
completed by the end of December 1995. Federal facilities covered by
the Executive Order are not required to submit their plans to EPA but
they must be available upon request by the public or EPA. Over 2,400
Federal facilities meet the threshold for preparation of the plans. The
Department of Defense (DOD) has directed all DOD facilities to prepare
those plans, whether or not they are ``covered facilities''. EPA has
provided extensive training to assist Federal facilities in preparing
their pollution prevention plans and estimates that a majority of
facilities required to prepare the plans have done so.
While there is no provision established by the Order for
determining compliance, EPA regional staff use compliance inspections
and other facility visits to request and informally review copies of
the facility plans.
POLLUTION PREVENTION STRATEGIES
Question. Has EPA found that individual agencies and facilities are
adequately funding the pollution prevention strategies established by
these plans?
Answer. EPA does not track specific funding allocations related to
implementation of Executive Order 12856.
As directed by Executive Order 12088, however, EPA reviews agency
environmental budget requests and has recently amended its FEDPLAN
guidance on those requests to include projects required to comply with
the specified deadline requirements of Executive Order 12856 in the
``Class 1'' category of funding requests. This revision will be
implemented for fiscal year 1998. These projects are compliance/
enforcement related and the Class 1 designation signifies a vital
project. The amended guidance will allow facility funding requests for
projects outlined in agency pollution prevention strategies and
facility pollution prevention plans to be designated as Class 1 and
thus receive more favorable consideration during the budget allocation
process. In addition, EPA's FEDPLAN guidance also allows Class 1
designations for pollution prevention projects that are necessary to
bring a facility into compliance or prevent non-compliance in the
following fiscal year.
POLLUTION PREVENTION CONGRESSIONAL SUPPORT
Question. I understand that, at times, implementing pollution
prevention plans requires a short term cost increase to an agency or
facility in order to realize longer-term savings in the costs of
complying with environmental laws and regulations. It is my hope that
federal agency and facility budget staff will see the fiscal wisdom of
paying for good pollution prevention practices. In EPA's view, what
budgeting rules or policies should be established by the Congress or
the Administration in order to further encourage implementing federal
pollution prevention plans?
Answer. While EPA does not have any specific recommendations, our
experience indicates that those agencies that have been most effective
in implementing pollution prevention plans and strategies are those
where agency budget policies include life cycle considerations and
recognize the economic benefit of pollution prevention as well as the
ability of pollution prevention projects to meet or exceed the
requirements set forth in many environmental regulations.
In addition, within the Executive Branch process, EPA has provided
comment to the General Services Administration on proposed changes to
the Federal Acquisition Regulation to meet the requirements of
Executive Order 12856. Section 3-303(c) of the Executive Order
recognizes that changes would be necessary to ensure that acquisition
and procurement goals established in the Order were carried out. Under
the Executive Order, these changes are expected to be completed in
fiscal year 1997.
POLLUTION PREVENTION IMPROVED COMPLIANCE
Question. I understand that during this Administration, the
compliance levels for the federal procurement and acquisition rules
that encourage pollution prevention strategies have improved
significantly. However, there is still room for further improvement. Is
EPA devoting adequate resources toward achieving improved compliance?
What is the level of support? What resources are needed for the coming
fiscal year?
Answer. In response to Executive Order 12873 on Federal
Acquisition, Recycling, and Waste Prevention, EPA proposed guidance for
federal agencies which establishes a set of principles to help federal
agencies incorporate environmental preferability into their procurement
practices. The Environmentally Preferable Products Program (EPP) is
budgeted in fiscal year 1998 at $677.6 thousand. EPA also has a number
of pilot projects underway to apply the guidance's principles to
specific product categories. The pilot projects EPA has initiated focus
on cleaning products with the General Services Administration and
building construction and renovation with the Department of Defense.
The Cleaning Products Pilot Project is a cooperative interagency effort
which has established a framework for identifying and comparing the
relevant environmental attributes of cleaning products. The DOD-EPA
construction and renovation pilot has focused initially on using the
procurement process to encourage contractors to use environmentally
preferable products in parking lot construction and will extend to
integrating environmental considerations into the renovation of the
Pentagon. Other agencies are beginning pilots which will demonstrate
how third party certification programs can assist federal agencies in
assessing environmental preferability.
SUBCOMMITTEE RECESS
Senator Bond. And with that, the subcommittee stands in
recess until April 22, when we will take testimony from the
National Science Foundation and OSTP.
The hearing is recessed.
[Whereupon, at 12:30 p.m., Tuesday, April 8, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, APRIL 22, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:33 a.m., in room SD-192, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, and Mikulski.
EXECUTIVE OFFICE OF THE PRESIDENT
Office of Science and Technology Policy
STATEMENT OF JOHN GIBBONS, DIRECTOR
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The hearing comes to order. The
subcommittee meets today to review the budget request of the
Office of Science and Technology Policy and the National
Science Foundation.
We welcome Dr. John Gibbons, the President's science
advisor, and Dr. Neal Lane, the Director of the National
Science Foundation. OSTP's budget request totals $4.932
million, the same as fiscal year 1997 enacted level. The NSF's
budget request for fiscal year 1998 is $3.367 billion, a $97
million or 3-percent increase over enacted fiscal year 1997
level.
I am very pleased to be able to convene this hearing today
on the Office of Science and Technology Policy and the National
Science Foundation. I do not guess we need to remind you of the
strong support this subcommittee has provided for the Nation's
scientific endeavors, certainly under Senator Mikulski's
leadership as well as in the last couple of years.
Some of you may have heard that my fellow Missourian Harry
Truman once commented that he needed a one-handed economist so
his advisors would not be able to say, but on the other hand.
Senator Burns. Economists are like that. [Laughter.]
Senator Bond. You will have your time, Senator Burns, but I
now have one on you.
Support for science is where we do not need a one-handed
economist. Economists generally agree that investment in
research and development provides a positive return to the
economy, although they may disagree on exactly how much return,
or how to measure the rate of return, and we agree with the
general principles of economists on this one. Research and
development are good investments, and we will have some
questions to find out how you are prioritizing those
investments.
We know that you Dr. Gibbons and Dr. Lane agree with it. We
acknowledge and applaud the efforts you have made to
communicate the wonder and awe that scientific endeavors can
inspire in the American public, particularly in Americas' young
people.
As one who normally drives a car pool with a bunch of high
school sophomores once a week, I am fascinated that they are
paying attention to the scientific accomplishments that are
reported in the news media. We have seen great coverage, this
morning's television focusing on Hale-Bopp, the Washington Post
Magazine covering everything from the smallest bacteria to the
far reaches of the universe, and I think that is exciting and
very healthy.
As chair of the subcommittee I have a particular interest
in exploring the Federal investment in biotechnology,
particularly as it applies to agricultural sectors, plant
genetics.
I think it is imperative to maintain the long-term
sustainability and competitiveness of U.S. agriculture, and I
agree with Dr. Gibbons that plant genome research is vital to
this effort. I know I can count on both OSTP and the National
Science Foundation to help organize, direct, coordinate, and
support the efforts that are beginning in this important area.
And on the other hand, this is another very difficult year
for this subcommittee. We have human-scale problems, ranging
from medical care for veterans to housing for low-income
Americans to relief for victims of disasters, which also
unfortunately are occupying the headlines in the top of the
news.
We are not far enough along in the budget process to have
an allocation for this subcommittee to know how much money we
will be dealing with, so it is premature to be able to discuss
absolute levels of funding that may be available for these
critical science accounts.
Our purpose today is to discuss with both of you the
priorities for this Nation's scientific enterprise and how
those priorities are reflected in your agency's activities. We
are particularly interested in the implementation of the
results act, which requires agencies to think strategically
about their goals and to measure their performance against
goals they have set.
Although we appreciate the difficulty of setting goals in
basic scientific research, where the goal is to explore the
unknown, we have to ask that you hold yourselves and that you
be accountable and responsible to us for how we spend those
Federal dollars.
It is a pleasure now to call on my distinguished ranking
member, Senator Mikulski, for her opening statement. Senator
Mikulski.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and I
would like to welcome our two witnesses today, Dr. Lane of the
National Science Foundation, and Dr. Gibbons, the Director of
the Office of Science Technology Policy for the President.
Mr. Chairman, I have long been an advocate for Federal
investments in research and in development, and several years
ago a report was issued by various councils on competitiveness
that outlined 13 critical technologies that would be needed in
the 21st century, the type of work that you have just outlined
that will be so important for not only agriculture but its
ultimate impact on the value-added agriculture for people.
The report noted how we should link our science and our
engineering to the development of technology, and give us and
develop manufacturing in this country that would allow us to
have products to export overseas.
Everyone knows that for some time I have been concerned
about how the fact the United States of America wins the Nobel
Prize, and yet other nations win markets. Therefore, I
encouraged the National Science Foundation to examine how it
organized itself and encouraged it to increase funding for
basic research, always focusing on basic research, but in
strategic areas, what were the needs of this country to be able
to develop and move ahead.
The aim was not to reduce basic research, but to develop a
navigational chart of strategic areas in which funds could be
focused. Therefore, in the course of our testimony, I will want
to know exactly where we have been moving in that particular
area.
I want to hear what progress has been made in developing
national goals to stimulate not only new ideas, but new
opportunities for economic growth through research and
development. I want to hear what the agencies are doing to
encourage public-private partnerships, and how public
investment is leveraging private sector research and also,
ultimately, leading to private sector jobs.
Mr. Chairman, I am not calling for an industrial policy,
but I am calling for a national set of the focus. I understand
that the National Science Foundation no longer highlights these
strategic interests, and I will be interested in knowing how
they are moving ahead.
I also understand that Dr. Gibbons in his testimony has
referred to the gap between university research and private
sector product development as the valley of death. We want to
make sure that there is no valley of death between the creating
of new ideas and new products, but that we really work to have
a broadbased set of policies that create a canyon of
opportunity.
I know I am using agriculture and western metaphors, but I
will come back to my own Chesapeake Bay one. We need a
navigational chart to make sure that we go from a clipper ship
economy to a microchip economy, and I look forward to working
with you and our colleagues, who I esteem very much in this
endeavor.
Thank you.
Senator Bond. An inspiring metaphor, Senator Mikulski.
[Laughter.]
Now we will turn to Senator Burns for equally lofty
comments.
STATEMENT OF CONRAD BURNS
Senator Burns. Mine will not be lofty, Mr Chairman. In
fact, the working relationship that we have had both in the
authorizing committee and in the Appropriations Committee with
Jack Gibbons and Neal Lane has been one that I think has been a
very good one. We will probably argue about priorities, but we
never argue about the need of science and technology and the
role that the Government plays and the dollars that the
taxpayers invest in science and technology.
I am struck by the comment of the ranking member, Ms.
Mikulski, that we win the Nobel Prizes and other countries get
the markets. Maybe we better get some scientists in trading. We
send lousy traders to these negotiations. That is what we have.
We better get on the street and know how to sell a product and
know when to make a deal and when not to make a deal, and that
is where we fall down quite a lot.
I just want to congratulate Jack and Dr. Lane in our
working relationship. We want to do that. I would just like for
my statement to be made part of the record, and I think we
should hear from them.
Thank you very much.
STATEMENT OF JOHN GIBBONS
Senator Bond. Now I would like to call forth Dr. John
Gibbons, Director of the Office of Science and Technology
Policy and Dr. Neal Lane, Director of the National Science
Foundation. We would like to ask both of you gentlemen to give
your statements, and the questions will be directed in many
instances to one or both of you so we can hear your ideas
together. So with that, Dr. Gibbons.
Dr. Gibbons. Thank you, Senator. I am delighted to appear
before you, Senator. I must say at the outset how much I have
appreciated the strong support, the bipartisan support of this
committee over the years with respect to science and technology
in our Nation's future. There are a lot of discomforting things
in this job, but your support is a very comforting thing to me.
As I was preparing for today I was recalling some of the
events that were transpiring a little over 1 year ago in which
there were serious talks of draconian cuts in research. There
was acrimonious debate about the role of Government in our
Nation's life, especially the public-private cooperation and
partnerships in science and technology, but I am really
optimistic that much of this is behind us, that we are slowly
but surely moving toward reestablishing the more traditional
broad bipartisan support for science and technology.
But having said that, I think there are as many struggles
ahead of us as there are opportunities. We talk about
opportunities in a report I sent to the Congress about 1 week
ago. It is a biennial report on the status of science and
technology. It is a very enthusiastic report because it relates
the enormous progress we are making, but also the number of
extraordinary opportunities ahead of us.
But our central concern still is our fiscal challenge. The
heaviest pressure of getting our budget balanced is on the
discretionary part of our national budget, which is only one-
sixth of the total. In that sense, nothing should be immune
from very close scrutiny. In my view, science and technology
stands out as one of those proven public investments that is so
key to our national strength, and so essential to enabling our
future, that it merits very special nurturing. At the same
time, it must not escape the same kind of scrutiny that all of
these programs must receive.
As you said, Mr. Chairman, we have an extraordinarily well-
proven high rate of return of public investments in research.
Probably one-half of our economy, our economic growth over the
last one-half century, is relatable to our research, and it has
shown up in our national security, our economy and jobs, our
health, and our environment. All of these directly benefit from
those investments.
We are now in our fifth year of moving toward that budget
balance. At the same time, it is the fifth year in which the
President has proposed a modest increase in support of our
research budget. We have budgeted for 1998 an increase in R&D
of about $1.6 billion over fiscal year 1997, to a total of
about $75 billion as scored by OMB. This represents about a 3-
percent increase in our civilian R&D activities and a
significant increase in our fundamental science support within
the Department of Defense.
What the budget does is, it boosts basic research, so key
to our future. It emphasizes peer-reviewed university-based
research because you get the double hit of training new
scientists along with the research.
It gives new support to technologies to benefit the
revolution in the new information age that we are immersing
ourselves in. It gives greater support for bringing that same
kind of information technology to our classrooms, which can so
greatly profit by having this kind of infusion and newness.
It puts greater investments in science and technology to
ensure our continued economic leadership and job creation. It
gives incentives to lever private sector investments in
research by providing ways to tease greater private investments
in this direction.
It increases environmental research. I was thinking about
that this morning. With the great floods in the upper Midwest,
we are now suffering about $1 billion a week from natural
disasters in the United States. The word natural is getting a
little unusual, because I think people are getting to be part
of that so-called natural system.
It increases our support for health, food, and safety
research. It sustains support for our civil space program. It
promotes science and technology for national security,
especially the long-term support base.
Balanced against our imperative to balance the budget, I am
satisfied that we are on target.
Of course, there are calls for larger increases in the
budget, and I would be delighted. It makes me very happy to
hear of these calls, but to turn a phrase, happiness cannot buy
money. Would I like to see an increase in Federal funding for
research? You bet I would. So would the President, and so would
all three of you.
Would strengthening Federal support for science and
technology support our economic and other national security
issues? Of course, but the constraints on Federal research
funding are driven by that need to balance the budget, and we
must keep that in mind as we go ahead.
I would be delighted to argue for increasing research to
track our national economic growth. Until we find that we can
secure ourselves fiscally, I think that would be premature
judgment.
Finally, in the face of these enduring constraints on our
funding, we have to find ways to stretch our effectiveness. I
would say there are three ways before I close. First, increase
productivity of our Federal agency-sponsored research. We can
talk about this during the question period, Mr. Chairman. I
think OSTP's work has been to more closely integrate the work
of the agencies across these agency boundaries, where you can
get much greater from the whole than the sum of the parts
separately, so we are working within the Federal administration
family.
The second thing is that we want to strengthen the national
innovation system, not just the Federal system. The Federal
system is only about 39 percent of the total national R&D. That
means encouraging greater private sector investment with tax
policies, with partnering, strengthening university-Government
relationships, which are stretched and need work. I will be
happy to recount some of that for you, increasing our State-
Federal collaboration, and we have a new activity going on now
with the National Governors' Conference. We are seeking greater
international cooperation where it makes sense for us,
especially in very expensive research and in basic research
where the information is so broadly shared.
The third area is introducing more effective
accountability, and you mentioned this earlier this morning,
Mr. Chairman. We are working hard on the Government Performance
and Results Act, especially as it relates to research and, of
course, this can get very difficult, as you pointed out, when
you are working in basic research. Sometimes you have to wait
20 years to find out how important it was or was not.
Nonetheless, we are working hard in that area, because more
effective accountability on the outcomes measures are really
important for us.
PREPARED STATEMENT
And finally, Mr. Chairman, as you pointed out, we are
asking for the same people and dollars in this coming year,
which we hope the committee will look favorably upon.
Thank you.
[The statement follows:]
Prepared Statement of John H. Gibbons
Mr. Chairman, Members of the Committee, I am pleased to appear
before you today to discuss the Office of Science and Technology
Policy's (OSTP) budget request for fiscal year 1998.
As we approach the turn of the century, it seems appropriate to
take stock of the Nation's science and technology (S&T) enterprise, and
to look to the opportunities that lie ahead as well as the challenges
that we face. The Information Age is bringing changes to our society
that are only beginning to unfold. Already, new communications
technologies are transforming the way we work, where we work, and what
we need to know to be successful in tomorrow's competitive environment.
Five years ago ``Internet'' was still a word known mostly to those in
S&T. Today, it is the backbone of a new industry and a window to a
tremendous world of information for all segments of our society, from
business executives to school children.
The rapid economic growth of other nations means a future with
greatly expanded markets for U.S. goods and services. Our ability to
move our ideas, our goods, and ourselves swiftly to any place on the
planet, with the help of new technologies, enhances our ability to
share in the growth of global wealth. The increasing availability of
these same capabilities throughout the world also means greater
competition; it means increasing pressures on our shared environment,
health, and natural resources; and it means more diverse dangers to our
security from threats such as terrorism and the spread of nuclear and
other materials of mass destruction.
The President's key goals for our country include competing
aggressively in the global market place, preserving our environment and
managing our Nation's resources in a sustainable manner, safeguarding
our national security from emerging threats, and maintaining the
technological innovation that has contributed to our economic
prosperity and quality of life. Achieving these goals requires a
sustained commitment to our S&T investments. Therefore, this year, as
in the previous four, the President has called for increasing our
national commitment to support S&T.
Just as we struggle with the increasingly difficult choices that a
balanced budget requires, we also must focus on the importance of
sustaining our investment in the future. Funding for S&T, like funding
for education, is a high-leverage investment in our continued peace and
prosperity. Support for such investments has traditionally been a
matter of bipartisan agreement. It is imperative that we build common
ground in support of a shared vision--a commitment to keep America the
world's leader in S&T.
RECENT ADVANCES IN SCIENCE AND TECHNOLOGY
Over the past year there have been numerous scientific and
technological advances, reminding us of how much there is yet to know,
and of the potential of S&T to further enrich and improve our lives. I
will mention just a few such recent advances.
--In December 1996, the U.S. Department of Energy, in cooperation
with Intel Corporation, announced the completion of the world's
first 1-trillion-calculations-per-second computer--breaking the
teraflop goal. This computer was developed as part of the
Department's Accelerated Strategic Computing Initiative, which
is pioneering technology to ensure the safety and reliability
of the U.S. nuclear stockpile. This accomplishment is the
culmination of years of effort to reinvent computing, organized
within the Federal government as a multiagency consortium
called the High Performance Computing and Communications (HPCC)
Initiative. Instead of focusing on a single computer processor,
which would have been extremely difficult and expensive, the
U.S. program resulted in an entirely new computer technology
called parallel computing. Parallel computing allows the
biggest computers in the world to be assembled from mass-
produced microprocessors, which were originally developed for
use in desktop and home PC's. This new computing power is
valuable in a variety of applications, including the simulation
of disease progression, the projection of severe weather
systems, the mapping of the human genome, the improvement of
highway safety, and the development of environmental
remediation methods to reclaim polluted lands.
--Scientists are unraveling the complex interactions that exist
between HIV and the human immune system. We now have a much
better understanding of how HIV gains entry into cells. NIH-
supported scientists have discovered two new cell-surface
proteins that act as ``cofactors,'' along with the CD4 receptor
that assists HIV, in binding and infecting immune cells. This
information will be extremely useful in developing new
approaches to control AIDS. In addition, the use of powerful
triple drug therapies is having a remarkable impact on the
number of deaths caused by HIV. Such deaths are down 13 percent
from last year, although the number of infected persons in the
population remains high.
--Two NIH-funded groups, using different but related genetic
techniques, reported an important advance in neuroscience:
employing sophisticated monitoring equipment, researchers were
able to detect activity in individual brain cells as the mice
investigated their surroundings and created a mental map of
their environment. This work provides a window into how human
memory functions.
--A group at the Massachusetts Institute of Technology has succeeded
in using a Bose-Einstein condensate (BEC) to make the world's
first ``atom laser,'' which fires a narrow beam of coherent
``matter waves'' with about a million atoms per pulse. Coherent
beams of atoms could eventually allow much finer measurements
and manipulations, such as moving atoms around one by one, or
``writing'' atoms into semiconductors.
--In a stunning scientific advance that contributes to our
fundamental understanding of the origins of life, in August of
1996 a team of researchers announced that they had decoded the
first complete genetic blueprint of a microorganism from the
third major branch of life on earth, a microbe named
Methanococcus janaschii. The finding will allow scientists to
understand more about the operation and function of the cell,
while bringing them closer to understanding the nature of
ancestral cells from which life stemmed early in the planet's
history. In the years ahead, this gene sequencing achievement
holds dramatic prospects for commercial applications in
biotechnology, for the development of renewable energy sources,
and for cleaning the environment.
THE NATIONAL RESEARCH INVESTMENT PORTFOLIO
Overall, the Federal government invests approximately 2.5 percent
of the Federal budget annually (roughly $75 billion) to generate new
knowledge, new technologies, and new scientists and engineers. The
return on investments in S&T as a whole for our Nation has been
impressive: half of our economic productivity growth in the last fifty
years is attributable to technological innovation and to the science
that supported this innovation.
The Administration's fiscal year 1998 budget supports the cutting-
edge research of the Federal government's mission agencies by
augmenting stable funding levels with targeted increases that include:
--A 2.6 percent increase in the National Institutes of Health budget,
to fund high-priority research areas such as HIV/AIDS-related
illnesses, breast cancer, minority health initiatives, disease
prevention, and spinal cord research.
--A 3 percent increase in the funding of science, engineering, and
education R&D at the National Science Foundation.
--A five-year, 1 billion dollar increase in NASA's space science
budget, funding research into the origins of the universe and
the possibility of life beyond Earth.
--An almost 8 percent increase in the basic research budget of the
Defense Department.
--A $1.4 billion appropriation (exclusive of funding for facilities
construction) for the Department of Energy's Stockpile
Stewardship Program, which supports the research that will
allow us to assure the reliability and safety of our nuclear
stockpile without resorting to nuclear testing.
--An almost 5 percent increase in basic science research programs at
the Department of Energy.
--A $289 million increase in funding for university-based research to
strengthen the University-Government partnership and a $497
million increase in peer reviewed R&D programs.
SHAPING THE TWENTY-FIRST CENTURY
A bipartisan consensus has emerged around the view that we must
create, not simply a Federal research program, but a truly national S&T
enterprise--one in which Federal investments stimulate and leverage the
S&T efforts of state and local governments, of private industry, of
universities and of our international collaborations. In a tight budget
environment, these partnerships are essential, and will be a
cornerstone of our S&T enterprise in the coming years.
The long-standing Federal partnership with universities has made
our Nation the world's leading generator of new knowledge and of
fundamental insights that lead to new industries, breakthrough medical
therapies, and a more sophisticated defense. We are also placing an
increased emphasis on partnerships with industry, in which the Federal
government shares the costs and the risks of advances that promise a
large benefit to society. An example is the Partnership for a New
Generation of Vehicles initiative, in which seven federal agencies and
twenty national laboratories have partnered with the Big Three
automobile manufacturers in R&D projects aimed at improving auto
safety, emissions, and fuel efficiency.
Increasingly, we are also seeing research at the frontier of
scientific knowledge become more sophisticated and more costly. Federal
investments in international collaborations have provided an effective
way in which we not only can share the burden of these expensive
programs, but we can benefit from the expertise and know-how of the
others. The International Space Station, the Large Hadron Project at
CERN, and the Gemini Telescopes in Chile and Hawaii are excellent
examples of how we can leverage our domestic investments and priorities
by collaborating with our international partners.
Other Federal partnerships include grass roots projects that bring
people and technology together. One such venture, the Technology
Innovation Challenge Grant Program, has already lead to the creation of
dozens of partnerships linking school systems with businesses,
universities, parks, and museums to develop creative uses for
information technologies. Partnerships such as these extend the
benefits of our Nation's investment in S&T.
THE OSTP MISSION
In support of our Nation's S&T priorities, OSTP has two primary
responsibilities: advising the President on S&T; and providing
leadership and coordination for our government's role in the national
S&T enterprise.
In the 1950's, in response to Soviet advances highlighted by the
launch of Sputnik, President Eisenhower saw the need for expert S&T
counsel, and he invited MIT President James Killian to serve as the
head of the first President's Science Advisory Committee, an OSTP
predecessor. Since then our Nation's Presidents have drawn on the
expertise of our office for S&T policy advice, and I see this as a
contribution that will continue to grow in value as the challenges we
face become increasingly complex.
Within our agency, a small staff of professionals analyzes
developments at the frontiers of scientific knowledge, and aids the
President in shaping policy. OSTP also provides scientific and
technical information and recommendations to the Vice President, the
White House Offices, the Executive Branch Agencies, and to Congress.
A second responsibility of OSTP is to provide leadership and
coordination across the Administration. OSTP plays this role for a
range of Administration S&T priorities, including national security and
global stability, environment, science, and technology. The National
Science and Technology Council (NSTC) has been an invaluable partner
with OSTP in developing interagency evaluations and forging consensus
on many crucial S&T issues.
NATIONAL SCIENCE AND TECHNOLOGY COUNCIL
To meet the Administration's priority S&T goals we must combine the
efforts and the expertise of multiple agencies. OSTP personnel support
the work of the NSTC, a Cabinet-level Council that sponsors interagency
initiatives to advance key S&T objectives. Our distributed system of
research funding also places a premium on coordination between
complementary agency programs. The NSTC, now in its fourth year, is
improving such coordination.
NSTC membership includes Cabinet Secretaries, heads of S&T
agencies, and key White House officials with significant S&T
responsibilities. In the process of generating specific budgetary and
policy recommendations, the NSTC routinely reaches beyond the federal
government to seek input from a wide spectrum of stakeholders in the
public and private sectors.
An important objective of the NSTC is to guide individual agency
budget priorities for R&D and to orient the S&T spending of each
Federal mission agency toward achieving national goals. To meet this
objective, the NSTC has established nine goal-oriented committees, each
of which is chaired jointly by a senior agency official and an OSTP
Associate Director. These standing committees, along with ad hoc
working groups within the NSTC, provide an effective forum to resolve
cross-cutting issues such as interagency review of the future role of
the U.S. national laboratories, or the Federal response to the threat
of emerging infectious diseases.
Current interagency S&T initiatives include:
--The National Bioethics Advisory Commission, a multiagency-supported
commission composed of experts and community representatives,
established by the President to ensure ethical conduct in human
biological and behavioral research.
--A three-year, $300 million Next Generation Internet Initiative to
create the foundation for the networks of the 21st century, by
connecting more than 100 of our universities and national labs
at speeds that are 100-1,000 times faster than today's
Internet--with the capacity for secure, reliable transmission
of voice, video, and virtual reality data.
--A multiagency task force to conduct a comprehensive review of the
University-Government partnership. This review will examine
which components of the university system may be under stress,
and will determine what the U.S. Government role should be in
addressing these issues.
--An Intelligent Transportation Initiative to support traffic control
centers that can manage the operation of major roads by
providing real-time information that will drastically cut
accident rates, produce an estimated 15 percent savings in
travel time, and result in significant productivity gains for
business and industry.
--An Emerging Infectious Diseases Initiative to develop more
effective systems of surveillance, prevention, treatment, and
response to these growing domestic and international health
threats.
--An interagency antiterrorism body, the Technical Support Working
Group, to coordinate the development of new technologies to
counter the modern terrorist threat.
--An Environmental Modeling and Research Initiative to allow, for the
first time, a comprehensive evaluation of our Nation's
environmental resources and its ecological systems, thus
producing a sound scientific base to support natural resource
assessment and decision-making.
--A variety of educational technology projects and classroom
telecommunications links, funded by major Federal agencies, to
reflect the President's unwavering support for improving the
educational and training opportunities of the workforce of
tomorrow.
--A multiagency Children's Initiative to assess the current scope of
research on children and adolescents, to identify significant
gaps in the research agenda, and to develop recommendations for
needed efforts and linkage in the research and policy
development.
the president's committee of advisors on science and technology
As Assistant to the President for Science and Technology, I co-
chair the President's Committee of Advisors on Science and Technology
(PCAST). John Young, former President and CEO of Hewlett-Packard Co.,
serves as the other co-chair. PCAST is a distinguished assembly of
scientists, academics, and industrial leaders. It serves as the
highest-level private sector S&T advisory group for both the President
and the NSTC. This past year, issues examined by PCAST included the
health of our research universities, the government's investment role
in technology, prevention of deadly conflict, University-Government
partnerships, sustainable development, and the Federal research and
development role in learning technologies.
OSTP BUDGET REQUEST
I ask today for your continued support of OST's role in
coordinating S&T policy for the Executive Branch and for our Nation at
large. OSTP's budget request of $4,932,000 for fiscal year 1998 will
maintain the ability of our agency to serve both the public and this
President to the fullest extent. This is the same figure as our request
for fiscal year 1997.
Since personnel costs constitute the largest portion of OSTP's
budget, wherever possible the fiscal year 1998 request reflects a
reduction of administrative expense in keeping with the
Administration's goal of creating a leaner, more efficient government.
The request for fiscal year 1998 reflects our commitment to operate
cost-effectively while retaining the most vital element of our agency--
our high-caliber personnel.
1996 ACCOMPLISHMENTS
Before concluding, it is appropriate that I take some time to
provide a sample of OSTP's accomplishments over the past year. (We have
submitted for the record a document fully summarizing our fiscal year
1996 accomplishments.) OSTP, working with the NSTC, has been
instrumental in shaping our Nation's S&T policy; not only as it relates
to Federal S&T activities, but also to partnerships between the Federal
government and states, universities, industry, and our international
colleagues.
Environment.--OSTP continued its focus on improving the efficiency
and coordination of on-going agency and interagency environmental R&D
activities. OSTP fostered an interagency effort, NSTC's Committee on
Environment and Natural Resources (CENR), to integrate the Nation's
environmental monitoring and related research. CENR will provide an
integrated scientific information base to support natural resource
assessment and decision-making. Many of today's monitoring programs are
designed with the goal of providing information on single-agency
missions, and tend to focus on a single source or issue. By integrating
these monitoring and research activities, the Nation can begin to
assess the status of resources and their multiple uses in the context
of entire ecosystems.
OSTP staff helped develop a strategy for national earthquake loss
reduction to focus scarce research and development dollars on the most
effective means of saving lives and property and of limiting the social
disruptions from earthquakes. This Administration is strongly committed
to reducing losses from natural disasters by supporting programs for
observing, documenting, understanding, assessing, and predicting the
potential consequences of natural hazards.
Following a series of workshops held across the country with more
than 1,000 key stakeholders, OSTP hosted a White House Conference to
discuss ways to implement the National Environmental Technology
Strategy. The required improved efficiency in our technological
infrastructure is being achieved through collaboration among industry,
academia, and communities to develop long-term goals, measure
performance on multiple scales, and implement complementary policies to
encourage high levels of innovation. Anticipating future needs is
critical to achieving successful improvements in efficiency.
OSTP played a key role in a number of domestic and international
science assessments. In climate change research, OSTP continued its
role in coordinating scientific and technical assessments to support
the U.S. delegation to the Framework Convention on Climate Change. A
planning framework for Federal research related to the human health and
ecological effects of endocrine disrupting chemicals was developed and
an inventory of related on-going Federal research programs was
completed.
Technology.--OSTP led the effort to reshape agency research
programs in information technology through the NSTC Committee on
Computing, Information, and Communications. This group designed and is
leading the Next Generation Internet (NGI) initiative, launched in
October 1996. The NGI initiative is a three year, $300 million
investment that will create the foundation for the networks of the 21st
century.
OSTP continued its active role in the Administration's education
technology programs. OSTP has provided broad support for the
President's Technology Initiative, launched in February 1996, which has
included public/private partnership activities such as NetDays, Tech
Corps, Cyber Ed, and the Technology Literacy Challenge (TLC). The TLC
program challenges communities to form local partnerships of school
systems, colleges, universities, and private businesses, to develop
creative new ways to use technology for learning. In fiscal year 1997,
24 finalists were awarded grants to communities in 16 states. An
interagency team under NSTC, developed a set of research priorities
which shaped agency R&D funding for education technology.
OSTP, through both its Technology and its National Security and
International Affairs divisions, provided technical support for the
White House Commission on Aviation Safety and Security. OSTP is also
coordinating the new interagency research program on advanced air
traffic management, developed in response to the Commission's
recommendations.
Other OSTP efforts included: (1) providing continued leadership for
the Partnership for a New Generation of Vehicle program; (2) developing
an integrated plan for R&D in transportation and launching a number of
implementation efforts; (3) initiating a project to streamline and
coordinate the regulatory permitting of construction projects by
developing model regulations and standards; and (4) initiating
cooperative agreements with the Departments of Energy and Agriculture
to evaluate the near- and long-term potential for biomass to serve as a
major fuel source for electricity generation and for converting biomass
fuels for transportation. This effort led to three pilot biomass energy
projects in 1996.
OSTP played a leadership role in the broad interagency review and
revision of the National Space Policy released last September. OSTP has
ongoing White House oversight responsibility for the International
Space Station and Space Shuttle programs, national R&D strategies for
satellite technology, launch vehicle systems in international trade,
and global communications technologies. OSTP supported the President in
commissioning an independent review of the Space Shuttle program, which
reaffirmed the operational safety of the Space Shuttle. OSTP
coordinated the White House response to the discovery that life may
have existed on ancient Mars and organized the Vice President's Space
Science Symposium in December. OSTP worked with OMB to define a stable
and balanced budget for NASA that continues to support our ongoing
mission priorities while enhancing our commitment to science. OSTP
continues to co-chair with the National Economic Council, an
interagency and international process designed to transform the current
intergovernmental organizations INTELSAT and INMARSAT into competitive,
fully-private satellite communication firms.
Science.--OSTP led the effort to ensure that basic research budgets
were given high priority in the fiscal year 1998 budget request and in
the outyears. OSTP also led an effort to follow up on the results of
the Presidential Decision Directive (PDD) on reforming DOD, DOE, and
NASA national laboratories. This effort indicated that substantial
progress has been made in meeting the goals of the PDD, but much
remains to be done.
OSTP initiated the first Presidential Early Career Award for
Scientists and Engineers. This award was given to sixty young
scientists who have made outstanding scientific contributions and who
have the leadership potential to keep our Nation on the cutting edge of
scientific and engineering advancement. OSTP also initiated the first
Presidential Award for Excellence in Science, Math, and Engineering
Mentoring, given to ten individuals and to six institutions that have
demonstrated a high degree of commitment to promoting diversity in the
S&T community.
Working with the NSTC, OSTP staff developed the Children's
Initiative, which addresses the need to better tie Federal actions that
impact children to sound science. As the Initiative develops it will
identify research gaps in a variety of areas relating to the health and
well-being of children and promote tighter linkages to policy making.
Other accomplishments related to children include the OSTP, DPC, NSF,
and DoEd collaboration on how to improve the performance of our
Nation's eighth graders in math.
The Presidential Advisory Committee on Gulf War Veterans'
Illnesses, for which OSTP had White House responsibility, released to
the President its final report that evaluated a number of potential
causes for illnesses reported by Gulf War veterans, and contained
numerous recommendations on how we can improve the treatment of these
veterans and how we can prevent similar problems in future conflicts.
An interagency response to the Committee's report was delivered to the
President on March 7, 1997. OSTP also launched the National Bioethics
Advisory Commission and was instrumental in arranging for appropriate
levels of funding. The Commission was recently charged by the President
to address the legal and ethical issues associated with cloning human
embryos.
National Security and International Affairs.--OSTP coordinates, in
conjunction with the National Security Council, both the national and
international aspects of U.S. efforts to dispose of worldwide stocks of
excess weapons-grade plutonium. OSTP played a key role in the
successful October 1996 conference of experts on plutonium disposition
that was called for by the April 1996 Nuclear Safety and Security
Summit. OSTP co-chairs a joint U.S.-Russian Plutonium Disposition
Steering Committee, which oversees the government-to-government
collaboration in this area and delivered the first-ever joint study of
plutonium disposition options last September. This committee continues
to meet and to coordinate both studies and demonstration projects.
OSTP provided technical analyses and advice to the White House
during negotiation of the Comprehensive Test Ban Treaty (CTBT), and
OSTP has led the interagency effort to ensure that existing U.S.-
operated global seismic networks will be adequately supported to
fulfill the international CTBT verification mission assigned to them
under the Treaty. More generally, OSTP has provided important S&T
policy perspectives in a variety of key national security areas
including aviation security, critical infrastructure protection, the
banning of antipersonnel landmines, counterterrorism, information
warfare, and ballistic missile defenses.
To more effectively address the growing global threat of emerging
and reemerging infectious diseases, at the President's direction OSTP
took the lead in forming an interagency task force to address this
issue. The Task Force has initiated activities to strengthen disease
surveillance, prevention, and response, including the development of a
global disease surveillance network.
OSTP has worked successfully to expand U.S. S&T relationships with
important trading partners and economies in transition to strengthen
benefits to our national security, economic, and scientific goals.
Through the Gore-Chernomyrdin Commission OSTP played a lead role in the
effort to develop guidelines for intellectual property rights
protection for government agreements and contracts with Russia, to
reach agreement on a plan to promote the use of the Internet in Russia,
and to build support for the U.S. Civilian Research and Development
Foundation for the Independent States Forum of the Former Soviet Union.
OSTP has also supported international S&T efforts to address policy
priorities through other high level bilateral commissions with South
Africa and Egypt, and through the evolving Sustainable Development
Forum with China. S&T partnerships have been strengthened with Japan,
such as in the creation of an Earthquake Disaster Mitigation
Partnership, and OSTP is participating in negotiations over an S&T
agreement with the European Union.
OSTP has also taken the U.S. Government lead in several
multilateral fora as a way to promote U.S. interests and maximize the
value of U.S. S&T investments. OSTP worked closely with the technical
agencies and OMB to coordinate the U.S. Government's negotiating
position on such international projects as the Large Hadron Collider,
the Human Frontier Science Program, and the International Thermonuclear
Experimental Reactor. OSTP promoted the creation of a follow-on
mechanism to the OECD Megascience Forum. In Asia, OSTP led U.S.
participation in the APEC Science and Technology Ministerial, and in
Latin America, OSTP had a lead in organizing the first-ever meeting of
S&T Ministers. Both fora have launched S&T initiatives that are useful
in promoting U.S. S&T interests in these regions.
Mr. Chairman and Members of the Committee, I hope that this brief
overview has conveyed to you the extent of this Administration's
commitment to advancing S&T in the national interest, and the
importance of OSTP's role in the national S&T enterprise.
Regardless of party affiliation, we can all agree that investments
in S&T are investments in our Nation's future. I look forward to
achieving bipartisan support for a national S&T strategy that will
combine the resources of industry, academia, non-profit organizations,
and all levels of government to advance knowledge, promote education,
strengthen institutions, and develop human potential.
I ask not only for your support for OSTP's fiscal year 1998 budget
request but also want you to know how much I appreciate the long-
standing bipartisan support of the committee for OSTP and for the S&T
research enterprise. I would be happy to answer any questions that you
have.
______
Appendix A. Reports Issued By The NSTC During Calendar Year 1996
1. Interagency Assessment of Potential Health Risks Associated with
Oxygenated Gasoline, NSTC Committee on Environment and Natural
Resources, February 1996.
2. Meeting the Challenge (A Research Agenda for America's Health,
Safety, and Food), NSTC Committee on Health, Safety, and Food, February
1996.
3. United States Antarctic Program, NSTC Committee on Fundamental
Science, April 1996.
4. Strategy for National Earthquake Loss Reduction, NSTC Committee
on Environment and Natural Resources, April 1996.
5. NSTC Accomplishments B Calendar Year 1995, NSTC Executive
Secretariat, May 1996.
6. Human-Centered Transportation Systems Brochure, NSTC Committee
on Transportation, May 1996.
7. Assessing Fundamental Science Report, NSTC Committee on
Fundamental Science, July 1996.
8. Program Guide to Federally-Funded Environment and Natural
Resources, NSTC Committee on Environment and Natural Resources, June
1996.
9. Environmental Technologies Testing and Demonstration Sites: A
federal Directory, NSTC Committee on Environment and Natural Resources,
September 1996.
10. Our Changing Planet: The fiscal year 1997 U.S. Global Change
Research Program, NSTC Committee on Environment and Natural Resources,
September 1996.
11. Committee on Environment and Natural Resources Brochure, NSTC
Committee on Environment and Natural Resources, September 1996.
12. The Federal Research and Development Program in Materials
Science and Technology, NSTC Committee on Technological Innovation,
November 1996.
13.High Performance Computing and Communications (HPCC) Advancing
The Frontiers of Information Technology, NSTC Committee on Computing,
Information, and Communications, November 1996.
14. The Health and Ecological Effects of Endocrine Disrupting
Chemicals: A Framework for Planning, NSTC Committee on Environment and
Natural Resources, November 1996.
______
Appendix B. Reports Issued By PCAST During The First Clinton
Administration
Report of the PCAST Panel on U.S.-Russian Cooperation to Protect,
Control, and Account for Weapons-Useable Nuclear Materials (May 1995).
The U.S. Program of Fusion Energy Research and Development (July
1995).
Science and Technology Principles (September 1995), Report to the
President on Academic Health Centers (November 1995).
Principles of the U.S. Government's Investment Role in Technology
(June 1996).
Report on Research Universities (June 1996).
Report on Preventing Deadly Conflict (November 1996).
Report on Sustainable Development (January 1997).
ADDITIONAL COMMITTEE QUESTIONS
[The following questions were not asked at the hearing, but
were submitted to the Office for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
RESULTS OUT VERSUS DOLLARS IN
Question. As you know, we in Congress are very interested in the
Government Performance and Results Act, which we've shortened to ``the
Results Act.'' Given the focus of the Results Act, it might be more
important to look at what is coming out of the federal investments in
R&D in terms of results, and not just at the dollars going into the
program. The Council on Competitiveness recently issued a report
entitled ``Endless Frontier, Limited Resources,'' setting scientific
priorities and defining a more realistic, pragmatic framework for
allocating federal resources. In recent years, the National Academy of
Sciences has also issued several reports which require setting
priorities with the federal science and technology budget.
What role does the Office of Science and Technology Policy play in
setting national scientific priorities? Is OSTP involved in developing
guidance to R&D agencies on how to measure for results and the setting
of appropriate outcomes for R&D programs?
Answer. The Office of Science and Technology Policy (OSTP) plays
both a leadership and a coordination role in setting national
scientific priorities and in mobilizing scientific expertise to
accomplish national goals. OSTP advises the President of the United
States on policy and budget formulation in matters in which science and
technology are important elements. OSTP also coordinates the
development and implementation of the Administration's domestic and
international science, research, and technology policies, programs, and
budgets in support of the President's goals for strengthening the
economy and creating jobs, improving education and health care,
enhancing the quality of the environment, harnessing information
technology, and maintaining national security. More information about
national scientific priorities and OSTP's role in both setting and
communicating them can be found in Science in the National Interest
(1994), Building a Scientific Basis to Ensure the Vitality and
Productivity of U.S. Ecosystems (1995), National Security Science and
Technology Strategy (1995), Technology in the National Interest (1996),
and Meeting the Challenge: A Research Agenda for America's Health,
Safety, and Food (1996). The Administration's biennial report to the
Congress: Science and Technology Shaping the Twenty-First Century
(1997) provides a comprehensive overview of the substance and process
of OSTP's role in guiding the development of science and technology
policy.
OSTP is involved in developing guidance for R&D agencies and is
working with them in partnership with the Office of Management and
Budget (OMB) on the important tasks of strategic planning, goal
setting, and creating performance plans with meaningful, reasonable,
and measurable target outcomes. Recognizing both the importance and the
challenge of designing a planning and assessment methodology for
fundamental science that would satisfy the requirements of the Results
Act (1993), OSTP took the initiative in 1994 to conceive and initiate
the Assessment Process under the auspices of the National Science and
Technology Council (NSTC). The NSTC Assessment Process involved senior
scientific managers from ten major R&D agencies, OMB, and OSTP and was
charged to establish a framework for implementing Results Act
requirements in assessing fundamental science programs. The report,
``Assessing Fundamental Science,'' was published in 1996, and provides
guidance to R&D agencies for their development of strategic and
performance plans. The report also provides a set of principles for use
by these agencies for designing and testing a range of methods
appropriate to their particular goals and programs. In partnership with
OMB, OSTP is now working with the individual R&D agencies to develop
and fine tune their strategic and performance plans and to ensure that
they are responsive to the requirements of the Results Act. These plans
should be useful as management tools for the agency and the
Administration, and should promote scientific excellence, high
productivity, and accountability to the taxpayer, without creating an
unreasonable and costly bureaucracy that detracts from program
outcomes.
ROLE OF THE NATIONAL SCIENCE AND TECHNOLOGY COUNCIL (NSTC)
Question. Two years ago, we asked you what role the NSTC played in
the formulation of the President's fiscal year 1996 budget. You said
that NSTC committees had compiled the ``lessons learned'' from that
process, and were streamlining the process for fiscal year 1997. Could
you please update us on the progress of the ``lessons learned?'' What
was NSTC's role in developing the fiscal year 1998 budget? What grade
would you give the NSTC in fiscal year 1997? In fiscal year 1996?
What other role does the NSTC play, in addition to its role in
developing the President's budget request? How have the NSTC roles
evolved over time?
Answer. The President established the NSTC in 1993 to coordinate
the diverse parts of the federal research and development (R&D)
enterprise and to foster synergy among the varied talents of the
federal science and technology (S&T) workforce. This coordination
includes the federal R&D budget, as well as S&T policy making. In
November 1996, the NSTC completed its third year of operation and moved
from the identification of strategic goals, as defined in the 1995 NSTC
committees' strategic plans, to implementation of specific initiatives
that redirect the federal government's investments in S&T toward
fundamental national goals, while streamlining government and saving
taxpayers' dollars.
At the beginning of the Clinton Administration, the President
committed to integrating agency R&D budgets to ensure that the nation's
S&T investments serve broad national goals as well as agency missions.
This is the most important budget issue addressed by the NSTC. Starting
with the fiscal year 1996 budget, the NSTC has been using a process
designed to improve the way priorities are set in federal R&D
expenditures. This process starts in the spring each year with R&D
budget guidance to the NSTC departments and agencies, issued jointly by
the Directors of the Office of Science and Technology Policy (OSTP) and
the Office of Management and Budget (OMB). This guidance is developed
through the NSTC process, a mechanism for building consensus throughout
the federal S&T enterprise, and reflects the President's budget message
for that year. The NSTC departments and agencies are instructed to
examine their base programs carefully and focus and/or redirect funds
into the identified R&D priority areas within the budget constraints
provided from OMB.
Following the initial joint OSTP/OMB R&D budget guidance, issued
for the fiscal year 1996 budget, feedback was solicited and received
from the nine NSTC committees (which represent all NSTC member
departments and agencies) on how to improve the process in preparation
for the fiscal year 1997 budget guidance. This feedback mechanism or
``lessons learned'' is used each year to continuously streamline the
R&D budget priority setting process and make it more useful for the
NSTC departments and agencies. The joint OSTP/OMB budget guidance
memorandum for fiscal year 1999 reflects three years of evolution in
the S&T priority setting process through the NSTC.
For fiscal years 1996, 1997 and 1998, the NSTC R&D budget guidance
process resulted in positive outcomes for the overall S&T budgets by
concentrating federal spending on critical national priorities. Each
year, by the time the agency budgets were submitted to OMB in the fall,
agencies had already made trade-offs by eliminating programs that did
not correspond to the priority areas identified in the OSTP/OMB R&D
budget guidance.
In addition to the NSTC's role in developing the President's R&D
budget request, the NSTC effectively provides a venue for developing
interagency consensus on major S&T policy decisions. The NSTC review
process ensures that all agencies impacted by a decision are afforded
an opportunity to provide thoughtful input. The NSTC Presidential
Decision Directive (PDD) is one mechanism used to implement major
policy decisions, often having budgetary implications.
Examples of recent NSTC accomplishments include:
--National Bioethics Advisory Commission.--To address bioethical
issues arising from research on human biology, the President
appointed 18 non-government experts to serve on the National
Bioethics Advisory Commission (NBAC) under the auspices of the
NSTC. The NBAC charter was signed by the Assistant to the
President for Science and Technology in June 1996 and NBAC met
for the first time in October 1996. NBAC recently advised the
President on appropriate policy regarding cloning research
results announced in February 1997.
--United States Antarctic Program.--The NSTC conducted a review of
the United States Antarctic Program, concluding that the
science performed under that program was of high quality and
high interest and should be maintained within funding
constraints.
--U.S. Research Universities.--In response to communications to the
President from the President's Committee of Advisors on Science
and Technology (PCAST) and other national, political,
corporate, and educational leaders emphasizing that the
nation's university research system was going through a period
of stress, Dr. John H. Gibbons issued a Presidential Review
Directive to evaluate the need to revisit federal policies
concerning the capacity of U.S. universities to meet the
nation's research and educational requirements of the next
century. The resulting NSTC review will be completed in Fall
1997.
--Federal Laboratory System.--During the summer 1996, OSTP assessed
each agency's response to the Federal Laboratory Reform
Presidential Decision Directive (PDD). The review confirmed
that the agencies are making progress in meeting the PDD goals,
however, much still needs to be done to be fully responsive.
Opportunities exist to advance the goals of the PDD through
simplified directives and better use of federal personnel rules
and other regulations.
--Education.--The NSTC established and presented awards through two
new programs: (1) Presidential Awards for Excellence in
Science, Mathematics, and Engineering Mentoring; and (2)
Presidential Early Career Awards for Scientists and Engineers
(PECASE). The Presidential Awards for Excellence in Science,
Mathematics, and Engineering Mentoring program was established
in 1996 as one strategy to achieve the goal of developing a
pool of highly trained scientists and engineers that reflects
the nation's diverse population. President Clinton named 10
individual and six institutions as the first recipients of this
award in September 1996. The PECASE award recognizes
demonstrated excellence and promise of future success in
scientific or engineering research, and the potential for
eventual leadership of the recipients in their respective
fields. In December 1996, the President selected 60 individuals
to receive the first annual PECASE awards.
The work of the NSTC has also supported the President's
Educational Technology Initiative, launched in February 1996,
and has included public/private partnership activities such as
NetDays, Tech Corps, and America's Technology Literacy
Challenge.
--Dual-Use Technologies.--To address civil, military, scientific, and
commercial interests, Presidential Decision Directives were
issued for National Space Policy (PDD NSTC-8) and the Global
Positioning System (PDD NSTC-6).
--Children's Research.--The NSTC developed a policy statement on
children's issues, ``A National Research Initiative for
Children for the 21st Century,'' that examines the federal
research agenda on the biological, cognitive, and social
development of America's children and adolescents.
--Environmental Quality.--The NSTC fostered the development of
partnerships between the federal government and non-federal
researchers working toward improving environmental quality by
making information available to the public on: (1) federal
environmental testing and demonstration sites; and (2)
federally-funded environment and natural resources R&D.
--High-Performance Computing, and Communications (HPCC) Advisory
Committee.--On February 11, 1997, the President signed the
Executive Order establishing the Advisory Committee on High-
Performance Computing, and Communications (HPCC), Information
Technology, and the Next Generation Internet. This Advisory
Committee will provide guidance and advice on all areas of
advanced computing, communications and information
technologies. The Committee has already completed an initial
review of plans for the Administration's Next Generation
Internet Initiative (NGI) and concluded the NGI is essential to
sustaining U.S. technological and commercial leadership in
computing and communications. Members bring together a broad
range of expertise and interests from business and
universities.
--Emerging Infectious Diseases.--In response to an NSTC study, Vice
President Gore announced a Presidential Decision Directive
directing the federal government to strengthen the United
States' ability to respond to the growing threat of emerging
and re-emerging infectious diseases. This NSTC has begun a
tracking process of our investments in this important field of
research. We are now able to look across agencies and
understand what the federal R&D effort includes.
--Partnerships.--The NSTC also fosters collaborations between
industry, academia, and federal, state and local governments.
--The Partnership for a New Generation of Vehicles (PNGV).--Each of
the Big Three U.S. automakers--Ford, Chrysler, and General
Motors, working with small and medium sized suppliers and
leveraging collaborative research with government
agencies--produced a PNGV concept vehicle demonstrating
different ``Supercar'' possibilities. The partnership
includes research on: (1) manufacturing productivity
improvement; (2) near-term improvement in fuel efficiency
and emission reduction; and (3) development of a production
prototype by the year 2010 that can achieve three times the
fuel efficiency of today's vehicles with comparable cost
and performance.
--National Electronics Manufacturing Initiative (NEMI).--The NSTC
undertook an initiative with the American Electronics
Association (AEA) to develop a research partnership with
the nation's electronics manufacturing industry. This
effort came to fruition on March 13, 1996, with the
announcement of National Electronics Manufacturing
Initiative, Incorporated (NEMI), a consortium created to
ensure the sustained growth and competitiveness of
electronics manufacturing in the U.S. NEMI is an industry-
funded, industry-led, private-public partnership that
brings together the largest electronic equipment
manufacturers in the U.S. and their key suppliers with
government agencies to foster development of the world's
best electronics manufacturing supply chain. NEMI is a
prime example of the NSTC providing an initial federal
government impetus to stimulate collaboration and growth of
a non-government activity.
--Building and Construction.--In the area of construction and
building, progress was made toward streamlining and
coordinating regulatory permitting of construction
projects, as well as meeting the National Construction
Goals and supporting the Department of Housing and Urban
Developments' National Home Ownership Strategy.
--United States Innovation Partnership (USIP).--To enhance the
technology partnerships between the federal and state
governments, the United States Innovation Partnership
(USIP) was established. A Memorandum of Understanding (MOU)
between OSTP, the Department of Commerce (DOC), and the
National Governors Association (NGA), outlining policies
and procedures for USIP, has been approved by all parties.
There are plans for the MOU to be signed the week of June
23 in the home states of the NGA lead-Governors on
technology, Governor John Rowland, Connecticut, and
Governor Paris Glendening, Maryland. The NGA and DOC issued
solicitations for state and federal participants in Task
Forces for initial USIP projects. A federal agency or
department head and a governor will be sought to act as
champions for selected projects.
The NSTC developed several major science and technology policies
that drive the activities of several NSTC committees and have led to
some of the accomplishments listed above.
--Technology in the National Interest (July 1996) outlines the rich
portfolio of policies and programs being carried out by
departments and agencies across the federal government to
ensure that technology remains the key driver of the nation's
economic growth, leading to creation of high-wage jobs in the
U.S. and an improved standard of living and quality of life for
the American people.
--Meeting the Challenge (February 1996) laid out the following five
initiatives: (1) establish the Presidential Early Career
Scientist Award; (2) strengthen domestic health, safety, and
food data systems; (3) strengthen the integrated,
multidisciplinary human nutrition research initiative; (4)
develop an integrated research agenda to develop technologies
to assure the safety and quality of food for consumers; and (5)
develop methods for assessing exposures and other factors
influencing health.
--National Security Science and Technology Strategy (September 1995)
was the nation's first national security S&T strategy document
to describe how U.S. investments and international cooperation
in S&T support the full range of U.S. national security
objectives. This report offers a policy context for a rigorous
defense of Clinton Administration initiatives, including the
Cooperative Threat Reduction (Nunn-Lugar) Program, the Advanced
Technology Program, and economic development programs aimed at
mitigating or addressing the problems of endemic poverty,
overpopulation, food scarcity, infectious diseases and
environmental degradation. This report focuses on the
importance of investments in support of military superiority,
verifiable arms control, sustainable development abroad, and
economic performance at home.
--Preparing for the Future Through Science and Technology, An Agenda
for Environmental and Natural Resources Research (March 1995)
is a multidisciplinary environmental strategy that provides the
scientific and technical information needed for national and
international policy formulation and to assure the most
efficient use of scarce research and development resources.
This strategy was developed by the NSTC, with assistance from
stakeholders from academia, industry, and state and local
governments.
--Science in the National Interest (August 1994) is the
Administration's statement on science policy released by the
Vice-President. The first such statement in 15 years, this
document presents policy objectives for the Nation's research
enterprise. It is the product of extensive NSTC consultation,
combined with the input received at the forum held on January
31-February 1, 1994.
The Clinton Administration considers science and technology an
important investment for America's future. Our nation relies on federal
investments in science and technology to contribute to: the growth of
our economy; the health of our citizens; the sustainability of our
environment and natural resources; the United States' leadership in
critical world markets; the education of our children; the ensuring of
our national security; and the addressing of global problems through
cooperation with other countries.
Since its establishment, the NSTC has served a vital role in
identifying and prioritizing how federal investments in science and
technology can be wisely applied toward addressing our nation's
critical needs, in the context of balancing the budget. The NSTC has
made considerable progress in helping federal research and development
organizations evolve from an autonomous, fiscally expansive environment
to a collaborative fiscally constrained one. There is still much
progress to be made, however, in integrating our federal R&D efforts to
face the challenges in the areas of education, transportation systems,
energy resources, human health, national security, and the environment.
Working through the NSTC will become even more compelling as the
players are more comfortable with change, as innovators recognize the
untapped opportunities, and the federal research and development
enterprise is guided toward a unified set of goals.
federal investments in producing new scientists and engineers
Question. In 1993, there were about 2.5 million people in the U S.
with graduate degrees in science or engineering. In addition, there
were about 330,000 science and engineering graduate students. Over 70
percent of the scientists and engineers with Ph.D.'s were working in
science and engineering, in their own or a closely related field.
Yet, there are repeated complaints from young scientists that their
opportunities for a career in science are abysmal. In my own state of
Missouri, at least one university has tried to address this problem.
Washington University in St. Louis has recently chosen to scale back
the number of students to those the university can provide full
financial support for six years, rather than producing as many students
as they can.
What should the federal government's role be in assisting the
development of the next generation of scientists and engineers? Are we
overproducing scientist and engineers? Are we producing the right kind
of scientists and engineers?
Answer. For forty years since enactment of the National Defense
Education Act of 1958, the federal government has played a role in the
support of graduate students seeking a career in science or
engineering. Through fellowships, traineeships, and research
assistantships, students gain experience and become professionally
socialized as team members and apprentice researchers. But the
Committee's question about graduate degrees is integrally related to an
even larger issue: the health of research institutions and the strength
of the government-university partnership. The President has received
letters from national, political, corporate and education leaders
warning that universities are stressed in a number of ways, and urging
a policy and administrative review of the government-university
partnership. The President's Council of Advisors on Science and
Technology also urged such a review. Accordingly, I have established an
interagency Task Force under the auspices of the NSTC to review the
status of the federal government-university partnership and recommend
options for strengthening it. The Committee's question regarding the
number of Ph.D.'s produced through this partnership is central to the
issues being addressed by the Task Force: the policies, programs, and
regulations that shape the partnership, the education of graduate
students, and research administration. In addition, the Task Force will
consider mechanisms that can help sustain the strong U.S. tradition of
innovative research, even under current budgetary and other
constraints. How we utilize new Ph.D.'s is an important element of
whether or not we continue to get new ideas into the system.
The Task Force's work constitutes a first step in a multi-step
process. In this first phase, expected to be completed this fall, the
Task Force will recommend actions to the NSTC through its Committee on
Fundamental Science. Follow-on activities will also be identified at
that time. The Task Force is chaired by the Acting Associate Director
for OSTP's Science Division, and is composed of representatives from
the six major research funding agencies: DOD, DOE, NASA, NIH, NSF, and
USDA. Both OMB and the National Performance Review are also
represented. RAND's Critical Technologies Institute, the Federal
Demonstration Partnership, and the NAS Government-University-Industry
Research Roundtable are providing crucial assistance and insight based
on their extensive experience in this area.
I would like to address one special concern I have about the impact
of depressed demand for science and engineering Ph.D.'s, and that is
the continued and persistent under representation of women, persons of
color, and persons with disabilities in the science and engineering
workforce. With market opportunities sluggish in the 1990's, new
Ph.D.'s have experienced unprecedented under-employment rates in
mathematics and strikingly high rates in physics and chemistry. In
general, there are fewer positions to be found in research
universities. But students recruited from traditionally under
represented categories receive less financial support, experience
higher attrition at each succeeding educational stage, and complete
proportionately fewer degrees relative to their number in the pool. And
those who do earn the Ph.D. still face lesser career prospects in terms
of full-time employment, tenure-track status, promotion to full
professor, etc.
So at a time of constrained opportunity for all, diversity suffers.
At present, the student pool is becoming more ethnically diverse with
foreign citizens earning a majority of the doctoral degrees from U.S.
institutions in some science and engineering disciplines. There is the
perception and perhaps the reality--that science and engineering are
not rewarding career choices for U.S. students. We must be concerned
about what this means not only in terms of individual career choices,
but about what it means for the future of the nation. We must therefore
consider the impact of federal policies and graduate support mechanisms
on the future vitality of our nation's scientific enterprise and
economic competitiveness.
international cooperation versus international competition
Question. One of the key R&D goals of the Administration is to
``maintain world leadership in science, engineering, and mathematics.''
Yet another important strategy of the Administration seems to be
involving our sometimes competitors as international partners. How do
you perceive the difference between international cooperation and
international competition?
More specifically, there have been reports that Japan intends to
increase their investments in R&D, particularly at colleges and
universities, by a substantial amount. Some seem to see that increase
as a threat, and others see it as an opportunity. What is your view?
Answer. International cooperation and international competition are
both important drivers of innovation. Embracing the benefits of both is
essential to advancing U.S. science and technology policies. In many
parts of the globe today, a clear rise in sources of innovation in
science and technology creates expanded opportunities to leverage
international cooperation and international competition to benefit our
society and our economy.
Cooperation among nations is becoming more essential to our goals
in science and technology for several reasons, including: (1) a growing
number of the challenges that we face are regional or global and
require an international solution; (2) the scale of resources needed to
tackle priority issues stretch the capability of support by any one
nation, but can be addressed through cooperation; and (3) finding
solutions to problems of common concern can be accelerated. For
example, cooperation among nations in environmental research is
expanding rapidly and has been essential in deciphering climate changes
and other complex interactions in our planet's system; understanding
the fundamental nature of life and matter are large-scale efforts that
advance more rapidly by pooling international resources; and in the
fight against emerging infectious diseases or the mitigation of natural
disasters, the U.S. shares an interest with all nations in bringing the
best science and technology to bear, with other nations having
important assets and experiences to share.
I should also note that an important benefit of international
cooperation in science and technology is its value in helping to defuse
the sources of conflict abroad. Steady cooperation between U.S. and
Soviet scientists during the Cold War has been of significant value in
the post-Soviet era in smoothing that transition and in dealing with
critical issues such as the management and disposition of nuclear
materials.
International competition is also a resource in advancing
innovation. To the extent that international advances spur further
innovation in the United States, we are all better off as it drives all
of us to greater heights. However, this requires that the U.S. makes
the investments needed to stay at the forefront of science and
technology and works with other nations to remove barriers to
innovation and trade that handicap our interests. Domestically, we must
maintain the investments that we need to keep up with the pace of
international competition. Internationally, we are working with the
U.S. Trade Representative and other agencies to remove regulations and
practices that are discriminatory against U.S. innovations and to
achieve fair and consistent protection for intellectual property. We
are supporting work to develop international regimes such as the
Multilateral Agreement on Investments that will help to protect our
competitive edge.
With regard to Japan, we are currently assessing its Basic Plan for
Science and Technology, for potential impacts on our science and
technology relations. This ambitious plan calls for substantial
increases in government support for science and technology and major
reforms in the public system of innovation. Under the Committee on
International Science, Engineering and Technology of the NSTC we have
formed a Working Group on Japan. This Working Group is charged with
broadly examining our bilateral relations in science and technology to
identify areas in which we can strengthen the value to the U.S. of this
partnership. The increases in investments being undertaken by the
government of Japan, particularly in the universities, will spur their
innovative capability and will surely bring long-term benefit to their
economy and societal well being. These increases will ultimately lead
to greater competition for the U.S. in future markets, but they will
also create greater opportunities for leveraging research cooperation
to more effectively address common concerns.
One of the challenges that we face is pressing for reciprocal
access to Japan's resources for innovation, a challenge that continues
to need attention. A concern that has been raised by the U.S. members
of the U.S.-Japan Joint High Level Advisory Panel on science and
technology is that Japan develop transparent processes for access to
its universities and clear protection of intellectual property. Another
area of concern continues to be the substantial asymmetry in exchange
of scientific and technical personnel and in the flow of information.
We will continue to work with Japan to ensure that more Americans
participate in Japan's research system and that information is made
more easily available from Japan, exploiting the capabilities of
machine translation and the Internet.
It is our responsibility to engage with the innovation community in
Japan, to gain from their advances in science and technology as they
have gained from our open system, and to encourage Japan to join with
the U.S. and other nations in taking leadership to address common
international concerns. We have had a recent success in the rapidly
expanding area of global change prediction, where Japan plans to
increase its investment four-fold in five years. In this area, the
government of Japan has been forthcoming in seeking mutually beneficial
cooperation. The U.S. government must ensure that engagement with
Japan, and with other nations, is given appropriate priority because
achieving the benefits of international cooperation and competition for
the U.S. will depend on our deep commitment to success.
ostp budget
Question. Please provide travel costs by division within OSTP for
fiscal year 1995 and fiscal year 1996, differentiated into domestic and
international travel. Also, please provide projected travel costs for
fiscal year 1997.
Answer. Please see attached chart.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year 1995 Fiscal Year 1996
Divison -----------------------------------------------------------------------------------------------
Local travel Domestic International Local travel Domestic International
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director................................................ $294.20 $12,111.19 $16,031.88 $282.23 $16,058.97 $9,235.87
Environment............................................. 547.50 16,225.08 24,087.81 769.50 20,637.24 16,155.53
National Security and International..................... 1,555.12 703.10 42,727.02 2,521.31 2,575.96 43,499.82
Science................................................. 2,131.05 29,932.90 2,619.61 1,767.10 15,949.12 7,749.19
Technology.............................................. 862.10 10,659.45 14,156.39 868.05 14,267.76 7,642.97
PCAST................................................... 751.65 33,707.88 .............. 613.25 26,945.09 ..............
Budget and Administration............................... 214.25 .............. .............. 320.30 .............. ..............
-----------------------------------------------------------------------------------------------
Subtotal.......................................... 6,355.87 103,339.60 99,622.71 7,141.74 96,434.14 84,283.38
===============================================================================================
Grand total....................................... 209,318.18 187,859.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal Year 1997 to date Fiscal Year 1997 remaining
Divison -----------------------------------------------------------------------------------------------
Local travel Domestic International Local travel Domestic International
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director................................................ $22.00 $6,472.61 $22,631.79 $1,428.00 $5,400.00 $8,000.00
Environment............................................. 735.42 17,469.21 1,141.51 714.58 7,100.00 2,600.00
National Security and International..................... 1,361.68 75.36 39,202.44 88.32 .............. 12,800.00
Science................................................. 606.41 13,701.72 5,981.58 843.59 4,115.00 2,550.00
Technology.............................................. 107.70 7,881.09 6,076.25 1,342.30 11,500.00 800.00
PCAST................................................... 377.95 25,221.70 .............. 122.05 13,074.00 ..............
Budget and Administration............................... 108.55 3,050.77 .............. 141.45 .............. ..............
-----------------------------------------------------------------------------------------------
Subtotal.......................................... 3,319.71 73,872.46 75,033.57 4,680.29 41,189.00 26,750.00
===============================================================================================
Total............................................. 152,225.74 72,619.29
-----------------------------------------------------------------------------------------------
Grand total.......................................
(5)224,845.03
--------------------------------------------------------------------------------------------------------------------------------------------------------
Question. Please provide data, by division, on FTE's, and
reimbursed and nonreimbursed detailees for fiscal year 1995 and fiscal
year 1996, and projections for fiscal year 1997.
Answer. The attached table illustrates OSTP's personnel expenses,
FTE's, detailees, non-reimbursed detailees, and reimbursed IPA's.
SUMMARY OF OSTP PERSONNEL EXPENSES--FISCAL YEAR 1995 THROUGH FISCAL YEAR 1997 (ESTIMATED)
----------------------------------------------------------------------------------------------------------------
Fiscal year 1995 Fiscal year 1996 Fiscal year 1997 estimate
--------------------------------------------------------------------------------
Division Salary/ Salary/ Salary/
benefits FTE count benefits FTE count benefits FTE count
----------------------------------------------------------------------------------------------------------------
Director's Office--FTE's....... $610,825.98 7.34 $654,454.72 7.29 $709,954.06 8.25
Environment--FTE's............. 470,320.54 5.00 345,619.30 4.00 340,318.45 3.83
National Security and
International--FTE's.......... 437,329.81 5.50 573,038.81 6.70 674,412.69 7.70
Science--FTE's................. 349,816.04 4.67 356,466.53 5.58 330,912.26 3.92
Technology-- FTE's............. 644,867.35 6.70 554,432.11 5.80 432,820.40 4.83
Budget and Administration--
FTE's......................... 272,479.24 5.42 $271,611.55 4.50 310,581.63 5.00
PCAST--FTE's................... 40,650.76 0.88 95,625.22 0.96 46,029.79 0.59
--------------------------------------------------------------------------------
Total FTE's, salary and
benefits................ 2,826,289.72 35.51 2,851,248.24 34.83 2,845,029.28 34.12
================================================================================
Director's Office--Detailees/
IPA's......................... .............. ......... .............. ......... $30,000.00 0.50
Environment--Detailees/IPA's... $17,125.00 0.25 $38,158.00 0.21 230,623.02 1.67
National Security and
International--Detailees/IPA's 178,809.00 1.60 .............. ......... .............. .........
Science--Detailees/IPA's....... 307,873.48 3.25 266,283.31 3.17 145,052.38 2.46
Technology--Detailees/IPA's.... 156,231.00 2.00 74,888.01 1.08 87,537.82 1.00
Budget and Administration--
Detailees/IPA's............... .............. ......... .............. ......... .............. .........
PCAST--Detailees/IPA's......... .............. ......... .............. ......... .............. .........
--------------------------------------------------------------------------------
Total detailees/IPA's.... 660,038.48 7.10 379,329.32 4.46 493,213.22 5.63
================================================================================
Lump Sum Leave Payments........ 32,550.80 ......... 16,165.74 ......... 53,058.81 .........
Overtime Payments.............. 27,109.57 ......... 21,183.25 ......... 20,000.00 .........
Awards......................... 40,500.00 ......... 24,000.00 ......... 40,000.00 .........
Unemployment Compensation...... .............. ......... 7,713.00 ......... 10,000.00 .........
OPM Buyout Charge.............. 3,040.00 ......... 2,880.00 ......... 2,680.00 .........
--------------------------------------------------------------------------------
Total personnel expenses. 3,589,528.57 ......... 3,302,519.55 ......... 3,463,981.31 .........
Budget apportionment or
request................. 3,754,000.00 ......... 3,797,000.00 ......... 3,746,000.00 .........
Difference--Surplus or
(deficit)............... 164,471.43 ......... 494,480.45 ......... 282,018.69 .........
----------------------------------------------------------------------------------------------------------------
With regard to fiscal year 1996 and fiscal year 1997 staffing,
these were unusual years. During these two years OSTP had long
stretches of time without confirmed Associate Directors. Because
incoming Associate Directors should make the decision on permanent
staffing replacements for departing staff, in many instances Acting
Associate Directors made temporary assignments in order to ensure that
required work got done during the transitions. Many of these temporary
assignments were in the form of short-term detailees, hiring of
consultants, etc. In addition, in most cases individuals currently on
staff were named Acting Associate Directors. These individuals have
salaries that are $10,000 to $30,000 less than the salaries of
confirmed Associate Directors. The combination of unfilled Executive
Level III positions and temporary assignments to enable OSTP to meet
required deadlines contributed substantially to the excess of personnel
funds.
NATIONAL SCIENCE FOUNDATION
STATEMENT OF NEAL LANE, DIRECTOR
ACCOMPANIED BY DR. JOSEPH BORDOGNA, ACTING DEPUTY DIRECTOR
Senator Bond. Thank you very much. Dr. Lane.
Dr. Lane. Thank you very much, Mr. Chairman and ranking
member Mikulski. I very much appreciate the opportunity to
appear before you this afternoon to discuss NSF's budget
request for the coming fiscal year. I join my colleague, Jack
Gibbons, in expressing my appreciation for the very good
working relationship that we have had with the committee under
your leadership and under Senator Mikulski's leadership.
I would like to ask your permission, Mr Chairman, if during
the question session Dr. Joe Bordogna be permitted to join us
at the table.
Senator Bond. We will be happy to do so, and I should have
said earlier that we will make your full statements part of the
record so that you may just touch on what you feel are the most
important items.
Dr. Lane. Thank you. I would also like to submit the
statement of Dr. Richard Zare, Chairman of the National Science
Board, for the record.
Senator Bond. Without objection, it will be accepted.
Dr. Lane. NSF-supported discoveries have a very large
impact on the world, from understanding how plants respond to
diseases, and paving the way to plants that resist parasites
without pesticides, to developing microbes that purify
contaminated groundwater, to using auditory detection
strategies first identified in frogs as models for improving
hearing aids.
The 1996 Nobel Prize in chemistry was awarded for research
that NSF has supported for over a decade on the carbon
molecules known as buckyballs. Today, these NSF-supported
researchers are stringing buckyballs together to create tiny
nanotubes which are 100 times stronger than steel, but only a
fraction--one-sixth--of the weight. In the words of the
Washington Post, these could be the drop-dead superfiber of the
future.
NSF's unique role in support of university-based research
and education across all fields has been found to be among the
most productive of all public investments. One seminal study
has estimated that the rate of return on investments on
academic research exceeds 25 percent on an annual basis,
outpacing even the market over the long haul.
America's system of higher education sets a world-leading
standard of excellence and inclusiveness, yet even this
outstanding system faces challenges in preparing students to
deal with a rapidly changing scientific and technological
world. NSF addresses these challenges by supporting innovative,
systemic approaches to education and training at all levels.
NSF remains committed to delivering the highest possible
returns on the Nation's investments. We have traditionally
maintained a very low overhead rate and have received national
recognition for our commitment to efficiency and productivity.
This past December, NSF became the first Federal agency to
receive the prestigious National Information Infrastructure
Award, which recognizes innovative uses of the Internet and
World Wide Web in business, education, and Government.
Mr. Chairman, our budget request of $3.367 billion will
provide us with resources to continue supporting more than
19,000 research and education projects in science and
engineering. An increase of $97 million, it represents a strong
commitment to research at a time of constrained Federal
discretionary spending.
This increase will enable NSF to pursue several
initiatives, one of which we call knowledge and distributed
intelligence, or KDI. It is designed to push the frontier of
Internet use and development to a new level of capability. It
has not only major scientific implications, but practical
societal benefits as well.
This is a truly remarkable era for research and education
in America. The investments in this request will help ensure
that our Nation gains full benefit from these emerging
opportunities, and that the future brings greater progress and
prosperity to all Americans.
We are struck by the recent commitment by Japan to double
the Government's research and development budget between the
years 1992 and 2000. This is one more reminder that strong
support for research and education is essential if the United
States is to remain a world-leading economy in the 21st
century. How can we expect to compete in the world's aggressive
technology-driven markets if we reduce the very investments in
people and ideas and instrumentation that creates technology?
PREPARED STATEMENTS
Mr. Chairman, I thank you for this opportunity to discuss
the role of the National Science Foundation in ensuring
America's global leadership in science, engineering, and
technology, as well as quality education for all Americans.
I would be very pleased to respond to any questions that
you or members of the committee might have.
[The statements follow:]
Prepared Statement of Dr. Neal Lane
Mr. Chairman, I appreciate the opportunity to appear today and
provide the subcommittee with an overview of the NSF budget request for
1998. For the coming fiscal year, the National Science Foundation
requests $3.367 billion. This will allow us to invest in more than
19,000 research and education projects in science and engineering.
These investments in people, ideas, and exploring the unknown will
guide our future course as a nation and bring new sources of prosperity
and opportunity to all Americans.
If one were to take a snapshot of the U.S. economy today, it would
show a number of key areas driving growth and opportunity. They come
under headings like biotechnology, multimedia, medical imaging,
environmental technologies, polymers, decision theory, educational
technologies, sensors, and opto-electronics, not to mention high-speed
computational and communications technologies like the Internet and
World Wide Web.
Virtually all of these innovations have become widely used within
the past few decades. And while these areas are key to productivity in
a wide array of industries and sectors, from manufacturing to health
care to financial services, they share one important trait--each has
deep roots in the support for fundamental research and education
provided by the National Science Foundation and other Federal agencies.
For example:
--Boeing's new 777 jetliner has been cited as ``the most advanced and
service-ready jet in commercial aviation history.'' Yet, the
777 was designed entirely ``on screen'' bypassing the need for
models and mockups, and saving the company an estimated $100
million. The computer-assisted-design and virtual reality
systems that underlie this important accomplishment can all be
traced to years of sustained public investments in such diverse
topics as scientific visualization, fundamental mathematics,
rapid prototyping, and other areas that cut across the spectrum
of science and engineering.
--On January 2, 1997, a New York Times article on productivity in
business opened with the following passage: ``Dell Computer
Corp. has designed its newest factory without room for
inventory storage. Chrysler Corp. can increase vehicle
production without building new factories. And General Electric
expects to save millions of dollars by purchasing spare parts
over the Internet. On the surface, these are manufacturing
stories. At heart they are among the thousands of new business
practices made possible by technology.''
--If an ordinary citizen were asked to name a field of research that
is unlikely to generate much in the way of discoveries that
would quickly find their way to the marketplace, it would not
be surprising if astronomy were mentioned. But the
determination of precise positions for satellites can only be
accomplished by very long baseline interferometry (VLBI) radio
telescopes fixing on distant cosmic radio sources. The Global
Positioning System that uses satellites to precisely pinpoint
our location at any spot on the globe would be impossible
without such precision. GPS has important applications for the
military, recreation, transportation, and even for reducing the
time and cost of commercial airline flights. GPS is a
multibillion dollar industry that would have been impossible
without astronomical research.
Moreover, the technologies that made possible these new innovations
were in turn made possible by steady and stable Federal support for the
instruments and insights needed to extend the frontiers of physics,
cosmology, supercomputing, manufacturing research, and other areas of
science and engineering that demand the most of new technologies.
Similar success stories abound in today's world, such as bacteria
that munch on oil spills, classroom computers that adapt automatically
to students' strengths and weaknesses, and new chemical techniques that
slash the cost of drug design and development. Each can be traced back
to investments in people and ideas through research and education in
science and engineering.
In this same way, we have great expectations that recent
breakthroughs in fundamental research hold the key to future economic
success. For example, the 1996 Nobel Prize in Chemistry was awarded for
research on the carbon structures known as buckyballs that NSF has
supported for over a decade. Today, these NSF-supported researchers are
stringing buckyballs together to create ``nanotubes'' which turn out to
be 100 times stronger than steel but only one sixth the weight. In the
words of The Washington Post, these could be the ``drop-dead super-
fiber of the future.'' These and other examples bring to life what top
economists have been saying for years: public investments in science
and engineering yield immense dividends to our economy and society.
Furthermore, NSF's unique role--that of supporting university-based
(non-clinical) research and education across all fields and
disciplines--has been found to be among the most productive of all
public investments. One seminal study \1\ has estimated that the rate
of return on investments in academic research exceeds 25 percent on an
annual basis, outpacing even the stock market over the long haul. Other
studies have found an increasingly vital link between our university
research base and the competitive position of U.S. industry. Newly
awarded patents, for example, draw upon current findings from academic
research at a rate never before seen in history.
---------------------------------------------------------------------------
\1\ Mansfield, E. 199. ``Academic Research and Industrial
Innovation.'' Research Policy 20: 1-12. For a fuller discussion of the
rate of return on scientific research, See ``Science and Engineering
Indicators 1996'', Chapter 8.
---------------------------------------------------------------------------
While these examples provide ample testimony to the success of
NSF's past investments, all signs are that they are only the beginning
of what is possible--provided we uphold our nation's position of
leadership across the spectrum of science and engineering research and
education.
As we approach the 21st Century, it is especially noteworthy that
other nations--Japan in particular--are demonstrating a growing
awareness of the link between a strong science and technology base and
a nation's overall economic vitality. U.S. Ambassador and former Vice
President Walter Mondale noted this in a recent editorial: ``One clear
indicator of the seriousness of Japan's R&D efforts is the level of
spending * * *.'' Japan has recently announced a national goal of
doubling its support of basic research over the next five years. This
provides one more reminder that strong public support for research and
education is essential if the U.S. is to remain a world leading economy
in the 21st Century.
NSF FISCAL YEAR 1998 REQUEST: HIGHLIGHTS AND PRIORITIES
NSF's fiscal year 1998 budget request provides NSF with an overall
increase of 3 percent, which would enable the agency to pursue a number
of emerging opportunities that hold immense potential both from a
scientific standpoint and as drivers of future economic growth and
social benefit.
These focused efforts draw upon NSF's strong linkages across all
science and engineering fields, as well as the agency's commitment to
the integration of research and education and to working in partnership
with academic institutions, private industry, and other agencies at all
levels of government.
Knowledge and Distributed Intelligence in the Age of Information
Over the span of a few years, computers have moved from large, air-
conditioned rooms to our laps and our pockets. While in 1980 NSF-
supported scientists and engineers had only limited access to the
highest levels of computational power, today they employ desktop
systems of comparable power and have access to a collection of
supercomputing facilities with capabilities they could only dream about
a decade ago. Over this same period, the number of host computers on
what is now the Internet has leapt from about 200 to over 10 million in
1996--a 50,000 fold increase.
This rise in both power and connectivity has changed the face of
science and engineering, just as it has generated new opportunities for
all Americans. The challenge today is to realize the full potential of
these emerging technologies for research, for education, and for our
economy and society. This era is often referred to as ``the information
age,'' but that heading does not do justice to the possibilities and
opportunities emerging today. The coming age is perhaps best described
as an era of ``knowledge and distributed intelligence''--an era in
which knowledge is available to anyone, located anywhere, at any time,
and an era in which power, information, and control move away from
centralized systems to the individual.
Knowledge and Distributed Intelligence (KDI) is an ambitious
Foundation-wide effort designed to take information, communications,
computing and networking to a new level of technological, economic,
educational, and societal impact. It has the potential to revolutionize
not only U.S. science and engineering, but also the way in which all
Americans learn, work, and interact. It draws on past advances made in
networking, supercomputing, and learning and intelligent systems. In
fiscal year 1998, NSF plans a focused, multidisciplinary $58 million
program of activities in support of KDI research, infrastructure
development, and education that draws upon and reinforces related on-
going efforts totaling approximately $355 million.
For fiscal year 1998, these investments in KDI fall into two basic
categories:
--Multidisciplinary Approaches to Knowledge and Distributed
Intelligence ($48 million). This NSF-wide activity will provide
researchers and educators an opportunity to link diverse
components of the KDI framework, so that advances in one area
work to the benefit of all. This effort will span such
activities as knowledge-based networking, learning and
intelligent systems, and new approaches to computational tools
important to many disciplines.
--Next Generation Internet ($10 million). NSF is a key participant in
the President's 5-year program to move toward the Next
Generation Internet. The agency's role builds on its current
programs of networking, infrastructure development, and
research. NSF's $10 million contribution will be devoted to
participation in a multi-agency program aimed at enhancing
Internet capabilities for research and education at colleges
and universities.
Life and Earth's Environment
NSF has had a strong presence in the life, social, and
environmental sciences for many years, supporting research and
education activities that complement the mission-driven activities of
other agencies. Increasingly, NSF is focusing on how living organisms
interact with their environment, including how humans affect their
environment and vice versa. Examples include microbial diversity and
bioremediation, metabolic engineering and bioprocessing, natural
hazards mitigation, environmental geochemistry and biogeochemistry,
human dimensions of global change, and long term ecological research
sites.
The study of life in extreme environments can provide important new
insights into how organisms formed, and about the range of adaptive
mechanisms which allow them to function. Researchers can then examine
how to mimic such mechanisms for use in situations inimical to human
life such as bioremediation or bioprocessing. This overall effort was
begun in fiscal year 1997 and we will continue to develop this program
in fiscal year 1998, in concert with activities in other agencies (such
as NASA's Origins program).
Educating for the Future
America's system of higher education sets a world-leading standard
for excellence and inclusiveness. Yet even this outstanding system
faces challenges in preparing students for dealing with the rapidly
changing scientific and technological landscape expected in the 21st
century. NSF is addressing these challenges by supporting innovative,
systemic approaches to education and training at all levels, and
especially through activities that link learning and discovery.
Integration of Research and Education.--This core strategy from the
Foundation's strategic plan has emerged as a key touchstone for all NSF
investments. Educating today's students in a discovery-rich environment
will better prepare them to meet tomorrow's challenges. Likewise,
history has shown that research in an education-rich environment yields
an exceptionally dynamic and diverse enterprise. Fiscal year 1998
highlights include:
--The CAREER program (Faculty Early Career Development), which
provides a framework for junior-level faculty to link their
research activities with their teaching and mentoring
responsibilities. For fiscal year 1998 the CAREER program will
grow by 21 percent, to $81 million. NSF nominates selected
awardees for the prestigious Presidential Early Career Awards
for Scientists and Engineers in order to recognize both the
outstanding character of their research and their commitment to
education.
--The REU program (Research Experiences for Undergraduates) will
significantly expand in fiscal year 1998, increasing by 11
percent to almost $30 million. It is one of NSF's most popular
and successful programs, as it provides opportunities for
several thousand undergraduate students each year to
participate in ongoing or specially designated research
projects at sites throughout the nation.
--Integrative Graduate Education and Research Training (IGERT). This
new cross-Foundation activity, funded at $20 million, will
merge features of the ongoing Research Training Group program
in the biological sciences with the Graduate Research
Traineeship program. This experimental effort provides a
flexible alternate approach to graduate education--as was
recommended in recent reports by the National Science Board and
the National Academy of Sciences.
Systemic Reform.--NSF's systemic reform activities are well-
established at the K-12 level, where they will remain a high priority.
Fiscal year 1998 will see the initiation of focused systemic reform
efforts at the undergraduate and graduate levels that will involve all
parts of the Foundation. Experimental activities in fiscal year 1996
and fiscal year 1997--such as the Comprehensive Reform of Undergraduate
Education and the Recognition Awards for the Integration of Research
and Education--have set the stage for an enhanced effort, or more
accurately, the age of Knowledge and Distributed Intelligence.
The Urban Systemic Initiative will fund up to 25 implementation
sites in the remaining eligible cities. In 1996 our investment in USI
was leveraged nearly 4-fold as other Federal agencies, states, and the
private sector committed over $206 million. More than 145,000 teachers
who serve 3.6 million students typically in minority districts in urban
centers have received intensive training in math and science content as
a result of their participation in the USI.
Challenges to Learning.--Just as the information age creates
challenges and opportunities for the research component of science and
engineering, it creates challenges and opportunities for learning.
Formal education systems have changed little while the workplace and
other aspects of life have been transformed and redesigned. In
conjunction with the KDI effort described above, NSF will explore how
individuals and groups of individuals learn, both inside and outside
formal education systems, as well as how technology might be used to
change the patterns of traditional education.
EPSCoR (Experimental Program to Stimulate Competitive Research) is
a Foundation-wide investment pursued in cooperation with state
governments that helps to broaden U.S. capabilities in science,
engineering, and technology. In fiscal year 1998, NSF funding for
EPSCoR totals more than $38 million. Improved linkages between EPSCoR
and other NSF-supported research and education activities is expected
to result in an additional $8-10 million in merit-reviewed research for
EPSCoR states. This funding is intended to enable researchers and
educators supported through EPSCoR to participate more fully in other
Foundation-wide activities.
Facility Investments
In keeping with its core purpose of advancing the frontiers of
science and engineering, NSF is acutely aware of the need for major
research platforms that support the activities of a broad spectrum of
researchers and educators. Fiscal year 1998 will see the completion of
funding for the Laser Interferometer Gravitational Wave Observatory
(LIGO), maintain investments in facility improvements at the South
Pole, and initiate support for the Polar Cap Observatory and the first
phase of the Millimeter Array.
Last month the External Review Panel for the South Pole Station
completed its work and its chairman, Dr. Norm Augustine, presented a
set of recommendations for NSF supported research at the South Pole.
Included in the list of recommendations was that the existing South
Pole Station be replaced with an optimized new station.
Salaries and Expenses
NSF has a well-deserved reputation as an efficiently run agency.
Credit for this belongs to dedicated men and women who have worked
there over the years. But the work is growing increasingly challenging
as the workload increases and the resources for managing the agency
remain flat. Over the past decade NSF's budget has effectively doubled,
from $1.62 billion to $3.22 billion. During that time the number of
participating institutions has grown by 50 percent, as has the number
of proposals submitted for evaluation and review. During this same
period, however, NSF career staffing levels have remained relatively
flat.
Two factors contribute to the agency's success in increasing its
workload with no accompanying growth in personnel. First is the
successful partnership with the research community to provide merit
review for proposals. Last year more than 59,000 experts provided more
than 170,000 reviews of proposals submitted to NSF. The second factor
is the astute use of technology to automate labor intensive processes.
NSF was the first government agency chosen for a National Information
Infrastructure (NII) award for extraordinary achievements and
innovative uses of the information highway for its FastLane initiative.
conclusion
I would like to close with just a brief comment on NSF's efforts to
improve our accountability--to Congress, to the public, and to the
research and education communities that are our major constituencies.
This budget was prepared in accordance with our Strategic Plan. We are
now working to develop performance measurements so that our next budget
submission complies with the Government Performance and Results Act. We
are anxious to have your views on the types of metrics that would be
most helpful to Congress in setting budget priorities.
Today's budget realities require that every dollar work harder and
yield the highest possible dividends. At the same time, the
possibilities and opportunities emerging across the spectrum of science
and engineering remind us that this is a truly remarkable era for
research and education in America. The investments contained in this
request will help ensure that our nation gains full benefit from these
emerging opportunities--and that the future brings greater progress and
prosperity to all Americans.
Mr. Chairman, thank you for this opportunity to discuss some of the
highlights of our budget request. I would be pleased to respond to any
questions that you or members of the committee might have.
______
Prepared Statement of Dr. Richard Zare, Chairman, National Science
Board
Chairman Bond and members of the Subcommittee, I appreciate the
opportunity to provided testimony on behalf of the appropriation for
the National Science Foundation. I am Dr. Richard Zare, Chairman of the
National Science Board and Professor of Chemistry at Stanford
University. I would like to convey to you a bit of the excitement and
value to the nation of the research and education activities that will
be supported by the National Science Foundation's fiscal year 1998
budget request. I will also mention some of the work of the Board in
helping to develop this budget, and in trying to get a better
understanding of the possible effects of any changes in Federal agency
research programs on the broader picture of Federal support for
research.
First, however, I would like to thank the Subcommittee for its
strong support of the Foundation in the past. Your continuing
commitment to a strong national effort in research and education is
extremely important to the NSF as we carry out our various
responsibilities.
The National Science Board is a 24-member body appointed by the
President for six-year terms. We represent a broad cross-section of the
nation's leaders in science, engineering and education, and include
full-time researchers, educators, university officials and industry
executives. Since the founding of the NSF in 1950, the Board has
exercised two roles: that of a national policy body, and that of a
governing body for the Foundation. In many respects the latter role is
similar to that of a corporate board of directors, but as a Federal
entity we operate within the framework of policy guidance established
by the Congress and the Administration.
The Board approves NSF's policies, budget proposals, new programs,
and major multimillion-dollar awards, and generally oversees the fiscal
and management operations of NSF as a whole. We work very hard to make
sure that all of the Foundation's policies, systems, programs and
awards are of the highest quality, incorporate our best thinking, and
reflect the perspectives of the communities we represent.
The budget before you has the wholehearted approval of the Board.
NSF funding is a vital investment in the nation's future. The budget
you're looking at today will provide the means to fund thousands of
worthwhile projects across the exciting frontiers of all fields of
research, and it will fund important efforts to improve the Nation's
education in science, mathematics, engineering and technology.
I would especially like to call your attention to a new initiative
in the area of Knowledge and Distributed Intelligence, which holds
immense potential as a driver of progress and opportunity for all
Americans. This is a new set of investments spanning a wide range of
Foundation programs, including NSF's part of the Next Generation
Internet, and going beyond that, for example, to better link research
in cognition with technologies for teaching and learning. I am so
excited about the possibilities arising from this ``KDI'' initiative
that I wrote an editorial that appeared in Science magazine on February
21. With your permission, I would like to submit the editorial for the
record.
The Foundation's fiscal year 1998 budget also is important for
improving education in science and mathematics at all grade levels.
Aside from the beauty and enjoyment that flows from better
understanding our world, there are three practical reasons for that
education:
First, to educate the workers and entrepreneurs who are able to
understand and use research results and new technological capabilities
to keep the nation at the forefront in today's global marketplace;
Second, to refresh the pool of researchers who can go about gaining
new understanding of nature, who can design novel processes and
products, and who are able to capitalize on discoveries made by other
societies; and,
Third, to give the public as a whole, and especially its future
leaders, a sufficient foundation in science, mathematics, technology
and problem-solving, to make sound decisions about important national
and global issues.
The Board also recently led an effort to revise the general
criteria for proposal review that are used to select projects for
funding in all NSF programs. The criteria have served the Foundation
well, by and large, but they have not been given a comprehensive
examination since the early 1980's, and we think they need at least
some updating to be brought into line with the Foundation's Strategic
Plan.
A task force consisting of the Board members and senior NSF staff,
with input from our proposer and reviewer communities developed new
general criteria. The revised criteria were adopted at our March
meeting, a couple of weeks ago for use for all proposals reviewed
beginning October 1. NSF is getting the word out to the national
research community, so investigators can have the new criteria in mind
as they work on their proposals over the summer.
We are also providing oversight to NSF as it develops methods and
processes to comply with the present and forthcoming requirements of
the Government Performance and Results Act, and monitoring the phase-in
of other legislated government-wide requirements such as the
Information Technology Management Reform Act.
In addition to our close and continuing oversight of NSF, the Board
has a special role in monitoring the health of science and engineering
in the U.S. and in providing advice on national policy in research and
education. We have been discussing ways to give considerable attention
this year to research funding priorities within NSF, in the context of
the overall picture of support by the various Federal agencies.
The world is changing more quickly than ever. Each of us sees the
speed and force of those changes around us every day, in ways that we
perceive as wondrous, elegant and profound--even, sometimes, a little
overwhelming. I need only mention three examples:
--Developing (when it's working) a nearly instantaneous, worldwide
information delivery capability that, among other things, is
promising to cause a revolution in scientific publishing
comparable in its impact to the Gutenberg printing press;
--The ever-increasing use of microprocessors and robotics, from what
you see in the home to those used in manufacturing; and,
--Something that I have a very personal involvement in, namely,
finding possible evidence of primitive life on ancient Mars.
In more down-to-earth ways, we also see, for example, that global
competition in manufacturing continues to grow, challenging our
economic base; and that the public's expectations about combating
terrorism, violence, disease, poverty and environmental problems
continue to rise. Although research alone cannot solve these problems,
it is one of the most important contributors to their solution. Because
the Federal government plays a critical role in supporting the
fundamental research that underlies progress in these areas, it is more
important than ever that a robust and well-considered level of overall
Federal investment in long-term research be sustained.
Strong support for NSF is clearly a keystone of that investment.
And strong support for the research performed or supported by other
Federal agencies, in connection with their missions, is vital as well.
The Board is very concerned about the possibilities for reduction or
compression of the overall Federal investment in research. We are
concerned as well for the possible fate of the various research
programs in Federal agencies whose budgets--indeed, their very
existence--continue to be challenged.
Mr. Chairman, we urge the Congress, when considering funding for
Federal agencies that have science, engineering and education programs,
to do so with explicit regard for the relationships among those
programs across the government and with industrial research and
development. It is important not to take actions that will undercut
areas of science and engineering vital to our national interest.
The Board's efforts over the next few months will center on getting
a clearer understanding of the many linkages within the Federal and
national picture for research so that we will be better able to
visualize or anticipate the consequences of various actions by the
Administration and Congress.
Thank you, Mr. Chairman.
______
Knowledge and Distributed Intelligence
(By Richard N. Zare)
The author is chairman of the National Science Board, which is the
governing body of NSF, and professor of chemistry at Stanford
University, Stanford, CA.
In reading the pages of Science, I have been struck by the stunning
progress being made in science and engineering--new phenomena
discovered, new materials synthesized, new methods developed. What I
see behind many of these exciting stories is the widespread and even
revolutionary use of distributed intelligence that is made possible by
the ``wiring'' of the scientific community. It is more than a time
saver or a communication enhancer; it is enabling us to think in new
ways and its impact on society may be monumental.
Consider this random sampling of newspaper headlines: ``Medical
Schools Use Palmtop Computers to Improve Training,'' ``Web Site Allows
Users to `Handle' Specimens From Smithsonian,'' ``Laugh and Your
Computer Will Laugh With You, Someday.'' There's obviously something
profound going on here, and it is more than just the Internet.
Computational technologies are becoming more powerful and more
portable. We can access more information at greater speeds and with
greater facility than was previously imaginable. We can even remotely
control sophisticated experiments--on a recent visit to the National
Science Foundation's (NSF's) South Pole Station, I watched as
astronomers in Wisconsin controlled an infrared telescope on site. As
these advances in computing and communications coalesce, we begin to
see their full potential for promoting progress in science and
engineering and for driving economic growth and societal gain.
The term ``information age'' probably does not do justice to the
possibilities of this emerging era. This is an age of ``knowledge and
distributed intelligence,'' in which knowledge is available to anyone,
located anywhere, at any time; and in which power, information, and
control are moving from centralized systems to individuals. This era
calls for a new form of leadership and vision from the academic science
and engineering community. We know from countless examples that
academic science and engineering have enabled our society to make the
most of new technologies. We wouldn't have today's advanced computer
graphics systems if mathematicians hadn't been able to solve problems
related to surface geometries. We wouldn't have networks capable of
handling massive amounts of data if physicists and astronomers hadn't
continuously forged tools to look more deeply into subatomic structures
and the cosmos. Chemists' efforts to simulate complex phenomena and
predict the properties of many-electron systems have inspired massively
parallel architectures for computing. And the information made
available by the sequencing of the human genome has caused us to
rethink how to store, manipulate, and retrieve data most effectively.
It will take new insights from studies of human cognition, linguistics,
neurobiology, computing, and more to develop systems that truly augment
our capacity to learn and create. The best may be yet to come.
Despite brutally tight constraints on federal discretionary
spending, President Clinton has stepped forward to champion a 3 percent
increase (uncorrected for inflation) in NSF's 1998 budget. The
president's request is only the first step in the congressional budget
process ahead. Given that the priorities of Congress will almost
certainly differ from those of the president, it will take an
unprecedented level of input and commitment from the research community
to ensure that investments in science and engineering receive the same
strong bipartisan support they have enjoyed for generations. This 3
percent increase would enable NSF to launch a new set of investments
spanning all its directorates. This knowledge and distributed
intelligence (KDI) initiative would promote collaborations that seem
long overdue, such as linking the science of learning and cognition
with the development of technologies for teaching and learning. NSF's
role in the proposed Next Generation Internet project is also part of
the KDI package. This project would create a ``smart'' infrastructure
for research and education at colleges and universities that would
facilitate collaboration across geographic as well as intellectual
distances.
It is clear that knowledge and distributed intelligence holds
immense potential, both from a scientific standpoint and as a driver of
progress and opportunity for all Americans. Knowledge and distributed
intelligence is not just about hardware or software, but about the
wherewithal to change for the better the way we learn, communicate, and
do research.
FEDERAL R&D INVESTMENT
Senator Bond. Thank you very much, Dr. Lane.
First, we recognize the comments made by Dr. Gibbons that
the amount of money is a critically important item. The
discretionary funds have been squeezed because we have not yet
been able to come to agreement on dealing with the entitlement
or mandated benefit programs which threaten to bankrupt our
country.
Until we get that part of the spending under control we are
going to see continued pressure on not only science but other
items funded through the appropriations process, and I am
hopeful that perhaps as early as this week we will see some
evidence of bipartisan agreement that will move us in the path
of getting entitlement spending under control.
SCIENCE AND TECHNOLOGY BUDGET
Let me ask a broad, probably unanswerable question as to
the correct level in science and research development. As you
know, the NSTC put out a report that said 3 percent of gross
domestic product would be a good total investment. The
President's fiscal year 1998 budget shows an overall increase
of some 2 percent. Unfortunately, the entire budget shows a
very significant increase this year with all the cuts to come
in year 2001 and 2002, and that is not going to happen, so we
have additional pressure that I can expect from the budget
agreement.
What would you say is the proper Federal investment in R&D?
How should it be made in relationship with the private sector
investment, and what kind of tests should we be using to
determine this level?
Let us start with Dr. Gibbons.
Dr. Gibbons. Well, there is an interesting dialog going on
now as you know, Senator, that talks about how much should we
be putting into research, and it has been an international
dialog.
The Japanese, in the face of a sluggard economy, decided to
double their Federal research budget as a means of stimulating
their economic growth. At the same time, we have been trimming
ours well below the past historical trajectories.
The study that OSTP carried out suggested that the
traditional level of presently around 2\1/2\, 2.6 percent total
fraction of our national GNP, public and private, goes into
research, and perhaps as we move into the new century it would
be well to ramp that up to around 3, because we are so much
more dependent on science and technology in that future time.
It was not a recommendation, but it raised the question of
whether or not we should not be thinking about what fraction of
our national wealth should we be recommitting to assure our
future.
Now, what we have done in the past several years is try to
assure that at least we are holding on as we all struggle to
get our fiscal house in balance, and so our changes over the
past 4 years have been basically to try to hold on to our
purchasing power, but we have been unable to make the kinds of
historic increases that have been made in the past, when we are
borrowing money from the future to do it.
Now, I would suggest that our first priority, then, is to
hold on to the level of support we have, and to maintain that
support with a reasonably stable environment. We do not want a
lot of up and down in research, because it is very difficult to
plan and carry out research in that way, or to train students,
but that in the long term we might want to talk very seriously
about establishing some kind of a goal in which the research
reinvestments in our Nation would track our economic growth
over the long term.
PUBLIC INVESTMENT IN RESEARCH AND DEVELOPMENT
Senator Bond. Where public investment results in a
profitable R&D result, should the Government participate in a
share of the profits in order to reinvest?
Dr. Gibbons. The Government does clearly but indirectly
profit, because those investments in the private economy result
in taxes on goods and services. That is probably the most
assured and most efficient way of return.
At the same time, there are other measures now when public
and private sectors partner and both invest in a research
project that private investor receives certain advantages in
that intellectual property, such as an exclusive license for a
period of time.
PUBLIC INVESTMENT IN R&D
Senator Bond. Let me ask Dr. Lane to comment on that
unanswerable question.
Dr. Lane. Thank you, Mr. Chairman. Maybe I would just add
to the excellent response Dr. Gibbons just gave that, in
particular in the area that NSF focuses on, namely research and
education activities integrated in a university and college
environment, I think the payoff even for the most fundamental
studies can be immediate and large in terms of educational
benefits, because the students that flow through those
institutions go very quickly out into jobs, careers of various
kinds that take advantage of technological capability that they
get from a university education.
There is a place in which our investment is relatively
small. I think we invest from the Federal budget about $13
billion in academic research compared to a total Federal
investment of $75 billion or so.
I believe that, in deciding how much is enough and
addressing the issue of how you test to determine whether you
are there yet or not, one needs to try to look for those scale-
dependent terms of the equation. The size of our country, the
number of students that flow through our universities and
colleges, for example, and the size of our industry that will
require the knowledge and technology as it comes out of the
companies does make a difference.
So whether it should scale directly with GDP or not I
certainly do not know, but we must make a larger investment
than other countries. It is not enough just to say the United
States is at the leading edge in all of these important fields.
It is at the leading edge right now in many fields. Our worry
is about the future. But there also are the direct benefits
that come out of research activity, and I point particularly to
the educational benefits that flow from our universities and
colleges.
Senator Bond. Thank you, Dr. Lane. Senator Mikulski.
Senator Mikulski. Thank you. Dr. Gibbons, I do not want to
turn this hearing into a NASA hearing by proxy, but I do have a
few questions related to our space program if we would, and
then also to some of the roles directly related to the OSTP.
ROLE OF OSTP IN SPACE ISSUES
In your testimony you outline essentially the role of the
Office of Science and Technology in space. First, I want to
thank you for your role in helping increase space funding so
that we did not have that draconian dip that took us to $11
billion in the out-years and I felt would have decimated it, so
thank you for your very key advocacy role in that.
I want to ask two questions, one about the space station
and the shuttle, and I understand they are interlocked. We are
deeply concerned about the future of the space station because
of the role, of the involvement with the Russians.
There are, as you know, questions raised by both ourselves
as well as our counterpart in the House, Mr. Sensenbrenner,
about what are we bankrolling with the Russians? Do we have
what will then amount to a bailout operation, and if we do, are
we then foraging, taking money out of the space shuttle program
to pay for the inadequacies of the Russians failing to meet
their commitments.
RUSSIA'S ROLE IN SPACE STATION
So now, having said that, let me go to my questions. Where
are we with the Russians? Second, do you think they are going
to keep their commitments? Do we have to have this kind of
backup system, and then if we then are funding two programs
with the Russians and then our own backup to them, what is the
impact on the other NASA budget, particularly the shuttle and
the safety of the shuttle, essentially the Sensenbrenner
question.
Dr. Gibbons. Senator, first of all I want to thank you for
your steadfast support of NASA and the space science
activities. Without that kind of support we would not have
gotten where I think we have gotten today in terms of improving
especially those outyear profiles.
With respect to the station, as you know, early in
President Clinton's first term we decided to try to move toward
a full internationalization of the work and to bring the
Russians into that equation for a variety of reasons, including
their extensive knowledge of space science and engineering and
the capability of their being added to that international
consortium to make a truly extraordinary venture.
Now, we did not anticipate all of the problems that Russia
was going to have, and one never can do that, but clearly they
have run into some enormous fiscal problems here in this past
year or so. They have delivered fully on those things for which
we were purchasing from them, purchasing at a far less cost
than we could have done ourselves. Where they have fallen short
are on the areas in which they promised to furnish at their own
expense certain elements of the space station.
What has happened is that their lack of funds flowing into
their space agency has caused them to be slipping in their
schedule of a couple of important units for the space station.
We want to treat this incrementally because both Prime Minister
Chernomyrdin and at Helsinki a conversation between the
President and President Yeltsin indicated that the Russian
leadership does indeed intend to fulfill their obligations.
We would like to see that happen. We very much want to see
that happen, so we are going to make our moves as required to
maintain the station's integrity, but we will make them
incrementally rather than some sudden decision to walk away
from Russia or some other, I would call it a draconian move.
So our first move is to put a little postponement--well,
not a little, about 6 months of postponement into the launch
sequence of the elements of the station. Second, to provide
some funding to assist in the preparation of an alternative way
to maintain the station's elements in orbit as it is assembled.
This would cause perhaps a $200 million investment which
Administrator Goldin feels he can provide from internal funds
within NASA, the largest portion of them being the fact that he
has so increased the efficiency of the shuttle program that
there are underruns in this year that could provide funds
without any sacrifice in safety with respect to providing some
of this funding. It would need funding some this year and some
next year.
So we are in close negotiations and discussions, of course,
with the Russians on this matter. We would like to move
incrementally. We believe we can do it from within the NASA
budget framework, but that is still a matter to be worked out.
SPACE PROGRAMS
Senator Mikulski. Well, Dr. Gibbons, first of all I do not
doubt the technical competency of the Russians and would rely
on our scientific and administrative teams to evaluate this. I
think the condition, the situation in which we find ourselves
within the Congress makes the international space station
coalition a bit vulnerable. I do not say it is fragile, and I
do not say it is brittle, but I think that there is a very
serious question about whether that commitment, the Russian
commitment can be made.
We understand the Russian contractors themselves would
rather be doing direct business with us than going through
their own country because of the hard currency and actually
cash on delivery, and there is question that if we have saved
$200 million in efficiency, then No. 1, why should not the
American space program, the other aspects, benefit?
You know, we have been through a hard time with buyouts and
drawdowns, all of those anxiety issues that you and I have had
excellent conversations on, and I am very concerned about the
future of the station because every year Senator Bond and I and
others and our colleagues in the House have to mount a vigorous
battle to save it.
SAFETY OF SPACE PROGRAM
I think these are the kinds of things surrounding the
debate that could make the viability of the votes in--I would
not say danger, but I think it could move to a danger zone very
quickly, so I really caution the administration that they will
really need to step forward here and tell us where we are
going, recognizing the delicate international situation.
But we cannot place any American at risk either through
underfunding the shuttle, any American at risk in space without
an evacuation vehicle, and No. 2, that for all of our benefits
in trying to make NASA faster, quicker, cheaper, et cetera,
that then we do not benefit from it in another way, but that
the benefits go to the Russians.
Dr. Gibbons. I firmly agree with that, Senator. I think we
must assure that our safety record be maintained. You know, the
President asked for a review of the shuttle safety system, and
an independent and very expert group did have a look at it and
they are satisfied with the process that Administrator Goldin
has gone through in the shuttle operations.
I tend to think of shuttle and space station both as very
much our human space flight, center of investment in human
space flight, and that in the prime protection here must be
that the safety be assured. In no way will we want to sacrifice
any of the safety moves on the shuttle or the shuttle upgrades,
which I think would be a good way to invest some of this
efficiency, but neither do we want to take away from our space
science work in order to do this.
Senator Mikulski. That is right.
Dr. Gibbons. So we have to be very careful which Peter we
rob to pay Paul.
Senator Mikulski. But you see, I do not want anybody to be
robbed, because we feel we had a deal and the deal is not there
any more.
Dr. Gibbons. That is right.
Senator Mikulski. So now we are providing, kind of like--I
do not want this to be like a space savings and loan bailout
here.
Dr. Gibbons. That is why I was pleased that the President
spoke specifically with Mr. Yeltsin about this issue in
Helsinki.
Senator Mikulski. I am going to yield back to the chairman
and we will come back to the National Science Foundation. As
both the House and the Senate move on their appropriations and
this particular subcommittee I think we really need to have
clarity and specificity about where we are going, and what is
this cost to us for the involvement, and what would be the cost
if we did not provide this backup.
But anyway, thank you.
Dr. Gibbons. Thank you.
Senator Mikulski. I think you would agree this is a big
deal.
Senator Bond. Oh, this is one of many very important things
we need to cover.
STRATEGIC RESEARCH
Let me move on again and ask Dr. Lane, Senator Mikulski
several years ago called for the National Science Foundation to
increase its investment in strategic research, and NSF came
back to us identifying certain areas of strategic areas of high
national priority. These included high performance computing
and communications, biotechnology, global climate change,
manufacturing materials, civil infrastructure systems, et
cetera.
I note that the fiscal year 1998 budget request contains no
discussion nor funding profiles for these strategic areas, and
they are not included in the NSF's list of highlights and
priorities. What happened to them? What were the outcomes of
the investments in these strategic areas, and what happened to
all these strategic areas?
Dr. Lane. Mr. Chairman, Senator Mikulski, NSF is continuing
to support these strategic areas and, in fact, they are
incorporated throughout the budget request, even though they
are not highlighted or pulled together, as you have pointed
out. They really have become part of our day-to-day activities.
For the most part they came from the bottom up, out of the
research interests and capabilities of the community in ways
that most of the outstanding research disciplines and cross-
discipline areas do.
In some cases they were coordinated across many agencies so
as to take advantage of the fact that other agencies than NSF
could contribute in one or another of these areas, and it is
important to make the larger investment greater than the sum of
the parts. Such areas as global change and high performance
computing and communications come to mind. We have expanded
some of our areas, and I will be a little more specific here in
just 1 second, in what we think are particularly timely
directions.
One area that is highlighted in this budget request--it is
our highest priority for new investment and research--is
something we call knowledge and distributed intelligence. It
has a high overlap with high performance computing and
communications, but what it really does is pull in much of the
human side and much of what we learned about learning, about
human learning, about animal learning, machine learning,
putting it all together to try to move the whole computing
networking, communication, and other aspects of information
technology, one whole leap forward.
It is a very exciting area for us. It has an infrastructure
aspect to it. It has a large multidisciplinary research
challenge associated with it, and it is very much highlighted.
As I pointed out, it does overlap substantially with high
performance computing and communications.
We continue to place high emphasis on our other strategic
areas such as biotechnology, manufacturing, and materials. Just
to give you an example of some of these areas, they are all--
the amounts that we continue to track within the Foundation
cutting across the budget--are all well above what they were at
the time of my arrival in fiscal year 1993 and our discussions
in fiscal year 1994. In particular, for 1998 our support for
environmental and natural resources, including global change,
goes up by almost $10 million.
HPCC, a part of knowledge and distributed intelligence,
goes up by $16 million. There is over a $4-million increase in
biotechnology, almost $3 million increase in materials, and
over $20 million in science, math, engineering, and technology
education.
So as we talked a couple of years ago, Senator, about the
evolving nature of strategic areas, you made very clear to me
in our early discussions and in hearings that one would expect
these areas to evolve. Some will mature, some will simply
become a part of the larger program, others will change their
character to take advantage of new technologies, new
capabilities of the scientists and engineers, and that is what
NSF is about.
We still have in place at the Foundation, a high level
management committee called the Senior Management Integration
Group. It exists in order to bring the Assistant Directors of
the Foundation and the other office heads together to deal on a
regular basis with all kinds of crosscutting activities in
research and education, including these areas.
Senator Bond. Dr. Lane, if you will excuse me, that may be
a little more about frogs than we want to know.
Dr. Lane. Oh, I am sorry, sir.
GOAL SETTING
Senator Bond. The problem that we have, since we have a
very brief acquaintance with science quite a few years ago, we
need to be able to understand better what it is you are setting
out to do, and the progress you are making.
When you come up with a whole new set of schemes and ideas
and come forth with a brand new program, they all sound good to
us, but as we proceed in the budget process we have to have a
more definable area as to what your focus is going to be, how
you know whether you are making progress in that area, and so
we can when challenged on the floor tell our colleagues that
here are the high priority areas, and this is the progress.
I know in basic research it may be 20 years before you come
to a final result, but we had better be able to find some way
to explain to lay persons, who at least 99 out of the 100 are,
whether we have made any progress. Are we getting there?
We are most impressed with and supportive of the scientific
skills and knowledge you bring, but in the budget process we
need specific things like an ability to say, well, we are
getting these results. This, I think, is a problem that we
face.
We need to have a common framework of projected goals that
you can explain to us in simple enough terms that we can
understand and share with our colleagues, and so next year when
you come back you can tell us either, (a) we met the
milestones, we met the guideposts, or (b) we didn't, and here
is why not.
I would welcome any comments you might have. How can you
tell us in concrete, definable terms what it is you are doing?
MEASURING THE IMPACT OF RESEARCH
Dr. Gibbons. I might just add a vignette. I think as you
understand, and Neal Lane has pointed out, the closer you get
to the fundamental science the tougher it is to do this thing.
You can look at the number of Noble Prizes, you can look at
citation indexes in peer-review journals, you can look even
farther back at that stream or flow of research into satisfying
national needs and concerns, and all those look like pretty
good numbers. The question is, how can one put this in a
tighter framework?
There are some areas, for instance in the development of
supercomputers, in which goals have been set. The teraflop was
a goal that was established. Just last year it was met and
exceeded ahead of schedule, if anything, so there are those
particular areas where one can identify and put down a marker
and then measure against it in a much clearer way.
I think there are some interesting markers coming up, for
instance, that have not yet been defined, but one marker is can
we continue this extraordinary improvement in semiconductors
and microelectronics called Moore's Law, which says roughly
every 3 years you have the cost of the chips, and the question
is, how long can we continue that before we run into some real
limits of science, and, therefore, what are the areas of
science most needing advancement in order to be able to
continue on that curve?
GPRA
Senator Bond. Dr. Lane, did you want to comment on that?
Dr. Lane. Yes, Mr. Chairman. Let me add that we really
think this is how we should be thinking about the results act
for the investments that are made in science and engineering by
the National Science Foundation. We need to be able to identify
clearly stated objectives that we can agree on which will
provide a basis to evaluate how well we are doing, and we, in
fact, are working on that very hard. It is not so easy to do.
Perhaps it is not easy for anyone to do, but it is
particularly challenging in the area of fundamental research,
where quantitative measures are not likely to be very helpful,
and where even qualitative descriptions might only provide
guidance over some period of time.
So for example in our budget, we report examples of major
advances in one or another field of science, any of which
overlap. Biotechnology for example, where plant communication
and response to attack is an interesting area. Our progress on
unraveling the genome of Arabidopsis, a little mustard plant,
makes progress here.
There is much that we could have described about materials
and manufacturing and many other areas. That is our challenge,
to try to identify a descriptor that will satisfy your needs
and our needs to measure our progress.
Senator Bond. Clearly I do not have the ability--I speak of
myself--to establish clearly what the milestones and guideposts
are, but we need to have those from you in ascertainable terms
because I assume that you do not just throw money out in the
hope that 20 years later something good is going to come out of
it. There has got to be some kind of measure, and that has to
be explainable.
That may be the toughest thing explaining it to people like
me, but to continue to support it we have got to have that kind
of promise, performance, and report on the progress.
Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman. You have really
covered my questions on both the strategic initiatives and the
so-called Government Performance and Results Act, known as
results act, so I will not go over that ground.
I just want to affirm that my position is that Government
is not involved in commercial research, and so I am going to be
very clear when we talk about strategic research that
Government really helps by both directing and then leveraging
in other areas the precompetitive research, the basic
knowledge, but that we are organized around these strategic
goals which we know this century demands.
YEAR 2000 COMPUTER DILEMMA
However, I do believe that both the Office of Science and
Technology and NSF could play a role in solving a juggernaut
problem that is presenting itself to us, and that is, what
happens to all the computers in the world when we hit 2000, the
so-called year 2000?
I wonder, as part of the science and technology role, and
then really where so much information technology is developed
through the NSF and I believe NIST have really been the two
agencies most responsive, what is the White House role and the
NSF role in working to come up with a solution that has
enormous ramifications for not only the public sector but the
private sector, or should we say do it the American way and
offer a $1 billion, or a prize to anybody in America that comes
up with it?
Dr. Gibbons. That is the best idea I have heard in a long
time on that issue, Senator, the one you just mentioned. I
would like to respond to that, but may I do just a postscript
on this assessing outcomes of research, because I think it is
really important.
There are two things I should have mentioned to you. First
is that the National Science and Technology Council, with OSTP
and Neal Lane's direct involvement, completed a study last year
called Assessing Fundamental Science. We are now using that
report with the agencies in their preparation for the GPRA, so
we hope we are sharing wisdom across the agencies.
The second point I should have mentioned is that at the end
of each of the chapters in our biannual report on science and
technology is a discussion of the accomplishments over the
previous 2 years, so it gives at least a benchmark for that
progress.
Now, with respect to the year 2000 issue, which is what
happens when you get the double zeros and the computers do not
know what to do about it, there is going to be no magic bullet,
but it was a uniformly missed concern in programmers throughout
the years in thousands of different programs about how to
handle the double zero. Each program has to be reviewed
technically, so across Government as well as the private sector
there is a sharing of experience.
ROLE WHITE HOUSE HAS IN SOLVING YEAR 2000 ISSUE
Senator Mikulski. Are you all taking the lead? In other
words, who is taking the lead?
Dr. Gibbons. Well, the lead within the White House I
believe is both the National Economic Council and OMB because
it is more a business and programming issue than it is a
science issue.
Honestly, it is not a science issue. It is an issue of
having not thought very well in advance about these programs as
we get to the millennium.
Senator Mikulski. Where is the solution going to come from?
Dr. Gibbons. The solution is going to come--Neal may have a
special one for you, but I would say the solution is going to
come from a number of innovative approaches to fixing these
programs and records so that there will be minimum problems as
we cross the millennium. It is happening all over the world. It
is not just a U.S. issue.
Dr. Lane. Excuse me. May I add a comment, Senator?
Senator Mikulski. Yes.
YEAR 2000 ISSUES
Dr. Lane. There are millions of lines of computer code all
around in businesses and governments, and somewhere buried in
there is a statement that deals with this issue of how to
handle the flipover, and it has not been dealt with in much of
that code. There really is no magic way to get into all of
that. We are focusing with OMB in making sure that our agency
does not have any problems, and I am assured by my Chief
Information Officer that we are on schedule with that, but it
really is not a research problem. It is not an area where the
National Science Foundation or other Federal agencies can
somehow support research that will take care of it.
All of us who deal with computers are just going to have to
find these problems before the time happens.
Senator Mikulski. I find these answers dismaying,
gentlemen. Everywhere I go in my own State and even outside,
talking with people, this is one of the No. 1 issues facing
business, Government, academic centers, et cetera, what is
going to happen with this so-called flipover, as you said, that
could throw us into chaos, and there is enormous concern from
the private sector about this.
I can go on where the concerns are, and just as there has
been a missing of the problem, there seems to be a missing of
the solution, and I am somewhat surprised--I do not know if my
colleague shares it--that there is not a one-stop shop within
our own Government that wants to take the leadership in helping
deal with this issue, and it might not be research, but I do
not know, then, what it is.
To say it is a business problem, it has horrendous
implications for national defense, our encryption, our
banking--it goes on. I could name so many different sectors,
and frankly, I think this is where the United States should be
playing a role in global leadership and global cooperation.
I know it is a global problem because computers are global,
but if we are going to have all these, let us wire schools, and
let us do Kid Net, College Net and so on, unless we deal with
the year 2000 issue we are truly going to be in a global
meltdown.
Dr. Gibbons. Senator, I agree with your statement of the
importance and the pervasiveness of this problem. The
frustration is, as Dr. Lane points out, it is buried in some,
however, mundane computer line codes down in all of these
various programs. Each agency--for instance, the Department of
Defense, Social Security----
Senator Mikulski. Are you telling me each agency is going
to have to solve its own problem, that each business is going
to have to solve its own problem?
Dr. Gibbons. They are going to have to solve their own
problems, but hopefully we will be able to share, and this is
where I would like to pick up on your comment, share on each
other's experience, and I promise you that when I get back to
my office this afternoon I will look into the extent to which
appropriate sharing of innovative ideas or progress is being
made.
I have not focused on this recently, but you have gotten my
attention for sure.
YEAR 2000 FLIPOVER
Dr. Lane. I am aware that OMB has thought through the
phases of activity, advising all of the agencies to go through
this process, and they are scheduled for that, and we are on
that schedule. I am sorry that I do not have those things with
me today, but OMB is at least playing a very important role
here.
Senator Mikulski. What role do you play?
Dr. Lane. Our role is to ensure that we follow those
guidelines and make our whole system work.
Senator Mikulski. Are you helping to write the guidelines?
In your testimony, Dr. Lane, you talk about how you are one of
the premier agencies in funding information technology
knowledge and sharing your networking and micro this and
parallel that, and I am not minimizing this. I do not want this
to be a cranky hearing, but if you aren't, then what the agency
is, are you in the room? Are you helping them solve the
problems? Is there a sense of urgency? Is there a collaboration
here, or is it OMB?
I know--you know, I really do not feel comfortable with OMB
being the lead agency. They are management and budget of this,
and given the way every single agency in the Federal Government
that even buys information technology squanders its resources,
we have no leadership advising the agency on what they should
even buy now.
NEED FOR BETTER COMMUNICATION/COORDINATION
We could go to IRS, we could go through every--the veterans
and what they buy, et cetera. So do we need a White House Chief
Information Officer that does all that and tells these agencies
what to do? That is another topic.
But now, there is one issue that the world knows that it
will face, that there will come a year 2000, and all of the
computers in the world are going to have a problem, every
single computer in the world is going to have a problem, and
all dependent on it are going to have a problem. Well, maybe
not every single--I mean, you are shaking your head.
You know, I am a generalist here. I am on five
Appropriations Committees. I am on two other committees. We
work on FDA reform. We really rely on you.
But I am really relying on the United States of America to
have (1) a sense of urgency, (2) a one-stop shop that we are
coordinating this, that this is not a management issue, it is a
serious technology issue, and the guidance that we can offer
the world and that we can gain from other thinkers in the world
I think is absolutely crucial, and obviously the sense of
urgency I feel from the private sector and other local and
State government agencies is not what is felt.
Do you share this view or not?
Senator Bond. Senator Mikulski, when we talk about computer
technology my lack of knowledge is infinite, and as one who
still relies on a Rolodex----
Senator Mikulski. And under Moore's law, that will multiply
manyfold.
Senator Bond. Well, I carry these things around, so really
my own personal life is not going to be much more difficult if
I get to 2000, because I will just get a brandnew card with the
knowledge on it, but from my very limited understanding----
Senator Mikulski. But it is going to say 1900.
Senator Bond. Not mine. Not mine. [Laughter.]
YEAR 2000 FLIPOVER ISSUES
Let me ask you two gentlemen to collaborate and do one
thing for the ranking member and me. It seemed to me--this is a
humongous problem that is going to afflict everybody who uses
computers, generations younger than me and those who are into
the computer age.
It would seem to me that this is a problem in applied
technology and programming that is not rocket science but it is
very complicated real time technological unscrambling of
something that has been scrambled.
There may be some high-level scientific input that is
appropriate, but it seems to me that there may be a technology
body or a technology focus that would be the appropriate one to
coordinate the efforts, that it may be a different level of
science, and rather than continuing it, if you would all just
send us a very brief memo, two pages, who is going to do it and
what you see as the resources and needs on it. We would like to
have something.
[The information follows:]
Year 2000 Computer Concerns
There appears to be no generic solution to the Year 2000 problem.
The reason is to be found in the economics of and practices used in the
early days of widespread computer use.
In order to save on what was then very expensive memory (which in
the mid sixties cost about $1/byte, compared to the present cost of
roughly $0.000005/byte, which equals $5/megabyte), many business and
other systems coded the year as two bytes or in some cases at two
digits in one byte. This served immediate purposes well and at an
acceptable cost. The standard procedure for determining which year is
earlier consists of subtracting the old year from the new and testing
to see if the result is positive. Once again, to speed up the operation
on relatively slow computers or to save memory, many codes did this
``in line'', i. e. the instructions were imbedded in the instruction
stream to be used whenever needed. Such calculations could occur dozens
of times in a business system.
An additional problem arises because of how many ``legacy systems''
were programmed. In the 1960's and 1970's many applications were coded
in assembly language, specific to a given processor type. The primary
reason for this was to obtain maximum performance on slow systems.
Difficulties in addressing problems arise because this kind of code is
difficult to interpret or read. Further, in many cases, the processors
in question no longer exist, although the code is still running by
emulating old processors on new ones. Moreover, many organizations did
not put into place adequate means for maintaining software.
This complexity and diversity is what stands in the way of a
broadly applicable procedure for resolving the Year 2000 problem. The
result is that in legacy systems many of the problem sections
associated with the date comparison must be found by hand in a
laborious fashion and the results tested as comprehensively as
possible. Such actions will, in the case of more modern software,
especially that produced by third parties and widely used on standard
architectures, be easier to fix.
GENOME STUDIES
Senator Bond. But let me move from these wonderful broad
generalities down to the specific. I mentioned the corn genome
project. We have had tremendous growth in technology in
agriculture, more food, healthier food, less expensive, more
nutritious, and we are going to continue to need to do that
with more people on less land.
One hundred years ago, 60 percent of our population was
engaged in providing food. Now, maybe 2 to 3 percent is. An
acre that produced food for one person in 1960 now produces
food for two and one-half today, and biotechnology, plant
genetics and specifically, I believe, carrying the work from
the mustard plant on to the corn plant is going to be one of
the significant steps that we take that will benefit all of
agriculture.
We know that Japan is deeply involved in mapping the rice
genome, and rice may be appropriate for them, but when they get
the mapping done on the rice genome they are going to be in a
very significant competitive position to expand that into other
grains, and it seems to me that No. 1, I know there are a
number of groups in the private sector, there are a number of
disparate efforts underway on this project.
I would like to have your honest opinion, and if you think
I am wrong, please tell me. I promise no retaliation. I just
want to know, is this from a scientific standpoint as
significant an effort as I believe it is? If so, what role
should the NSF and Government science play in this?
If it is important, what is the best way to organize it and
manage it so that all of the different efforts are brought
together in a consistent and productive and complementary
fashion?
Let me start with Dr. Gibbons and go to Dr. Lane.
Dr. Gibbons. Mr. Chairman, I applaud your interest in this.
The whole food genome is now, in the current decade, ripe for
major advances in understanding, and I think we have a lot of
lessons to learn from the human genome project, which is
working very well. It is achieving its goals. It is reducing
dramatically the cost of sequencing and the like, so other
things become less costly than they would have been.
At the same time, in approaching corn, which presently is
mostly the subject of research at USDA--I think they are doing
the majority of the work at this point--corn has to be taken in
the context of the other grasses, because you might learn
faster and cheaper about corn by working on some of the grass.
We are not quite sure.
So I would suggest that we push ahead on this notion of the
food genome program, which would inherently be best done as a
multiagency activity. Presumably USDA leads, but we know that
NSF, USDA, Department of Energy, all are, and obviously the
health agencies, are all pretty well working together now, and
if we could focus this and take the best of the capabilities of
each of these agencies in a food genome program, that would be
the best way to get there.
I do not think we can do it, as I think you intimate, with
existing funds. It will probably take some additional
commitment of funding to do this.
Senator Bond. Dr. Lane.
Dr. Lane. Mr. Chairman, I also commend your interest in
this area. Undoubtedly, understanding the genomes of plants is
going to continue to be very important for agriculture.
ARABIDOPSIS GENOME PROJECT
Let me say a word about why we have focused on the mustard
plant, arabidopsis. There are very good reasons for it. First
of all, how are we doing it? It is an international project.
There is an international steering committee that we are
involved with in countries in the European Union, United
Kingdom, France, and in Asia, Japan, working together on this.
Why did we choose this mustard plant? Well, one of the
unique things about this plant is that its genome is the
smallest, as far as we know, of any flowering plant. So, if we
can sequence the genes in this plant we can gain the tools and
the understanding that will then enable us to do things with
other plants, to transfer properties, and in time to realize
the benefits over a larger class of important food plants and
other plants that benefit people.
How much simpler? Well, the genome size is 100 million base
pairs. For corn and for humans the number is approximately 3
billion base pairs, so corn, while I think corn is terrific,
and it does not look a lot like a human, on the other hand it
has got this extraordinarily complex genome.
So our approach is to understand a plant that replicates
itself very fast and that flowers rapidly. It is not of any
commercial value, so an international partnership is very easy
to form. Nobody is worried about intellectual property on the
mustard plant, and the partnership has worked extremely well.
The tools we get from that plant are going to help us in
many, many ways in trying to understand the genomes of corn and
wheat and barley and rice, and I agree with Dr. Gibbons that
the way to get at some of these others is through many
agencies' involvement and perhaps international activities,
where we can forge those partnerships.
We think that our investment is the right way for NSF now.
It is an active partnership that ought to deliver the full
genome for arabidopsis around the year 2002. We are requesting
about $3 million in 1998 to continue this work. It is being
carried out by a couple of consortia, one of which involves
Washington University in St. Louis, and one organization doing
this work is the Institute for Genomic Research in Maryland.
Senator Bond. Those are very well chosen examples.
[Laughter.]
Nice target on the examples. [Laughter.]
Dr. Lane. It really turns out that there are two consortia
and two institutions. One of the consortia involves Missouri,
and one of the institutions is in Maryland, so I just think it
shows there is wisdom in those States at least. [Laughter.]
Senator Bond. I am always struck by your farsightedness and
your intuitive sense of what is important. [Laughter.]
FUNDING FOR AGRICULTURAL RESEARCH
As we speak, the Under Secretary for Research Education is
testifying before the Agricultural Appropriations Committee,
and I intend to submit a question over there asking whether
funding should be included in the fund for rural America
instead of excluding it, but there are a couple of points I
guess I ought to make.
We talked abut the USDA, and I have supported much USDA
research, but applied practical research on things like dealing
with soybean nematodes, some practical applications, and the
Food & Agricultural Policy Research Institute does economic
research. The fescue problems in feeding cattle are really the
strong point of research in the USDA.
But we know that there is currently research going on in
this area, and what I am concerned about is that there is
significant resources being put in piecemeal. There are
uncoordinated, underfunded, proprietary limits. There is some
redundancy. It is unfocused.
Now, I recognize and I strongly support that private
funding should be utilized extensively to the greatest extent
possible, but there ought to be some way through your agency or
agencies that progress, or the paths could be coordinated so
that at least someone would have an idea of where progress is
being made.
POTENTIAL CORN GENOME STUDY
The reason that we focus on corn, and I recognize that it
is a second step, or something like it is a second step after
the mustard plant, is that it is our highest value crop. It is
our most exported crop. Scientists say that of the cereal crops
it makes the most scientific sense to begin with corn. That is
what the experts have told us, that you ought to begin with
corn because you can move from there.
They have told me that doing corn would yield the most
information on other cereals, and the industry itself is coming
forward with a business plan and they are willing to bring in
resources and organize major funding for it, but if it is more
appropriate to begin a 5-year plan to map the genomes of other
cereals, if that makes more scientific sense, please let us
know.
REQUEST FOR INTERAGENCY MEETING
I would ask--maybe Dr. Gibbons you would be the appropriate
one--if you and your staff could arrange an interagency meeting
with the appropriate agencies and departments, including NSF
and Energy and Agriculture and NIH, to lay out not only for us
but for all those who are interested in what an appropriate
strategy would be.
Scientifically, how can we make the most progress where
there will be benefits to agriculture and to all of us who
enjoy the benefits of agriculture--i.e., we eat--in this area,
the mapping of the genome, whether it is corn or whether it is
all cereals, and give us a game plan that we can understand and
that the private sector can relate to, provide input to, and
provide assistance and research.
Is this something that would be appropriate for you or for
the NSF?
Dr. Gibbons. Absolutely. I would be pleased to put together
an interagency working group on this, Senator, and get as early
as possible feedback to you on an interim basis of what we
would suggest as the most appropriate and efficient way of
going about this as a Federal family, also keeping in mind that
we should look for partnerships with the private sector and
perhaps the States on this as well.
Senator Bond. Well, clearly there will be just for one
example the University of Missouri has a very well recognized
program, Food for the 21st century, which has brought together
tremendous scientists with plant biotechnology skills and the
universities and the State government has supported it very
strongly.
I think that there are resources out there. You are the
ones to take the lead in identifying how to use those
resources.
Dr. Lane, a comment on that?
Dr. Lane. Mr. Chairman, I do not know what the right thing
to do here is. I think the outcome is very important. It may
well be that we need to understand the series of grasses
better. After we go from the mustard plant, then it might be
that an intermediate step before going to a genome as
complicated as corn is the proper strategy, but I am not sure.
I think we certainly look forward to participating with
other agencies in this discussion and getting the best advice
of the scientists in the country, and then there is excellent
fundamental research to be done here, and NSF would expect to
be part of it.
FUTURE OF GENOME STUDIES
Senator Bond. Could you give me an idea--it is going to be
done by somebody somewhere. A cereal is going to be--the genome
is going to be mapped. What are the benefits? What will happen?
What do you see as the likely area of benefits when the job is
done for something more complicated than the mustard plant,
whether it be the rice genome in Japan, or a cereal genome
here? What is likely to come from it?
Dr. Gibbons. Well, it is very hazardous to make guesses on
areas like this, but I am getting old enough to not be worried
that much about it, so let me make a few guesses.
Senator Bond. Good. Good. Nobody will hold it against you
if you miss this one.
Dr. Gibbons. Corn probably has at least one-half as many
genes in it as people do. It is a very complicated plant, but
those genes do various things. They turn on and off things.
They make various proteins that cause various things to happen,
and if we could learn the structure of corn we can figure out
from other research how we might be able to insert, for
instance, the capability of corn--and these are going to be
wild guesses, Senator, but sometimes it helps. How to insert a
gene that would enable the corn to be even better in terms of
its protein production. You know, corn is typically lysine
short and maybe you could figure out how to get lysine in the
corn.
The second thing is how to maybe make corn perennial. There
are primitive corn plants in Mexico that are perennial, and
that would change very much the situation with respect to corn
growing. It is a long shot, but that is a question.
Another question could be corn that would attract microbes
to its roots and enable it to fix nitrogen, like our legumes
do.
Senator Bond. Clover and legumes.
Dr. Gibbons. These are wild stabs, but those are the sort
of things one would look for after we come to understand the
structure of the corn genes, their functions, and how one might
be able to manipulate by bringing in certain special functions
into the corn genome.
Senator Bond. One of the items suggested to me was by
making corn more digestible you would make it a more efficient
feed for cattle and eliminate the environmental problems which
always draw laughs on the floor of the Senate when discussed as
being a significant environmental problem as a result of the
indigestibility of corn that is fed to many of the herds.
Dr. Lane, any thoughts that you would like to offer on the
higher noble uses of the corn genome?
Dr. Lane. Well, Mr. Chairman, I think the examples that Dr.
Gibbons gave are excellent ones, and we will want to check back
down the road to see how well he did.
Dr. Gibbons. Uh-oh.
Dr. Lane. I think an obvious thing that we are interested
in, in the cases of all valuable and useful plants, is disease-
resistance, and we want to be able to make these plants
disease-resistant in a way that has the least damaging
environmental impact to the plant itself, other plants around,
people, animals and so on, so it is a clear area in which I
think researchers will be looking.
I like chocolate a lot. I do not know if there is any way
to change that substance.
Senator Bond. If you could make it less fattening, I am
with you on that one. We will have a special set-aside if you
find a solution to that one. [Laughter.]
I do not want to get into your business, but if you give me
a promising area there we will steal money from some place to
make that happen, to make that nonnutritive but delectable.
EXAMINATION OF GOAL SETTINGS
Let me just ask, let me go back to my questions about what
we are doing, and how we are going to get there. There are two
things you have talked about, knowledge and distributed
intelligence, and life and Earth's environment. Would you try
to explain to me briefly what you are doing in each of those
initiatives, why you chose them, and precisely what mile
markers, guideposts you will set out for us to tell us whether
you have been successful in the progress that you propose or
expect in these two areas?
Dr. Lane. Mr. Chairman, if I could just make a comment, I
would like my colleague, Dr. Joe Bordogna, who is Deputy
Director of the Foundation, to add his comments. He chairs the
senior staff group that, in fact, developed the programs in
these interdisciplinary areas, and I would like to get his
comment on those.
There are two things about them. First, the research that
falls within the interdisciplinary areas really does arise out
of the community. It comes from what scientists are interested
in and what they can do, and the advances that they have made
in recent years.
What they have begun to see is a commonality of interests
across all fields of science in information, science and
technology, and we are going to build on that because we see
real benefits not only for the science itself but benefits of a
more practical nature. Education clearly relates to these
advanced technologies that are coming out of KDI.
The second thing I would say in terms of the objectives and
matrices that we will use is, we are working on those. Those
will be a part for the long range of our strategic plan that is
due to OMB this fall. The particular objectives for the fiscal
year 1999 will be a part of the submission of the 1999 budget,
as required by the act, so it is a work in progress, and we
will give you as much information on how that is going as we
can.
Senator Bond. Do not bury me with information. Just give me
something that is clearly understandable, because if I have to
defend it on the floor I am not going to be able to give a \1/
2\-hour speech. I need to have just a simplified explanation of
what it is all about, why it is important, and how we know we
are getting there.
Dr. Lane. Let me ask Dr. Bordogna to start.
Senator Bond. That is very simple, and you have 90 seconds
on each one. [Laughter.]
KNOWLEDGE AND DISTRIBUTED INTELLIGENCE
Mr. Bordogna. We are not wedded to this term, knowledge and
distributed intelligence. It is the moniker at the moment,
because this is something at the edge of the knowledge base,
but there are two pieces to it.
Distributed intelligence is a term we use because we can
now, more and more of us individually, access knowledge from
any place, any time, anywhere. That is a strength the United
States has. We would like to enable more people to be able to
access it, and when they access this information it is more
facile to get it.
It is very complicated to interface with a machine now, or
a keyboard. Wiring the school is good, but once you have the
interface with the students, how can they access this
information and learn from it better?
The knowledge part means, can we create a whole new
knowledge base for doing things differently? For example, in
the strategic area of manufacturing, we have done a lot of
things there the last several years to move that strategic area
ahead. Five of the last six engineering research centers in the
last couple of years deal with manufacturing.
One of the key issues there is using information to make
manufacturing less expensive to do, be more competitive in
world markets. Can we, for example, take this Moore's Law that
was talked about--yes, we can get more in a small space. That
creates a new problem of packaging things better, and that
needs a knowledge base for doing that.
Manufacturing is done in many places from anywhere at any
time, and having a broadbased infrastructure that is
intelligent as well as having the Internet can be helpful for
that.
Another piece of this is what we call learning and
intelligence systems. The idea there simply is, can we augment
a capacity for each of us, at any level in life, not just
professionals but everybody, to learn and create more
efficiently? Can we work smarter in this? This is a key basis
of distributed intelligence, increasing the knowledge base of
everyone to do things better, including craftsman, carpenters,
plumbers, and well as professional people.
On the high end, we will do our research differently and
more efficiently. We will share resources around the country.
One of the problems we have in equipment now is that the
equipment need to push back the frontiers of knowledge is
increasingly expensive. You cannot have it repeated in many
universities. We have to share this infrastructure equipment.
Having a knowledge and distributed intelligence infrastructure
will enable us and enable our clients, in a sense, the people
we support, to share instrumentation, to be able to do their
research better.
A nice neat aspect of this is with regard to the EPSCoR
effort. Many States and universities cannot afford the
equipment needed, but with this kind of system they are going
to be able to access it everywhere.
We have a cute term called collaboratories, collaborative
laboratories, collaborative meaning working together.
All of this is coming together. We are trying to integrate
all of that to lift the knowledge base to a level where people
can work smarter, and a greater range of people can work
smarter. We can also change, perhaps, the paradigm of
education.
One bottom line here is that life and society as we have
known it so far is essentially entity-based, companies,
schools, and so on. All of this is enabling this whole effort
to be human-center based, where the individual is empowered
better.
So knowledge and distributed intelligence, in summary, is
the ability to get knowledge anywhere, any place, at any time.
The knowledge part lifts the knowledge level of everyone, and
lets us work smarter. It provides a certain competitive
advantage against the rest of the world, and it also enables
progress in all the strategic areas that were listed in the
last several years. It is going to help us move ahead.
SUCCESS INDICATORS
Senator Bond. I agree that is noble. It is very important.
Next year at this time how will we know if you have made
progress in that area? How will we make sure that you have not
just blown the money?
Dr. Bordogna. Well, I will give you some examples. That is
the best way to do it. Let us take manufacturing. Some
strategic areas have been brought up. Let me relate it to that.
Right now, the interagency effort in manufacturing, which
is still extant, is into a new way of looking at manufacturing,
and that is, now that we have distributed intelligence, now
that we have a high-speed network, now that we can enable even
small manufacturers to get access to the best ways of doing
things, we can measure next year, whether new engineering
research centers arise, for example, because of this effort.
Five of the latest engineering research centers arose
because of the strategic effort in manufacturing. We did not
spend extra money. We reoriented the investment in engineering
research programs to these new issues.
Another example would be if we were able to take the wiring
of the schools, for example, and we could see that students are
learning better, that their scores are increasing, for example.
These are measures of how to ensure that this infrastructure
base is really moving us ahead.
LIFE AND EARTH'S ENVIRONMENT
Senator Bond. All right. I would be interested to see, and
I would ask you to submit for the record what you think these
markers would be, and then suggest that next year we get a
report on which of the markers have been achieved, or whatever
markers there may be.
Life and Earth's environment, just a quick synopsis of
that. Not that it is not rather broad.
Dr. Bordogna. We are trying to do two things here. One of
the things that has happened over the past few years is that a
lot of new knowledge has been created on how life is formed,
where do we come from, and many, many venues of research. That
is an important issue. We are at the cusp of learning a lot
very, very fast.
The environment is an issue. The environment is a concern
because we have to live in it, and so on, so life in the
environment on the Earth is an important issue for NSF, and we
are trying to couple these two things.
From an environmental point of view, we have really two
issues there. One is to ensure that the environment is
sustainable as we know it, that we can somehow get into a
system of producing wealth while not impacting the environment
obviously. We also want to be able make wealth out of that
activity, however, so one of the issues we have a very serious
interest in at NSF is how to avoid harm to the environment in
the first place.
It is a very technologically based kind of thing. Can we
apply technologies to the processes that we use in life to
create wealth and lift our standard of living, while at the
same time creating businesses out of that so that it can be
wealth created out of the idea of working with the environment.
The bottom line here is that we are trying to connect the
issues of where life has come from, understanding that well,
with all of the ramifications that means for our progress and
health and so on, with sustaining the environment so that we
have a livable society.
[The information follows:]
NSF Initiatives in Knowledge and Distributed Intelligence (KDI) and
Life and Earth's Environment (LEE)
NSF's initiative in Knowledge and Distributed Intelligence (KDI)
addresses the question of ``what's next for the computer-communications
revolution?'' We have already seen advanced information technologies
transform how research is conducted. We have glimpsed how they can
dramatically improve teaching and learning in schools and classrooms at
all levels of education. We have seen the Internet grow into a
veritable global village. We have even seen a supercomputer crowned
champion of chess.
In fiscal year 1998, NSF plans to initiate its targeted KDI
program. We will issue focused program solicitations in specific areas
of research, based on workshops currently being held. In the first year
of this program, NSF will support scientists and engineers, selected
through the merit review process, to begin working in focused,
multidisciplinary areas, on problems such as those described below.
Through this first KDI competition, we will gain a better sense of the
range and type of questions that researchers consider most pressing,
while enabling researchers to begin working on those problems.
After the first year of KDI, we should be able to show that NSF has
indeed funded important research projects in this area. We should be
able to describe, both generally and in detail, what those projects
are, what they are setting out to accomplish, and what the priorities
for research within KDI are. Through review of the merit review
process, we should be able to show that the projects selected for
funding are competitive and of very high quality. We will also be able
to demonstrate the outputs of NSF's processes--numbers of proposals
received, awards made and people involved, and lessons learned from the
merit review process for the initial KDI competition. We will, however,
not yet be able to identify what scientific or technical results have
been achieved or even much about the training and educational results.
In subsequent years, NSF should be able to show the accumulated
research results from these awards, and link these to NSF's outcome
goals. The initial awards made in fiscal year 1998 will be generating a
stream of outputs and outcomes. Indeed, we are currently developing a
new Web-based project reporting system that should allow us to collect
much better information on direct outputs from awards. Even then,
however, many of the truly important ``outcomes'' of KDI--the knowledge
gained, the training of scientists and engineers, and the education of
students--may still be years off.
The challenge for KDI is to develop new ways to manage and make
productive use of the flood of information released by these emerging
technologies. To address this challenge, we need first to create new
ways of collecting, transforming, representing, sharing and using
information. We need to develop ways of modeling complex systems,
managing vast amounts of data, and merging data and models. We need to
effectively harness these new technologies to improve education. In
short, we need to mobilize them for the benefit of society.
NSF's KDI initiative will lay the scientific and technical base for
these next steps. It will address a wide range of highly complex issues
such as:
--New technologies such as satellite and airborne sensors, and
automated or remotely-operated sampling stations are generating
an explosion of geospacial information. Integration of this
data is necessary to proceed with multidisciplinary research on
problems such as environmental phenomena (e.g. the Ozone Hole),
and using real-time data to understand and predict storms.
--Taxonomists are building a Web-linked network to share databases,
and to analyze and identify specimens. A major challenge they
face is managing and coordinating the amount and complexity of
information. However, the availability of quick and accurate
taxonomic identification would be valuable for uses ranging
from agricultural extension agents encountering a new weed, to
customs officials interdicting imports of new biological
materials, to geologists searching marine cores for fossils
indicative of petroleum deposits.
--Systems as dissimilar as an economic market, the brain, and large
computer networks have this in common: information is widely
distributed throughout the system, and no identifiable entity
coordinates the information or makes decisions. Yet, this
information is somehow coordinated and focused into sensible
outcomes. Researchers in disciplines ranging from economics to
neuroscience to mathematics and computer science currently
study these types of systems separately. Collaboration may
reveal similarities in how these systems function, and hence
how to improve system performance.
--Most simulations of complex phenomena generate vast volumes of
numeric data. Whether these simulations address natural
processes--the collapse of a star, global weather patterns,
groundwater flow, or the function of the nervous system--or
engineering or social processes--the management of electrical
power networks, fluid flow around an airplane, or the behavior
of financial markets--the phenomena are too complicated to be
understood either by simple observation or by reduction to
isolated components. The only hope of extracting useful
information from those volumes of data depends on visualization
techniques that are beyond current capabilities.
NSF's initiative in Life and Earth's Environment (LEE) seeks to
increase understanding of the mutual interdependence among Earth's
lifeforms and the environments that affect and sustain them. LEE builds
on the exciting new discoveries regarding how lifeforms originate and
flourish in a diverse range of environments. These discoveries have
challenged traditional conceptions of the origins and conditions for
life. LEE also focuses on the interactions between lifeforms and the
environments they inhabit, ranging from desolate parts of the world
where few lifeforms survive to urban complexes dominated by human
activity to tropical forests where flora and fauna abound.
NSF initiated its targeted LEE program in fiscal year 1997 by
enhancing existing programs in areas such as global change, natural
hazard reduction, and the NSF-EPA Environmental Partnership. Fiscal
year 1997 also saw the conduct of a special competition focusing on
Life in Extreme Environments (LExEn). During fiscal year 1998, NSF
plans to continue these efforts and to expand its coordination
activities. A set of workshops and studies will be held to stimulate
identification of new lines of inquiry, and special competitions
focused on urban environments will be held. NSF also will encourage the
development of new educational approaches that will initially focus on
life and Earth's environment but that ultimately will be useful in
improving science and engineering knowledge for people at all levels
across a broad range of topics.
Looking beyond fiscal year 1998, NSF will encourage increased
interdisciplinary work to address a set of integrating themes
associated with Life and Earth's Environment. Through the merit review
process, NSF will identify those projects for which potential
contributions in expanding and disseminating knowledge are especially
great. As with KDI, we will be ale to demonstrate the output of NSF's
merit review process, but it will take a decade or longer for the
ultimate outputs and outcomes of NSF's investments to become clear. The
new Web-based project reporting system that NSF will be implementing
during fiscal year 1998 will provide improved means for identifying
both short- and longer-term products and contributions of LEE research
and educational projects.
An expanded emphasis on support for research and education dealing
with life and Earth's environment will enable us to build on the
exciting new perspectives provided by recent discoveries; enhanced
capabilities for making observations, conducting analyses, and making
predictions; and growing awareness among the scientific communities and
the general public regarding the potential value of increased knowledge
about life and Earth's environment.
Increased understanding about life processes and the interactions
among lifeforms and other facets of their environments gained through
LEE could address issues which affect all Americans. For instance,
citizens would be better able to assess how changing environmental
conditions may affect their health and well-being. Industrial firms
could have a sounder basis for developing and implementing productions
techniques that will stimulate economic growth while improving
environmental quality. Local governments would be better prepared to
deal with hazards associated with adverse environmental conditions,
while state and federal agency officials would be able to evaluate how
to deal with environmental change.
Examples of LEE research activities follow:
--New research shows that millions of years ago, fish in the
Antarctic and in the Arctic independently evolved nearly
identical antifreeze glycoproteins that kept them from freezing
in frigid oceans, which in turn allowed them to exploit new
ecological niches. For the first time the genetic process by
which a novel protein evolved to enable this adaptation has
been traced. This knowledge will provide the basis to
understand how life originated and evolved on Earth as well as
how life has managed to thrive in unexpected environments.
--One of the biggest challenges facing scientists and engineers
involved in environmental research is understanding the highly
interrelated physical, chemical and biological feedback loops
commonly present in the Earth's natural systems. NSF addresses
this challenge by supporting studies on a variety of
environments of interest including soils, ground waters,
surface waters, coastal marine and estuarine areas, and
portions of the troposphere in contact with these environments.
Methods from molecular biology and high resolution surface
microscopy are combining to revolutionize understanding of many
geological processes in these environments. For example,
microorganisms have been found to interact with minerals, such
as pyrite, causing them to dissolve. Previously, weathering was
understood as an inorganic process, but that is now known to be
inadequate. The role of microorganisms is critical since it
often controls the first step in the dissolution process.
Because the constituents of soils and sediments depend on
mineral weathering, fundamental knowledge of these complex
chemical reactions is basic to understanding environments both
natural and man-made, and may have longer-term impacts on our
understanding of processes such as the weathering of man-made
infrastructure.
--Global change research focuses on interactions among different
components of the integrated Earth system. NSF-supported global
change research has been instrumental in observing ocean
circulation patterns and in advancing understanding of the
ocean-atmosphere interactions that have permitted major
improvements in capabilities for predicting the onset of major
seasonal events like El Nino nearly a year in advance. This
prediction enables affected communities to adapt and to
minimize the destructive impacts of El Nino. Other global
change programs have supported research that improves
understanding of the ways that ecological systems respond to
changes in climate and to the impacts of climate variability
and change on human activities at local and regional scales.
EVALUATION AND PERFORMANCE
Senator Bond. And you will be able to give us some markers
on progress and we will be able to measure in future years your
progress toward those goals, those two areas?
Dr. Lane. Yes; Mr. Chairman, but let me be very clear about
this kind of research activity, that the way we evaluate what
we found and set our priorities is by using expert opinion of
scientists and engineers. That is the merit review process that
we use now and have used for years. That is also how we will
have to evaluate ultimate outcomes of these investments. It is
the field advancing? Are we world class in one or another area?
So we have to write these objectives, and we have to
present for you these markers or metrics in such a way that it
satisfies both the needs, that it is going to be a genuine
measurement of quality at the same time.
Senator Bond. Maybe we ought to ask you to have a peer-
review group look at from the outside NSF who is not dependent
upon you for the funding, evaluate the markers and the
guideposts that you set forth, and come back next year as an
independent scientific auditor to say are you doing the job?
Are you game for that?
Dr. Lane. Well, I think there is not anybody who could not
come to NSF. There is not any scientist or engineer who could
not come to NSF for support. We support the entire research and
education community, so if you ask who the experts are I would
say we probably support many of them.
But I do agree with the point of putting together an
objective such as you describe.
SETTING PRIORITIES AND MEASURING PROGRAMS
Senator Bond. We have used the National Academy of Public
Administrators and others in many instances to evaluate it, and
obviously apparently everybody has the hope of getting an NSF
grant, but perhaps--I am sure there are enough scientists, men
and women of integrity that maybe we have to have them
anonymously work for an independent agency that can evaluate
your markers, your guidelines, and then come back to us.
I have been looking forward to seeing from the National
Academy of Sciences a report they worked on a couple of years
ago about how we do a better job of appropriating research
dollars, and we are still struggling to apply the scientific
tests in a way that is feasible through the political process.
I would welcome your comments and discussion on that so
that we can give assurances to our colleagues and to our
constituents that we are getting something for the money, and
you all lay out lofty goals and talk about things that are
absolutely mind-boggling and breathtaking, but we need to be
able to make sure that we are getting our breath taken and our
mind boggled in an efficient manner with the dollars that we
make available.
Dr. Gibbons. Mr. Chairman, may I interject just an element
that I think you would enjoy?
Senator Bond. Please.
Dr. Gibbons. The late Lewis Thomas, who was a famous
physician and medical writer, once observed that he thought in
terms of proposals in the area of basic research that when
people proposed things and proposed what they would achieve
during the time of that research, that if they came back and
reported that they had achieved just what they said they were
going to do, they should be penalized, because it means they
did not discover anything new that they did not expect, and
that I think puts the bottom line on the concern and issues
that I know you understand.
Senator Bond. Yes; it makes it a little tougher for you to
develop the guidelines you are going to give me on how you
measure those things.
Dr. Gibbons. That is right, but I think there are
guidelines, and we are working on this assessment of
fundamental science. I believe we are going to make some real
progress in the months ahead now as we get ready for GPRA this
fall--that is, G-P-R-A--and we very much are in sympathy with
your concern that we have got to report back to our investors,
the American people, about how well their investment is
working.
Senator Bond. Well, we will look forward to working with
you. We would like to have that information, and we would like
to have a means, better means than we have now, of assessing
it, because I think that is really important.
We very much appreciate your time, and I know there are
many knowledgeable people in the audience here who seem to be
nodding and scratching their heads, and proposing thinking of
things.
Additional committee questions
We would welcome your written comments, but we would keep
the record open for you to present to us your suggestions in
response to these questions and a few other questions we will
submit to you in writing.
[The following questions were not asked at the hearing, but
were submitted to the Foundation for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
IMPACT OF BUDGET REDUCTION
Question. What programs would the agency cut or eliminate if the
subcommittee had to recommend a reduction in the NSF budget of 10
percent? What parts of the budget request would the agency protect?
Answer. A 10 percent reduction in NSF's budget would have serious
consequences. It would not only lead to significant reductions in our
ability to support the conduct of science and engineering research and
education, but would also cause:
--A reduction of approximately 4,600 research and education awards,
about 50 percent of the number of new competitive awards;
--Consideration of funding continuing awards below their committed
levels;
--A delay in initiation and/or stretch-out of construction for new
research facilities;
--Significant reductions for K-12 teacher enhancement; and
--Major reductions in all aspects of undergraduate education.
This level of reduction would also have significant impact on the
number of people NSF supports through its programs, with possibly the
greatest reduction in numbers of people realized in the support of K-12
teachers. In total, over 20,000 people could lose NSF support. All
interagency agreements, memoranda of understanding with other agencies
and other countries, and partnership agreements with universities,
colleges, other institutions and industry would require reexamination.
In the face of such reductions, NSF would continue to move its agenda
forward through:
--Significant shifts in funding to maintain areas of priority at or
near fiscal year 1997 levels;
--Completion of LIGO construction and initiation of operations of
LIGO and Gemini;
--A shift toward graduate traineeships and away from other mechanisms
of graduate student support; and
--Maintaining appropriate levels of staff for effective management
during a period of massive change.
GOVERNMENT PERFORMANCE AND RESULTS ACT
Question. NSF's draft strategic plan does not meet the requirements
of the Government Performance and Results Act (GPRA). Please provide
your timetable for addressing the following issues: (a) long range
goals, which are within the agency's statutory authority and span of
responsibility; (b) objectives that conform with statutory
requirements, and provide guidance in formulating budget requests,
setting priorities, and allocating resources; (c) an annual performance
plan with quantifiable annual performance goals.
Answer. On March 14, 1997, NSF submitted to all the relevant
Congressional committees a copy of its GPRA Strategic Plan. This
version contained a mission statement condensed from its statutory
authority; both over-arching and outcome-specific goals generated
therefrom; investment strategies to achieve those goals; and a set of
critical factors for success that address agency management.
Based on comments received from Congressional staff, the Office of
Management and Budget, the Office of Science and Technology Policy, and
the National Science Board, a revised draft of the strategic plan was
developed and forwarded to Congress. This draft will also be available
on the Internet in order to provide a broad range of stakeholders an
opportunity to comment on it. As required, we will also submit our
Strategic Plan to Congress by September 30, 1997. An annual Performance
Plan, based upon but distinct from, the Strategic Plan, will be
submitted with the President's fiscal year 1999 budget request for NSF,
per the Results Act.
NSF recognizes the difficulty of identifying specific goals for
which NSF's discrete contributions can be separated from the
contributions of other agencies and activities. Nonetheless, we are
committed to working with Congress and the relevant stakeholders in
developing and refining over time the most reasonable outcome measures
practical.
Question. The NSF budget justification states that NSF is committed
to delivering ``the highest possible social returns'' on the Nation's
investment in research and education. Could you please explain what you
mean by that statement, and how you will measure ``the highest possible
social returns''?
Answer. A number of studies by economists and others have
demonstrated the benefits of research to the economy. We use the phrase
``social returns'' to refer to this broad range of benefits that
research and education activities provide for the public, including new
knowledge, the capacity for innovation, and new educational approaches.
The statement that appears in the budget justification is one statement
of our vision for the agency. It reminds us that we promote the
progress of science in order to obtain such returns for the nation.
Social returns can only be assessed over time, and then only
indirectly. The concept is not appropriate as a performance goal that
requires direct measurement.
NSF'S ROLE IN EDUCATION STRATEGY
Question. The President placed an extremely high priority on
education in his budget proposals for fiscal year 1998. What role is
NSF playing in the White House education initiatives? If the President
has made education a priority, why does NSF's budget for the education
account go up by only 1 percent, and support for precollege math and
science education actually decline from the fiscal year 1997 level?
Answer. NSF places high priority on education and has a coordinated
set of programs that cross the education spectrum. In fiscal year 1998,
the funding request for grade K-12 activities is $376 million, less
than $2 million below the fiscal year 1997 level. Nearly 56 percent of
the NSF education and training portfolio is invested in grades K-12
with the objective of developing resources and strategies that enable
implementation of standards-based mathematics and science education
materials. NSF programs thus fully support the Presidential initiative
for improving mathematics education, grades K-8.
Informed by fiscal realities and careful review of priorities and
emerging opportunities, the fiscal year 1998 budget request redirects
funding from certain K-12 activities to other important program areas
within the K-12 arena. For example, increased emphasis is planned for
pre-service undergraduate preparation and education of teachers by
redirecting resources from teacher enhancement activities that focus on
in-service training of the existing workforce. NSF will also place
emphasis on developing materials and strategies that will ensure the
effective application of learning technologies throughout the K-12
sector. Increases will be offset by reductions in the Instructional
Materials Development program, which has a number of comprehensive
mathematics curricula projects nearing completion. The fiscal year 1998
program thrusts complement NSF's existing large-scale systemic projects
that engage entire states, urban and rural areas, and school districts
in mathematics and science education reform. In addition, through its
dissemination and evaluation activities, NSF will intensify efforts to
communicate information about effective curricula, research on teaching
and learning, as well as effective strategies for reform and teacher
development.
NSF and the Department of Education (DoED) share expertise and work
to coordinate their science and mathematics education activities.
Recently, in response to a March 6, 1997 Presidential Directive, Dr.
Lane and Secretary Riley established a Working Group on Improving
Mathematics and Science Education that is comprised of senior officials
and program experts from each agency. That Working Group has nearly
completed an action strategy for ensuring effective use of Federal
resources for improving teaching and learning in support of the
President's voluntary, standards-based national mathematics test for
individual eighth grade students. The strategy addresses: teacher
preparation and professional development; implementation of
instructional materials; improved integration of technology into the
classrooms; and effective strategies for motivating students.
GRADUATE EDUCATION
Question. The budget proposes a new graduate program called
integrated graduate research and education traineeships to be supported
at a level of $20 million. An additional $14.5 million is being spent
on other traineeship programs, thereby increasing traineeship
activities by about 65 percent. In order to make this increase, you
must have some convincing evidence that this is a good investment. What
evaluations have you done of your traineeship programs? Please provide
copies of the evaluations. What criteria were used to determine the
fiscal year 1998 funding request? What are the annual performance goals
for fiscal year 1997? When will you know if they have been met?
Answer. Development of the new Integrative Graduate Education and
Research Training (IGERT) program, to be initiated in fiscal year 1998,
is based on need, on an understanding of the ability of the traineeship
mode of support to affect institutional change, and on experience with
two prototype programs. Recent studies by the National Academy of
Sciences and the National Science Board indicate a growing need for
broadly prepared Ph.D.'s with multidisciplinary backgrounds. The need
for technical, professional, and personal skills essential to
addressing career demands of the future also has been articulated in a
number of recent studies. The goal of the NSF-wide IGERT program is to
develop a new training paradigm by supporting the development of better
education and training activities that provide an environment for
acquiring those skills, as well as for conducting the nation's premier
research.
The IGERT program builds on the strengths of two NSF existing
traineeship programs: Research Training Groups and Graduate Research
Traineeships. IGERT will support development of innovative graduate
education efforts based on multidisciplinary research themes in
emerging areas of science, mathematics, and engineering. These grantee-
identified themes will provide the framework for integrating research
and education and for fostering effective interdisciplinary
collaboration of faculty. Projects will develop innovative courses,
workshops and other activities; provide access to state-of-the-art
research instrumentation and methodologies; offer training experiences
relevant to academic and non-academic careers; develop communication
and teamwork skills; and provide international perspectives on
research. In addition, IGERT will facilitate development of a
demographically diverse Ph.D. workforce.
Summative program evaluation can only be conducted after projects
have appropriate opportunity to mature. Such evaluations for the
programs underlying IGERT are being developed. Interim formative
program development is based on project monitoring and focuses on
progress in meeting long-range objectives for improving the quality of
graduate education and, as appropriate, increasing Ph.D. production in
critical disciplinary areas. Projects under both underlying programs
have been evaluated through annual reports. Program performance is
being strengthened through implementation of an electronic, Web-based
distance-monitoring system that collects annual performance data on
students and faculty, as well as written reports. The future
development of IGERT will be informed by the formal evaluations that
are being initiated.
INVESTMENTS IN PRODUCING NEW SCIENTISTS AND ENGINEERS
Question. In 1993, there were about 2.5 million people in the U.S.
with graduate degrees in science or engineering. In addition, there
were about 330,000 science and engineering graduate students. Over 70
percent of the scientists and engineers with Ph.D.'s were working in
science and engineering, in their own or a closely related field.
Yet, there are repeated complaints from young scientists (most
recently from the co-discoverer of the Hale-Bopp comet) that their
opportunities for a career in science are abysmal. In my own state of
Missouri, at least one university has tried to address this problem.
Washington University in St. Louis has recently chosen to scale back
the number of students to those the university can provide full
financial support for six years, rather than producing as many students
as they can.
Why are you proposing to increase the number of graduate students
supported by NSF?
Answer. NSF supports only about four percent of the full-time
science and engineering graduate students in the United States. In
fiscal year 1998, NSF expects to support approximately 21,000 graduate
students, an increase of 2 percent above the fiscal year 1997 level.
The majority of this increase (380 students) is directly attributable
to the new Integrative Graduate Education and Research Training (IGERT)
program. The IGERT program is a focused experiment designed to reform
graduate education, making it more responsive to the growing need for
researchers and educators who are capable of functioning beyond the
boundaries of a single discipline and who have technical, professional,
and personal skills necessary to address varied career demands of the
future. In addition to IGERT, NSF will provide for a modest increase in
the number of students supported as research assistants on NSF-
supported grants and a slight reduction in students supported by
graduate research fellowships.
COSTS AND MANAGEMENT OF HIGHER EDUCATION
Question. Recently Time Magazine ran a story on why a college
education costs so much. The article seemed to challenge the entire
academic enterprise to wake up to the fact that they--just like
corporate America and government--have to downsize, re-engineer,
streamline and reduce costs if they are to remain strong and vital
institutions in the future. And, by and large, the public perception is
that they have not yet stepped up to the plate. What do you think our
colleges and universities need to do to remain strong and yet, at the
same time, control their costs and management activities.
Answer. University costs are increasing in a number of areas,
including physical plant improvements, maintenance of competitive
salaries, financial aid to students, acquisition of technical
information, upgrading of computer technology, and compliance with
federal regulations (such as improving access and services for the
disabled). In addition, many public universities face decreasing
support from state funds. All these factors result in a difficult
financial situation for many universities but one which NSF believes
most universities are, each in their own way, attempting to address.
NSF can comment on this complex matter only in connection with the
research and other activities that the federal government sponsors at
universities.
The federal government and university communities face similar
budgetary constraints, but share common goals, in the conduct of
academic research. There is incentive for both communities to not only
work together to assure that universities are fairly compensated for
the costs of performing federally-sponsored research, but also to
strive to contain the cost of engaging in that research. In that
regard, the Federal Demonstration Partnership (FDP) is a valuable forum
for both federal agencies and the university community to consider not
only which research-related costs should be reimbursed by the federal
government, but also to discuss issues such as simplifying
accountability for federal funds and eliminating unnecessary
administrative requirements.
ANTARCTIC PROGRAM: SOUTH POLE STATION MODERNIZATION
Question. The Antarctic External Panel led by Norm Augustine is
about to issue their reports on the Antarctic Program. This
Subcommittee asked for an examination of the U.S. Antarctic Program
about 18 months ago. According to recent Congressional testimony by Mr.
Augustine, the panel is going to reaffirm the need for this country to
maintain its active and influential presence in the Antarctic. The
panel is also going to call for the modernization of the South Pole
station to address some very critical safety, health, and structural
issues. The panel estimates that a new station and other necessary
infrastructure improvements would come to about $145 million--less than
earlier estimates that were in the $180 to $200 million range.
If you accept the panel's assumptions and recommendations, an
additional $95 million is needed over the next five years to rebuild
the station. You have a request of $25 million in the fiscal year 1998
request so if we were to provide the request, over the next few years,
you would have to come up with an additional $70 million. Would you
agree with that estimate?
Answer. The $145 million estimate includes the following:
In millions
New South Pole Station............................................ $125
Repairs to keep the existing South Pole Station operational during
construction of the new station............................... 5
Minimum infrastructure improvements at McMurdo and Palmer Stations
identified by the Augustine Panel............................. 15
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Total....................................................... 145
NSF's fiscal year 1998 Budget Request includes $25 million for a
new South Pole Station. To rebuild the station for $70 million in post-
1998 costs, two additional assumptions are necessary. First, the USAP
must actually realize an estimated $30 million in savings associated
with the transfer from the Navy to other DOD support. These would bring
the post-1998 costs down to $90 million.
In addition, NSF would have to reprogram $20 million away from
ongoing research and support activities to the South Pole Station
rebuilding effort. Which research efforts would not receive funding has
not been identified at this early stage.
If this additional reprogramming were implemented, the remaining
post-1998 costs would be reduced to the $70 million identified in the
Augustine report:
In millions
South Pole Station and other infrastructure....................... $145
Fiscal year 1998 Budget Request for South Pole Station............ -25
Cost savings...................................................... -30
Reallocation of science funds..................................... -20
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Total....................................................... 70
Note that the cost estimates for the South Pole Station were based
on inflation rates in use at the time of planning (2.2 percent).
Current projected inflation rates are slightly higher (2.7 percent),
which may affect the total cost.
Question. Within the Administration's outyear profile for NSF, are
there sufficient funds to accommodate the cost of the redevelopment of
the South Pole station?
Answer. The Administration's outyear profile for NSF's Major
Research Equipment Account is flat from fiscal year 1998 to fiscal year
2002. The Foundation continues to examine how to accommodate needs for
major projects across the agency within its funding profile. Funding
for redevelopment of South Pole Station is one item being considered,
in the context of the Augustine Panel statement that the USAP should be
viewed as a national program, not as another NSF science project, and
should be designed, funded and judged as such.
Question. Have you thought about international participation in the
redevelopment of the station?
Answer. NSF concurs with Recommendation IV in the Augustine Panel
report, which states that ``International cooperation in scientific
research and logistics support should be encouraged, but permanent
facilities and infrastructure at permanent U.S. sites in Antarctica
should be provided by and maintained by the U.S.'' The Panel concluded
that:
``Considering the geopolitical history of Antarctica outside the
reach of the Antarctic Treaty system, that joint funding and/or
ownership of infrastructure and facilities may lead to substantial
international legal issues while producing little or no fiscal benefit.
The Panel is mindful of the experience of the space program in
international cooperation, but draws a strong distinction between joint
ownership of a space station--where there are no territorial issues in
contention--and the joint ownership of a facility at, say, the South
Pole.''
The Panel also concluded that:
``To internationalize the physical plant in Antarctica with foreign
capital investment in fixed facilities at the U.S. stations raises
ownership issues that, ultimately, work to the detriment of U.S.
interests and, in the opinion of the Panel, worldwide interests. It is
not, it would seem, illogical that a nation which shares the basic
costs of the existence of a facility would seek a voice in the
operation and governance of that facility--and ultimately in the title
to that facility.''
Question. How do you plan to respond to the Augustine Panel's
report?
Answer. NSF is currently analyzing the recommendations contained in
the Augustine Panel report to determine how best to address them.
NSF-EPA PARTNERSHIP/ENVIRONMENTAL BIOLOGY
Question. A few years back this subcommittee urged NSF and EPA to
work together on some common research interests. Part of the reason for
that effort was to assist EPA in improving the quality of its research
and research program management activities. Recently NSF and EPA
decided to renew that partnership activity through a new Memorandum of
Understanding. How well is that partnership effort working?
Answer. The NSF-EPA Partnership for Environmental Research has
sponsored joint competitions each year since fiscal year 1995.
Professional staff from both agencies have worked together to plan and
manage the competitions, and both agencies have provided funds to
support the highest quality peer reviewed research proposals. The NSF
administered the competitions in the first two years while mentoring
EPA staff. In the third year of the partnership (fiscal year 1997), the
EPA is administering the competitions.
The partnership emphasizes shared investments, shared risks and
shared benefits. From an NSF perspective, the partnership has enabled
the support of research that synergistically integrates elements of
diverse core activities. Fundamental interdisciplinary research has
been particularly emphasized in the three competitions sponsored to
date: (1) Water and Watersheds, (2) Technology for Sustainable
Environment, and (3) Decision Making and Valuation for Environmental
Policy. Of special value has been the ability to link the traditional
NSF-supported community of researchers with the management-oriented
goals of EPA.
NSF has been pleased to join with the EPA to promote the discovery,
integration, dissemination, and employment of new environmental
knowledge in service to society.
ADMINISTRATIVE EXPENSES
Question. One of your ``key program functions'' is Administration
and Management. In your fiscal year 1998 Budget Submission (Overview)
you state that Administration and Management function constitutes 4
percent of your request of $3.367 billion. How is that percentage
determined?
Answer. The percentage of fiscal year 1998 total support provided
for NSF's Administration and Management function is determined by
adding the $136.9 million in the Salaries and Expenses appropriation to
the $4.85 million request for the Office of Inspector General and
dividing by the total NSF request of $3.367 billion.
Question. What activities are included in the four percent
Administration and management category?
Answer. The Administration and Management function includes funds
for staff salaries, benefits, travel, rent, contracted administrative
services, supplies, equipment, and other administrative operating
expenses.
Question. Are there any personnel-related and/or program support-
related activities funded out of other appropriation accounts?
Answer. NSF has traditionally funded program support costs from the
``program'' appropriations because of their direct support to the
research and education programs. Some examples include the cost of
proposal review panels, contracts for special services--such as
proposal processing and evaluation--directly related to the program,
and grants to institutions to obtain the temporary assignment of
visiting program managers through the Intergovernmental Personnel Act.
These scientists and engineers contribute significantly to our program
operations. Program support costs are usually program specific, short
term costs.
Question. Please provide the funding levels for the various program
support activities outlined above, including but not limited to cost
associated with holding review panels, personnel costs for IPA
positions, and costs for performing program evaluation.
Answer. Program support costs funded through ``program''
appropriations are shown below for fiscal year 1996.
National Science Foundation Fiscal Year 1996 Program Support Costs
[In millions of dollars]
IPA's............................................................. 16.9
Travel--(panelists, committees of visitors (COV) and IPA's)....... 5.1
Printing.......................................................... 0.8
Equipment......................................................... 0.3
Contracts (includes education evaluations, SRS and other contracts 14.6
Panelists and COV's............................................... 4.5
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Total....................................................... 42.2
internet registration
Question. NSF entered into a cooperative agreement in 1993 with
Network Solutions, Inc. (NSI) to manage the registration service for
domain names on the Internet. The agreement is due to expire in
September 1998. What plans does NSF have regarding the ending of that
cooperative agreement?
Answer. The September 30, 1998 date allows for an administrative
period for concluding activities such as the preparation and submission
of the final report. As a result, the agreement is actually scheduled
to be concluded by March 31, 1998. Since there appears to be no need
for continued NSF support of an activity which has become self-
supporting, no recompetition, extension or other follow-on of the
current award is anticipated.
Question. How will NSF ensure that NSI does not have an unfair
advantage over other potential registrars for domain name services?
Answer. There are currently several proposals based on two
alternative concepts being discussed that are posing alternative
mechanisms for increasing competition for name registration in Internet
Top Level Domains (TLD's). All involve the creation of additional
TLD's. One is based on the model of ``sharing'' of TLD's among several
registries (competition within TLD's). Others involve the ownership of
specific TLD's by individual registries (competition among TLD's). It
is probable that, by March 31, 1998, a number of registries, both
``shared'' and private, will be competing for domain name
registrations.
Question. Does NSF retain the rights to the database of
registration information?
Answer. In accordance with the principles governing the treatment
of copyrightable material produced under NSF awards adopted by the
National Science Board on March 16, 1984, the Foundation normally
acquires only such rights to copyrightable material as are needed to
achieve its purposes or to comply with the requirements of any
applicable international agreement or government-wide policy notably
Sec.__36(a) of Office of Management and Budget Circular A-110, Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Other Non-Profit Organizations
(revised November 1993), which for efficient administration the
Foundation applies to most of its few for-profit awardees. The
Copyrightable Material clause in the Foundation's Grant General
Conditions, which were attached to and made part of the cooperative
agreement with NSI, provides (in part): ``[T]he grantee may own or
permit others to own copyright in all subject writings. The grantee
agrees that if it or anyone else does own copyright in a subject
writing, the Federal Government will have a nonexclusive,
nontransferable, irrevocable, royalty-free license to exercise or have
exercised for or on behalf of the United States throughout the world
all exclusive rights provided by copyright. Such license, however, will
not include the right to sell copies or of the copyrighted work to the
public.''
``Subject writing'' is defined in the first paragraph of that
clause as meaning any material produced by the awardee or its employees
that is or may be copyrightable under Title 17 of the United States
Code.
Under the above-quoted Copyrightable Material provision, NSF has a
license under any copyright asserted on the database as it exists
during, and at the conclusion of, the agreement. Also, under Article
10E of the agreement, NSF has the right to request ``a copy and
documentation of any and all software and data generated'' as part of
the final report, which must ``contain a description of all work
performed and problems encountered * * * in such form and sufficient
detail as to permit replication of the work by a reasonably
knowledgeable party or organization''. This discretionary ``delivery''
requirement, unusual in an assistance award, was added to give the
Foundation the option of continuing to assist Internet registration by
supporting some other entity subsequent to the NSI agreement. Since
Internet registration has become self-supporting and NSF will no longer
be involved in supporting the activity, there is no need for us to
obtain that material.
Question. Beginning in 1995, NSF authorized NSI to charge $100 to
register a domain name initially, and $50 a year to maintain it in the
master database. Thirty percent of that money is set aside in an
account for the purpose of reinvestment of the ``intellectual
infrastructure'' of the Internet. As of December 1996, over $12 million
was deposited in that account, but there has not been any disbursement
of funds. What plans does NSF have for using those funds and future
monies that will be collected?
Answer. As of April 30, 1997, the balance in the fund was
approximately $23.8 million. Consistent with the requirements of the
agreement, Network Solutions has proposed that a 501(c)(3) non-profit
organization (having no connection with either Network Solutions or
NSF), with an appropriate charter and board of directors, be formed to
disburse the funds. Using this proposed approach, as of an established
date, all funds collected in the account would be transferred into the
nonprofit organization, collection of additional Infrastructure funds
would cease and fees would be reduced by a corresponding amount.
Pending resolution of appropriate details we believe this to be a
reasonable plan for disposition of the funds.
Question. Recently, there has been criticism of NSI's performance
of the registration function and concern about their role as the sole
provider of certain categories of domain names. What oversight has NSF
conducted of NSI's activities?
Answer. Consistent with normal practice for such awards, NSF
conducted an external merit review of NSI's performance in 1994 which
found it to be excellent. NSF receives and reviews monthly, quarterly
and annual reports on their activities as well as copies of complaints
or comments on their service and conducts periodic performance review
meetings. Recently, a management review of the registration activity
was conducted by the NSF's Office of the Inspector General. The
resulting report and Agency response have been released to the public.
Additionally, NSF's Office of the Inspector General is currently
conducting a financial audit of the NSI award at our request.
Question. There is a new proposal from a coalition involving the
Internet Society and other interested groups for adding additional
generic groups of domain names and adding new registrars. What is NSF's
position on this proposal?
Answer. The proposal from the Internet Society is only one of a
number of proposals which have recently been advanced to increase
competition in the Internet Domain Name registration process. NSF
believes that several of the proposals currently being considered by
the Internet community have merit. NSF also believes that any of the
proposals being considered will have only minimal, if any, impact on
the research and education community which we support. As a result, NSF
has no preference at this time among the proposed alternatives.
MATH AND SCIENCE EDUCATION
Question. For the past several years, NSF has invested about $300
million annually in efforts to improve K-12 math and science education.
How has NSF evaluated the progress in this area? How were these
evaluations used in determining the fiscal year 1998 budget request?
Answer. NSF's K-12 education programs benefit from a comprehensive
set of evaluation activities that includes project monitoring, formal
program evaluations, informal assessments by staff and external
experts, and management reviews. As part of NSF's response to the
Government Performance and Results Act (GPRA), other efforts are being
implemented to ensure accountability: (1) Performance Effectiveness
Reviews (PER) of sets of large-scale projects to obtain management and
standardized performance information; (2) standardized program
evaluation that allows monitoring of individual projects, program
aggregation, and cross-site comparisons; and (3) electronic, Web-based
monitoring systems. NSF also regularly supports specialized studies,
such as the Third International Mathematics and Science Survey (TIMSS)
to obtain information on the context in which our programs operate.
Development of NSF K-12 programs is firmly grounded in evaluations
and can itself be viewed as implementation research, evolving with
observations of strengths and weaknesses. Examples of rationale for
major program thrusts include:
--Systemic Reform: NSF is able to broaden and deepen its impact in
implementing standards-based science and mathematics education
reform when it engages entire school districts and
simultaneously addresses requisite policies, curriculum,
professional development, assessment, and resources. In the
1995-96 school year, NSF reform initiatives reached nearly 7.5
million students and 103,000 teachers and administrators. Sites
reported improvements in standardized achievement tests and
statewide assessments in mathematics and science. Program
monitoring has demonstrated the need for reform projects to
articulate high student and teacher expectations; align
assessment and curriculum; converge resources; provide linkages
to parents, communities and industry; and develop scale-up
strategies. While systemic programs show great promise for
being effective, only a portion of the students in greatest
need have been reached thus far. A large number of systems are
looking for resources (financial and otherwise) to undertake
such reform, particularly those in urban settings.
--Teacher Education: A major obstacle to reform and increased student
achievement has been shown to be the competency of the
instructional workforce. It has become apparent that pre-
service preparation of teachers must be accelerated and linked
to systemic reform sites. Recent TIMSS findings further
indicate the critical need for elementary teachers to develop
an understanding of mathematics. While pre-service education is
a critical issue, in-service training of the existing workforce
continues to remain problematic.
--Technology: The potential of educational technologies, as well as
barriers to its implementation are documented by systemic
reform, instructional materials development, and teacher
education programs. Technology is effectively being used to
foster development of learning communities, to provide access
to expertise and other resources in underserved areas (e.g.,
inner cities, rural areas), and to address differences in
learning styles.
SUPERCOMPUTERS CENTERS COMPETITION
Question. Earlier this year (March 27 and 28) the National Science
Board gave its approval for two partnership proposals for
supercomputing. How does this supercomputer initiative differ from the
previous NSF advanced scientific computing program?
Answer. At its inception, the existing NSF Supercomputer Centers
program focused on providing access to high performance computers for
the research and education community that NSF supports. This program
has evolved over time, moving from providing cycles on vector multi-
processors, to exploring and adopting scalable, massively parallel
systems. This transition demonstrated that usage and performance
advances of these architectures are hampered by difficulties in
programming such systems for a broad range of applications. General
acceptance of these systems by the research and education community,
who generally program applications themselves, can benefit from a
broadened effort.
In examining possible structures for an advanced computational
infrastructure program, it became apparent that considerable expertise
in this area existed at many universities and research centers. The
Partnerships for Advanced Computational Infrastructure (PACI) program
was NSF's response to the recommendations of the Task Force on the
Future of the NSF Supercomputing Centers Program (the Hayes Task
Force), and represented a plan to deploy the most competent
investigators to develop a coordinated national infrastructure.
The Hayes report indicated that the new initiative should be
substantially different from the current activity. In particular, the
addition of a large number of partner universities engaged in
infrastructure development is a shift from the previous concentration
on ``leading-edge'' sites in the current centers program. The result is
a broadening of participation in the program, targeted initiatives in
software development, and a national education, training, and outreach
effort.
Question. How will NSF transition to this new partnership
arrangement? (e.g. the phaseout process for those centers not part of
the new program, how the user community will be accommodated during the
transition process).
Answer. There are several aspects of the transition to the new
partnership arrangement--funding, allocations, and phase-out--that
merit individual attention.
Funding for the new partnerships is derived from the reduction in
operating expenses by reducing the number of ``leading-edge'' sites
from four to two. These savings are accomplished as follows:
--The operations budgets for the leading-edge sites in the PACI
program are substantially the same as in the current centers
program.
--The capital budget for the overall PACI Program is essentially the
same as that for the four previous centers.
--The savings in operations at the discontinued centers program
(approximately $20 million in 1997 dollars) will be used mainly
to fund partner activities, increased maintenance on the larger
system configurations, and a modest increase in staff at the
continuing leading edge sites to augment the user support that
is expected to increase less than 50 percent at each site.
NSF plans to fund the PACI partnerships through cooperative
agreements, the same means used to fund the current Centers. This
funding mechanism assures a cooperative management structure, and close
oversight of all partnership activities, including those at the leading
edge site. An independent contractor will survey user opinion of the
performance, and designated NSF staff will be contacted in instances
when users do not receive satisfactory responses from center staff. All
allocations will remain under the control of peer review allocation
panels, with active NSF oversight.
Current allocations of the largest users have been made for the
period April 1, 1997 to March 31, 1998. Future allocations for these
resources will be made only at permanent PACI leading edge sites and
partner sites, as appropriate. All plans include retention and use of
current facilities for the entire transition period at centers being
phased out.
Both of the new PACI sites, the National Partnership for Advanced
Computational Infrastructure (NPACI) at the University of California,
San Diego and the National Computational Science Alliance (NCSA) at the
University of Illinois at Urbana-Champaign, are making plans for new
systems and upgrades to be brought on-line during the fall of 1997.
These systems are powerful enough to meet the current demand, even
without the Pittsburgh Supercomputer Center (PSC) and the Cornell
Theory Center (CTC) resources, and are expected to attract some users
from phase-out sites. Both NPACI and NCSA have active plans for
workshops and training sessions to orient current users of both PSC and
CTC to the new facilities.
Very few high-end users make exclusive use of resources at only one
center. We do not anticipate a major difficulty in providing proper
orientation and training to this segment of the community. Other users
will be moving from one phasing-out center to a partnership to utilize
the same type of computer system. The problems resulting from this
transfer are substantially less than a change in operating systems at
one facility, an event that has occurred and been successfully
addressed many times during the history of the centers program.
One potential significant problem is the movement of user data from
one center to another. This is a consequence of the fact that PSC had
not adopted the same standard mass storage systems as the other
centers. As a result, the migration of files from PSC may also involve
some data translation and record reformatting. NCSA is already working
with the largest users at PSC by providing access to the NCSA Origin
2000 computer system to ease the transition.
The NPACI's facilities at the San Diego Supercomputer Center (SDSC)
will support a new vector system approximately 75 percent faster than
the current systems at PSC. The greater speed machine should attract
users, and the capacity to be added should equal the current capacity
at PSC and SDSC. Additionally, NPACI will be augmenting its distributed
memory system to one having approximately the same capacity as the one
at CTC.
Transition plans for both CTC and PSC include measures to retain
key personnel during the phase-out period. NSF plans to augment user
support services at both NCSA and NPACI to handle the new user load.
Towards this end, NCSA has completed a reorganization of its user
support function and is expected to have the new structure in place by
the summer of 1997 to meet the requirements of PACI. It appears that no
reorganization will be necessary at NPACI, except for that involving
the integration of partnership expertise into the national
infrastructure.
When the current Supercomputer Centers program was extended by the
National Science Board (NSB) in October 1994, and again in the Board's
December 1995 resolution approving the new PACI program, all of the
centers were informed that the transition would begin immediately
following Board approval of the new awards. After analyzing the cost
structure of each center, NSF concluded (based on the argument outlined
below) that one year's operations budget (i.e., excluding all
supercomputer capital payments) should be sufficient to support a
center for 15-18 months, if they started to reduce expenditure levels
immediately.
NSF is now providing an average of $800,000 per month for non-
capital items (salaries and wages, maintenance, expendable materials
and supplies, indirect costs, etc.) at each center. A phase-out model
was constructed that included a linear ramp-down of personnel from
April 1, 1997 staffing levels to a 25 FTE level in early fiscal year
1998 which generally results in a loss of about 2.5 FTE/month. Other
expenses were modeled as fixed (hardware maintenance, software
licenses, power, utilities), while others (travel, training, etc.) were
set to arbitrarily lower (but non-zero) levels; indirect costs were
estimated at the last current rate. Based on the different cost
structures at each center, this model projected an operation time of
15-18 months. With this, NSF allocated one full year's operating
expenses (at an $11 million level, about $1 million higher than actual)
to be expended during a period not to exceed 24 months beginning April
1, 1997, for phase-out. The detailed validity of the model is being
explored in phase out negotiations with PSC and CTC.
This $11 million figure was authorized in the NSB resolution, i.e.,
a sum not-to-exceed one full year's operational funding (actually $11
million) that could be expended over a period not-to-exceed two years,
starting April 1, 1997. Thus, the last six months of the final year of
the extended cooperative agreement would be part of the phase-out.
MERIT REVIEW PROCESS--ADJUSTING THE CRITERIA
Question. The Foundation and the Board have recently issued draft
revisions to the merit review criteria. Please provide background and
an update on the status of this effort.
Answer. NSF's current criteria were adopted by the National Science
Board in 1981. They remain an effective means for determining the
optimal allocation of NSF's valuable resources. From time to time, it
is nevertheless prudent to examine the review criteria--in the spirit
of improving an already outstanding system.
Furthermore, there are also a number of important factors that
deserve consideration in any assessment of NSF's review criteria, such
as:
--NSF's 1994 strategic plan established long-range goals and core
strategies for the Foundation;
--Several studies suggest that there is room for improvement in NSF's
highly successful system of merit review. For example, surveys
of reviewers and program officers have revealed that the
current criteria are not always well understood and some are
often ignored; and
--Seminal events over the past fifteen years--notably the end of the
Cold War and the rise of global economic competition--have
altered the context for public support of research and
education. It is now more important than ever to highlight and
document the returns to society on NSF's investments in
research and education.
On March 28, 1997, the National Science Board passed a resolution
approving use of the following criteria for all proposals reviewed
beginning October 1, 1997:
1. What is the intellectual merit of the proposed activity?
The following are suggested questions to consider in assessing how
well the proposal meets this criterion: How important is the proposed
activity to advancing knowledge and understanding within its own field
and across different fields? How well qualified is the proposer
(individual or team) to conduct the project? (If appropriate, please
comment on the quality of prior work.) To what extent does the proposed
activity suggest and explore creative and original concepts? How well
conceived and organized is the proposed activity? Is there sufficient
access to resources?
2. What are the broader impacts of the proposed activity?
The following are suggested questions to consider in assessing how
well the proposal meets this criterion: How well does the activity
advance discovery and understanding while promoting teaching, training,
and learning? How well does the proposed activity broaden the
participation of underrepresented groups (e.g., gender, ethnicity,
geographic, etc.)? To what extent will it enhance the infrastructure
for research and education, such as facilities, instrumentation,
networks, and partnerships? Will the results be disseminated broadly to
enhance scientific and technological understanding? What may be the
benefits of the proposed activity to society?
The Task Force's Final Recommendations are available on the World
Wide Web at http://www.nsf.gov/home/nsb/pubs/nsbmr975/nsbmr975.htm.
A task group of NSF staff is developing procedures to implement the
Board's resolution.
privatizing logistics in the antarctic
Question. This past season in the Antarctic, private sector
helicopter support was used in place of the helicopter support of the
Navy, as part of the privatization actions you have been undertaking
for sometime. How well is the privatizing program working and do you
agree with the Augustine External Panel's estimates that an additional
$30 million over the next 5 years will be saved if we continue with
these privatization efforts?
Answer. Since 1993 when the Navy proposed a phased withdrawal from
the U.S. Antarctic Program, NSF has planned for replacement support by
both civilian contractors and other Department of Defense units,
including air support by the New York Air National Guard. The 1996-1997
field season was the first year of civilian helicopter support,
provided by Petroleum Helicopters, Inc. (PHI) of Lafayette, Louisiana.
NSF considers the transfer of this function an extraordinary success
for the following reasons:
--Helicopter operations costs have decreased from $5 million to about
$2.5 million per year.
--The ``footprint'' in McMurdo has decreased from 52 to 18 people,
placing less strain on station resources, and the aircraft
footprint has decreased from six to four.
--A greater overall efficiency of operations has been realized, with
a 20 percent reduction in flight hours with no decrease in
support service.
--There is a greater platform variety--the helicopter inventory is
now comprised of light and medium-lift aircraft. Previously,
only medium-lift helicopters were available through the Navy.
--PHI had a perfect safety record this season with no helicopter
accidents or incidents.
Other parts of the transition are also continuing on track. An
agreement between the NSF, Office of the Secretary of Defense, Navy,
Air Force, and Air National Guard (ANG) will result in transition of
the LC-130 aircraft operations from the Navy to the ANG by March 31,
1999.
Other functions supported by the Navy such as medical services,
services in New Zealand, and communications, will be transferred in
fiscal year 1998 to civilian contractors in fiscal year 1998. Air
traffic control and weather forecasting functions will be transferred
to civilian contractors under the management of other DOD units.
DOD will continue to support the following functions: procurement
of fuel, fuel and cargo ships, and some engineering services.
NSF believes the Augustine Panel's estimate that up to $30 million
can be saved over the next five years (fiscal year 1998-2002) as a
result of the transition to private contractors and other DOD
providers--is realistic.
ACADEMIC RESEARCH INSTRUMENTATION
Question. The budget contains no discussion about academic research
infrastructure. Last year NSF proposed to terminate its support for the
modernization of research facilities. That was a decision this
subcommittee supported reluctantly. But now this budget is strangely
silent on the instrumentation program for fiscal year 1998. Are you
going to support the effort in fiscal year 1998 and, if so, why is
there no discussion or funding level outlined in the budget proposal?
Answer. The NSF's Academic Research Infrastructure (ARI) Program
was well conceived, well planned, and well leveraged but the overall
impact on the nation's research and research training facilities
infrastructure was relatively minor. This program, funded at
approximately $50 million per year, was not a major source of funds for
colleges and universities that were renewing their research
infrastructure. With approval from the National Science Board, NSF
decided to focus its investment of limited funds in areas where NSF can
make a major contribution to the science and engineering education
enterprise. Consequently, NSF chose to terminate the ARI facilities
program.
NSF will continue to support instrumentation programs in fiscal
year 1998. As mentioned in the discussion of Research Project Support
within NSF's fiscal year 1998 budget justification, $50 million will be
used to continue support for an NSF-wide instrumentation program. This
program, formerly funded out of the Academic Research Infrastructure
appropriation, is now supported through the Research and Related
Activities appropriation. In addition, approximately $180 million in
additional support for smaller-scale instrumentation will also be
provided.
STATUS OF GREEN BANK AND ARECIBO TELESCOPE OVERRUNS
Question. In December press reports circulated about the Arecibo
telescope and the Green Bank telescope. Stories of cost overruns and
significant delays appeared on the pages of Nature magazine. Please
provide the status of these two telescope. What steps have been taken
to address the construction management issues associated with large
scale facilities?
Answer. The Green Bank Telescope (GBT) is located at the National
Radio Astronomy Observatory's (NRAO) Green Bank, West Virginia site. In
December 1990, Radiation Systems Inc (RSi) was awarded a $55 million
fixed-price, design-and-build contract by NRAO's managing organization,
Associated Universities Inc (AUI), for the 100-meter diameter Green
Bank telescope. In 1994, COMSAT Corporation purchased RSi and its
subsidiaries.
The telescope was originally contracted for delivery in late 1994,
but the contractor was unable to meet this date. The current schedule
calls for completion of the telescope assembly, telescope,
installation, and alignment of the panels by the contractor by the end
of April 1998. Recently, the contractor requested that the schedule be
extended by an additional eight months, but has been told that further
delays are unacceptable; the contractor has been asked for
clarification and a plan to keep the project on schedule. All the
systems for the telescope that are to be provided by the NRAO are
expected to be ready for a delivery as early as April 1998.
Progress on the telescope has been significant during the past
year, with the contractor's workforce nearly doubled at the job site in
recent months. All 16 million pounds of steel that make up the
telescope have been designed, engineered, fabricated, and delivered.
About 1,500 of the 2,200 curved aluminum reflecting panels have been
manufactured. The 165-foot-high telescope base is essentially complete,
and the 100-meter diameter surface backup structure has been pre-
assembled on the ground; it will be lifted into place on the telescope
for final welding beginning in June.
In an attempt to recover costs incurred due to its delays, the
contractor has filed claims against AUI under the Disputes provision of
the telescope contract; the claims allege that actions on the
Observatory's part have resulted in additional costs. The initial claim
filed in October 1995 totaled $14.4 million; in December 1996, it was
increased to $28.6 million. AUI disputes the factual basis of these
claims, and is auditing their fiscal basis. Should the claims be
unresolved to the mutual satisfaction of NRAO and COMSAT RSi, the
contract calls for binding arbitration. At this stage, the claims do
not involve the National Science Foundation.
At the National Astronomy and Ionosphere Center's (NAIC) Arecibo
radio telescope, NSF and NASA co-funded--approximately equally--a major
upgrade projected to cost $22 million. The upgrade has three separate
elements: (i) structural reinforcement of the main antenna structure
and the installation of so-called ``Gregorian'' reflectors to correct
the aberration of the main spherical antenna; (ii) construction of a
50-foot high ground screen surrounding the 1,000-foot diameter main
dish to reduce the effect on astronomical observations of scattered
radiation from the ground; and (iii) doubling the power of the
planetary radar.
All upgrade construction was completed in April 1997, and NAIC
staff are now in the process of putting the Arecibo radio telescope--
the world's largest--back into service. The upgrade, started in 1992,
was originally scheduled for final completion at the end of 1995, and
is thus about 15 months late. (It should be noted that the telescope
was only out of service for about one year of the upgrade period.) The
upgrade project ran over its original 1990 budget by about 7 percent;
the costs of the overrun were borne by the NAIC program within the
Division of Astronomical Sciences.
In June 1996, the prime contractor for the structural reinforcement
phase of the project, RSi (now COMSAT RSi), filed a $7 million lawsuit
in Federal Court against Cornell University, NSF's manager of NAIC. NSF
is not a party to the suit. The crux of the lawsuit is COMSAT RSi's
contention that Cornell did not provide adequate and accurate
engineering drawings of the Arecibo radio telescope to RSi. Since these
drawings were the responsibility of Cornell's engineering contractor
for the Arecibo facility, Amman and Whitney (AW), Cornell has made AW a
third party to the law suit. Cornell disputes COMSAT RSi's claims and
has counter-sued the contractor for $635,000 in excess costs resulting
from the company's failure to complete its work in a timely fashion.
The case is scheduled to go to trial in United States District Court,
Northern District New York. The trial date was recently (re)set to May
4, 1998. Both sides are gathering information at this time.
Regarding the construction management issues associated with large
scale facilities, the Foundation is taking a number of steps to
minimize the possibility of future problems like those associated with
the GBT and Arecibo projects. First, the Foundation plans a high-level
review of its methods for overseeing management of large facilities,
and intends to provide closer project oversight where needed in the
future. Second, in light of our Green Bank experience where the
contractor subcontracted a key activity of the project, NSF will now
take steps to ensure that more careful attention will be paid to the
in-house capabilities of potential contractors.
Finally, the construction of any large single telescope presents a
unique potential problem: the telescope being constructed is also the
prototype. This issue is particularly acute when the telescope breaks
new ground in technology, as was the case with the GBT.
MILLIMETER ARRAY (MMA)
Question. In light of the situation with respect to your ongoing
telescope projects, why is it necessary to start forward with the new
Millimeter Array radio telescope? Please describe the project, the
outyear funding implications, as well as your interactions with NASA to
coordinate with ongoing NASA programs.
Answer. We are confident that the construction and management of
the Millimeter Array (MMA) will not encounter the same type of concerns
involved with the Green Bank Telescope (GBT) and the Arecibo radio
telescope. The MMA is a mature concept; there are no technical
impediments to making the instrument work.
Any problems encountered in developing the prototype during the
Design and Development phase will be resolved prior to beginning the
construction phase of the project. Construction of the MMA was endorsed
by the Astronomy and Astrophysics Survey Committee of the National
Research Council (NRC) as the highest-priority radio astronomy project
for the 1990's in its last decadal planning study (the ``Bahcall
Report''). Most important, momentum for the project has built up over
the past few years to the point where there is now strong international
interest in cooperation; postponement could put this at serious risk.
The MMA will be the world's most sensitive and highest-resolution
millimeter-wavelength telescope, and will consist of an array of
antennas rather than a single antenna. In the proposed Design and
Development phase, it will be possible to construct a true prototype,
resolve on a small scale any problems that will be encountered, and
then proceed to replicate the prototype many times during the
construction phase. Millimeter wavelength astronomy provides a testing
ground for theories of star birth and stellar evolution, galaxy
formation and evolution, and the evolution of the Universe itself. The
chemistry and composition of the interstellar medium, the earliest
stages of star formation, and the internal kinematics of luminous
galaxies are uniquely revealed by observations at millimeter
wavelengths. The MMA will combine angular resolution comparable to that
of the Hubble Space Telescope with the sensitivity of a single antenna
over 50 meters in diameter.
With these capabilities, the MMA will reveal the inner workings of
the central black hole ``engines'' which power quasars, and will make
possible a search for planets around hundreds of nearby stars.
Instrumentation to be developed for the MMA will push existing gallium
arsenide (GaAs) and indium phosphide (InP) amplifier technology to high
frequencies, will challenge production of high-density, high-speed
integrated circuits, and can be expected to stimulate commercial device
and communication technologies.
Physically, the MMA is to consist of 40 transportable, precision
antennas, each eight meters in diameter and equipped with a suite of
advanced receivers. To fulfill its potential, the array must be located
at a high, dry site. Two candidate sites currently under serious
consideration and undergoing testing for sky transparency and phase
stability are Mauna Kea, Hawaii, and a high plateau in Northern Chile.
The MMA was proposed to NSF by the National Radio Astronomy
Observatory in 1990. It is expected that the MMA will be a cooperative
project, with the construction and operating costs to be shared by
international partners or other Federal agencies. The NRAO has active
discussions underway with the Netherlands, Japan, Chile and Spain.
The total cost for design, development and construction of the MMA
is estimated at $232 million. Estimated annual funding requirements
are:
[By fiscal year]
In millions
Design and development phase:
1998.......................................................... $9.0
1999.......................................................... 9.0
2000.......................................................... 8.0
Capital construction phase:
2001.......................................................... 30.8
2002.......................................................... 50.5
2003.......................................................... 50.6
2004.......................................................... 38.1
2005.......................................................... 35.9
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________________________________________________
Total....................................................... 231.9
Although we have presented a five year capital construction
timeline, the design and development phase will address the question of
the optimum construction period for this project. Also, current budget
planning models assume cost-sharing between NSF and international/other
agency partners on roughly a 60/40 percent basis.
The annual operating cost for the MMA is estimated to be $8.5
million in fiscal year 1998 dollars. All of the U.S. share of the
operating funds will come from the Research and Related Activities
appropriation; however, approximately $3 million of these funds will
come from the closure of the NRAO 12m millimeter-wave antenna on Kitt
Peak.
NSF would welcome NASA participation in the MMA project as part of
the Space Agency's Origins initiative. Discussions between the NSF and
NASA staff have been held, as yet with no definite results.
POLAR CAP OBSERVATORY
Question. The budget also proposes another new start, the Polar Cap
Observatory. In this very tight budget environment, why are you
proposing this new start at this time?
Answer. Completion of the PCO by the year 2001 will allow
observations during the Sun's next sunspot maximum phase, during which
the dramatic effects of solar storms on Earth's upper atmosphere occur
more frequently. The Polar Cap Observatory (PCO) is planned for
construction in Resolute Bay, Northwest Territory, Canada and will be
completed in three years.
The facility will include an array of radiowave and optical
instruments for remotely sensing properties of the upper atmosphere and
ionosphere. The centerpiece of the facility is a large, state-of-the-
art incoherent scatter radar. Fiscal year 1998 proposed funding of $25
million fully constructs the PCO with no further construction funds
required in the outyears. The PCO will also complement a constellation
of international research satellites being deployed over the next five
years.
At a location very close to Earth's magnetic pole, the site of
unique atmospheric phenomena such as sun-aligned auroral arcs and
drifting ionospheric plasma clouds, the PCO will serve as the apex of
both the U.S. and European chains of large upper atmospheric radar
facilities. The PCO will allow us to better understand these unique
atmospheric phenomena, enabling us to better forecast space weather,
leading to the prevention of satellite damage, communication and
navigation disruptions, and electrical power loss.
LARGE HADRON COLLIDER
Question. While not yet in the NSF budget, the Department of Energy
is proposing an advance appropriation of nearly $400 million for the
Large Hadron Collider as part of its fiscal year 1998 budget. Is the
Foundation planning on participating in the LHC and if so, when and in
what way? Please provide the Foundation's funding profile and
programmatic interest in the LHC.
Answer. In February 1996, the National Science Board approved a
Project Development Plan which authorizes NSF to proceed with planning
and R&D support for possible eventual NSF participation in the Large
Hadron Collider (LHC). In fiscal year 1996, about $1 million was
provided from the Research and Related Activities (R&RA) account for
these activities. We are planning to spend up to $1.4 million toward
R&D in both fiscal year 1997 and fiscal year 1998. NSF grantees are
proposing involvement in two detectors, ATLAS and CMS. NSF will not be
involved in the construction of the LHC accelerator. It is standard
practice at accelerator labs around the world that participating
parties make financial and in-kind contributions to hardware for the
experiments (i.e. the detectors) in which they are involved. NSF
support for the construction of the detectors would likely begin in
fiscal year 1999 and end in fiscal year 2003.
NSF support for R&D and construction of the detectors was projected
to be approximately $81 million. It is likely that a substantial
portion of the funds will be requested through the Major Research
Equipment (MRE) account, although the internal discussions that will
shape our request have not yet been completed.
We anticipate that about $61 million of the $81 million total would
go to ATLAS R&D and construction, and the remaining $20 million to CMS
R&D and construction. Operations costs for NSF participants would be in
addition to these amounts, and would be provided via NSF's usual
proposals procedures from R&RA resources.
The National Science Board (NSB) authorized NSF participation in
these construction projects at its May 1997 meeting. CERN has been
informed from the beginning that NSB approval is necessary prior to
NSF's involvement. This is written into the ``Umbrella Agreement'' and
the ``Experiment Protocol'' that have recently been initialed by DOE,
NSF, and CERN. The Director General of CERN, Chris Llewellyn-Smith,
attended the March 1997 NSB meeting to discuss the LHC project with the
Board.
The DOE and the NSF have worked very closely together on this
project. The process has been mutually consultative at each step over
the last two or more years, and the result, in terms of inter-agency
cooperation, has been very positive. Dr. Martha Krebs, Director of the
Office of Energy Research at DOE, also attended the March 1997 NSB
meeting to discuss the LHC project with the Board.
To our knowledge, CERN has never stated that the U.S. would not be
allowed access to the LHC should we not contribute. The Director of
CERN, Chris Llewellyn-Smith, has recently reaffirmed that CERN has an
``open door'' policy with respect to U.S. participation in the LHC.
This policy is a continuation of long-standing international tradition
in the fields of nuclear and particle physics.
UNDERGRADUATE EDUCATION
Question. The fiscal year 1998 budget also puts a rather high
priority on undergraduate education--with a particularly large emphasis
on an undergraduate reform initiative. What are your reasons for
emphasizing undergraduate education seemingly, by the way, at the
expense of the precollege level of education?
Answer. In fiscal year 1998, NSF requests an increase of $11.3
million (or 12.9 percent) for several critical undergraduate areas--
teacher education, undergraduate institutional reform, and advanced
technological education. Many of these NSF-funded undergraduate
programs will in fact have a major impact on K-12 education. The
rationale for these areas of emphasis are as follows:
--Pre-Service Teacher Education.--The availability of well-trained
teachers has been identified as one of the most critical needs
of school systems engaged in science and mathematics reform.
Retirements, student population growth, and turnover will
require the hiring of more than two million teachers during the
next decade, over 75 percent at elementary and middle grade
levels. Therefore, NSF is investing more of its teacher
education resources in accelerating production and subsequent
career retention of teachers whose preparation meets national
science and mathematics education standards.
--Undergraduate Institution Reform.--Recent studies highlight the
need for improving undergraduate education in science,
mathematics, engineering, and technology (SMET) in order to
achieve major gains in learning for all students--SMET majors,
non-majors, and the future K-12 instructional workforce.
Building on pilot efforts, this program will lead to visionary
institutional models for stimulating the modernization of
academic culture and infrastructure through development of
innovative curricula and courses; revision of faculty reward
systems; modification of operating policies, procedures, and
budgets; and development of effective partnerships with
industry and the broader community.
--Advanced Technological Workforce.--Critical high-technology
industrial sectors face shortages of personnel with requisite
SMET expertise. Program efforts in this area address this need,
as well as strengthen the capacity of two-year colleges to
deliver SMET education. The effort also facilitates the
transition among secondary schools, two- and four-year
institutions, and the workplace and builds effective
partnerships between the academic and industrial sectors.
The proposed fiscal year 1998 support for preK-12 education ($376
million) is a relatively modest decline of $1.73 million from fiscal
year 1997. Within this relatively stable funding environment, NSF can
continue to strengthen its programmatic impact by broadening systemic
reform efforts; redirecting teacher education activities; and focusing
attention on materials development and implementation strategies that
effectively bring learning technologies into the classroom. NSF will
also intensify its dissemination of standards-based curriculum models,
research on teaching and learning, and effective strategies for
systemic reform, teacher education, and the engagement of
underrepresented groups (e.g., minorities, women, and the disabled) in
SMET disciplines.
SCIENCE AND TECHNOLOGY CENTERS
Question. The fiscal year 1998 budget proposes a net decrease in
support of your science and technology centers of about $6 million.
What is the Foundation's long range plan for the science and tech
centers programs? Are you beginning to phase it out with this request?
Answer. NSF has recently concluded a major evaluation of the
Science and Technology Centers (STC) program in order to determine the
future of the program. The National Academy of Public Administrators
(NAPA) performed an evaluation of the management of the STC program and
published their findings in NSF's STC Program--Building an
Interdisciplinary Research Paradigm (July 1995). Abt Associates Inc.,
under contract to the NSF, performed an evaluation of the STC program
to determine the progress of the program towards its stated goals. This
study was completed in June 1996. The National Research Council also
performed an assessment of this program and the utility of this mode of
support for fostering interdisciplinary research and published a report
on their findings in An Assessment of the NSF's STC Program (August
1996). Finally, an STC ad hoc Advisory Committee reviewed the findings
of the aforementioned reports as well as reports from the NSF research
directorate advisory committees on the STC Program, and made
recommendations to the Director of the NSF regarding the STC program
and how it fits into the NSF strategic plan. All of the reviews and
evaluations stated this mode of support was very valuable to the NSF
portfolio and recommended that the STC program should be continued.
NSF views the STC program as a vehicle for innovation in the
integrative conduct of research and education and knowledge transfer.
This program helps NSF fulfill its strategic vision and, with
programmatic and management modifications, we will continue to support
it.
On the basis of the numerous evaluations and reviews, in February
1997, the National Science Board approved a plan to hold a new
competition for Science and Technology Centers: Integrative
Partnerships. This competition for new centers will be initiated in
fiscal year 1998, with new competitions to be held about every three
years. Each competition is expected to be for approximately $25 million
with a steady-state being reached in 2006 of approximately $75 million.
In the guidelines for the initial Science and Technology Centers
program, it was written that the awardees would have a maximum of
eleven years of NSF support and would be phased out in the final two
years of their awards if they continued to be successful. In fiscal
year 1998 the planned budget phase-down for the first cohort of STC's
begins. Also in fiscal year 1998, NSF will have shut down two STC's due
to performance issues. These factors contribute to the net decrease in
support for STC's in the fiscal year 1998 budget.
LASER INTERFEROMETER GRAVITATIONAL WAVE OBSERVATORY
Question. Support for the LIGO observatory is slated to decline by
some $22 million in fiscal year 1998. Presumably, this is because the
construction phase of this project is beginning to come to an end.
Please provide a brief update on LIGO.
Answer. The fiscal year 1998 request for LIGO construction of $26
million represents the final increment of support for LIGO
construction. The construction at Washington is proceeding on schedule,
but unusual rainy weather has delayed the scheduled initiation of
construction activities at the Louisiana site. This is not expected to
cause any significant delay in the final completion of the entire
construction project.
In Washington, the concrete slabs supporting the two beam tubes (4
km vacuum pipes) have been finished. All beam tube sections produced
have been individually tested, and no leaks were discovered that were
due to the manufacturing process. Manufacture of the remaining tube
sections is nearing completion and the contractor is planning to
demobilize the spiral beam tube mill around June 1 in order to move it
to Louisiana. Currently, one entire beam tube has been assembled and
vacuum testing will begin shortly. The manufacture of all the 2,500
precast concrete beam tube enclosures is complete, and the casting
forms are being demobilized for shipment to Louisiana. The corner and
mid-station buildings are under construction. The vacuum equipment
vendor has completed six of the large vacuum chambers which will house
the optical components needed for the experimental program.
In Louisiana, the first concrete was poured in March. Preparations
are underway for the installation of the concrete slabs, and the road
along one arm has been constructed. The state of Louisiana has
completed construction of the bypass road which provides alternate
access to the southern end of the facility.
PRECOLLEGE TEACHERS OF SCIENCE AND MATH
Question. In fiscal year 1998 you are proposing to increase your
support for teacher preparation substantially (up by $7 million) while
at the same time you are calling for a reduction in support for teacher
enhancement to the tune of $8 million. Please explain the difference
between teacher preparation and teacher enhancement and why the teacher
preparation program is being emphasized seemingly at the expense of
enhancement activities.
Answer. Teacher training activities--both preparation and
enhancement--remain high priority areas within NSF's support of K-12
education. The goal of both programs is to support development of a K-
12 instructional workforce with sufficient grounding in disciplinary
content and pedagogy to deliver standards-based science and mathematics
education. Teacher preparation focuses on undergraduate education of
pre-service (or future) teachers; teacher enhancement focuses on
strengthening skills of in-service teachers (i.e., the current
workforce). In general, teacher preparation is viewed as a long-term
strategy for improving the instructional workforce while teacher
enhancement is more short-term in nature. Each strategy complements the
other and activities must be coordinated. Over time, stronger pre-
service teacher training will change the nature of in-service training.
The redirection of funding to teacher pre-service education is
derived from identified needs at the national level, as well as those
to ensure success of NSF systemic reform projects. Studies show that
(1) retirements, student population growth, and turnover will result in
the hiring of more than two million teachers during the next decade,
over 75 percent at elementary and middle grade levels and (2)
availability of well-trained teachers presents a major obstacle to the
effective implementation of science and mathematics education reform.
In fiscal year 1998, NSF intends to pursue a revised strategy for
teacher preparation that will accelerate production and subsequent
career retention of teachers whose preparation meets national science
and mathematics education standards.
Teacher enhancement operates in an environment in which a vast
majority of an instructional workforce of more than 2.5 million
teachers requires remedial training, especially at the K-8 grade
levels. Over the past several years, teacher enhancement has pursued a
strategy for training the instructional workforce within entire
districts thereby broadening program impact, strengthening the training
of individual teachers, and positioning school districts for continual
development of their instructional workforce well after termination of
NSF funding. The gains made under this strategy will leave in place a
strong program despite the budget reduction.
OCEAN DRILLING VESSEL REFIT
Question. The budget proposes to allocate about $1.5 million for
some retrofit work associated with the ocean drilling vessel. Please
provide the agency's future plans for the ocean drilling program.
Answer. The Ocean Drilling Program is a multinational program of
basic scientific research in the oceans which uses drilling and data
from drill holes to improve fundamental understanding of the role of
physical, chemical and biological processes in the geological history,
structure and evolution of the oceanic portion of the earth's crust.
Operational support for this activity is shared by seven international
partners, comprising 19 other countries.
In fiscal year 1998, the JOIDES Resolution is scheduled for a mid-
life refit. This refit, which will cost $6 million over two years, is
necessary to extend the life of the ship. This will be the first major
replacement and upgrading of primary ship systems since the ODP began
in 1985. Emphasis will be on ship station-keeping capability, pipe
handling and drilling systems, and improvements to laboratory and
personnel spaces. With these improvements, operational life of the
vessel will be adequate to support the Program through 2003.
An additional motivation for conducting a mid-life refit is that
doing so will result in considerable cost savings to NSF. Under the
terms of the operating contract for the ship, unless a refit is done,
the daily rate NSF is charged for drilling activities will have to be
renegotiated. The large increase in ocean drilling activities
associated with oil exploration has caused the average industry daily
rate to jump significantly. We estimate that a renegotiated daily rate
would be at least twice what we currently pay. Under these assumptions,
the entire cost of the mid-life refit will be recovered in cost savings
in about 120 days of operation. The JOIDES Resolution is operated
essentially year-round.
In addition, planning for ocean drilling activity beyond 2003 is
underway. JOIDES (Joint Oceanographic Institutions for Deep Earth
Sampling) has recently published a Long Range Plan which calls for the
addition of a second drilling vessel in the period following 2003. This
vessel would be capable of deploying a marine riser and well-control
equipment to improve hole stability while drilling deep holes and to
allow drilling in areas of oil and gas accumulations.
Simultaneously, the Science and Technology Agency (STA) in Japan
has been working to attain resources to construct a next-generation
drillship of the type envisioned by JOIDES. STA is committed to seeking
the $500-$600 million required for the new vessel's construction.
Recently, the Japanese and JOIDES plans have been merged into what
is presently called the ``Integrated Ocean Drilling Program'' which
would operate two vessels--one to undertake global studies of climate
and oceanographic processes requiring large spatial arrays of cores,
and the second to provide deep drilling for studies of continental and
ocean crust evolution. NSF and STA staffs are pursuing additional
international participation in the program.
ARCTIC RESEARCH VESSEL
Question. Please provide an update on the Coast Guard icebreaker.
What role is NSF playing so that this vessel will serve the needs of
the arctic research community?
Answer. NSF and the U.S. Coast Guard established an Arctic
Icebreaker Coordinating Committee (AICC), which operates under the
auspices of the University National Oceanographic Laboratory System
(UNOLS). The AICC chair, Dr. James Swift of Scripps Institution of
Oceanography, reports that the AICC has made an ``excellent start to a
working relationship with the ship construction oversight group'' of
the Coast Guard. The AICC, which represents the research community, has
met both in Washington, DC, and at the shipyard in Louisiana where the
icebreaker is being constructed. Based on these reports, the committee
has made a number of recommendations regarding science-related layout
and specifications of the ship and has found the Coast Guard receptive
to these suggestions. In fact, certain changes in the main deck science
area will be accommodated during construction instead of waiting until
after delivery in 1998, as originally planned by the Coast Guard. Dr.
Swift states that AICC is pleased that the Coast Guard is working to
meet the needs of the research community. Final conclusions on the
suitability of the ship for research support purposes will ultimately
depend on sea trials, but at this point the research community is
optimistic about progress with respect to the ship, which has been
named the Healy.
TECHNOLOGY PROGRAM IN RESEARCH, EVALUATION, AND COMMUNICATION
Question. The Technology program in EHR is slated to increase by
over 40 percent in fiscal year 1998. What is this program designed to
accomplish and why is such a substantial increase necessary?
Answer. In education, technology is both the catalyst for change
and a means to implementing significant reform and restructuring. It
affords the opportunity to equalize access to high-quality materials
and expertise; to connect learning communities that foster development
of knowledge bases; and to individualize instruction in response to
differences in learning styles. Yet, the academic sector has yet to
visualize the potential, let alone realize the benefits of the computer
revolution.
The Foundation brings leadership and critical expertise to
research, experimentation, and implementation of educational
technologies that support science, mathematics, engineering, and
technology (SMET) education. Current programmatic emphasis is on
developing new strategies that promise to make significant and lasting
improvements in the nation's educational system. In fiscal year 1998,
the technology-related increment of $5.25 million is directly
attributable to Learning and Intelligent Systems (LIS) which supports
the NSF-wide Knowledge and Distributed Intelligence (KDI) initiative.
LIS will stimulate interdisciplinary research that promotes use and
development of information technologies in learning. Priority will be
placed on: (1) embedding technology within learning systems for
judicious and appropriate use; (2) expanding R&D on advanced
technologies for the enhancement of student achievement and teacher
competencies in standards-based pre-K-12 education, as well as inquiry-
based undergraduate education; (3) integrating technology to enrich the
pre-K-12 educational enterprise with emphasis on creating and modifying
effective tools to enrich teaching and learning; and, (4) strengthening
collaborations and partnerships between developers of learning
technologies and education experts. Programming efforts will continue
to focus on several critical issues: the absence of science and
mathematics content for delivery by hardware/software systems; barriers
afforded by the instructional workforce; and other factors that affect
large-scale, systemic implementation (e.g., education policies,
resources).
MAJOR RESEARCH EQUIPMENT ACCOUNT
Question. Please provide your plans for the next five years for
this account, including what projects you plan to fund and what dollar
levels.
Answer. The fiscal year 1998 Budget Request for the MRE account
includes $85 million for four projects: completion of construction
funding for Laser Interferometer Gravitational-Wave Observatory ($26
million); initial funding for the design and development phase of the
Millimeter Array ($9 million); construction of the Polar Cap
Observatory ($25 million); and initial requirements for modernization
of South Pole Station ($25 million). In addition, there are several
potential projects for future consideration.
NSF senior management are currently conducting an annual review of
MRE candidates to determine which projects may be considered for
funding in fiscal year 1999 and which are more appropriate for later
consideration. Decision factors include scientific merit, technical
readiness, quality and comprehensiveness of the planning effort, impact
on other programs, balance and availability of funds. Several projects
are in the preliminary stage, with planning, design, construction and
cost estimates still being assessed. With the exception of the Large
Hadron Collider and continued work on South Pole Station, all of the
other projects are at various stages in conceptual design.
Below is a brief description of some potential future projects--
over the next five years and beyond--with preliminary cost estimates:
--Large Hadron Collider (LHC).--The LHC will be constructed at the
CERN Laboratory in Geneva, Switzerland by a consortium of more
than 22 nations and will be the world's most energetic
accelerator. Coupled to this device will be four particle
detectors, including the two largest, most complex ever built,
ATLAS and CMS. NSF support for the construction phase of the
ATLAS and CMS projects, pending Congressional approval of U.S.
participation in the LHC project, is expected to be $81
million.
--South Pole Station.--The Foundation is currently considering the
recommendations of the U.S. Antarctic Program External Panel
(the Augustine Panel) regarding modernization of the U.S.
research station at the South Pole. Those recommendations
outline the need to replace the station--for economic, safety
and operational reasons--at a cost of approximately $125
million. The fiscal year 1998 Budget Request includes $25
million toward this modernization, leaving an anticipated
balance in the range of $100 million for fiscal year 1999 and
beyond.
The following potential projects are in a more preliminary planning
phase than those cited above:
--High Altitude Research Platform (HARP).--HARP is a specially-
instrumented high altitude mid-sized jet with range, altitude
and communication capabilities that will significantly advance
national capabilities in airborne research and provide
measurement access over the entire globe. The acquisition cost,
which includes airframe, structural modifications, research
modifications, and instrumentation, is estimated at about $60
million.
--National Network for High Performance Seismic Simulation (NHPS).--
NHPS is a geographically distributed set of facilities linked
by an efficient communication network, for research in earth
sciences, geotechnical and structural engineering, and
earthquake-related social science that contributes to
earthquake hazard mitigation. The preliminary projected total
cost for developing new facilities, upgrading existing
facilities, integrating them and developing one or several user
networks is estimated to be in the range of $100 to $120
million.
--Millimeter Array (MMA)--Construction Phase.--The MMA will be the
world's most sensitive, highest resolution, millimeter-wave
telescope. Following the proposed three-year design and
development phase of MMA (requested for funding in fiscal year
1998), NSF will decide whether to proceed to the capital
construction phase. Costs for construction are estimated to be
approximately $200 million. International or other agency
participation will be sought.
--Coastal Research Vessel.--A coastal research vessel is planned as a
replacement for one or more existing aging research vessels.
Interdisciplinary studies of coastal systems require the
involvement of a large contingent of scientists engaged in a
diverse mix of activities, including the rapid sampling of
conditions for extended periods. The diversity of measurements,
experiments, and over-the-side operations necessary for the
conduct of science require extensive laboratory and deck space,
usually not available on the current coastal research ships.
Estimated costs for construction are in the range of $20
million to $30 million.
--Ocean Drillship.--The Ocean Drilling Program (ODP) is a
multinational program, consisting of a total of seven
international partners involving nineteen nations. Continued
use of the Drilling Vessel (DV) JOIDES Resolution as the
primary facility for ODP coring and logging is anticipated
through at least 2003. In ongoing discussions with Japan and
European ODP partners on future drillship requirements,
possible alternatives have been identified including a major
refitting of the DV JOIDES Resolution. The U.S. will be
expected to help support the maintenance of ODP drillship
capabilities. If this alternative were to be pursued, the total
estimated cost is in the range of $50 million to $70 million.
--National Spallation Neutron Source (NSNS).--The U.S. has fallen
behind the European scientific community in the past twenty
years in the availability of neutron sources and
instrumentation. No single agency is able to take full
responsibility for a facility of this kind. The proposal calls
for a joint partnership between DOE and NSF. DOE would
construct the proton accelerators and one fully instrumented
target area at a cost of approximately $1 billion. NSF would
assume the responsibility for the second fully instrumented
target area. At the present time, the estimated cost would be
approximately $150-175 million.
This list provides an indication of the ongoing planning for major
research equipment. Other projects are likely to be brought forward--
such as an ocean floor observatory system to understand processes in
the ocean crust--as planning continues and as needs for forefront
facilities are defined.
Question. What mechanisms do you have in place to discourage cost
overruns in major equipment projects?
Answer. Projects funded through the Major Research Equipment (MRE)
account contain award conditions which allow NSF to monitor the
performance of the organizations that construct, manage and operate
research facilities, and to oversee the expenditure of federal funds.
Increasingly, large projects are being undertaken on a ``build-to-
cost'' basis that controls cost overruns. In the current MRE program,
cost overruns are to be borne within the sponsoring organization within
NSF, a policy that focuses additional attention by staff to this issue.
The NSF Director names an NSF staff person to be responsible for
monitoring progress during the construction phase of a MRE project and
for advising on the transition from construction to operations. The
responsibility for project management typically resides in the
cognizant disciplinary division or office, with assistance provided as
necessary from other parts of the NSF. Status reports on the progress
of MRE projects are provided by the responsible directorate or office
at least semiannually to the Chief Operating Officer, the Director and
to the National Science Board (NSB).
At its February 1997 NSB meeting, the NSB Committee on Programs and
Plans received status reports on all major facilities construction
projects. At the present time, internal discussions with staff about
the oversight of large facilities are being conducted by the Chief
Operating Officer. Recommendations will be made to the Director based
on these discussions.
NEXT GENERATION INTERNET
Question. What is NSF's role in the interagency Next Generation
Internet project? What are the expected outcomes for this project.
The Next Generation Internet project has three closely-related
goals:
1. To connect about 100 leading research universities and labs with
an advanced network fabric that provides an increase of 100 fold in
end-to-end performance and serves as a testbed for the development of
future Internet technologies,
2. To develop, test, and model future network technologies that
provide differentiated qualities of service, enhanced reliability and
security, and other capabilities required for advanced applications of
the Internet, and
3. To develop and model advanced applications that better support
important national objectives in research, education, medicine, crisis
management, commerce, etc.
NSF will play an important role in all three facets of the NGI:
1. NSF's ongoing ``high-performance connections'' program will play
a central role in the first NGI goal by interconnecting about 100
leading universities and their research partners to NSF's existing
VBNS, the very high-speed backbone network service. (The VBNS recently
has been selected as the primary network of ``Internet 2,'' a
university-based consortium committed to the development of advanced
networking to support future modes of education.)
2. NSF will continue to fund research in network technologies in a
coordinated effort with DARPA and other agencies.
3. NSF will direct more than $200 million in new and existing
funding to the development of a wide variety of advanced network
applications in the cross-foundation Knowledge and Distributed
Intelligence (KDI) program.
Nearly all programs in NSF are expected to substantially benefit
from the deployment of the advanced network fabric of the NGI, and some
(e.g., the PACI partnerships) depend by design on NSF's success in the
connections program.
LIFE IN EXTREME ENVIRONMENTS (LEXEN) INITIATIVE
Question. The NSF budget includes funding for an initiative called
``Life in Extreme Environments (LExEn),'' an exobiology program that is
one of the components of the Administration's Origins Initiative. While
$35.9 million is requested for this program in 1998, it appears that
little of this investment represents new money. Given the
Administration's emphasis on this particular initiative, including the
meeting which the Vice President hosted last fall, why are there no
additional funds proposed for it in 1998?
Answer. Recent discoveries of the incredible diversity of microbial
life here on Earth, the development of molecular techniques for
analyzing genetic material, discoveries concerning volcanism on our
ocean floors, oceans on Europa, and extra-solar planets around other
stars, have revolutionized our perceptions of life and the potential
for life in extreme environments.
To capitalize on these discoveries, the National Science Foundation
invested $6 million in fiscal year 1997 in a special competition
focused on the development and application of techniques, technologies
and methodologies associated with the Life in Extreme Environments
(LExEn) initiative. Together with related research, the total effort
for the LExEn initiative accounted for more than $35 million in fiscal
year 1997.
We estimate that our investment in the LExEn Activity will continue
to exceed $35 million in fiscal year 1998. This estimate is based upon
support that individual programs within the Foundation expect to devote
to the LExEn Activity. NSF believes that the research accomplished at
this funding level, along with increased support for specific
activities not included under the LExEn umbrella, will contribute
significantly to the ORIGINS initiative.
NSF PARTICIPATION IN ``ORIGINS''
Question. We understand that NASA, the Department of Energy (DOE),
and NSF are discussing the consideration of an interagency Origins
program, with NSF taking a broader role than simply to support the
LExEn initiative, but to include a significant role in the use of
ground-based optical observatories to help in the detection of planets
and determine the origins of the universe. We further understand that
NSF alone has been unwilling to sign this proposed agreement. Can you
explain why the Foundation has not agreed to support this interagency
effort and when we might see a change of heart from the leadership of
the Math and Physical Sciences Directorate to support a significant and
meaningful role for NSF in Origins?
Answer. NSF's support for ``Origins'' research includes continued
funding for the Life in Extreme Environments (LExEn) initiative,
increased funding for a number of research activities to be supported
collaboratively with NASA or the Department of Energy (DOE) under the
``Origins'' umbrella, support for the Design and Development phase of
the Millimeter Array, and support for the Gemini Telescopes. Together,
these constitute a much broader role for NSF than simply maintaining
support for the LExEn initiative.
NSF is unaware of any proposed interagency agreement concerning
``Origins'' but is participating actively with NASA and DOE in
developing a brochure describing the activities of the three agencies
concerning ``Origins'' research. NSF regards the suite of activities
described above to constitute a very significant and meaningful role
for NSF in ``Origins''. In fact a major portion of NSF's Division of
Astronomical Sciences' efforts are focused already on questions related
to the origin of the Universe. Within the next two years, the upgraded
Arecibo Telescope, the new Green Bank Telescope, and the Gemini
Telescope in Mauna Kea will become operational, adding immensely to the
capabilities for exploring these questions.
OPTICAL ASTRONOMY PARTICIPATION IN ``ORIGINS''
Question. Does NSF's outyear planning estimates (fiscal year 1999-
2002) for the MPS Directorate assume any funding in optical astronomy
for the Origins Initiative over and above the base funding for
astronomy? If so, please explain. If not, please advise the Committee
on why this has been given relatively lower priority relative to other
NSF programs, particularly within MPS.
Answer. NSF's outyear planning for optical astronomy does assume
funding for ``Origins'' over and above the base funding for astronomy.
This includes (1) increased participation in the Life in Extreme
Environments (LExEn) initiative, and (2) a joint effort with NASA to
support comparative investigations of planetary atmospheres. Probably
the most important development in NSF's efforts in optical astronomy in
the outyears will be the completion of construction of the Gemini
Telescopes and the beginning of Gemini operations, first at Mauna Kea
in 1998 and at Cerro Pachon in Chile in 2000.
subcommittee recess
Senator Bond. There being no further business to come
before the subcommittee, we stand recessed.
[Whereupon, at 11:10 a.m., Tuesday, April 22, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MAY 1, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:23 p.m., in room SD-124, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Mikulski, and Harkin.
Also present: Senator Faircloth.
DEPARTMENT OF VETERANS AFFAIRS
Office of the Secretary
STATEMENT OF HON. JESSE BROWN, SECRETARY
ACCOMPANIED BY:
KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH
D. MARK CATLETT, ASSISTANT SECRETARY FOR MANAGEMENT
STEPHEN L. LEMONS, ACTING UNDER SECRETARY FOR BENEFITS
JERRY BOWEN, DIRECTOR, NATIONAL CEMETERY SYSTEM
KATHY E. JURADO, ASSISTANT SECRETARY FOR PUBLIC AND
INTERGOVERNMENTAL AFFAIRS
WILLIAM MERRIMAN, DEPUTY INSPECTOR GENERAL
EDWARD SCOTT, ASSISTANT SECRETARY FOR CONGRESSIONAL AFFAIRS
SHIRLEY C. CAROZZA, DEPUTY ASSISTANT SECRETARY FOR BUDGET
ROGER BAUER, VICE CHAIRMAN, BOARD OF VETERANS' APPEALS
MARY LOU KEENER, GENERAL COUNSEL
EUGENE BRICKHOUSE, ASSISTANT SECRETARY FOR HUMAN RESOURCES AND
ADMINISTRATION
DENNIS DUFFY, ASSISTANT SECRETARY FOR POLICY AND PLANNING
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good afternoon. The committee will come to
order. Let me apologize again for the schedule of the Senate.
We had a vote that began just after 2 p.m., and I wanted to
make that vote so that I could come back and start as soon as
possible.
Senator Mikulski, who has been here, asked us to go ahead.
I will make sure to submit to her a full copy of my written
statement so she will not miss anything, and we are very
pleased today to welcome on behalf of the Department of
Veterans Affairs on the fiscal year 1998 budget request
Secretary Jesse Brown and other VA officials.
The Department of Veterans Affairs appropriations request
totals about $40 billion, including $21.3 billion in mandatory
programs and $18.7 billion in discretionary programs.
Discretionary appropriations would decrease in fiscal year 1998
by $225 million, while mandatory programs would increase by
about $1 billion.
In general, VA's budget request is modest, and the goals
presented are worthy, albeit ambitious. The budget reflects
continued progress in overhauling VA service delivery without a
massive price tag. However, there are a number of important
concerns raised by the budget request.
The largest discretionary program in this subcommittee's
jurisdiction, and one of our highest priorities, is veterans'
medical care, for which no increase has been requested. In
fact, under the President's budget VA medical care actually
would be reduced by $54.6 million owing to some accounting
changes, but in essence the proposed budget would freeze VA
medical care at about $17 billion in fiscal year 1998.
In order to finance the increase VA believes is necessary
to cover inflation, payroll, and other increases, the
administration is proposing the Department be authorized to
retain third-party collections and veterans copayments totaling
about $468 million after deducting administrative costs.
Mr. Secretary, the administration's proposal is a great
gamble, with veterans' medical care at stake. I am concerned
that, while it provides an incentive for VA to improve cost
recovery, and that is not a bad idea, the concept is part of a
large and, frankly, controversial package of proposed user fees
for a number of departments.
Should VA's proposal not be enacted as part of the budget
reconciliation legislation, I really question whether the
Veterans Health Administration could avoid making large
reductions in staff and undertaking other major cost-cutting
measures if no increase in discretionary appropriations were to
be provided.
We have to acknowledge, and we are delighted to
acknowledge, that the VA has made significant and impressive
changes to its health care system in the last 2 years. The
system has been completely restructured. Major improvements
have been put in place and are continuing to be implemented,
such as enrolling patients in primary care, eliminating
redundancies and unnecessary management layers, increasing the
use of ambulatory care, and implementing bulk purchasing.
These changes have enabled the VA to redirect millions of
dollars to patient care. In just one of VA's 22 networks
savings of $130 million have been made this year alone. VA has
actually managed to do more with less, a real success story of
which you and your team can rightfully be proud.
In addition, VA has overhauled its allocation methodology,
vastly improving the fairness and appropriateness with which
resources are allocated to facilities. While some fine tuning
may be needed, the new system is a tremendous step forward.
The changes have occurred in large part due to the
leadership and vision particularly of Dr. Ken Kizer. He
deserves accolades for bringing these important and long-needed
changes about.
Before Dr. Kizer's arrival at the VA, the idea of such
dramatic changes would have been considered heresy, and Dr.
Kizer I hope still you are not being tried for heresy in the
Department, but I am afraid a funding freeze would do more than
force efficiencies. A funding freeze could have the effect of
eviscerating some of the improvements which are now underway.
The American Legion has advised us that the flat
appropriations levels recommended in the fiscal year 1998-2002
medical care budget proposal are far beyond what the system can
absorb without jeopardizing the quantity, quality, timeliness
and access to care.
Mr. Secretary, if you recall, at last year's hearing you
stated VA could not operate on flat funding. You said it would
force VA to eliminate about 60,000 physicians and deny care to
about one million veterans and would force you to close the
equivalent of 41 hospitals. We raised questions about that at
the time, and I still have some questions about the adequacy of
the budget request before us.
In addition, the President's budget is predicated on the
assumption that VA can achieve a 30-percent reduction in per-
patient cost, a 20-percent increase in the number of patients
served, a 10-percent increase in revenues from nonappropriated
sources by the year 2002. It would be a great feat if you could
do it. Again, I am from Missouri. You are going to have to show
me.
PREPARED STATEMENT
VA's 30-20-10 goal is based on enactment of the cost
recovery proposal, and the Medicare subvention proposal, both
of which are controversial and problematic. In addition, we do
have some concerns about whether VA's projections are overly
optimistic. GAO has submitted testimony for the record today,
and unlike most GAO reports, it notes with approval many of the
changes that have been undertaken, and I again commend you on
the favorable report from an agency not always prone to give
favorable reports.
[The statement follows:]
Prepared Statement of Stephen P. Backhus
Mr. Chairman and Members of the Subcommittee: We are pleased to
contribute this statement for the record for the Subcommittee's
deliberations on the President's 1998 budget request for the Department
of Veterans Affairs (VA) health care system. With a 1997 medical care
appropriation of $17 billion and a declining veteran population, VA
faces increasing pressure to contain or reduce spending as part of
governmentwide efforts to achieve a balanced budget. Last year, we
reported that VA's health care system had the opportunity to reduce its
operating costs by billions of dollars over the next several years.\1\
---------------------------------------------------------------------------
\1\ VA Health Care: Opportunities for Service Delivery Efficiencies
Within Existing Resources (GAO/HEHS-96-121, July 25, 1996) and VA
Health Care: Opportunities to Increase Efficiency and Reduce Resource
Needs (GAO/T-HEHS-96-99, Mar. 8, 1996).
---------------------------------------------------------------------------
VA's 1998 budget proposal requests a medical care funding level of
$17.6 billion, consisting of an appropriation of almost $17 billion and
a legislative proposal to retain insurance payments and other third-
party reimbursements.\2\ VA characterizes this as the first step in a
5-year plan to reduce its per patient cost by 30 percent, increase
patients served by 20 percent, and finance 10 percent of its
expenditures using nonappropriated revenues by the year 2002. VA
proposes to use appropriations of about $17 billion over the next 5
years and supplement this with increases in third-party reimbursements
that are estimated to be $1.7 billion in 2002.
---------------------------------------------------------------------------
\2\ This includes $123 million of administrative costs for third-
party insurance recoveries and $68 million of reimbursements for
veterans compensation and pension examinations.
---------------------------------------------------------------------------
Our comments focus on VA's 5-year plan, including the outlook for
attaining the stated targets and the potential effects on veterans and
others. In addition, as requested by the Subcommittee, we also offer
our preliminary observations on VA's progress on two major initiatives:
developing a method to more equitably allocate resources and
establishing a decentralized management structure to more efficiently
and effectively deliver services. We plan to provide the Subcommittee
more detailed information on these two initiatives at a later date.
Our comments on VA's budget proposal are based on past and ongoing
work to assess operating policies, procedures, and practices of VA
hospitals and clinics.\3\ We spoke with hundreds of VA officials and
examined a wide array of documents, including VA's budget submission,
annual reports, and studies done by VA's Office of Inspector General
and others. Our comments on VA's decentralized management and resource
allocation initiatives are based on information obtained from
discussions with officials at headquarters and seven networks as well
as a review of documents they provided.
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\3\ A list of related GAO testimonies and reports appears at the
end of this statement.
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In summary, while VA's budget goals may be attainable, they also
carry implications such as limited deficit reduction contributions and
potential risks to low-income, uninsured veterans. Achieving increased
efficiency is not contingent on either increases in patients served or
resources. VA's ongoing efforts to restructure its health care system
could yield billions of dollars in savings during the next 5 years. A
large part of these savings would be realized through more efficient
use of its workforce, which will allow the existing patient base to be
served with fewer employees. In fact, sufficient savings could be
generated to afford VA an opportunity to increase patients served
without new resources or increase its contribution to deficit
reduction. Furthermore, VA can significantly decrease its reliance on
appropriated resources by using its existing authority to sell excess
capacity to help other federal agencies meet their beneficiaries'
health care needs.
VA's proposal to generate billions of dollars in new revenue to
serve 20 percent more patients intensifies VA's direct competition with
the private sector and potentially leaves low income, uninsured
veterans vulnerable. VA may be able to attain its revenue goals only by
attracting thousands of new users who have higher incomes or public or
private insurance. And such new VA users are likely to be drawn from
private providers who may see their revenue base erode as patients
shift to VA care. Moreover, VA may spend unreimbursed resources on
these veterans that could reduce the availability of resources for low-
income, uninsured veterans.
VA also faces a difficult challenge as it takes steps to implement
a new resource allocation method to improve veterans' access to VA care
and a decentralized management structure to improve resource
utilization. These initiatives promise improvements in equity and have
stimulated significant changes in efficiency. However, VA's challenge
will be to adequately monitor these changes to identify and correct
unintended effects such as those that limit equity of access.
BACKGROUND
VA's role in providing for the health care needs of veterans has
evolved over time. During its first 50 years, VA predominantly served
veterans who had disabilities caused or aggravated by military service
and other low-income, uninsured veterans in need of a health care
safety net. Over the past 10 years, VA has also served higher income
and insured veterans with nonservice-connected conditions. Over time,
however, VA's patient base has been shifting from serving primarily
veterans with service-connected conditions to those without service-
connected conditions. Currently, VA operates over 750 facilities,
including 173 hospitals and over 400 outpatient clinics. These
facilities serve 2.6 million of the nation's almost 26 million veterans
as well as about 300,000 nonveterans.
In 1995, to promote greater efficiency and services to veterans, VA
created a new decentralized management structure, forming 22 Veterans
Integrated Service Networks (VISN). These networks replaced the
previous structure's four regions and expanded their authority. The
VISN is now the basic budgetary and decision-making unit of VA's health
care system and exercises management authority over VA facilities in
its geographic area. This system of networks clearly places value on
efficiency and customer service, and the networks are empowered to make
a wide range of decisions regarding care delivery options. Under the
recently enacted eligibility reform legislation (Public Law 104-262),
for example, networks can contract with a broader range of private
providers to purchase services at prices lower than VA's costs and
generate revenue by selling excess services. In April 1997, VA
implemented the Veterans Equitable Resource Allocation (VERA) system to
allocate medical care appropriations among the 22 VISN's. VERA is
intended to improve the equity of resource distribution throughout VA's
health care system.
efficiency savings not dependent on increased number of veterans served
Last year, we testified that VA could save billions of dollars over
the next 7 years through improved efficiency. As noted before, the
Congress subsequently gave VA the two additional tools-eligibility
reform and expanded contracting authority--that VA said were key to the
success of its efforts to increase efficiency. With these tools, VA can
help veterans prevent costly hospital admissions and access lower cost
services, regardless of where veterans reside. VA's 1998 budget
request, however, suggests that VA will be able to achieve 30 percent
efficiency savings over the next 5 years only if it has the additional
resources to serve 20 percent more patients.
Over the past 18 months, VA has taken aggressive steps to change
the way it operates to reduce costs and improve services to veterans.
These initiatives are expected to save billions of dollars by avoiding
unnecessary expenditures. Most of the initiatives involve a resizing
and more efficient use of its workforce, which accounts for over $10
billion of VA's medical care budget. For example, VA is shifting
patient care from inpatient to outpatient settings as well as reducing
average lengths of inpatient stays. It is also consolidating management
and clinical services of nearby hospitals to reduce costs. Moreover, VA
is exploring opportunities to contract with other health care providers
for services at costs lower than VA's.
These restructuring efforts should save billions of dollars without
attracting new users as the following examples indicate:
--VA established a pre-admission screening process for hospitals
that, if effectively implemented, could save $8.4 billion over
the next 5 years.
--VA integrated the management of two or more nearby facilities in 26
different locations, which should result in savings of $230
million over the next 5 years.
--VA shifted substance abuse treatment from an inpatient to an
outpatient setting in one service location, which is expected
to result in savings of $10 million over the next 5 years.
Currently, VA has teams exploring additional opportunities for
streamlining operations and reducing workforce needs. Many of these
teams are identifying ways to use lower cost methods for delivering
services within individual facilities. For example, many facilities are
--reducing patient bed-days of care, including one location that
would close seven medical wards and generate potential savings
of almost $50 million over the next 5 years, and
--shifting inpatient surgeries to ambulatory settings, including one
location that shifted enough workload among facilities to close
two surgical wards and potentially save over $15 million during
the next 5 years.
VA also has many teams exploring ways to consolidate services at
nearby facilities. Such actions should result in significant savings
over the next 5 years as shown by the following examples:
--Facilities in one service area are planning to integrate eight
pathology and laboratory medicine services into a single
business unit with two central laboratories. This integration
is expected to save about $10 million over the next 5 years.
--Facilities in another area are exploring ways to consolidate small
purchases into one location, which is expected to save over $20
million during the next 5 years.
Additional savings opportunities could be available in later years
from the closing of hospitals whose workloads may be shifted to nearby
hospitals that have sufficient unused capacity to efficiently and
effectively meet veterans' needs. For example, closing a facility with
about 300 beds could save over $100 million in overhead costs alone
during a 5-year period.
EFFICIENCY SAVINGS COULD PROVIDE OPPORTUNITIES TO SERVE MORE VETERANS
WITHOUT ADDITIONAL RESOURCES
VA could expand its current patient base if its efficiency savings
exceed payroll and other cost increases. These costs are expected to be
about $637 million in 1998 and to increase by a rate of about 4 percent
a year over the next 5 years.
The effect of VA's efficiency savings is to increase its purchasing
power each year. For example, most of the savings are attributable to
reductions in VA's workforce, which currently numbers about 189,000
full-time equivalents. VA may need to reduce its workforce by about
6,800 full-time equivalents to realize an annual savings of $637
million. This level of reductions would decrease VA's resource needs by
comparable amounts in succeeding years. Thus, an annual appropriation
of $17 billion could be sufficient to serve 2.9 million patients in
2002 if efficiency savings and cost increases approximate $637 million
a year, on average. Moreover, VA could increase its patient base if its
efficiency initiatives yield greater savings.
ADDING RESOURCES FURTHER ENHANCES VA'S OPPORTUNITY TO SERVE MORE
VETERANS
VA's 1998 budget proposes reinvesting all efficiency savings and
using additional resources to expand its patient base. VA expects to
add a total of $5.8 billion in new resources over the next 5 years
(from public and private insurers and others), starting with $737
million in 1998 and increasing to $1.7 billion in 2002. VA expects that
these additional resources will allow it to increase the number of
veterans served by 587,000 which would increase its patient base from
2.9 million to 3.5 million in 2002.
If the targeted resource levels are attained, VA appears capable of
attracting 587,000 new users by 2002. Recent expansion of VA's
contracting authority and veterans' eligibility for care should
facilitate creation of new access points, referred to as community-
based outpatient clinics, which along with VA's efforts to improve
accessibility of existing hospital-based clinics are likely to attract
new workload.
For example, VA has opened or developed plans to open 86 new
community-based clinics over the last 3 years. These clinics provide
only primary care and refer veterans to VA hospitals for more
specialized care. Last month, we surveyed the 12 clinics that had at
least 2 years' operating experience and found that they had attracted
3,000 new veterans. These clinics experienced the largest growth in
their initial year and smaller growth in subsequent years. VA estimates
that the remaining 74 clinics will serve over 128,000 users a year but
has not estimated how many will be new VA users. Twenty-two of the new
clinics estimated that between 5 and 60 percent of the patients served
will be new users, while the rest expected to serve no new users or
were unsure whether new users would be served.
Although it plans to open many more clinics, VA told us that it is
too early to estimate how many or where they will be located. Our
analysis suggests that VA could need between 1,200 and 1,800 additional
clinics to attract 587,000 new users if each clinic attracts between
250 and 500 new veterans. The first 12 clinics averaged 250 in their
initial years. These clinics also appear to provide an affordable way
for VA to attract new users.
In addition, VA's efforts to improve veterans' access to existing
facilities should also attract new users. These initiatives include
expanding primary care by extending operating times for hospital-based
clinics to night and weekend hours as well as ways to reduce waiting
times. For example, one hospital-based clinic reported enrolling 3,000
new veterans for care during the first year after having made such
accessibility improvements.
EXPANDING VA'S RESOURCE BASE POSES CHALLENGES
VA's revenue goal of $1.7 billion in 2002 includes estimated
recoveries of about $902 million from private insurance, $557 million
from Medicare, and $178 million from federal agencies and others.
Attaining these targets may present a challenge as VA would probably
have to attract thousands of new revenue-generating veterans. VA has
provided, however, little information on the numbers of new veterans
needed to meet revenue goals or how much of the revenue will come from
inpatient or outpatient services. This lack of information creates
uncertainties about VA's ability to achieve its revenue goals.
Increasing Recoveries From Private Health Insurance May Be Difficult
VA currently serves insured veterans and recovers some or all of
its costs of care from insurers. Presently, VA returns all recoveries
to the Treasury, except those needed to cover VA's billing and
collection costs. In 1996, VA deposited $455 million into the Treasury
and used $119 million for administrative costs. VA's recovery of $574
million represents a decline in recoveries from 1995, despite an
increase in the number of users.
VA's ability to increase future recoveries from its current insured
patient base is uncertain for several reasons:
--Veterans are increasingly covered by health maintenance and
preferred provider organizations from which VA generally cannot
recover.
--As an increasing proportion of VA users become eligible for
Medicare, their private health insurance becomes secondary, so
potential recoveries drop.
--As VA shifts from inpatient to outpatient settings, insurance
recoveries decrease and the cost of recovery increases.
--VA found that Medigap insurers have been paying VA too much, which
will result in decreased future recoveries and refunds of about
$150 million a year.
--VA's authority to recover from private health insurance for care
provided to service-connected veterans for non-service-related
conditions expires September 30, 1998.
As a result, to meet its revenue projections of $902 million from
private insurance, VA will probably have to focus its marketing efforts
on attracting veterans with fee-for-service private health insurance.
In addition, the Congress would need to extend VA's authorization to
recover for certain services provided to service-connected veterans.
VA officials told us that they do not know how many veterans in
their 2.9 million patient base have insurance or how many insured
veterans receive billable care. This lack of information on key
elements affecting its projections creates considerable uncertainty
about the number of new insured users it would need to attract in order
to generate its target revenues.
Attaining Medicare Recovery Target May Be Difficult
VA proposes to collect about $557 million from Medicare in 2002 for
services provided to about 106,000 additional higher-income veterans
who are covered by Medicare. VA currently attracts only about 1 out of
every 100 higher-income Medicare-eligible veterans--about 41,000
veterans in 1992. It thus appears questionable whether VA will be able
to attract an additional 106,000 higher-income Medicare-eligible
veterans by the year 2002.
VA expects to recover from Medicare, on average, about $5,300 for
each of the 106,000 additional Medicare-eligible veterans it expects to
serve in 2002, a target amount that seems achievable based on average
Medicare spending levels per patient nationwide. However, it may be
difficult for VA to achieve this collection rate if Medicare-eligible
veterans use primarily VA services that are not covered by Medicare,
such as prescription drugs, inpatient psychiatric care, and long-term
nursing home care. Our assessment of Medicare-eligible veterans' use of
VA services in 1994 suggests that most of these veterans use VA, at
least in part, for services not covered by Medicare.\4\
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\4\ Veterans' Health Care: Use of VA Services by Medicare-Eligible
Veterans (GAO/HEHS-95-13, Oct. 24, 1994).
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Increasing Recoveries From Other Sources Appears Attainable
VA proposes to collect $178 million in 2002 through sales of excess
services to federal agencies, affiliated medical schools, and others.
This amount represents over a 300-percent increase over VA's
collections of $43 million in 1996.
Since 1966, the Congress has expanded VA's authority on several
occasions to sell excess services in an effort to encourage VA
facilities to generate revenues in addition to those appropriated. Over
the last 5 years, VA's sales have increased by about 37 percent, with
most sales to the Department of Defense (DOD) and affiliated medical
schools. Last September, the Congress took another step to expand VA's
ability to generate revenue by authorizing VA to sell excess health
care services to any health care plan, insurer, or other provider.
VA could meet or exceed its goal of $178 million in 2002 if it
markets its excess capacity to other federal agencies. DOD and VA
reached agreement in 1995 that VA can provide health care services to
active duty and retired members of the military and dependents enrolled
in DOD's TRICARE program. While some VA facilities have become TRICARE
providers, most have not. Similarly, few VA facilities have generated
revenue by serving beneficiaries of other federal agencies, such as the
Indian Health Service and the Bureau of Prisons, even though these
agencies have expressed interest in buying VA's excess services.
expanding va's resource base may place some veterans and others at risk
Over the last 25 years, VA has served an increasing number of
veterans without service-connected conditions, generally those low-
income veterans in need of a health care safety net. During the last 10
years, VA has also served higher-income and insured veterans with its
resources that were in excess of those needed to provide care to
service-connected and low-income veterans.
Allowing VA to retain nonappropriated revenues may change VA's
perspective. This is because the veteran population is, in effect,
likely to represent two distinct groups--non-revenue-generating
veterans and revenue-generating veterans. Within this later group are
several potential target populations: privately insured veterans;
Medicare-eligible veterans; higher-income veterans; and higher-income,
privately insured, or Medicare-eligible veterans.
Non-Revenue-Generating Veterans May Be at Risk of Having Access Limited
VA may encounter difficulty attaining its revenue goals unless a
significant number of new users have higher incomes or insurance. This
could create a strong incentive for VA to market services to attract
revenue-generating rather than non-revenue-generating veterans. This
incentive could manifest itself in several ways, including where VA
decides to locate new community-based outpatient clinics. For example,
VA recently proposed locating a community-based clinic in a homeless
shelter that VA expects could attract 2,040 new users in need of VA's
safety net and therefore not likely to generate revenue. By contrast,
VA has also proposed opening a new clinic in one of the country's more
affluent counties. While the clinic is intended to improve access for
current users, it is also expected to attract patients who could
ultimately generate revenue.
Non-VA Providers May Be at Risk of Losing Workload
Marketing VA services to generate revenue has the potential to draw
higher-income insured veterans from private providers who may then see
their revenue base erode, depending on the number of patients who shift
to VA care. If VA has to aggressively attract new users who are now
receiving health care elsewhere, it will intensify the competition
between VA and other state, county, and private providers for a larger
share of a shrinking veterans' health care market.
VA's success in attracting revenue-generating patients will be
likely to result in a shifting of health care costs from other
financing organizations to VA and to exacerbate financial hardships for
those competing health care providers that have excess capacities. For
example, our interviews with 115 veterans using new access points last
year revealed that 70 percent had Medicare coverage, 50 percent had
private insurance, and 7 percent had Medicaid.\5\ Most said they paid
for their own primary care or used insurance coverage to obtain care at
other providers before they switched to VA care.
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\5\ VA's Health Care: Improving Veterans' Access Poses Financial
and Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).
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VA's Proposal Could Lower Contribution to Deficit Reduction
VA's proposal to retain revenue generated from nonappropriated
sources would also affect VA's contribution to deficit reduction. VA
currently returns recoveries to the Treasury, which, in effect, reduces
the government's cost of VA health care. For example, VA expects to
return $438 million in 1997, which would reduce the amount of
government resources needed to serve VA's patient base from its
appropriated amount of $17 billion to $16.6 billion. By contrast, under
VA's proposal it would retain insurance recoveries of $590 million in
1998, increasing the government's cost to finance VA health care to
$17.6 billion, or $1 billion more than in the previous year.
In addition, VA's proposal to reinvest efficiency savings and use
additional nonappropriated resources to increase the number of patients
served could affect VA's contribution to deficit reduction. For
example, VA would need an appropriation of $17 billion a year to serve
2.9 million users if savings equal payroll and inflation costs between
1998 and 2002. By contrast, VA may be able to contribute up to $1
billion more in 2002 toward deficit reduction if annual efficiency
savings exceed cost increases by $200 million, on average, over the 5-
year period and such excess savings are returned to the Treasury.
NEW ALLOCATION METHOD AND DECENTRALIZED MANAGEMENT SHOW PROMISE BUT
RISKS EXIST
VA is using a new resource allocation method and a decentralized
management structure to address two long-standing issues: equity and
efficiency. These initiatives are intended to improve the equity of
veterans' access to care and produce cost savings.
Allocating Resources Equitably Seems Achievable With New Methodology
VA is using the Veterans Equitable Resource Allocation (VERA)
system to allocate 88 percent of the $17 billion medical care
appropriation to the 22 networks. This approach is a major shift away
from VA's historical process for two reasons. First, it funds 22
networks rather than hundreds of facilities. Second, it allocates
resources on the basis of costs per veteran served rather than on the
basis of facilities' historical budgets. Funding networks sends a clear
message that each facility is a part of a larger regional enterprise
charged, in part, with a mission of achieving equity of access. VERA
recognizes that networks are the vehicles for fostering regional
change, eliminating redundancies, and facilitating cooperation among
medical facilities. Network officials have the authority to tailor
their VERA allocations to facilities and programs, within the
parameters set by national policy and guidelines, and to integrate
services across facilities for equity and other purposes.
The goal of VERA is to provide networks with comparable levels of
resources per veteran served. VA implemented VERA in an attempt to
allocate patient care resources on the basis of differences in patient
needs and regional differences in the price of their care. To do this,
VERA classifies patients into two groups--basic care and special care--
as a simple case mix adjustment. Basic care patients generally receive
routine services that are less expensive than those received by special
care patients. Special care patients often have complex or chronic
conditions, such as spinal cord injury or end-stage renal disease, or
require care in settings such as nursing homes. The VERA special care
category also includes some adjustment for age to account for the
higher medical demands of older population groups.
VERA allocates resources to networks based on two key components:
network workloads and national prices. VA patient workloads are the
estimates of the number of patients--basic and special--a network may
serve. VA also calculates workloads for research support, education
support, equipment, and nonrecurring maintenance. To determine a
national price for each workload category, VERA divides national
resources available by the national workload for that category. VERA
allocates funds to a network by multiplying the network's workload
numbers by their respective national prices. In addition, VERA adjusts
for differences in regional labor costs for patient care.
To the extent that VERA allocates comparable levels of patient care
resources for each veteran served, it provides incentives for networks
to obtain these resources by increasing workload and decreasing costs.
Networks that increase their patient workload relative to other
networks gain resources under VERA; those whose patient workloads
decrease relative to others lose resources. Networks that are more
efficient, that is, have patient care costs below the national price,
have more funds available for local initiatives. However, those with
patient care costs above the national price (that is, less efficient
networks) must increase efficiency to have such funds available. Thus,
these incentives can result in cost savings and enhanced access for
veterans.
VERA will not be fully implemented until fiscal year 1999. As a
result, few resources will move among networks this year. (See fig. 1.)
Five VISN's will receive fewer dollars and 17 will receive more.\6\
VERA generally moves resources from the Northeast and Midwest, where
per veteran costs have been higher than the national average, to the
South and West where per veteran costs have been lower than the
national average. If VA had fully implemented VERA this year, shifts in
funding among the networks would have ranged from a reduction of 14
percent to an increase of 16 percent.
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\6\ In VA's Veterans Equitable Resource Allocation System Briefing
Booklet, March 1997, VA shows that 6 networks will lose funds and 16
will gain funds in fiscal year 1997. However, VA excludes allocations
for equipment and non-recurring maintenance. We included those amounts
in our calculations to show the impact of VERA more fully. Neither we
nor VA includes funds not allocated by VERA in these comparisons.
[GRAPHIC] [TIFF OMITTED] T05MA01.000
VERA, like any allocation model, has limitations. First, VERA may
shift some resources inappropriately because it may not fully account
for justifiable differences in regional cost variations. Although VERA
adjusts for differences in regional case mix with its basic and special
care patient categories and adjusts the allocations for differences in
regional labor costs, it assumes that all the remaining differences are
based on differences in efficiencies. While inefficiency is a major
factor in these cost differences, other factors may play a role. For
example, to the extent that veterans are sicker and need more health
care services in different parts of the country, additional case mix
adjustments may be necessary to fully explain regional cost
differences. As we have said in the past, VA needs to provide more
information on why costs vary throughout the country.\7\ VA officials
told us they plan to examine this further.
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\7\ Veterans' Health Care: Facilities' Resource Allocations Could
Be More Equitable (GAO/HEHS-96-48, Feb. 7, 1996) and Department of
Veterans Affairs: Programmatic and Management Challenges Facing the
Department (GAO/T-HEHS-97-97, Mar. 18, 1997).
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Another potential issue is that basing VERA on veteran-users may
result in underallocation of funds in areas with low usage rates. If
these rates result from past inequities in access to services, VERA may
need to incorporate population-based data on veterans with highest
priority for receiving services rather than relying solely on user
data.\8\ However, other factors, such as number of veterans with health
insurance coverage, could also affect usage rates. Because adequate
data were not available and VA wished to implement VERA as quickly as
possible, it did not include population data in VERA. VA continues to
examine the utility of doing so.
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\8\ Category A veterans have the highest priority for receiving VA
health care services. Included in Category A are veterans with service-
connected disabilities and those with service-connected disabilities
whose income falls below certain thresholds.
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VERA's incentives for lower per veteran costs and higher workload
numbers could lead to unintended consequences if not properly monitored
and corrected. In our discussions and visits with network and medical
center officials, we found efforts under way to increase the number of
veterans served. VA indicators for the first quarter of fiscal year
1997 generally show increases in the number of high-priority veterans
(that is, Category A veterans) seen, and the increases for some
networks are dramatic. We have concerns about whether the data
accurately depict changes in workload. If the data are reliable, we are
concerned that some networks may be inappropriately increasing their
workload numbers to get more resources under VERA. For example,
networks may be increasing workload by increasing the number of one-
visit patients. This may be good primary or preventive care, or it
could distort VERA allocations because only minimal services are
provided to get credit for increased workload. In the short time since
the indicators were published, however, we have been unable to
determine the accuracy of the data and the services the new users
received. VA officials told us that they recognize the importance of
monitoring, identifying, and correcting unintended consequences. They
said they will monitor data used in the allocation model, including
workload increases, to ensure that they reflect changes at the network
and medical center levels that are consistent with VA-wide policy and
guidance.
Although VERA is a step toward to a more equitable allocation of
resources, it does not specifically address equitable access to
services. Networks are ultimately responsible for allocating funds to
ensure that veterans have equal access to VA services. Each of the
networks we contacted differs in how it allocates funds. One funds its
facilities using a flat rate for each veteran-user. Another uses a
combination of historical funding and negotiation with medical center
management regarding new initiatives. Still another includes a feature
in its allocation method that provides payment for each additional
veteran served. VA officials told us they will examine these processes
to ensure that different allocation mechanisms increase equity of
access to services while addressing other national VA goals.
Networks Have Made Significant Progress. But Decentralized Management
Poses Oversight Challenges
VA has taken a page from private sector organizations and empowered
the network directors by delegating broad decision making authority
over network budgets, facility staffing, health care delivery, and
administrative functions. This has resulted in notable accomplishments
at VA, including significant cost savings and improvements in access.
Decentralized decision-making at VA places a premium on effective
headquarters guidance and monitoring of VISN activities. The challenge
is to ensure that networks have a common understanding of VA-wide goals
and legislative requirements while permitting them flexibility in how
to achieve the goals. The challenge in monitoring network performance
is to have reliable, appropriate, and timely indicators to ensure that
problems are identified and corrected.
VA has provided guidance to managers and staff since the beginning
of its reorganization. For example, the Under-Secretary for Health
issued two volumes, ``Vision for Change'' and ``Prescription for
Change,'' delineating the type of organization he intended VA to become
and the goals VA would strive to attain. Network and medical center
staff told us that these publications and other communications, such as
monthly meetings between network and headquarters managers, help
develop their understanding of the structural and operational changes
being made.
VA's new performance measurement process also plays an important
guidance role by underscoring VA-wide organizational priorities. These
measures include key indicators such as reduced bed-days of care and an
increased percentage of surgeries performed on an ambulatory basis. The
measures are the main components of the network directors' performance
agreements. In networks we visited, medical center directors'
performance agreements also included these measures. Medical center
directors we contacted told us that network directors were exercising
closer oversight of their progress in achieving VA-wide goals than had
occurred under previous organizational structures.
Another strategy for reducing unnecessary variation has been the
use of clinical practice guidelines. These are intended to enhance the
quality and appropriate utilization of health care services by reducing
variations in the way a health condition--for example, stroke--is
treated. Networks are required to adopt 12 practice guidelines by the
end of fiscal year 1997. They can choose from those identified by
headquarters or other sources.
Providing national guidelines but offering networks discretion on
when to follow these guidelines can create opportunities for local
innovation but problems for national oversight. If discretion results
in variation across the system, it will be difficult for VA to assess
the impact of the guidelines. Network flexibility may produce tension
between headquarters and networks. For example, officials in one
network we visited told us that they preferred the American Medical
Association guidelines to the national diabetes guidelines VA adopted.
Headquarters, network, and medical center officials told us that
national guidance had not been sufficiently clear on whether to notify
headquarters of significant program changes at the network level. They
told us that they had not always been clear on what constituted
``significant'' changes. In a few instances, headquarters officials
were not notified of impending network-initiated changes such as
closure of a surgical program at a medical center. In May and September
1996, headquarters issued guidance for networks on prior notification
and consultation with headquarters for network actions such as
restructuring clinical services--including closures of major programs--
and proposed changes to special emphasis programs such as those for
spinal cord injury and prosthetics. VA has additional measures planned
to ensure that headquarters is involved in significant network-
initiated program changes.
Performance measures and standards developed by headquarters are
the key components of VA's monitoring process. Headquarters holds
network directors accountable for making progress toward VA goals by
including measures and standards of performance in the directors'
contracts. Headquarters lengthened its list of measures for fiscal year
1997; it now includes about two dozen indicators. In networks we
visited, directors are monitoring medical centers on these measures as
well.
CONCLUDING OBSERVATIONS
VA's 1998 budget presents the Congress with a fundamental choice
about the future course of VA health care, a choice that will have an
effect on veterans, other health care providers, and efforts to achieve
a balanced federal budget. In general, VA's proposal to reinvest all
savings and generate additional nonappropriated revenues may intensify
the direct competition between VA and other providers. By contrast, a
decision to limit VA's retention of nonappropriated revenues will set
VA on a course to becoming a more cost-efficient safety net for those
non-revenue-generating veterans who have no other health care options.
Currently, there is insufficient information to understand the full
implications of VA's budget proposal. VA states that the key elements
of its proposal--namely, a 30-percent per patient cost reduction, a 20-
percent increase in veterans served, and a 10-percent reduction of its
reliance on appropriations--are inexorably linked but, in our view,
this is not so. It seems plausible that any number of different
scenarios could occur, depending on the magnitude of cost savings that
VA will realize through its ongoing restructuring.
For instance, VA could operate as a health care safety net for
several years, with an appropriation of about $17 billion or less,
given VA's progress in identifying and implementing efficiency savings.
Such efficiency savings could equal or exceed the potential
nonappropriated revenues that VA estimates it can generate over the
next 2 years if authorized to do so. For this reason, there appears to
be time to obtain critical information from VA and others so that VA's
budget proposal may be more clearly understood and fully debated. In
this regard, several critical issues could be addressed, including the
following:
--Should VA reinvest all efficiency savings to expand the number of
patients served? If so, should VA's expansion be limited to
certain target groups of veterans, such as service-connected,
low-income, or uninsured veterans in need of a health care
safety net?
--Should VA use nonappropriated revenue sources to help finance
increased services to higher-income and insured veterans who
have no service-connected conditions or continue relying solely
on appropriated resources to finance increased services for
service-connected and low-income veterans without service-
connected conditions?
--Should VA reinvest savings in excess of those needed to maintain
its current patient base in order to serve more veterans or
should it return some or all of the excess savings as a
contribution toward deficit reduction?
It would be less difficult to make such choices at this time if VA
had provided a road map that clearly articulated (1) what operational
changes would be needed to move along its newly proposed competitive
course and (2) what consequences such competition would have for
veterans and others. For example, additional information would be
helpful about how different choices may affect (1) service-connected
veterans and those in need of VA's safety net; (2) VA's existing
hospitals, clinics, and other facilities; (3) VA's workforce; and (4)
other health care providers.
Delaying a decision on VA's legislative proposals until such
critical information is available--including a plan describing how the
system will look and operate in 2002--may result in a better
legislative decision on VA's budget proposal. It will also afford VA
and the Congress time to better assess how VA's future resource needs
may be affected by the new decentralized management and resource
allocation initiatives.
VA's new resource allocation process and decentralized management
structure hold promise for improved operational efficiencies and
equitable access. Responding to VERA's incentives and VA's goals, local
managers are already producing substantial savings and increasing the
number of veterans served. VA, however, needs to continue examining how
price and workload data are determined under VERA to improve equity of
resource allocation. VA also needs to carefully monitor the impact of
VERA's incentives on network and facilities performance. This is
particularly important given the variation resulting from local
managers' flexibility in the decentralized system. We believe that
identifying and correcting problems is essential to the success of VA's
proposed 5-year plan.
RELATED GAO PRODUCTS
Department of Veterans Affairs: Programmatic and Management
Challenges Facing the Department (GAO/T-HEHS-97-97, Mar. 18, 1997).
VA Health Care: Improving Veterans' Access Poses Financial and
Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).
VA Health Care: Opportunities to Significantly Reduce Outpatient
Pharmacy (GAO/HEHS-97-15, Oct. 11, 1996).
VA Health Care: Issues Affecting Eligibility Reform Efforts (GAO/
HEHS-96-160, Sept. 11, 1996).
VA Health Care: Opportunities for Service Delivery Efficiencies
Within Existing Resources (GAO/HEHS-96-121, July 25, 1996).
VA Health Care: Challenges for the Future (GAO/HEHS-96-172, June
27, 1996).
VA Health Care: Efforts to Improve Veterans' Access to Primary Care
Services (GAO/T-HEHS-96-134, Apr. 24, 1996).
VA Health Care: Approaches for Developing Budget-Neutral
Eligibility Reform (GAO/T-HEHS-96-107, Mar. 20, 1996).
VA Health Care: Opportunities to Increase Efficiency and Reduce
Resource Needs (GAO/T-HEHS-96-99, Mar. 8, 1996).
Veterans' Health Care: Facilities' Resource Allocations Could Be
More Equitable (GAO/HEHS-96-48, Feb. 7, 1996).
VA Health Care: Issues Affecting Eligibility Reform (GAO/T-HEHS-95-
213, July 19, 1995).
VA Health Care: Challenges and Options for the Future (GAO/T-HEHS-
95-147, May 9, 1995).
VA Health Care: Retargeting Needed to Better Meet Veterans'
Changing Needs (GAO/HEHS-95-39, Apr. 21, 1995).
Veterans' Health Care: Use of VA Services by Medicare-Eligible
Veterans (GAO/HEHS-95-13, Oct. 24, 1994).
Senator Bond. But the VA does raise the question: ``It
appears that efficiency savings could equally equal or exceed
the $700 to $850 million in potential nonappropriated revenues
that VA estimates it could generate over the next 2 years'' but
we have not seen the hard data to back up the VA's 5-year
projection of the 30-percent reduction in per-patient cost.
Nor have we been given justification for the increases
projected in user fee collections. GAO believes that VA may
have a tough time increasing recoveries from private health
insurance for a variety of reasons outlined in their testimony.
Outside of the medical care proposal, we have serious
concerns with the President's request for the VA research
program. This program, which has served to bring the best
physicians to the VA--and to keep them there--would be slashed
11 percent, or $28 million.
VA's research program has resulted in tremendous
discoveries and improvements in health care to veterans and the
general population. It is an integral element to the veterans'
health care system, and I am concerned about the implications
of such a significant cut.
In a recent letter, the chief of the pulmonary disease
section at the Kansas City VA hospital told me,
The opportunity to conduct basic and clinical research
relevant to my clinical interests was a major factor in my
joining the VA staff and in remaining here. Only in the last
year have I felt the need to explore other employment
opportunities. One of the major factors in this decision has
been the continuing decrease in funds available to support the
VA research program.
Unfortunately, the President's budget would also cut the VA
State home construction program by $6 million, a cost-effective
program which results in the provision of vitally needed
nursing home care to our Nation's veterans. There is almost
$200 million worth of priority projects awaiting funding, so
the President's proposal to cut this important program is very
disappointing.
In my own State of Missouri, there are proposed projects in
Cameron, Warrensburg, St. Louis, and Mount Vernon. I strongly
support funding of these projects and will do my best to
increase the budget over the President's proposal.
For the Veterans Benefit Administration, funding would be
held close to fiscal year 1997 levels, factoring out the
proposed shift of funds for the cost of medical examinations in
connection with compensation and pension claims, formerly
funded from the medical care account. VBA's staff would decline
543 FTE's, or 5 percent.
I am pleased to see that VBA's budget would allow for the
implementation of reengineering efforts which are intended to
result in significantly faster and less expensive compensation
and pension claims processing by 2002. I am concerned, however,
that productivity is not improving, and we have seen little
data to back up VBA's assumptions that it could reduce
processing time for an original compensation claim by more than
one-half.
In addition, the National Academy of Public Administration,
which has been studying the VBA claims processing system at
this subcommittee's request, found fundamental problems in
VBA's leadership and management structures, and a lack of
capacity to undertake sound review, analysis, and evaluation of
ongoing operations.
NAPA states in testimony, which, again, is provided for the
record, and I assume you have received copies of it today:
The NAPA study team has discerned little improvement in the
VBA's ability to develop a clear prioritized business plan
within which resources are allocated only to critical
priorities, nor has there been any improvement in the staff's
ability to plan and manage software projects. These management
failures underlie a significant part of my concern about VBA's
ability to meet its year 2000 needs and deliver on its BPR
promises.
NAPA calls for strong and decisive leadership in VBA,
strengthen strategic management capacities, consolidation of
VBA's 58 regional offices, and other changes which are more
profound than the business processing reengineering effort,
which VBA seems to believe is the answer to its problem.
So while I am pleased the VA is proposing some changes, it
would seem they are not sufficient to address the core
management and organizational issues NAPA has identified.
We are pleased to see no new hospitals proposed and a
relatively modest major construction request. The President's
request would fund two cemetery projects and the completion of
a seismic correction project in Memphis. Perhaps the
administration has come around to our view that major medical
projects should be put on hold while the new Veterans Health
Administration organization restructuring grows roots.
PREPARED STATEMENT
Clearly, Mr. Secretary, we have much to discuss this
afternoon. I look forward to hearing your opening statement,
but first it is my pleasure to turn to the distinguished
ranking member, Senator Mikulski.
[The statement follows:]
Prepared Statement of Milton J. Socolar
Mr. Chairman and Members of the Subcommittee: My name is Milton J.
Socolar, and I am a Fellow of the National Academy of Public
Administration. I am serving as the chair of the Academy's panel on
claims processing at the Department of Veterans' Affairs. As I will
describe in a minute, the Committee has tasked the Academy with
studying and making recommendations on the claims process, and our
study will be completed at the end of June. Because the panel has not
yet fully reviewed the initial staff findings and recommendations, I am
addressing you today in my own capacity as chair and am not speaking
with finality on behalf of the panel.
THE SENATE'S TASKING TO THE NATIONAL ACADEMY
This Committee has expressed ongoing concerns about of the
compensation and pension (C&P) claims adjudication and appellate
process. In 1995, in its report accompanying the fiscal year 1996
Department of Veterans Affairs appropriations bill, the Committee
expressed concerns about the backlog of claims at the Veterans'
Benefits Administration (VBA) and shortcomings in its computer
modernization effort. Congress tasked the Academy with making `` * * *
a comprehensive assessment of the Veterans Benefits Administration with
particular emphasis on specific steps necessary to make claims
processing more efficient and less time consuming.'' Specifically, your
subcommittee instructed the Academy to evaluate: The computer
modernization initiative and its link to strategic goals and
priorities; efforts to reengineer the claims processing methodology;
efforts to simplify rules and regulations; performance measures for
critical program areas and systems modernization efforts; the regional
office structure; and the roles of the Board of Veterans Appeals and
the Court of Veterans Appeals.
You stated that the Academy needs to build on and not duplicate
previous or ongoing evaluations. In 1996, you amplified the tasking in
the subcommittee's report accompanying the fiscal year 1997
appropriations bill adding that the Academy ``* * * should provide
specific recommendations for comprehensive, strategic improvements to
the organization and the many problems which have been identified.''
THE CHALLENGE AHEAD
The VBA is under great pressure to improve the performance of its
C&P program. Long-existing problems have been chronicled by a series of
reports, the most recent of which is the December 1996 report to
Congress by the Veterans' Claims Adjudication Commission (VCAC). The
panel relied heavily on this excellent report in guiding its own
research and recommendations. With the exception of those
recommendations related to program policy, on which the panel takes no
position, the panel accepts or takes even farther the VCAC's
recommendations.
In thinking about VBA's administrative difficulties in delivering
C&P benefits, it is well to keep in mind the size of the program and
complexity of the process involved. Following are some complicating
program imperatives:
1. VBA's C&P workforce must manage a ``portfolio'' of about 5.3
million service-connected disabilities, which is growing in volume and
complexity, for over two million veterans.
2. In addition to statements filed by veteran claimants,
corroborating or new evidence to support claims must be collected from
numerous sources not controlled by VBA--the Department of Defense, VA
hospitals for medical data and claim-specific medical examinations,
other federal agencies, private medical practitioners, and others.
3. Under the program's concept of rating disabilities in ten
percent increments, assessing the degree of disability for many
injuries and diseases often requires the exercise of sophisticated
judgement complicated by the growing body of opinions from the Court of
Veterans' Appeals (COVA).
4. VBA is required, if necessary, to assist each claimant in
perfecting his or her claim which can contain many alleged
disabilities.
5. The claim is kept open for the receipt, at any time up to final
decision, of additional supporting evidence or evidence of additional
entitlement.
6. Within a year after VBA's decision on a claim, the claimant may
file a notice of disagreement to initiate the administrative appeals
process, requiring additional consideration and processing.
It is also well to keep in mind that, despite delays occasioned by
the foregoing, claimants to date have tended to formally appeal to the
board of veterans' appeals (BVA) in a relatively small percentage of
cases--less than five percent of VBA's decisions on compensation
claims. Nevertheless, considering the overall large volume of cases
handled, this small percentage translates into a significant number of
cases. They clog the system, which results in backlogs and further
delays in disposing of claims filed--from an average of three to as
long as five years for a significant number of cases.
The department and VBA have been administering the C&P program
within a narrow, insular perspective. VBA tends to address issues as
they arise, very much on an ad hoc basis. Although there have been
times when VBA has shown signs of a desire to raise C&P operations to
new and more efficient levels, it has not yet succeeded in realizing
the more important of its stated aims for improving service. In
essence, VBA has been ``administering'' the C&P program; it has not
been managing it.
Although VBA's problems have been tolerated to a degree through
previous years, it is now essential, even critical, that it undertake
and meet the management challenge to achieve greater efficiency and
provide better service. Medical issues underlying many disability
considerations now require deeper analysis to resolve. Harnessing the
boon of advancing information technologies is enormously complex and
difficult. With the arrival of judicial review in 1988, BVA is no
longer the final arbiter of statutory obligations to claimants and both
VBA and BVA must meet more stringent requirements as interpreted by
COVA. Perhaps, most significant, funds to cover inadequacies will
surely not be so freely available in the future as they have been in
the past.
Briefly stated here--I will return to the point later in my
statement--VA and VBA leadership must develop greater management
capacity and discipline to meet future demands. VBA's leadership and
management structures and systems do not embody essential analytic and
planning capacities. With poor analysis and planning, it is small
wonder that there is not sufficient discipline to carry out controlled
implementation of approved initiatives. And finally, VBA must develop
the capacity and will to do good review, analysis and evaluation of
ongoing operations. Even though some regional offices (RO's) operate at
high levels of performance, the VBA nationally operates in too
permissive a manner with little accountability for the achievement of
specific results across all 58 of its regions.
THREATS TO SERVICE
Fixing the Year 2000 Problem.--A good example of the consequences
resulting from inadequate management structure and discipline is the
risk that VBA was going to assume in resolving the critical ``year
2000'' computer problem embedded in its payment system. Should that
problem not be resolved, VBA would not be able at the turn of the
century to issue benefit checks to millions of veterans.
Notwithstanding that computer expertise was clearly spread too thin and
that its record of managing complex computer projects was poor, VBA was
poised to simultaneously undertake (1) development of VETSNET to
replace the existing payment system, (2) implementation of complex
legislative changes into the system, (3) reprogramming of its benefit
delivery network, (4) consolidation, at the department's behest, of the
Hines and Philadelphia benefit delivery centers with the Austin
automation center, while (5) also working on a number of programs to
cure the year 2000 problem.
We became alarmed during our study over the disastrous consequences
should VBA's risky approach fail, as well it might have. We met with
deputy secretary Hershel W. Gober to point out the risks involved and
explain our concerns. Subsequently, the deputy secretary changed the
direction of VBA's approach to significantly reduce the risk to the
payment system now and to support year 2000 operations. VBA has now
initiated action to hire the necessary systems integration contract
support, procure other resources and put in place the management
required to sustain payment system operations and achieve year 2000
capabilities.
Staffing Is Being Reduced By A Third While Workload And Other
Resource Demands Are Rising.--The fiscal year 1998 President's budget
reduces resources by 1,335 full time equivalent (FTE) staff or 31
percent between fiscal year 1996 and fiscal year 2002. While
recognizing the pressures for balancing the budget and that future VBA
budget estimates may be revised, I am concerned that inappropriate
reductions will only serve to make a bad situation worse, engendering
the need for larger expenditures in the future.
We are exploring some questions we have about VBA's workload
forecasting generally. A large percentage of these reductions is
premised in fiscal year 1999 and beyond on the success of the business
process reengineering (BPR) plan to change the way C&P claims will be
processed. The C&P service bases its staffing estimates on a series of
assumptions about programmatic and legal changes that will allow
reductions while at the same time achieving ambitious timeliness and
quality of service goals. These assumptions have not been evaluated in
an operational setting, and pilots intended to test their validity,
just now getting underway, will take up to 18 months to complete. Of
particular concern are VBA's assumptions about future workload,
projected levels of participation by veteran service organizations, and
the benefits of information technology.
Unmanaged Appellate Workloads In VBA Regional Offices May Reach
Crisis Proportions.--I am also concerned about growing appellate
workloads in VBA RO's. Since the end of fiscal year 1995, the number of
BVA remands pending in RO's increased by 69 percent to more than 23,000
and had been pending for an average of about a year. Over one-fourth of
the cases pending in RO's are in appellate status.
VBA has not treated this workload as a nation-wide problem needing
concerted attention. It has neither established 19 performance goals
for processing this work nor regularly tracked progress in their
accomplishment. I am concerned that, without adequate attention, the
RO's will continue to focus on new and reopened claims and that
appellate workloads and lead times will reach crisis proportions.
major claims and appeals problems continue to degrade service
Apart from these potential threats to program integrity, the VA
continues to struggle with major problems that continue to degrade
service.
Regional Office Adjudication Decisions Are Too Slow And Not Well
Enough Prepared.--While showing some improvement in the last several
years, processing time for claims continues to be far higher than the
BPR goal of 60 days. The VBA continues to have difficulty making
quality decisions early in the adjudication process, and quality
remains a point of major concern and contention. The rate of remands by
BVA peaked at a level of 50.5 percent of cases considered in fiscal
year 1992, and has come down only slightly to 45.6 percent at present.
The combined total of allowances and remands by the BVA peaked at 67.1
percent in fiscal year 1995 and is down to 62.6 percent at present, far
higher than the BPR goal of 25 percent.
Information Resources Management--Failure To Manage Effectively Has
Led To Current Crises.--VBA's has shown little ability to learn from a
1995 study by the CNA Corporation and a series of harshly critical GAO
reports about problems in managing VBA's information resources. The
study team has discerned little improvement in the VBA's ability to
develop a clear, prioritized business plan within which resources are
allocated only to critical priorities, nor has there been any
improvement in the staff's ability to plan and manage software
projects. These management failures underlie a significant part of my
concern about VBA's ability to meet its year 2000 needs and deliver on
its BPR promises.
VBA NEEDS TO DEVELOP MANAGEMENT CAPACITIES FOR MAKING MUCH NEEDED
CHANGES
I was initially puzzled as to why the sustained criticism VBA has
endured had not led to the reforms required for improving operations
but have now concluded that the reason is two-fold. First, VBA is
bounded by a culture that looks only to short-term needs without
concern over long-term implications. Second, this short term outlook
has led inevitably to the failure of leadership to develop capacities
that are essential to the successful management of complex programs in
a large organization. VBA has long felt that it could manage the
increasingly complex adjudication and appellate process on the basis of
past and existing organizational capacities and practices. While VBA
staff and executives are dedicated and hard working, enlightened
leadership and new approaches are critical to solving the
organization's problems and significantly improving program service.
The Institution Lacks Capacity For Strategic Management.--VBA lacks
the management capacities that would enable its leaders to define long-
term direction and provide the resources to follow through. At the same
time, it is leadership's function to see to it that those capacities
are established and maintained at high levels of competence. These
include: the capacity to plan, integrate and execute complex
programmatic activities; the evaluative and information capacities to
measure performance and hold executives accountable for results; and an
annual plan, implementation, and review cycle to integrate all parts of
the organization into a comprehensive operational effort to fulfill the
VBA's goals.
VBA Needs Strong, Decisive Leadership.--Despite progress since
1996, the potential for a cohesive, well functioning leadership team is
uncertain. The VBA strategic management committee (SMC), established in
1996, is a step in the right direction, but it lacks a clear purpose, a
long-term agenda for change, an ability to integrate and oversee
complex activities, and a clear vision of what strategic management
means. Recent efforts to implement the government performance and
results act (GPRA) and conduct BPR are laudable but insufficient.
There are also major gaps in clear lines of accountability within
the leadership team, including a lack of clarity in staff and
operational responsibilities between central office and field
organizations. This is exemplified by assignment of responsibility for
implementation of BPR, a quintessentially operational activity, to the
C&P Service, nominally a VBA staff office without operational control.
C&P lacks influence on the performance of the VBA area offices and
RO's. Nor is there sufficient uniformity among the 58 regions and four
area offices in their execution of central office direction. There are
also numerous cultural short circuits to accountability. These include
a bias against developing a systematic corporate information capacity
and a reactive and decision-averse culture in which senior executives
are reluctant to take tough action against a failing member. The VBA is
a closed organization that has historically not systematically sought
information for planning purposes from stakeholders or others outside
of the organization.
a fundamentally different configuration of field operations is required
VBA faces a compelling need to develop a fundamentally different
way of delivering services in the field. The current structure of 58
RO's is difficult at best to manage with any uniformity of policy
implementation, and such a structure prevents optimal allocation of
staff resources to service need. Such a structure with its inherent
staffing inefficiencies was affordable in an era of full budgets;
however, VBA is now facing a rapidly declining resource base as well as
requirements for funding new BPR and IT service improvements and
stronger strategic management and leadership capacities.
Consolidation of RO's would not only bring cost efficiencies but
would actually improve service to veterans. The BPR plan, when
implemented, will facilitate formation of small, stand alone
adjudication teams capable of flexible geographic targeting. Existing
faxing, conferencing and other technology now enable flexible
geographic processing, and future IT enhancements will only improve
this. A number of these small groups, situated to be convenient to
veterans, could be managed through a fewer number of RO's having larger
geographical jurisdictions than at present. Strengthened strategic
management capacities as recommended will facilitate development and
implementation of the integrated and phased planning and improved
performance data necessary for successful consolidation.
THE TIMELINESS OF APPEALS AT THE BOARD OF VETERANS' APPEALS IS SHOWING
IMPROVEMENT
Improvements put in place to improve the timeliness and quality of
decisions by the BVA appear to be working and show promise of reaching
acceptable levels by the end of fiscal year 2000. The establishment of
judicial review of VA decisions on claims for veterans benefits by the
Veterans Judicial Review Act of 1988 caused major stress in the entire
adjudication and appellate process generating waves of remands and
rework throughout both the VBA and BVA. As BVA's productivity declined,
backlogs of cases pending its review increased from about 17,000 in
fiscal year 1991 to more than 60,000 at the end of fiscal year 1996.
During this period, average elapsed time to final BVA decisions on
substantive appeals, including time during which RO's processed
remanded cases, increased almost three-fold from about 400 to over
1,100 days.
Both the backlog and average days to final decision are now being
reduced and our report will describe the actions BVA has taken to
improve its productivity. Principally these involve: (1) acquiring
increased staff resources, (2) implementing improved training and
performance evaluation programs, (3) increasing the ratio of
professional decision staff to support staff, and (4) dispensing with
BVA panel consideration of appeals in favor of single board member
decisions.
Our staff analysis indicates that with its current level of staff
resources, BVA should be able to reduce the backlog of cases to about
20,000 or the equivalent of six months' decision production by the end
of fiscal year 2000. At that time, average time to a BVA decision from
the time an appeal is ready for its review should be six months which
is acceptable given the complexity of appellate cases and the time
needed by national veteran service organizations to participate in this
stage of the appellate process.
recommendations for urgent action to head off crisis and achieve rapid
PERFORMANCE IMPROVEMENT
While the VBA has shown some progress, they do not have the three
to five years needed to allow that progress to take its natural course.
Events are being driven by potential threats to program integrity such
as preparing for the year 2000. But, even without these threats, the
seemingly endless and unbreakable cycle of complaint and inaction about
VBA performance is a major problem for the department.
It is time for the secretary to act.
Our preliminary recommendations are that:
Action Is Critical To Assure That Checks Continue To Go Out In The
Year 2000.--The secretary must ensure that VBA follows up on the recent
actions taken by the deputy secretary to assure uninterrupted payments
to veterans for the year 2000.
Regional Office Appellate Workloads Need To Be Addressed On A
Priority Basis.--To address growing appellate workloads in the RO's,
the under secretary for benefits should establish performance measures
and standards for these workloads, hold managers accountable for
meeting the established performance standards and report quarterly to
the secretary on progress in meeting them.
Congress Should Ensure That VBA Has The Resources Necessary To
Guarantee Continued Benefits To The Veteran.--VBA's proposed FTE
reductions are premature and put at risk current operational capability
to sustain performance of the claims processing system. Given
significant doubts about the validity of VBA's estimating methods,
Congress should not reduce VBA resources until the organization can
fully document the basis for its workload and staffing estimates and
demonstrate the validity of their reengineering efforts. I also
recommend that the inspector general (IG) be asked to work with VBA in
improving these estimating methods.
The Secretary Should Initiate Comprehensive Change In Leadership
and Management At The VBA.--Urgent action is needed by the secretary to
achieve rapid and effective reform. Such reform cannot come all at
once. Crucial leadership and organizational capacities must be built
before long term improvement in performance can be achieved.
The secretary should make every effort to ensure the selection of
an under secretary for benefits who can lead such a long-term reform
process. He should give the new leader an unequivocal charge to ``fix
the place'' and should require him or her to develop a long-term reform
plan for this. This plan should include a detailed, integrated,
sequenced timetable for achieving planned objectives and the costs
associated with key actions.
Vital first actions should be to: strengthen the leadership team;
design a better organizational structure to promote a higher degree of
accountability for performance; and ensure stronger influence by the
director of the C&P Service over field operations. The under secretary
should draw on the expertise of other federal agencies and private
sector organizations that have a proven ability to improve
organizational management and performance.
The secretary should also make every effort to ensure selection of
a capable leader/manager as the new chair of the BVA with a charge to
drive home BVA improvements already begun and to work closely with the
under secretary for benefits to develop system-wide solutions for
adjudication and appellate problems.
The New VBA Under Secretary Needs To Develop Strong Strategic
Management Capacities.--As essential first steps, the under secretary
and appropriate departmental components must take rapid action to
develop jointly the strategic management capacities necessary to give
leadership the tools with which to manage. These tools include an
integrated and fully resourced set of strategic management capacities
within the VA, VBA and C&P service. These include: (1) an effective
plan, implementation, review and revision cycle at the department level
and within the VBA; (2) effective evaluation, assessment, and
information capacities; (3) an accountability-based implementation
system of goal-setting, performance measurement, and regular tracking
of results; and (4) stronger coordination among VBA components and with
key stakeholders such as the BVA, veterans' health administration(VHA)
and key staff offices at the departmental level.
The Business Process Reengineering Effort Needs To Be Improved And
Broadened.--The new under secretary for benefits should act to
reexamine and improve the analysis, approach, and management of the BPR
program. Budget estimates must be based on a more complete and detailed
analysis of workloads coming into the organization and their effects on
appellate workloads in VBA and BVA. Further, the BPR implementation
plans must be carefully evaluated in an operational setting and their
effects on program performance and staff requirements measured. The
under secretary should seek assistance from the IG and expertise from
the private sector in accomplishing this.
Regional Office Restructuring Is Necessary.--A fundamentally
different configuration of field operations is required by budget and
other pressures. In the interest of greater efficiency and improved
service, the under secretary needs to plan for restructuring and
consolidation of the 58 VBA RO's while maintaining the availability of
local access by veterans to small, well-trained adjudication staffs
dispersed throughout the nation. The under secretary must begin
planning a new, phased effort to restructure the field service delivery
network to improve customer service performance but achieve
administrative savings with which to finance enhanced strategic
management capacities, a training and quality strategy, and other
needs. Congress should require (1) the secretary to prepare a
restructuring plan by March 31, 1998; (2) the IG to review and report
to Congress on progress at least twice yearly; and (3) the under
secretary for benefits to report to Congress on progress twice yearly.
Key Steps To Improve Management Of Information Resources Are
Necessary.--The under secretary should follow through on the deputy
secretary's recent decision to reallocate VBA's software workforce to
implement fiscal year 1996 legislative changes and hire a systems
integration contractor to assume total system performance
responsibility for all year 2000 modifications. In addition, the under
secretary should suspend the VETSNET program and reallocate those
resources to support higher priority needs. He should initiate an
effort to reprioritize VBA information resources management (IRM)
projects; establish rigorous processes for IRM requirements
determination and configuration control; improve IRM leadership and
management; and determine the necessary size of the IRM workforce. He
should turn total system performance responsibility for new systems
over to a systems integration contractor.
Key VCAC Recommendations Affecting The Claims Adjudication Process
Need To Be Implemented.--The under secretary for benefits should
implement key VCAC recommendations including rule simplification,
development of regulations to clarify statutory requirements, and
development of an integrated VBA/BVA plan to measure the quality of
claims processing. VBA should also develop a capacity to evaluate field
innovations, develop a training strategy, and continue improvements in
disability rating examinations.
The Secretary And The Congress Should Track And Fund Progress.--The
secretary should direct the under secretary to present a comprehensive
reform plan to the Congress. For at least the next three years, the IG
should monitor progress and report semi-annually to the secretary and
Congress on their assessment of overall progress. The deputy DVA
secretary, in conjunction with the under secretary for benefits and the
chair of the BVA, should report on this progress at least semi-annually
to the Congress outside of the budget process. As Congress is assured
that the VBA is making progress, it should provide necessary funding in
support of VBA efforts.
Attachment 1
ABOUT THE ACADEMY
The National Academy of Public Administration is an independent,
nonprofit, nonpartisan organization chartered by Congress to assist
federal, state, and local governments in improving their performance.
The Academy, through its many projects, is at the forefront of efforts
to create more efficient, effective, and accountable government.
Making a Difference
The Academy is frequently called upon to tackle the toughest issues
facing government today. The problem-solving ability and innovative
responses to change of the Academy are increasingly sought by Congress,
federal agencies; state, local and international governments; and
private institutions. Some of the 27 projects underway in 1997 are:
--Assessing the future direction of environmental regulation and
interaction among stakeholders (Enterprise for the Environment
project)
--Analyzing federal mapping, surveying, and other geographical
information services, including possible consolidation or
privatization, and the relationship to state, local, and
private activities
--Training current and future public officials in the Republic of
Georgia
--Developing seismic safety standards for buildings covered by
federal safety regulations
--Creating a new human resources management system at the National
Institutes of Health
--Studying the feasibility of creating an enterprise organization to
conduct environmental management functions at the Department of
Energy
--Examining compensation and benefits claims processing at the
Department of Veterans Affairs
A Unique Institution
A Focus on Performance.--Since its founding in 1967 the Academy has
focused on improving the nation's capacity to achieve public purposes
by maximizing available financial, information, technological, natural,
and human resources.
An Objective Viewpoint.--The Academy is nonpartisan, insulated from
political concerns, and free from ideological agendas.
A Congressional Charter.--The Academy's congressional charter,
granted in 1984, distinguishes it as a national institution dedicated
to the public good.
A Guiding Framework.--The Academy's framework of governance
provides a formula for examining public management processes,
functions, strategies, and institutions. The framework identifies four
dimensions for evaluating systems and structures for meeting public
needs: public purposes and strategies, institutional roles and
responsibilities, performance capacities, and change.
Academy Fellows.--The Academy's most distinctive feature is its 480
Fellows: current and former Cabinet officers, members of Congress,
governors, mayors, legislators, diplomats, business executives, public
managers, and scholars.
Advice to Congress
Mindful of the Academy's special capacity to evaluate management
issues and offer concrete recommendations for improving performance,
Congress called upon the Academy for testimony 30 times in 1995 and
1996.
The Academy responded to requests for advice on emerging issues of
governance and the implementation of legislation. Oversight and
appropriations committees also requested Academy expertise when
examining management and organization of federal agencies. Fellows also
assessed legislative proposals and provided members of Congress
valuable institutional history. The Academy was also called upon to
identify and illuminate opportunities created by dilemmas such as the
fiscal year 1996 budget stalemate.
Funding
The Academy is a private nonprofit organization whose projects are
funded on a contract basis from public agencies and private
organizations. Other revenue sources are foundation and corporate
grants, Fellows' dues, endowment income, individual contributions, and
seminar registration fees.
Recently Published Studies
A Path to Smarter Economic Development: Reassessing the Federal
Role, prepared for the Economic Development Administration, advocates a
``smarter'' federal role in economic development that is based on
``Learning, Leveraging, and Linking.''
The Role of the National Guard in Emergency Preparedness and
Response recommends ways that the Guard can enhance its disaster relief
capabilities without compromising its role within the nation's ``total
force structure.''
Ensuring Worker Safety and Health Across the DOE Complex states
that the Department of Energy should transfer regulatory responsibility
for worker safety and health at its sites to the Occupational Health
and Safety Administration.
Budgeting for Performance Strategy, Flexibility, and Accountability
to Meet a Demanding Mission found that with increasing demands to
control the flow of illegal aliens and serve those seeking citizenship,
the Immigration and Naturalization Service must rethink and redesign
its budgeting processes.
These and other reports can be purchased through NAPA Publications
at (301) 617-7801.
______
Attachment 2
VETERANS' CLAIMS PROCESSING AND THE VETERANS BENEFITS ADMINISTRATION
Panel members
Milton J. Socolar, Chair--Former positions with the General
Accounting Office: Special Assistant to the Comptroller General of the
U.S.; Acting Comptroller General of the U.S.; General Counsel and
Deputy General Counsel.
Mark A. Abranson--Chair, Leadership, Inc. Former President, Council
for Excellence in Government; Senior Program Evaluator, Office of
Assistant Secretary for Planning and Evaluation, U.S. Department of
Health and Human Services; Research Associate, National Academy of
Sciences.
Rhoda M. G. Davis--Member, Veterans Claims Adjudication Commission.
Former Director for Strategic Management, Social Security Commission;
Director of Field Operations and Director of Long-term Care Research,
Health Care Finance Administration.
C. William Fischer--Senior Vice President for Business and Finance,
Northwestern University. Former Executive Vice President, Brandeis
University; Vice President for Budget and Finance, University of
Colorado; Assistant Secretary for Planning and Budget, U.S. Department
of Education.
Anthony J. Principi--Former Deputy Secretary, Department of
Veterans Affairs; Staff Director, Senate Committee on Veterans Affairs;
Deputy Administrator, Congressional and Public Affairs, Veterans
Administration; Counsel, Senate Committee on Armed Services; and line
officer, U.S. Navy.
John Shannon--Former positions with the U.S. Army, including:
Special Assistant to the Assistant Secretary for Legislative Affairs;
Deputy Under Secretary; Assistant Secretary of the Army for
Installations and Logistics; Under Secretary of the Army.
Charles W. Washington--Professor of Public Administration, Florida
Atlantic University. Former Stennis Chair and Director, John C. Stennis
Institute of Government, Mississippi State University. Associate Dean,
School of Government and Business Administration, George Washington
University.
Project Staff
John P. Scully--Project director. The Alliance for Redesigning
Government Public Innovator Learning Network Manager; Acting Alliance
Director; Special Assignment to the Vice President's National
Performance Review; Deputy Director, Management Operations Directorate,
Goddard Space Flight Center.
Gregory J. Ahart--Senior research associate. Management consultant.
Former official at GAO, served as assistant comptroller general for
human resources, director of the Human Resources Division, and Deputy
Director of the former Civil Division.
Martha S. Ditmeyer--Research assistant. Consultant, National
Academy of Public Administration. Former staff member Massachusetts
Institute of Technology and Comsat.
Charles Hulick--Senior research associate. Former official at the
General Services Administration (GSA); Assistant Commissioner for
Quality and Contract Management, GSA; past President of the Senior
Executives Association, GSA.
Emerson Markham--Senior research associate. Former Budget Director,
Veterans Administration, ACTION and Airways Modernization Board; has
held a variety of financial management and planning positions in eight
federal agencies; Project Director on Academy projects, including with
the Administrative Office of the U.S. Courts, Department of Veterans
Affairs, General Accounting Office, Office of Personnel and Management,
and Treasury Department.
Michael H. McLendon--Senior research associate. Consultant in
aerospace, information technology and health care. Former professor,
Finance and System Acquisition, the Defense Systems Management College;
principal member, Office of the Secretary of Defense; Department of the
Air Force.
Roger I,. Sperry--Co-Project director. Director of Management
Studies. Former Professional staff member, U.S. Senate Committee on
Governmental Affairs; Senior Group Director and Special Assistant to
Comptroller.
STATEMENT OF BARBARA MIKULSKI
Senator Mikulski. Thank you, Mr. Chairman.
I am going to ask unanimous consent that my statement be
included in the record. I note that it is 2:30, and people have
been waiting to testify. We want to hear from Secretary Brown.
So just note that I really want to raise questions related
around the adequacy of funding for medical care. I am deeply
troubled about the numbers for veterans' medical research,
which has meant so much to not only the veterans, but the
American community at large, and also other issues related to
education, the utilization of the benefits of some others.
PREPARED STATEMENT
Mr. Chairman, you should know here, periodically, sounds of
applause. It is because about 10 percent of the back room are
my Maryland constituents that are visiting. And they should
know that Senator Bond is a real champion of the veterans. And
they are here as kind of a workshop, learning how Congress
works. So maybe we ought to get to it.
[The statement follows:]
Prepared Statement of Senator Barbara A. Mikulski
Mr. Chairman, thank you for holding this hearing today on the
fiscal year 1998 budget request for the Department of Veterans Affairs.
I'd like to welcome today's witness, Secretary Jesse Brown.
Since the VA was founded, we have fought a World War, a Cold War
and a Gulf War. From the World Wars to Korea, Vietnam to the Persian
Gulf, each conflict has created a new generation of veterans with their
own unique medical needs.
We recently celebrated the 50th anniversary of the end of World War
II. To the G.I. Joe generation, we said thank you again. And thank you
to all of the men and women who fought and died defending this nation.
Fifty years later, the World War Two soldiers, sailors and airmen
have become our veterans. We have a sacred contract with all of our
veterans that we cannot break. Promises made must be promises kept. We
have no higher responsibility than to provide the medical care that is
due our veterans.
The VA, despite all of the criticisms, has become indispensable to
our veterans. We can never abandon our responsibility to provide the
best possible care to our veterans--it is our responsibility to do
nothing less.
Unfortunately Mr. Chairman, you know as well as I do that this
subcommittee faces tremendous fiscal constraints. We need to make sure
that the VA and every other agency makes the most of the money it
receives. The need to cut costs and save money is driving a new agenda
for the VA.
This new agenda can be an opportunity for the VA and for the
Congress. We must look for new solutions and new ideas instead of
clinging to old ways of doing business.
However, as we look to reduce costs to the taxpayer, we must not
reduce the quality of care to our veterans. Improving quality and
efficiency should be our guiding principles, not simply cutting costs.
If we are not careful, saving a buck in the short term could cost us
bigger bucks in the long term.
During this morning's hearing, I plan to ask questions about
several of VA's initiatives. I want to make sure that the
Administration's projections for VA funding aren't overly optimistic. I
want to make sure that creative proposals don't end up harming veterans
as the proposals potentially get bogged down awaiting Congressional
approval.
I am concerned that the VA's budget request assumes new revenues
and service to new veterans without assurances that the money can be
collected or that costs can be reduced sufficiently to accommodate the
increase in the numbers of veterans served.
I also will raise questions about VA's plans to serve a new
generation of veterans. Tomorrow's veterans may have dramatically
different needs than yesterday's veterans. I want to make sure that the
VA is thinking strategically and creatively about what it needs to do
to make sure that the baby boomer veterans will receive the best care.
We must proceed cautiously when so much is at stake. The VA and the
Congress need to be guided by a strategic plan for improving the
quality of health care and delivery of benefits while utilizing new
management strategies, such as decentralizing decisionmaking authority,
to save money for the taxpayer.
I know the VA has begun to make some changes to become more
efficient and effective, and I look forward to hearing about this
process.
I want a better VA, a more efficient VA, and a VA that takes care
of our veterans.
Mr. Chairman, I thank you again for calling this hearing today and
I look forward to working with you on this issue.
Senator Bond. Thank you very much, Senator Mikulski.
And you have no better teacher on how Congress works than
your distinguished Senator from Maryland, Senator Mikulski, who
chaired this subcommittee and I would say taught me all I know
about this subcommittee. But she does not want to be hung with
that. And so I will just say that she has been valuable in her
assistance.
Senator Faircloth, do you have a statement to submit?
STATEMENT OF LAUCH FAIRCLOTH
Senator Faircloth. Yes, I do, Mr. Chairman. And I would
like to read it, if I may. It is not that long.
Mr. Chairman, I thank you for allowing me to be a visitor
to your subcommittee this afternoon. I have some very serious
questions that I need to ask the Secretary about a situation in
North Carolina concerning some wasteful and abusive practices
in the Department of Veterans Affairs there.
Mr. Chairman, almost 1 year ago today, the Veterans
Department took under investigation into allegations of a
sexual harassment misconduct and unprofessional behavior on the
part of the Director of the VA Medical Center in Fayetteville,
NC. In September 1996, the Office of the Inspector General of
the Veterans Department issued a report confirming the
allegations of sexual harassment as well as other acts of
misconduct by the Director.
Now, Mr. Chairman, in most organizations in today's world,
the Director would have been fired. But that did not happen at
the Department of Veterans Affairs. Instead, Mr. Jerome
Calhoun, about whom the allegations were made, was given a pay
increase. He now earns $106,000 a year. He was also transferred
to Bay Pines, FL, where he had asked to be transferred. Talk
about throwing the rabbit in the briar patch. His relocation
expenses were paid by the taxpayers.
Mr. Chairman, this is a very serious issue. My constituents
in North Carolina are outraged; in particular, the people at
Fayetteville and the veterans in that area. A man making
$100,000, in a settlement, is transferred to Florida, with a
pay increase. It is absurd, but it does not end here. Here are
some of the other examples of spending practices at VA while
Mr. Brown has been there. These are serious and they need
correction.
One, the number of Department of Veterans Affairs employees
earning $100,000 or more has increased by more than $1,200
since January 1993; 8,252 employees, or 3.8 percent of the VA
work force, earn six figures or better.
A $26,000 saltwater fish tank was installed in the South
Carolina VA Hospital. The yearly maintenance cost of the tank
is $7,800. This was installed at a time of layoffs and a budget
shortfall at the facility. The Director of the facility who
ordered the tank also spent $58,000 to renovate his office, and
$139,000 on furniture and equipment. When the new carpet was
deemed an inappropriate color, new carpeting was installed at
$5,600.
Mr. Chairman, I will not take up your time today and delay
your hearing, but there are a number of issues that need to be
addressed. And that is the reason I feel compelled to be here
today. And, Mr. Chairman, I thank you for letting me be here.
And, Secretary Brown, I plan to contact you next week and
ask you to come by as I want to discuss this with you.
Senator Bond. Thank you very much, Senator Faircloth.
And for Secretary Brown, let me tell you that I do not
believe you have received the GAO or the NAPA testimony yet. I
apologize for that, and we will make that available.
Secretary Brown. We have the study, Mr. Chairman.
Senator Bond. Fine. If you would proceed.
STATEMENT OF JESSE BROWN
Secretary Brown. Thank you, Mr. Chairman. I want to thank
you so much for allowing me to present the President's 1998
budget request for the Department of Veterans Affairs.
I notice there are some new members on the subcommittee
since I was here last year. I am glad that they are on this
committee, and we look forward to working with all of you.
As Senator Mikulski pointed out, we have some VA employees
in the audience. And she mentioned that they were a
constituency of hers. But I want to note for the record that
they are here to protect my back, especially after listening to
Senator Faircloth. [Laughter.]
Mr. Chairman, we are requesting $17.6 billion for medical
care and $19.7 billion for compensation and pension payments,
$818 million for VBA, $84 million for national cemeteries, $234
million for research, $79.5 million for major construction, and
$166.3 million for minor construction. The details on the total
of $41.1 billion and 210,625 employees for VA programs are
contained in my written testimony.
This is a good budget, Mr. Chairman, because it will allow
VA to continue providing quality care and services to our
veterans and their families. It builds on our progress in
making changes needed to operate, as you defined it, for the
last 2 years within budget realities. These changes, and
eligibility reform, offer VA a great opportunity to expand and
improve health care services, create new revenue streams and
provide value to the taxpayers.
Our proposal includes some new tools to keep our system
sound. I am pleased to report that VA will expand and improve
health care delivery in 1998, without any appropriated increase
above the 1997 enacted level for medical care. This is a first.
Mr. Chairman, we have been very proactive in changing the
way we do business, as you pointed out in your opening
statement. And we, too, are very, very proud of the
innovativeness and the proactiveness that Dr. Kizer has brought
to VA. But if we are to continue, we clearly need the help of
Congress. Critical to our strategy is our proposed legislation
to retain all third-party collections. Should this legislation
require an offset of $1.9 billion to overextenders, we are
proposing savings of $3.4 billion, which means $1.5 billion for
deficit reduction.
It is also our goal to collect Medicare reimbursements for
higher income, nonservice-connected veterans who chose VA
health care. Of course, this will require legislation
authorizing the Medicare demonstration.
Passage of our legislative package will permit us to
accomplish the following:
By the year 2002, we expect to reduce the per-patient cost
for health care by 30 percent, increase the number of veterans
served by 20 percent, and fund 10 percent of VA's health care
budget from nonappropriated revenues. These three goals are
mutually dependent. We cannot accomplish any one of them alone.
Without enactment of these legislative proposals, a
straight line appropriation in 1998 would force VA to treat
fewer veterans and eliminate thousands of health care
positions. We have estimated that 105,000 veterans would be
denied care next year and 6,600 health care positions may be
eliminated. A straight line budget in 1998 would force us to
change VERA. Those networks that will receive needed increases
will get less. And those that will lose dollars will lose more.
By the year 2002, we would have denied care to up to 500,000
veterans.
Mr. Chairman, no additional resources above the 1997 level
will mean the beginning of the end of the VA's health care
system. And I think you pointed in that direction when you
provided or shared your opening statement with us.
However, if our proposal is enacted, we would provide care
to 500,000 more veterans by the year 2002. Under this budget,
in 1998, we would treat 3.1 million unique patients--an
increase of 135,000 over 1997; provide 890,000 episodes of
inpatient care--and that is going down, which is good; and 33.2
million outpatient visits--that is going up, and that is good.
This budget also includes funds that are critical to
changing the claims processing system through the business
process reengineering process. When completed, reengineering
will allow most claims to be processed in less than 60 days by
the year 2002, while reducing the cost for processing claims by
over 20 percent.
I think, quite frankly, we do have a clear vision for the
future as we look to reengineer that whole operation. And I am
looking forward to the opportunity today to explain how.
The national cemetery system is continuing to experience
growth in its workload. I am pleased to note that funding is
being requested for the first full year of operations at the
national cemetery in Seattle, and activation of cemeteries at
Chicago, Dallas, and Albany.
PREPARED STATEMENT
Mr. Chairman, this concludes my statement. I do want you
and the committee to know that I look forward to working with
all of you to honor the commitments that we have made to our
veterans and their families.
Now, I would be happy to respond to any questions that you
or members of the committee may have.
[The statement follows:]
Prepared Statement of Jesse Brown
Mr. Chairman, members of the Subcommittee, I am pleased to present
the President's 1998 budget proposal for the Department of Veterans
Affairs (VA). We are requesting $41.1 billion in new budget authority
and 210,625 FTE for veterans' programs. This budget will allow VA to
continue providing quality care and services to our veterans and their
families.
The President's proposal is innovative and historic. It builds upon
the significant progress we have already made in preparing VA to
operate within current and future fiscal realities. Our request strikes
the appropriate balance between upholding our commitment to veterans
and supporting deficit reduction. It also includes new management and
revenue tools to keep our system viable and promote overall savings to
the Federal Government. The 1998 budget for Medical Care is the first
installment of a five-year strategy to improve the delivery of
healthcare to veterans. I wish to highlight several key elements of our
budget request.
A NEW COURSE FOR VETERANS' HEALTHCARE
VA has reinvented its approach to healthcare delivery and
implemented a new national network management structure. We are moving
toward becoming a truly national system, with coordinated networks of
patient-centered healthcare services. Beginning in fiscal year 1997, we
propose to allocate medical care funds on a capitation-based model
called the Veterans Equitable Resource Allocation (VERA) system. This
resource allocation system complies with the Congressional mandate
contained in Public Law 104-204. The recently enacted Eligibility
Reform Act (Public Law 104-262) offers VA a great new opportunity to
provide improved healthcare services to current customers, attract new
revenue-generating customers, and provide value to taxpayers.
VA will expand and improve healthcare delivery with a 2.8 percent
increase in funding, but without any increase in appropriated funds
above the current 1997 enacted level for Medical Care. This
``baseline'' strategy is tied directly to our proposed legislation to
retain all third-party medical collections and user fees. The estimated
$468 million in net collections will provide the funds necessary for us
to cover the costs of inflation and continue to improve services.
In future years, VA's goal is also to collect Medicare
reimbursements for higher income, non-service-connected veterans who
choose VA healthcare. This assumes authorization of the Medicare
subvention demonstration, successful pilot testing, and authorization
to expand nationwide. To keep our system vibrant and in step with
modern medicine, we will reach out with a high-quality product and
expand our customer base.
With these incentives come new challenges. Our budget request
commits us to reduce the per patient cost for healthcare by 30 percent,
increase the number of veterans served by 20 percent, and fund 10
percent of the VA healthcare budget from non-appropriated revenues by
the year 2002.
IMPROVING BENEFITS DELIVERY
We continue to process compensation and pension claims in a more
timely manner. The Veterans Benefits Administration (VBA) is on
schedule to process original compensation claims in 1998 in 106 days, a
reduction of 38 days from 1996 actual and an improvement of 107 days
from a high of 213 days in 1994. Progress also continues in reducing
the total pending caseload as well. By 1998, the total pending caseload
will be reduced by nearly 38 percent from its highest point of 570,000
in 1994 to 356,000 in 1998.
In addition to the Compensation & Pension (C&P) medical exam pilot
program funded from the C&P appropriation, our budget also proposes
that exams be funded directly from VBA resources with a transfer of $68
million from the Veterans Health Administration (VHA) to VBA for this
purpose. We propose that VBA reimburse VHA for the cost of medical
exams conducted in conjunction with a veteran's claim for benefits.
Establishing a customer/provider relationship should improve the
quality and timeliness of medical exams and, in turn, enhance the
quality of VBA claims adjudication. Claims remanded to VBA for
deficient medical exams should decline. This budget reflects the
continuation of VBA's Business Process Reengineering (BPR) for the C&P
claims process, which will significantly improve service to veterans.
When completed in 2002, this reengineered process will allow most
claims to be processed in less than 60 days and will reduce C&P costs
by over 20 percent in the same time frame.
ensuring a lasting tribute for veterans and family members
We project that annual veteran deaths will increase 13 percent,
from 525,000 in 1996 to 592,000 in 2002. Based on the 1990 census,
annual veteran deaths are expected to peak at 620,000 in 2008. As
deaths increase, we anticipate a corresponding increase in the number
of annual interments performed at our national cemeteries from 71,786
in 1996 to 92,300 in 2002. During the same time period, the total
number of graves maintained will increase from 2.1 million to 2.5
million.
Our request for the National Cemetery System begins to position VA
to meet future requirements. The budget includes funding and personnel
to completely open a new National cemetery at Tahoma, WA, begin the
activation process for three additional new national cemeteries, and
address workload growth at existing cemeteries. Infrastructure needs
will also be addressed.
The budget includes a change in Administration policy for the
National Cemetery System. The Federal Government will focus on
providing additional incentives for states to participate in the
veterans cemetery grant program in order to improve future access to
veterans cemeteries. We propose to increase the maximum Federal share
of the costs of construction from 50 percent to 100 percent. In
addition, the entire cost of initial equipment for cemetery operations
could be funded from Federal resources.
administrative services--maintain high quality at reduced costs
Reinvention efforts continue under VA's Franchise Fund. In 1998, we
anticipate gross billings of nearly $82 million compared to $55 million
in 1997. In addition to the six Service Activities already in the fund,
we have added the remaining portion of the Austin Finance Center's
fiscal operation.
Our budget also reflects the phased expansion of the Shared Service
Center (SSC). The SSC is an integrated facility in which VA employees
and managers can obtain fast, accurate responses to their payroll and
human resources questions. In fiscal year 1998, the SSC will provide
services to additional VA facilities and locations. The SSC will
centralize payroll processing and personnel information in a cost-
competitive way and will reduce the Department's overhead.
PERFORMANCE BASED BUDGETING
The Government Performance and Results Act of 1993 (GPRA) is the
primary vehicle through which we are developing more complete and
refined strategic goals and performance information. This will allow us
to better determine how well VA programs are meeting their intended
objectives. We are continuing to move our focus away from program
inputs and toward program results. Our strategic management process has
been reinvigorated to bring about a stronger ``One VA'' focus that
emphasizes our commitment to becoming a world-class service delivery
organization.
We have blended the performance plan required by GPRA into our
budget submission so that program goals, objectives, and performance
information are presented in an integrated fashion with our request for
resources. This provides much better information on what we are trying
to achieve, how we will measure our success, and what resources we
believe are needed to accomplish our stated goals and objectives.
Along with our enhanced planning efforts, we have strengthened our
focus on accountability for results. Our Accountability Report
documents the Department's financial and programmatic performance and
serves to meet the performance reporting requirements of GPRA. We
continue to move closer to our ultimate objective of having a single
set of performance measures that are used throughout the program
planning, budget formulation, budget execution, and accountability
processes. This emphasis on program results will position us to make
more informed budget and management decisions.
I will now briefly summarize our 1998 budget request by program.
MEDICAL PROGRAMS
Medical care
This year, funding of the veteran's health system is based upon
four elements: the appropriation, third-party collections, sharing
reimbursements and copayments, and a demonstration pilot for billing
Medicare for higher income veterans. For 1998, VA's request provides an
additional $468 million--a 2.8 percent increase--over last year's
enacted level. Essentially, the appropriation is straight-lined at the
enacted level for 1997 with a slight adjustment, a decrease of $68
million for C&P examinations to be transferred to the VBA and an
adjustment for Franchise Fund supported financial services (an increase
of $14 million). VA is proposing that all third-party medical
collections and user fees be merged with the Medical Care
appropriation. This will provide additional resources estimated to be
$591 million, of which $123 million is required to cover the cost of
collections and $468 million is available for veterans' healthcare
services.
The Administration is also proposing legislation to authorize a
demonstration pilot project for Medicare subvention which will allow VA
to bill Medicare for higher level income veterans (Category C) and
retain these funds. Although we do not estimate significant collections
from this pilot in 1998, it is VA's goal to accomplish national
implementation of Medicare billing before 2002. We estimate that by
2002 the combined collections from MCCR and Medicare could contribute
$1.4 billion in revenue to support veterans' healthcare. Important to
note, we believe VA can provide high quality care for Medicare eligible
veterans cheaper than the private sector so this will benefit the Trust
Funds and VA. We believe this is a ``win-win'' situation.
The net result of these proposals for 1998 is the total
availability of new funding of $17.6 billion, which will support
187,317 FTE. We expect to provide care to 3.1 million unique patients,
an increase of 135,000. The new funding level should support almost
891,000 inpatient admissions--560,000 acute care, 18,000
rehabilitation, 168,000 psychiatric care, 87,000 nursing home care,
28,000 subacute care, 30,000 residential care, and 33.2 million
outpatient visits.
This year's funding request includes a proposal that will make a
months' worth of funding (8.3 percent) available for two years. This
will increase network directors ability to plan procurement of medical
services, supplies and equipment more rationally and effectively than
if they were constrained by the end of the fiscal year.
This budget makes an extraordinary commitment over the next five
years to reduce per patient cost for healthcare by 30 percent, serve 20
percent more veterans, and increase the percent of the operating budget
obtained from non-appropriated sources to 10 percent of all medical
care funding by 2002.
VA's healthcare system is at a crossroads. VA is now implementing
its most significant management restructuring since its inception.
Creation of the Veterans Integrated Service Networks (VISN's) assures
that scarce resources will be focused upon high priority patient
healthcare. VA is also planning to move forward with the Veterans
Equitable Resource Allocation System (VERA). This process guarantees
that VA funding is distributed based on the eligible veteran population
receiving care in a network rather than on historic funding patterns.
With enactment of eligibility reform, Congress has given VA the tools
to restructure the delivery of healthcare in a practical, logical and
cost-effective manner, reflecting the priorities of the Nation.
Combined with VERA, eligibility reform will help VA serve all veterans
better and more fairly.
It is essential that VA receive Congressional support to allow us
to expand our non-appropriated funding sources to support veterans
healthcare. This includes VA retaining third-party insurance
collections and copayments and, after successful pilot testing, VA
billing Medicare for higher-income non-service-connected veterans.
Allowing VA to retain all third-party collection and user fees will
provide the incentive to improve collection performance. In addition,
providing the medical care program with access to these alternative
revenue sources will allow VA to meet the five-year funding levels
envisioned in this budget, while meeting the healthcare needs of our
Nation's veterans.
In this competitive health care environment, VA is becoming more
customer-focused. We are measuring customer satisfaction and timeliness
of services, while comparing community standards for quality measures
to ensure that veterans receive high-quality, compassionate care.
Decentralization of network management will continue to promote
innovations and generate more cost-effective care. VA will continue its
shift from a hospital-centered specialty-driven healthcare delivery
system to an integrated network delivery system that is grounded in
ambulatory and primary care. VA now has a Primary Care program in place
at each of its medical centers.
Medical and Prosthetic Research
For Medical and Prosthetic Research, a total of $234 million and
2,953 FTE will support over 1,469 high priority research projects that
will enhance the quality of healthcare to the veteran population and
will maintain operations of research centers in the areas of Persian
Gulf illnesses, diabetes, environmental hazards, and women's issues, as
well as rehabilitation centers and Heath Services Research and
Development Service (HSR&D) field programs. In addition to the projects
supported by VA appropriations, VA's staff will conduct over 5,200
projects supported by outside funding sources, such as the National
Institute for Health (NIH) and private grants and studies.
The following are areas of focus within research: Persian Gulf
Syndrome, Prostate Cancer, Outcomes Research, Nursing, Diabetes,
Occupational and Environmental Hazards, R&D Program Oversight,
Reorganize Cooperative Studies Program, R&D Program Research Project
Portfolio, Revitalize the Career Development Program, and DOD
Collaborative Research into Human Reproductive System Consequences from
Traumatic Military Experience.
Medical Care Cost Recovery
A total of $123 million and 2,295 FTE are provided for the
administrative costs of the Medical Care Cost Recovery program in order
to improve collections from third parties, copayments, and other
sources. With this proposal, any increase in performance will directly
benefit veterans by providing additional resources for veterans
heathcare. Collections in fiscal year 1998 are estimated to increase by
$58 million over the 1997 level to $591 million. Legislation is being
proposed to merge this function with the Medical Care appropriation to
allow VA to retain medical collections.
The Administration has proposed permanently extending several
Omnibus Budget Reconciliation Act (OBRA) provisions, most of which
would expire in 1998 under current law. They are: extending authority
to recover copayments for outpatient medication and nursing home and
hospital care; extending authority for certain income verification
authority; and extending authority to recover third-party insurance
payments from service-connected veterans for nonservice-connected
conditions.
BENEFITS PROGRAMS
VA benefits programs provide assistance to veterans in recognition
of their service to their country and the impact of that service on
their quality of life. We provide compensation payments to veterans who
suffered disabling illnesses or injuries during military service and to
survivors of those who died from service-connected causes, pension
payments to needy disabled wartime veterans and the needy survivors of
wartime veterans, education and training assistance to help veterans
readjust to civilian life, vocational rehabilitation and counseling
assistance to help disabled veterans obtain employment, credit
assistance to enable veterans and active duty personnel to purchase and
retain homes, and life insurance. VA seeks to use strategic planning
and performance measurement to improve benefits and services for
veterans and their families and ensure the best use of taxpayer
investments.
The Administration is requesting $19.7 billion to support 1998
compensation payments to 2.3 million veterans and 307,000 survivors,
and to support pension payments to 410,000 veterans and 304,000
survivors. This request reflects caseload and funds for benefits under
Public Law 104-204 for the child of a Vietnam veteran born with spina
bifida. Additionally, vocational training is also available to these
children. This training may consist of vocationally-oriented services
and assistance and may include a vocational education program at an
institution of higher learning. Caseload increases in compensation also
reflect the anticipated increases in accessions for Persian Gulf
veterans as well as increases anticipated due to the addition of
prostate cancer to the presumptive list for herbicide exposure in
Vietnam and the extension of the Vietnam era for veterans who served in
the Republic of Vietnam.
Legislation is being proposed to amend title 38 to prohibit service
connection of disabilities or deaths based solely on their being
attributable, in whole or in part, to veterans' use of tobacco products
during service. This proposal would not preclude establishing service
connection based on a finding that a disease or injury became manifest
or was aggravated during active service, or became manifest to the
requisite degree of disability during an applicable statutory
presumptive period. There are no costs or savings associated with this
proposal.
We are also proposing in this budget a 2.7 percent cost-of-living
adjustment (COLA), based on the projected change in the Consumer Price
Index, to be paid to compensation beneficiaries, including spouses and
children receiving Dependency and Indemnity (DIC). Proposed legislation
is included which makes permanent a provision of current law that
provides VA access to certain Internal Revenue Service data for
determining eligibility for VA income-based benefits. It also
permanently limits the monthly pension benefit to $90 for certain
Medicaid-eligible veterans and surviving spouses receiving nursing home
care. Also proposed is the requirement that all future compensation
COLA's be rounded down to the next lowest full dollar amount.
This budget request also reflects a need for an additional $753
million for the fiscal year 1997 Compensation programs to fund the COLA
that took effect December 1, 1996, and to fund increases in caseload
and average benefit payments. Several factors account for the increase
in projected average payments, including awards of original backlogged
claims, which generated significant retroactive benefit payments,
increases in the number of service-connected disabilities claimed and
granted to veterans, and changes in program eligibility, such as
additions to the list of conditions associated with exposure to
herbicides.
An appropriation of $1.37 billion is requested for the Readjustment
Benefits program to provide education opportunities to veterans and
eligible dependents and for various special assistance programs for
disabled veterans. Education benefits will be provided for about
516,000 trainees in 1998 including 345,300 training under the
Montgomery GI Bill. This request includes funds for the annual Consumer
Price Index adjustment, estimated to be 2.9 percent effective October
1, 1997, for education programs.
This budget proposes legislation which will combine the separate
Guaranty and Indemnity Fund, Loan Guaranty Fund and Direct Loan Fund
into one new fund, effective October 1, 1997. Beginning in fiscal year
1998 all income generated by the VA housing loan programs, except the
Native American Pilot Program, would be deposited into the new fund
along with appropriated monies. Under the credit reform legislation, 13
distinct accounts were necessary for the old structure. The
consolidation would merge the remaining eleven accounts into four
accounts under a new fund entitled the Veterans Housing Benefit Program
Fund (VHBPF). No program or cost changes would result.
We are also proposing legislation to repeal certain restrictions on
the collection of debts owed to the Government resulting from the
foreclosure of VA housing loans. The budget also proposes to
permanently extend VA's authority to (1) increase most housing loan
fees by 0.75 percent and (2) charge a 3 percent fee for certain multi-
use home loans. In addition, this budget proposes to permanently extend
the resale loss provision in the formula that determines whether VA
should acquire a foreclosed property or pay the default claim. Also
included are proposals that would permanently extend the loan asset
sale enhancement authority, so that VA can continue selling loans at a
greater return, and increase the vendee funding fee to match the FHA
fee structure on loans. VA's vendee loan program offers financing of VA
real estate obtained as a result of property foreclosures and is
available to both veteran and non-veteran purchasers.
GENERAL OPERATING EXPENSES
A total of $846.4 million is requested for the General Operating
Expenses (GOE) appropriation in 1998. This funding level, combined with
$161.5 million of administrative costs associated with VA's credit
programs (funded in the loan program accounts under credit reform
provisions), $11.3 million in reimbursements from the Compensation and
Pensions account for costs associated with the implementation of the
Omnibus Budget Reconciliation Act of 1990 as amended, and $35.8 million
from insurance funds' excess revenues, together with other reimbursable
authority, will provide $1.159 billion to support operations funded in
the GOE account.
Veterans Benefits Administration
The 1998 budget request for the Veterans Benefits Administration
(VBA) is $661 million which will support an average employment level of
11,400, which is 543 FTE below the 1997 level. This request, combined
with $157 million associated with credit reform funding, will result in
an increase of $55.6 million in discretionary appropriated funding over
the 1997 level. Included in these totals are $68 million transferred
from the Medical Care account for the cost of medical examinations
conducted with respect to veterans' claims for compensation or pension.
This budget reflects the continuation of VBA's Business Process
Reengineering (BPR) for the C&P claims process, which will
significantly improve service to veterans. The BPR effort has examined
C&P core business processes and addressed the entire claims processing
environment. The present lengthy process will be reengineered to reduce
internal handling and emphasize VBA interaction with veterans and their
representatives. When completed in 2002, this reengineered process will
allow most claims to be processed in less than 60 days and will reduce
C&P original claim costs by over 20 percent in the same time frame.
This also reflects several on-going and new information technology
initiatives that will support the needs of a reengineered environment.
A major component of the VETSNET initiative is scheduled for completion
in 1998. VETSNET will provide a user friendly interface and a standard
payment and accounting system for the C&P benefits programs. Also
included are funds for the Claims Processing System (CPS). CPS is an
integrated, rules-based data collection and case management instrument
designed to assist field staff in the development of disability claims
and the tracking of the current status of pending claims. This system
will ensure greater accuracy and consistency during the development
process.
This budget also includes funds to continue the development and
installation of the Education Electronic Data Interchange (EDI)/
Electronic Funds Transfer (EFT) project. We will use the EDI, an expert
system, to automatically process education enrollment certifications
where possible and the EFT to deliver the benefit to the claimant's
financial institution. When fully implemented, it is expected that the
EDI will automatically process up to 40 percent of all education
claims, resulting in a 45 percent improvement in processing time.
General Administration
A total of $185.6 million is requested for the Office of the
Secretary, five Assistant Secretaries and three VA-level staff offices.
This request, combined with $4.7 million associated with credit reform
funding, will result in a total resource level of $190.3 million.
The fiscal year 1998 budget includes a request to add the fiscal
operations of the Austin Finance Center to VA's Franchise Fund. The
revolving fund will continue to be used to supply common administrative
services on a reimbursable basis. All service activities under this
revolving fund for 1998 will have annual billings of nearly $82 million
and 659 employees, who were transferred from their parent
organizations.
The fiscal year 1998 budget reflects the phased expansion of the
Shared Service Center (SSC) to encompass additional VA employees and
sites. The SSC will centralize payroll processing and personnel
information. For fiscal year 1998, the SSC is requesting $23 million in
reimbursement authority from other VA organizations. Average employment
requested for the SSC is 252 FTE.
Board of Veterans' Appeals
The Board of Veterans' Appeals will continue working to improve
appellate decision-making timeliness in 1998. Response time for the
Board will decrease from 549 days in 1997 to 538 days in 1998. The 1998
request is $37.6 million for the Board in the General Administration
total.
National Cemetery System
The National Cemetery System proposes a budget of $84 million,
which will support 1,375 FTE. This represents an increase of $7.3
million and 52 FTE over the 1997 level. The funding increase over last
year's level is for the first full year of operations at the new Tahoma
National Cemetery in the Seattle, Washington area; for the partial
activation of three new national cemeteries near Chicago, IL; Dallas,
TX; and Albany, NY; for the increasing workload and infrastructure
needs at existing cemeteries; for equipment replacement; and for
inflation.
Office of Inspector General
The fiscal year 1998 request of $31 million for the Inspector
General will allow for continued audits of financial statements and a
continuing focus on high pay-off areas that are most vulnerable to
fraud, waste, and inefficiency.
Construction, Major Projects
A total of $79.5 million is requested for the Major Construction
program. The Major Construction request would fund the final phase of a
project to correct seismic deficiencies at the Memphis, TN, VA Medical
Center and expand VA's National Cemetery System. A new cemetery will be
constructed near Cleveland, OH, and funds are requested to expand
national cemeteries in Arizona and at Fort Sam Houston, TX. Additional
funds are requested to remove asbestos from VA-owned buildings and to
support advanced planning and design activities.
Construction, Minor Projects
A total of $166.3 million is requested for the fiscal year 1998
Minor Construction program. The request includes $140.5 million for
Veterans Health Administration projects. Of this amount, $42.4 million
is targeted for the outpatient care and support category. This will
enable VA to continue its commitment to provide primary and preventive
care. Additionally, $53.2 million will be earmarked for the inpatient
care and support category. This category includes projects that improve
the patient environment, such as providing private and semi-private
bedrooms. A total of $16 million is also included for the National
Cemetery System. Funds in the amount of $6.3 million are requested for
the Veterans Benefits Administration. Staff Office and Emergency
projects are provided $3.5 million.
Legislation is being proposed to increase the appropriation limit
on minor construction projects from $3 million to $5 million.
Grants for the Construction of State Extended Care Facilities
The fiscal year 1998 request of $41 million for the Grants for the
Construction of State Extended Care Facilities will provide funding to
assist the States to establish new, or renovate existing, nursing homes
and domiciliaries.
Grants for the Construction of State Veterans Cemeteries
The fiscal year 1998 request of $10 million for the Grants for the
Construction of State Veterans Cemeteries will provide funding to
assist the States to establish, expand or improve State Veterans
Cemeteries.
We propose legislation to increase the maximum Federal share of the
costs of construction from 50 to 100 percent. This legislation would
also permit Federal funding for up to 100 percent of the cost of
initial equipment for cemetery operations. The State would remain
responsible for paying all costs related to the operation of the state
cemeteries, including the costs for subsequent equipment purchases.
closing
Mr. Chairman, the challenges before us are great but they do not
exceed our dedication and commitment to ensuring the best possible care
and service to our Nation's veterans. We owe our veterans the best we
can provide. I look forward to working with you and the members of this
Subcommittee to meet these challenges. This completes my prepared
statement. I will be pleased to answer any questions the Subcommittee
might have.
Senator Bond. Thank you very much, Mr. Secretary. Excellent
timing. That is about as close as you can come in this
business. Your full statement will be made a part of the
record, as I hope I indicated earlier.
USER FEE PROPOSAL
Mr. Secretary, if Congress appropriates the budget request
but budget reconciliation legislation fails to include the user
fee proposal, what would be the impact on VHA's medical
services next year?
Secretary Brown. It would be, in my view, Mr. Chairman,
devastating. Because within, as you pointed out--while the
request is basically flat between 1997 and our 1998 request, we
would like to retain the third-party reimbursements revenue
that we receive--about $600 million, which we in turn send on
to the Treasury. What we would like to do is to retain those.
So it, in fact, represents a net increase in purchasing power
of about $468 million.
Now, we need somewhere between 300--and you can correct me
if I do not give the right numbers--about 300 and, let's say,
$390 million, just to offset the COLA's that we provide to our
approximately 240,000 employees. The private sector increased
their services, which we purchased. And we have to buy at that
increased rate. That is another $250 million or so.
And so that basically is what we used to refer to as
current services. Because we have no control over that
whatsoever. Just by being in existence, that is what we would
have to absorb.
So what we want to do is to create this new funding stream,
to allow us to absorb those institutional costs that we have no
other way to pay--in the absence of appropriated funding. To
answer your question to the best of our ability, we would have
to deny care to about 105,000 veterans and layoff about 6,600
VA employees.
VA HEALTH CARE RESTRUCTURING SAVINGS
Senator Bond. GAO states that the VA's ongoing efforts to
restructure its health care system could yield savings of $2
billion or more during the next 5 years, and that sufficient
savings could be generated to increase patients served without
new resources above the $17 billion level. What is your view of
that finding?
Secretary Brown. I do not know where they got that from. If
we just look at the basic structure that we have in place, this
is all about money. We can, Mr. Chairman, make anything work
that the Congress is kind enough to place on the table. But the
way we compensate for it is by closing our doors to our
veterans. We equate dollars with the number of veterans that we
can treat.
As I pointed out to you, just our institutional costs--just
the mere fact that we are in existence, will require us to
offset somewhere close to about $600 million. That has to come
from someplace. And what we would do if we do not have those
revenues coming in, either from a nonappropriated source or an
appropriated source, then we are going to take them out of our
base. When we take them out of our base, we are talking about
not providing care to veterans. If we do not provide care to
veterans, there is no need to have our employees. If there is
no need to have our employees, then there is no need to have
our hospitals.
And so I do not know exactly what the rationale for making
that kind of a statement is. But I do want you to know that we
have been working very hard to identify as many areas in which
we can generate savings to become much more efficient. And that
is what this is all about, everything that we are doing now, we
think, to some degree. It has been tested in the private
sector. We do not just dream these things up. We take advantage
of the experience of providing health care or health care
delivery in the private sector, and then we try to use VA to
copy them.
And so we think that we are doing a great job under Dr.
Kizer's leadership in this area.
Senator Bond. Well, I just praised you for cutting $130
million out of one network. And your own projections show that
you can cut 30-percent reductions in per-patient costs. And the
GAO study, I guess, hypothesized that you have been able to cut
expenses. And their figures must somehow relate to the cuts
that you have already achieved and the cuts that you project.
Let us go on to your own assumptions on the cost reduction.
We did not see any detail on how the savings could be achieved.
We do know anecdotally that there have been some tremendous
savings and cost efficiencies. And the GAO has mentioned some
of these. And I would like some specific information on how
these savings come about.
30 PERCENT PER-PATIENT COST REDUCTION
So, with your permission, Mr. Secretary, I would like to
turn to Dr. Kizer, and ask him to tell us how we are going to
achieve the savings of $956 million next year, and the
methodology or analysis behind your assumption that there can
be a 30-percent per-patient cost reduction by 2002.
Secretary Brown. Mr. Chairman, before I ask Dr. Kizer, can
you tell us where you get that $956 million from, sir?
Senator Bond. That was the figure, I am told, that was
given us by the Department. We figured out, if you take a 6-
percent reduction in patient cost next year--and you even did
the math--tell us how much you are going to save next year and
how you are going to get there.
Dr. Kizer. Let me try to respond to you in a couple of
ways. One, the number that you reference is a gross
calculation, in the sense that if you take 30 percent and
divide it by 5 years this would equal 6 percent per year. If
you then multiply it, you get the fiscal year 1998 number. It
is only one part of the overall effort. But, that is what the
genesis of that number is.
I think what you really were asking, though, was the more
important question as to how or what are some of the specifics.
Senator Bond. How do we get wherever it is you are going?
Dr. Kizer. Sure. That is a very reasonable question. The 30
percent is a target which, I believe, is the first time in the
Department's history that there has actually been some sort of
target set as a multiyear goal, that is, something to strive
for. While we recognize that it may be perceived by some as a
bit of a stretch target, we think that it is realistic and
consistent with what is occurring elsewhere in the health care
industry. We are employing some of the same management
strategies that are being used in the private sector--things
like disease management and case management; shifting care to
the outpatient setting, where medically appropriate, as opposed
to inpatient; using a variety of health care practitioners,
such as physician assistants, nurse practitioners, and
pharmacists to provide care where medically appropriate to do
so; and a host of other things of that type. We would be happy
to engage in a more detailed discussion with you in writing or
verbally, as you like, over time.
One other point, though, that I would add and one that
makes it difficult to take some of these numbers and focus on
them specifically is that we have tried to focus on the
aggregate cost or global cost. Because as you make some of
these changes, parts of the health care budget are going to go
up and others are going to go down.
For example, as we shift more care to the ambulatory or
outpatient mode it is anticipated that our pharmaceutical costs
will go up. That has been the experience elsewhere and that
seems to be our experience as well--that is, this form of
practice results in more use of medications.
So, while we will see an aggregate reduction in the global
cost of taking care of a patient, some portions of our cost may
go up while others go down. And, when you start doing multiple
things at the same time, the actual accounting gets very
difficult. The discussions we have had with staff repeatedly is
that, based on some of the cost accounting and other tools that
VA historically have had to work with, trying to get overly
precise in some of these areas may result in less than totally
accurate numbers. And so what we have focused on is the bottom
line--the overall cost.
Secretary Brown. Mr. Chairman, can I go back just for a
moment to that $956 million? It bothers me. And, Mark, can you
give us some--as I understand it, we understand how you got
there, but we do not think that it was offset by the $600
million.
Mr. Catlett. Mr. Chairman, the 6 percent is the number we
supplied. And that is the cost reduction that is based on a
deflated cost factor. So there is, in looking at the total
picture--and that is part of what Dr. Kizer was saying, I
believe--you have to look at that tradeoff. The commitment to
the 30-percent reduction per patient is adjusted for inflation.
And so we have those increases--$600-700 million a year
offsetting these reductions you have mentioned, that we have to
account for.
Senator Bond. Well, I see I have this information from the
Department, indicating that, before inflation, there is still a
net decrease of $181.4 million. Let me come back to that. But
let me first now turn to Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman.
VETERANS EDUCATION BENEFITS
I would like to switch gears for a moment if I could, Mr.
Secretary, and then come back to health care, to the issue of
education. As you know, is one of the hallmarks of the VA
benefit package has been in educational benefits. Veterans in
Maryland have approached me and said, gee, if you do not use
your education benefit within 10 years, you lose it.
President Clinton is talking about lifetime learning. Also
the educational benefit only has about a 37-percent
utilization. My question is, No. 1, how could we promote
greater utilization of the education benefit? With so many
young men and women who leave the military, this benefit could
be tremendous.
And then, No. 2, have you given any thought to
restructuring the educational benefit so that it could be a
tool for lifetime learning for America's veterans?
Secretary Brown. No; we looked at the education benefit in
terms of trying to bring it into conformity with today's
dollars. As has been pointed out over and over here this
morning, we expressed concern about the research budget, to
some degree about our flat budget and the impact that it will
have. All of this had to do with VA trying to prioritize the
resources that were made available to it.
Now, I like everything that you have said, quite frankly,
especially since we have a sense nationwide--I am not speaking
for the administration at this point; I would like to give some
further thought to it--but since we have a philosophy that
education is an ongoing process and it looks like the public
sector is going to become involved in all of that, then maybe
we need to think about taking some of the eligibility
limitation dates off of our chapter 30, chapter 31 and chapter
35 benefits and make them available for lifelong experiences. I
kind of like that. And I would like to explore that with you.
MONTGOMERY GI BILL USAGE RATE
Senator Mikulski. Mr. Secretary, I really think we could be
on to something here, in terms of our veterans. I understand
you need predictability in terms of budget predictions, which
is when eligibility would end. And a date is a nice way of
doing it. But we do have certain national goals. And also I
think you would appreciate that many veterans, when they come
back, have to get started in civilian life before they can then
turn to education, just coming back and getting started.
So I would like to explore that with you and look at how--
if it is not lifetime learning, that there is some extension of
the benefits for a certain period. I am also troubled by the
fact that the education benefit only has a 37-percent
utilization. Has the Department done any evaluations as to why
that utilization is so skimpy?
Secretary Brown. We expect to increase it to 42 percent.
But let me just get rid of this bureaucratic stuff here and
just kind of go right to what you are talking about. Because I
agree with you.
I think that there are some things in that area that we can
do directly. No. 1, we could write to all of the veterans that
have been discharged that we have addresses on and tell them
and remind them that they have this benefit. We can do an
aggressive outreach through our veterans organizations, asking
them to remind our veterans in their monthly publications about
this benefit. So there are some things that we could do to
increase this. And we do expect for it to be increased to 42
percent in 1998. And our performance target by the year 2002 is
about 75 percent. But I think there are some things we can do
right now.
[Clerk's Note.--Facts for consideration in modifying
Secretary Brown's testimony.]
Usage Rate
Both the Department of Veterans Affairs and the Department of
Defense want to see an improvement in the percentage of veterans who
use the Montgomery GI Bill (the usage rate). One of the goals of the
VA's Education Service's business plan is to improve the usage rate.
Since the Montgomery GI Bill is an important recruiting tool, DOD is
also seeking to improve the usage rate.
Consequently, discussions have begun between DOD and VA to
determine how best to discover the cause of the low usage rate and to
seek the best method of increasing it. In addition, a member of the
Secretary's Veterans' Advisory Committee on Education is conducting a
survey of a sample of those eligible for the Montgomery GI Bill, but
who are not using it, to ascertain their reasons for failure to pursue
training.
Senator Mikulski. I appreciate those good intentions. But
has there been an evaluation as to why the utilization is so
skimpy?
Mr. Lemons. There is concern expressed about the level of
the benefit and the increased cost of education generally. Our
focus groups and customer surveys have indicated that the high
cost of education is a barrier to utilization of the benefit.
It does not cover as much as we would like to have it cover.
Senator Mikulski. Well, Mr. Secretary, I would really
strongly recommend that there be an evaluation, taking your own
research and looking at the need that our veterans have when
they come back home and how this benefit can truly be a bridge
to the future. And I say this because, first of all, it is
something I know you are deeply committed to. So many of our
veterans are people who have come to the military from very
modest backgrounds. Many are minorities. Even if they are not,
they have come for service to the Nation and the possibility of
education afterwards.
I think one of the most empowering things we can do for
those veterans is to make sure that educational benefit is a
truly empowerment tool. If they stood sentry in defense of the
Nation, let us stand sentry on how the veterans benefit could
be a tool. And what we could do even for minority men could be
so fantastic that we would like to be a partner with you in
reevaluating it, using the resources we have, but more
creatively and more wisely.
Secretary Brown. We will do it.
Senator Mikulski. I would like to offer that as a
suggestion.
NAPA RECOMMENDATIONS
The other question that I would like to get to is also the
disability benefits. You and I have talked for some time about
our concern about the backlog in disability, the need to manage
that. This committee has had a National Association of Public
Administrators' study done on that. I believe you have their
recommendations. Could you comment on the NAPA recommendations
on the need for better management, better structure, greater
attention to the regional offices, and so on, and let us know
what you see yourself doing in that area?
Secretary Brown. Yes, ma'am. Let me just say that I do not
disagree with their conclusion that we need to have better
management of the resources that we have. And I think, now that
we have made recommendations to have a new Under Secretary
coming forth, that we are going to be able to move forward in
that respect.
There are, however, some recommendations that were made,
such as the consolidation of the regional offices--and I have
not had a chance to look at the entire report; I have just kind
of thumbed through it--that we have some concern about, not so
much in terms of concept, but in terms of reality. But we will
carefully review that and we will provide you with our analysis
of that review when we complete it.
[The information follows:]
Response to NAPA Recommendations
May 27, 1997, VBA received the draft NAPA report. NAPA has
requested our comments by June 13, 1997. We are currently reviewing it
with the Department and other appropriate stakeholders.
YEAR 2000 COMPUTER PROBLEM
Senator Mikulski. Well, one of the issues I am concerned
about, which goes to the benefits across the board, is the so-
called year 2000 problem. You know, when the computers hit
2000, if we do not have a way of fixing that, it would go back.
If the computer does not go forward to 2000, it goes back to
1900. And it could really mess up our pensions, our disability
benefits. And you understand that. Where are you on the year
2000 problem?
Secretary Brown. Ma'am, we have no problem with that.
Obviously, we are concerned, just like any other business
entity, whether in the private or public sector. But we think
we have that under control. Right now, we are modifying our
code, just like all of the other industry leaders are doing. We
expect to start testing that in December 1998.
At the same time, we are in the process of building a whole
new platform that is 2000 compliant. We are not using that as a
backup system, because we think, quite frankly, that we are
going to be able to have these modifications made, tested, and
running. We recognize that if we do not, then we just die on
the vine if our veterans are not getting their checks and we
are not able to make the computations. So we are well ahead of
that.
Not only are we taking advantage of the personnel that we
have inhouse, we are actually hiring outside contractors to
come in and help us. And so we think that we are managing this
program extremely well. And, quite frankly, I feel very
comfortable with it.
Senator Mikulski. Well, that gives me heart. But I really
would encourage you to go back to look at the so-called NAPA
study, because they sound the alarm about their concern that
claims and appeals issues are so significant that it could
really degrade the service to veterans, and are rapidly
reaching a crisis level, both with the diminishing staff, the
need for new technology and a streamlined regulatory process--
whether that is at the appellate level for the appeal or
whether it is at the first-line, particularly like the regional
offices, where they say decisions are too slow and not well
enough prepared.
Secretary Brown. Yes, ma'am. That is a little bit different
than the year 2000 problem.
Senator Mikulski. I know it is.
Secretary Brown. But I do not totally disagree with them.
We have not, in my view, managed our modernization programs
extremely well. But I think now we are on course. We understand
where our weaknesses are. What I have directed is that we bring
in an outside consultant to look at everything that we are
doing, from the top down, to make sure that all of the pieces
are in place.
Senator Mikulski. In all of VA or just this area?
Secretary Brown. All of VA. Because we are going to a new
platform. And so what we plan on doing, we think we are doing
it right. And I just did not rely on the resources within the
house--their conceptualization on how things should work. In
fact, we just signed that contract this week.
Senator Mikulski. Who is going to do it?
Mr. Catlett. Senator, Burch & Davis is the firm that we
will be retaining this week. We have the direction of the
Secretary. We have done interviews and the selection process.
As the Secretary said, they are going to assist us. We hope to
have the first deliverable in 90 days, defining the overall
information technology architecture for the Department in the
future. So while we are trying to fix the problem of the year
2000 now, which we have to do as our first priority, we are
looking to the future and designing the system that we are
going to need.
Senator Mikulski. Well, I know my time is up, and I will
wait for a second round on some of the health care issues. But,
again, NAPA says this: Information resource management failure
to manage effectively has led to our current crisis. The VA has
just shown no ability to learn from previous studies.
And so I do not know if you need a chief information
officer. I do not know. But, really, technology should be your
tool, particularly as other resources--technology should be
your best friend, particularly as other resources are frozen.
So thank you, Mr. Chairman.
Senator Bond. Thank you, Senator Mikulski.
SAVINGS ACHIEVED THROUGH HEALTH CARE EMPLOYMENT REDUCTIONS
Let me get back to the savings. Dr. Kizer, how much of the
savings would be achieved through reductions in staff? And what
would be the anticipated reduction of staff by 2002?
Dr. Kizer. I do not have that exact number on the tip of my
tongue. Mark may have it. We do expect to have further
substantive reductions. As you may know, our current staffing
level is about 185,000, which is down over 20,000 from where it
was 3 or 4 years ago.
Senator Bond. What other specific plans do you have for
savings? Or all of these to be generated by the networks?
Dr. Kizer. There is a long list of things that contribute
to the savings. It includes reductions in everything from
beds--and, as you probably know, our bed count now is down over
15,000 from where it was a few years ago. We expect that that
will drop another 10,000 or so in the next 2 or 3 years. We are
shifting care in a very marked way to the outpatient setting.
Senator Bond. What kind of percentage or what kind of
ballpark savings does that give? What is your general estimate
on that?
Dr. Kizer. The bulk of savings will come from retooling the
way care is provided. Now, how you apportion that--for example,
how much may be due specifically to case management versus,
say, a nurse-managed clinic versus ambulatory surgery versus
contracting for pharmaceuticals, that becomes very hard to
dissect out all of those specific components. But, let me give
you one very specific example--based upon 1 year's worth of
data. We set a target in fiscal year 1996 of increasing the
amount of surgery that was done on an ambulatory care basis,
starting the year at 39 percent of all of our surgeries being
done on an ambulatory care basis and ending the year at 52
percent, a 33-percent increase.
Now, during that year, if we compare the first-quarter
statistics with the fourth-quarter statistics, and I cite these
numbers recognizing the limitations of extrapolating to the
long term from a 1-year sample, the number of surgeries
performed in the first quarter was a little over 81,000. The
number of surgeries performed in the fourth quarter was over
89,000, or about a 10-percent increase in productivity in that
product line.
Likewise, the timeliness and the ease with which patients
were getting the surgery increased dramatically and
concomitantly, there was a 12-percent reduction in surgical-
related mortality. So not only did we do more, we did it more
cheaply, and we did it quicker and with fewer complications.
That is the type of thing that we are trying to do in all
of the different product lines and the manner in which we
provide care.
Senator Bond. Well, we appreciate those. What we would like
to see is the kinds of things you were laying out, the kinds of
things that you expect will continue to make those cuts. Do you
have specific plans or guidelines for the networks?
Dr. Kizer. Each of the networks has submitted a plan that
has been reviewed and critiqued, and feedback has been given to
each network on their plan. This is the first time in the
history of the Department that this type of exercise has ever
been done. In my judgment, it was not a perfect process, and we
do expect that as we move into the second year of this the
planning and the specific linking of budget to planning will be
better. We will be able to, I think, give you some more precise
extrapolations of where savings will come from in the future.
You referenced network 3, where they have been able to
achieve a savings of about $120 million in the past year, and
they can delineate rather precisely exactly where those savings
came from as far as the amount that was due to reduced staffing
and the amount due to a number of other things.
Senator Bond. Thank you, Mr. Secretary.
NEW PATIENT MIX
Let me turn to another part of your equation, and that is
the new patients. What sort of mix of new patients are you
expecting? Are they going to be primarily higher discretionary-
income veterans, with insurance and relatively fewer medical
problems?
Mr. Catlett. I am Mark Catlett, the Assistant Secretary for
Management. Of the increase we are anticipating over the next 5
years almost 600,000 new patients per year by the year 2002, we
are estimating over 80 percent of that would be what we used to
call category A, our service-connected and low-income veterans.
Only 20 percent would be the higher income veterans that you
referred to.
Secretary Brown. Let me make one other point on that. With
respect to if we have to get our legislative proposals in, the
Medicare reimbursement we expect to attract higher income
nonservice-connected veterans. Those are the ones that have
been left out of the system, and we have to keep in mind that
our high income basically could be a veteran that is making
$21,000 coming into the household, so what we would want to do
is to allow him to spend his Medicare dollars with VA and that
way in our view makes him whole. We think they are being
treated as second-class citizens now.
Dr. Kizer. If I might add just one other point to this.
Under the VERA methodology, appropriated funds are being
allocated only for the category A veterans, as you probably
know, and I think that represents a very tangible manifestation
of the philosophical commitment that is being made to serving
the service-connected veterans.
Secretary Brown. One other point, Mr. Chairman, I think
that is very important. What we are basically saying, that the
new, this 20 percent that we plan to attract, we really want a
mechanism by which they bring the dollars with them, and that
is what this is all about. That is what the third party
reimbursement is really all about.
We think there is a lot of fat, and I do not want to call
it fat, but there are a lot of opportunities to get more out of
that $600 million. For instance, in order to collect the $600
million, it costs us about $125 million. We think we can
probably do that for about $50 million, but we want to keep it
all, so those are the kinds of things that we are looking at.
Senator Bond. Really, when you are talking about this, it
seems to be a major change in the mission. Do you see the VA
becoming a full-scale health competitor seeking to provide care
for the general veteran population?
Secretary Brown. No; what we envision is allowing VA to
continue with this mission of providing care to category A's,
which are our service-connected veterans and our poor veterans,
and we want to, in order to take advantage of the economies of
scale so that we can spread out our resources, for instance, as
I mentioned to you for the first time I think it is the number
of inpatients have been reduced below a million. We expect in
1998 to provide about 890,000 inpatient episodes.
Now, at the same time, what is happening here, while the
number of bed vacancies are going down, we still have to pay
the rent--not the rent, but the cost of heating. We have to pay
the doctors and so forth, so in order to reduce the per-unit
cost, we wanted to get more people in there, and that is the
whole point that is central to this thing, and so I do not
think that we plan on opening this up to everybody, but the
people that we do plan on treating, we want them to bring
dollars with them.
Senator Bond. But you are talking about the general
veterans population. They do have dollars, and I think that the
GAO indicates that you are not going to get that revenue unless
you get the better-off veterans.
Secretary Brown. Well, let us talk about who the better-off
veterans are. Let us just talk about Medicare. We are talking
about veterans that are retired, and probably--I mean, they are
not extremely well off, but we think that many of them want to
come into our system, and in turn from the third party
reimbursement what we are talking about is just really
maximizing our efforts.
We think, for instance, a person can come into one of our
outpatient clinics and get a $3,900 procedure right today, and
we charge the insurance company $150. Dr. Kizer has in place
now a system by which we will be able to bill the insurance
company for the value that we provide to the veteran. That is
going to represent in our view increased revenues, so those are
the kinds of things we think we are going to be able to do much
better than some of the reports that we accumulate.
TREATING MORE VETERANS
Senator Bond. Allowing the VA to gather in more revenues
raised the question in GAO's mind that this could put at risk
the access of category A veterans to the health services.
I wonder also on the other hand if you are trying to bring
in veterans who have an option, who might go some place else if
you may not be getting the benefits of competition and finding
that you have to have the high quality care to get these people
in. I would ask if you are concerned, (1) about diverting
resources from the highest risk veterans, and (2) do you see an
opportunity for competitive improvements in the care, if you
are going to have to draw in veterans who currently have access
to other services?
Secretary Brown. I am going to ask Dr. Kizer to respond to
that, but before I do, let me just say this. We are already in
the process of making available comprehensive health care. With
your help and assistance we now have eligibility reform. A
veteran that is enrolled in our hospital can come in and get
treated for everything from the flu to a broken foot.
That is the kind of thing that we are making available all
across the Nation, and we believe that there will be many
people who now want our care, and quite frankly we think it is
going to, especially on the Medicare side, we think it is going
to end up as a savings to the taxpayer.
Dr. Kizer.
Dr. Kizer. Let me say just two or three things. I know that
you, Senator Bond, and you, Senator Mikulski, would never allow
VA to abandon its mission and its responsibility of treating
category A veterans. So while GAO may identify that as a
hypothetical potentiality it is not consistent with reality--
either from where the management of the VA is or where you as
our board of directors, our oversight body, would ever let the
system go.
Second, the amount of funding that we are talking about is
10 percent of our operating budget coming from nonappropriated
funding. That means that 90 percent, the overwhelming bulk of
money, is still provided to take care of those category A
patients.
I think the real benefit that we are talking about is for a
very small amount of marginal cost we can take care of some of
those veterans who repeatedly--and I know you have heard this
as well as we have--have said they would like to use their
Medicare benefits at VA. They would like to get taken care of
at the VA.
For those folks who would like to do that, and if they
brought with them some resources, that could be maximized so
that we could not only take care of the category A's that we
are currently taking care of, but we believe we could take care
of more of them.
So there is a benefit to the VA system and an overall
social benefit. We would be taking care of not only those for
which the appropriation is targeted, but a multiplicative or
synergistic effect would accrue by which we would be able to
take care of more category A's by maximizing the return on
those capital investments that have already been made.
Secretary Brown. Mr. Chairman, I do not know what he just
said, but it sounds good. [Laughter.]
Senator Bond. I am going to go back and read it.
[Laughter.]
I think I will probably understand it a little better the
second time around.
Senator Mikulski.
MEDICARE SUBVENTION
Senator Mikulski. Dr. Kizer, actually I did understand what
you said. What you said is that we already have in place a
physical infrastructure and a patient care infrastructure, and
we need to maximize it, and the best way to maximize it is to
ensure that the revenue that could be garnered by third party
reimbursement either of private health insurance or Medicare,
if it could be recaptured to go into essentially subsidizing
those who do not have either, but within the VA family
umbrella. Am I correct?
Dr. Kizer. You are correct, but the additional benefit, for
example, to Medicare, is that we can take care of those
Medicare patients cheaper than they would be taken care of in
the private sector, so there is an additional benefit, or a
benefit that would accrue to the trust fund, and Medicare
program, as well, but by maximizing those funds that we have we
are going to take care of more of the category A veterans, as
you note.
Senator Mikulski. And I understand the direction you are
going. I think we are very fortunate to really have you in the
VA family, as you really try to bring the best practices and
best learned from what is going on in the private sector of
health care, not the profitmaking side but the nonprofitmaking
side, where we are looking at--in many instances the VA medical
centers are tied to academic centers of excellence like the
University of Maryland, so bringing in those best practices I
think are helping reduce cost for outpatient care.
I think what concerns Senator Bond and myself is not the
good intentions or the strategic plan that you have outlined,
but how this is essentially a new way of doing business or
patient care, and the concern that I have is that during the
transition, that VA not be caught in a financial shortfall
while you are making the transition and delivering the care,
that the ability to capture or recapture these other forms of
reimbursement do not quite materialize the way we had hoped,
and there we are.
We would not want to in any way suffer the stressed out
demands on care, the possibility of RIF's and layoffs and
weakening the patient care structure that we have of nurses,
physicians, and other technicians, so our question is, do you
think VA is--I mean, how do you see this working?
THIRD PARTY REIMBURSEMENT LEGISLATION
That is what Senator Bond is asking. How do you see this
working out, and within a timeframe where they have not even
passed the authorization for you to do this, which, by the way,
I support, Secretary Brown, the change, so that when you do
capture third party reimbursement it does not go to deficit
reduction but comes back into veteran health care.
Do you see what I am saying? You have got an appropriation
now that is based on a whole bunch of assumptions related to
the transition, and we are not sure that transition is going to
happen.
Secretary Brown. Yes, and let me tell you----
Senator Mikulski. On the timetable that I believe you and
Dr. Kizer hoped that it would.
Secretary Brown. I am having nightmares about this whole
process.
Senator Mikulski. So we are on the same wavelength?
Secretary Brown. Yes, ma'am, and Senator Bond is, too. I
listened very carefully to his opening remarks. What frightens
me to death, I am afraid it will be so easy for--and no
disrespect--for the appropriators to say, well, we do not have
authorizing legislation so we are going to give you what you
asked for, and if you give us what we ask for, we end up with
$600 million less.
Senator Mikulski. That is exactly what I am worried about.
Secretary Brown. That frightens me to death, on the bottom
line, so we need to forget about all these numbers and just
say, give them $600 million and they will just shut up and go
away. [Laughter.]
Senator Bond. Is that OMB's position? That sounds too
sensible for OMB. [Laughter.]
Senator Mikulski. Well, Secretary Brown, I think we can do
it, but I really do believe you and the veterans' organizations
need to light a fire under the authorizers to give the
authority for you to move ahead with this strategic plan,
because we are deeply concerned--I mean, there is a possible
budget agreement, and we do not need to take our time to go
into that.
But that is really what I am concerned about, not the
strategic plan and the goals that are set, but the ability to
do that, because unless everything works right you could end
up--the veterans could end up with a $600 million shortfall,
and that could only be addressed by less patient care, a
diminishing of patient care, or riffs and layoffs.
Secretary Brown. Stop reading my notes. [Laughter.]
REDUCTION IN MEDICAL RESEARCH FUNDING
Senator Mikulski. Can I ask you another question about VA
medical research, which has been so important, because it is
bedside patient care, hands-on research. Could you tell us the
significance of this $28 million, 11 percent cut in VA medical
research?
Dr. Kizer. Well, the Secretary has given such good answers
before I thought he was going to take that. Clearly the impact
of this cut on the research program would be damaging. I do not
know any way of sugar-coating it. It would hurt. It would have
definite negative effects. It was a very difficult decision for
the Department, and I think, as the Secretary has testified
before, it is predicated on the overall availability of funds,
not on the judgment of the merits and the very high value that
that program has had in the past.
Senator Mikulski. But if you had to implement it, what
would you do, cut out new grants? Would you cut out, say, your
research in a particular scientific area?
I know you have been outstanding in your work on
orthopedics, spinal cord regeneration, these kinds of things,
new surgical techniques for high risk patients.
Secretary Brown. What would happen, ma'am, there would be a
decrease of $28 million, which means we have a decrease of
about 407 employees, and it will support a reduction in our
projects from about 1,644 to 1,469. What we have done within
that number, we have made a deliberate effort to fence our
commitment to Persian Gulf veterans, diabetes, prostate cancer,
sexual trauma. We kind of circled those to make sure they would
end up not getting hurt.
Now, I am not going to try to tell you that this is
adequate, because I agree with everything that you said about
the importance of research, everything. I am just simply saying
we had x number of dollars. We had to prioritize how we use
those dollars. Now, if those dollars--and back up here. You are
not going to hear any complaints from me. The only thing I
would ask, do not take it from another veterans program. Let us
find it from somewhere else, but not within the VA's program.
Senator Mikulski. Well, you talk to the other agencies. I
do not want to reiterate the importance of research, but I am
very proud that, in fact, the University of Maryland VA, that
they pioneered that gall bladder surgery of the laparoscopic--
what that did was reduce for high risk patients the ability to
have gall bladder surgery and be able to return home probably
in less than 1 week, or back to work in 1 week, where before
that recovery would take 30 days. The savings, both to
employers and the private sector, goes exactly to what you are
trying to achieve, which is 30-percent reduction on patient
cost. That is what the heck the research means, is how you can
reduce patient cost, by better surgical techniques, new
technologies.
Dr. Kizer. You are preaching to the choir.
MARYLAND COMMUNITY-BASED OUTREACH CLINICS
Senator Mikulski. Well, let me ask some other quick
Maryland questions in my time. One of the things I am so
pleased we pioneered in Maryland is outpatient care, and you
have been enormously helpful in both the Cumberland area and
Dorchester County.
Those leases are coming up for renegotiation, Mr.
Secretary, and I hope your headquarters stands sentry on that,
and we are also concerned about the possibility of new
outpatient facilities in St. Mary's County as well as in
Hagerstown. Are you in a position to tell us how those are
proceeding?
We understand two community based outreach clinics, one in
Charlotte Hall in St. Mary's County, the other in Hagerstown,
they are awaiting, I think, a sign-off from VA headquarters
with moving ahead with those.
Secretary Brown. Yes, ma'am. There is a proposal--well, the
proposal would state that Charlotte Hall State Veterans Home--
Todd, tell me what this says.
Dr. Kizer. The group, or next group of clinics that would
be forwarded to the Congress for concurrence is currently under
review. We are going back and forth with field staff. We have
not yet gotten sign-off or agreement or concurrence by the
relevant folks in Congress on the last bunch of clinics that
was submitted, although the Senate has indicated their
concurrence. We are waiting to hear from the House folks on
this, and when we get that we will proceed with those. Then we
will be further processing the next batch that would come
forward, and go on from there.
PERRY POINT MODERNIZATION
Senator Mikulski. Thank you. I just want to make one final
comment about status.
As you will recall, up at Perry Point, which has served the
veterans who are mentally ill and who are chronically ill with
situations like Alzheimer's, this subcommittee provided
leadership in providing funds to do modernization of that
facility. Ms. Apostolou particularly has been enormously
helpful in making that happen.
As I understand it, Perry Point now believes that new
construction would better serve the veterans but also
ultimately save the VA money and reduce cost, and I believe
that is pending at headquarters, and I do not know where that
is, and we would like you to again give you attention to it. I
believe you have the engineering and architects on that.
Dr. Kizer. The recommendation has not yet reached me, and
we can check and get back to you on that for the record, but I
would defer further comment at this point.
Senator Mikulski. I would really like you to see it. I wish
you could be up at Perry Point and see what your excellent
staff in the back has labored on, I mean, heart and soul to
keep an old building going that really, Mr. Chairman, goes back
to the early 1900's where you can't regulate the heat. You
can't do this.
What they have done has been heroic, and now with some
modest investments we could really turn that around, and again,
I believe it would help also reduce the cost of providing the
same level of care. A lot of their work just has to go into
maintaining the asset.
Dr. Kizer. We will be looking at that very carefully, and I
would just note that as you complimented Ms. Apostolou I would
second that; she has been very helpful in our dealings with the
committee.
Senator Bond. Than you, Senator Mikulski, and I do have a
significant number of additional questions, prepared with the
assistance of Ms. Apostolou, but Mr. Secretary, I know you are
enjoying this as much as I am, but I am going to ask a few
questions and regretfully have to submit the rest for the
record so you can get back to running the VA.
MEDICAL RESEARCH FUNDING REDUCTION
Let me ask a couple of very important questions. The budget
request would cut VA research by 11 percent. The number of new
projects funded would drop by 40 percent. You know my lack of
enthusiasm for that. There is no explanation in the budget
justifying it.
First, would you not agree that this program is a critical
element to quality care in the VA, and if so, why the
substantial reduction, and do you have any estimate on the
number of physicians, such as the one I referenced in my
opening statement, who might pursue careers outside of the VA
because of difficulty in getting research dollars?
Secretary Brown. The reduction is about 10 percent, Mr.
Chairman. It went from 1,644 projects to 1,469. But I agree
with everything that you said, and as I mentioned to Senator
Mikulski, I am not here to tell you that we are very happy with
this. If you can find the dollars, you are not going to hear
anybody complain about it. I mean, we just did not have the
dollars, so we just made the best that we can do with it.
We fenced off some of the programs that are very, very
important in terms of having the impact on physicians leaving.
We do have a lot of information on what will happen in terms of
the FTE loss, which is a little over 400. The type of projects
we hope to manage, a lot of that because most of these will be
projects as I understand it that will be coming in, and not
necessarily projects that are ongoing.
COMPENSATION ORIGINAL CLAIMS PROCESSING
Senator Bond. In the Veterans Benefit Administration the
current estimates of the time it takes to process an original
compensation claim does not meet the original projections. The
original estimate for fiscal year 1997 was 118 days. I
understand the current estimate is actually about 132 days. Why
is the VBA falling short of its goal, and when do you think you
will be able to meet the estimate of 118 days, and how can we
believe that you will meet the standard of 106 days when we
have not made the progress to date that was scheduled for 1997?
Secretary Brown. Quite frankly, we believe we are right on
target. We had a little bit of a setback because of some things
that were beyond our control. For instance, we had to
readjudicate all of our Persian Gulf claims. What else? Give me
the others, Steve.
Mr. Lemons. I am Steve Lemons, the Acting Under Secretary
for Benefits. We had approximately a 20-percent increase in
reopened compensation claims as a result of changes in
eligibility criteria in the Veterans Health Administration. We
put out new rating schedule changes on psychiatric conditions
and respiratory conditions that increased workload as a result
of readjudication of those claims, and in addition we had the
passage of legislation on spina bifida.
Secretary Brown. And we expect to be back on target--even
in the presence of that, we expect to be back on target in
1999, so we are OK.
FEDERAL SUPPLY SCHEDULES
Senator Bond. Mr. Secretary, in June 1995 I believe you
advised the GSA that the Federal supply schedules were open for
the pharmaceutical schedule. It would result in dramatically
increased prices for pharmaceutical products, and you said
there would be an adverse impact of about $153 million. Is it
still your view that the access would have a harmful effect on
the budget of the VA?
Mr. Catlett. Yes, sir, Mr. Chairman.
Senator Bond. And do you have an estimate of what might
occur if the measure that we included in yesterday's markup
does not go through?
Mr. Catlett. The estimate that $153 million is still our
estimate. I do not think we have relooked at that recently.
Senator Bond. But it is still your position?
Mr. Catlett. That is still our position.
COST EFFICIENCY GOALS
Senator Bond. While VA has made some impressive changes in
the health care system there have been no facility closures.
Dr. Kizer, you said there are more VA medical centers in the
Northeast than the current population would suggest is
necessary. Do you expect to achieve your cost efficiency goal
closures, that the closures will need to occur at some point to
get to your efficiency goals?
Dr. Kizer. That is a question that is going to continually
have to be asked and reassessed as we go forward. I think as
you know, we did close one facility last year. In Indianapolis
we have had two facilities. Of the two facilities that were
operational there 1 year ago, only one of them is operational
now. The other one is being operated by the State of Indiana
under an enhanced use lease arrangement.
Likewise, as you may know, inpatient services at Miles
City, MT, are slated to be discontinued on June 1 of this year.
Requisite notices have gone out, and we will be shifting many
of those resources to the Billings area to enhance the
outpatient services there, while we maintain a clinic and a
long-term care presence in Miles City. So, depending upon how
you want to view these things, since closure probably has more
than one definition, there are changes in the mission and the
services that are being provided by VA facilities--some of
which might qualify as closures.
As you know, in your home State there have been some
changes.
Senator Bond. And we have supported those, and I think the
veterans have by and large felt that the closing down of the
inpatient surgery at Poplar Bluff was an appropriate decision.
I mean, people go wild when you talk about closures, but I
think the veterans and the people who are concerned about them
really feel that they are getting better service and we are
grateful for that.
But let me ask you the tough question. You have got VA
hospitals in Chicago. You are going to consolidate management
of two of them, but you have run into incredible opposition.
Some think it comes from the affiliated medical schools.
There are those who suggest that there is more interest in
protecting medical school turf than the question of quality
care for veterans. Where do you stand with what you are trying
to do in Chicago, and how are you dealing with what we know is
a very hot political potato in Chicago?
Dr. Kizer. I think we have continued to work very closely
with the Chicago delegation, which has shown an exceptional
degree of interest in the activities attendant to those
facilities.
We will continue to work with the various constituents and
stakeholder groups there to allay any concerns and to convince
them that the actions that are currently underway will not only
result in more services and better quality of services but will
allow us to put a presence in underserved areas that currently
do not have adequate access. We will be able to make access to
VA care better.
I should also note that there are a number of very
innovative things going on in the Chicago area. For example,
the current plans to consolidate laboratories will result in
very substantial savings as well as increase the timeliness and
the availability of services to veterans there. While I know
that Chicago is not part of Missouri, there is a certain amount
of show-me-ness that occurs there, and I think the longer that
people work with us, and the more we are able to demonstrate
our intentions, the more they will be convinced that what we
are doing is the right thing and that we are on the correct
path. What we are doing will result in better services for the
people that we serve.
Senator Bond. Is the merger there on hold, or is it going
forward?
Dr. Kizer. It is moving forward with a degree of rapidity
that did not exist some months ago.
Secretary Brown. Let me just say on the merger, Mr.
Chairman, we have already merged the administrative functions,
so we have one director there and he is doing a great job.
Initially I appointed him on a temporary basis, and he has now
been permanently assigned.
We have set up a task force to look at the medical mergers
of clinics and we are bringing all of the stakeholders in, and
we have a completely open process, and we plan on moving
forward to do the right thing.
Senator Bond. Well, we strongly support you in that effort,
and you can tell them for those of us who have already given at
the office, or actually in our home State, we are looking to
see the same kind of benefits and the same kind of improvements
rendered to our friends in Chicago and elsewhere. We believe
that you are on the right track, and certainly this committee
will support you to the greatest extent that we can.
I am sorry to see that my time has expired, and with that,
I will leave the record open for questions that other committee
members may have.
Additional committee questions
If there are points that we have raised--and I am not going
to argue whether it is an 11-percent cut or a 10.6-percent cut
to research--I do not need any further information on that, but
on the substantive points that we have raised, if you have
further information you would like to share with us, we would
welcome that.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Christopher Bond
SAVINGS PROJECTIONS
Question. GAO's testimony indicates VA's ongoing efforts to
restructure its health care system could yield savings of $2 billion or
more during the next five years, and that sufficient savings could be
generated to increase patients served without new resources above the
$17 billion level.
Do you agree with GAO's assessment? If so, why?
Answer. No. Uncontrollable inflation and payroll increases alone
are estimated to increase costs cumulatively over 20 percent by 2002.
The total estimated budget resources needed to pay for these
uncontrollable costs from 1998 to 2002 (5 years) cumulatively is $10.2
billion. VA's actions, which will include continued restructuring
efforts to accomplish the 30 percent per patient cost reduction will,
with the help of alternative revenues, pay for the inflation and
payroll increases and the 20 percent increase in the number of veterans
served.
Question. How much could VA save without increasing its patient
base--in other words just how dependent is the 30 percent reduction in
unit cost dependent on the 20 percent increase in patients and the
attendant economies of scale?
Answer. It is not possible to precisely quantify how much of the 30
percent reduction in unit cost is dependent on ``spreading the base''
over optimally utilized fixed cost assets; however, it is expected to
account for a reasonably small part of a reduction in unit cost.
Question. GAO states that ``achieving increased efficiency is not
contingent on either increases in patients served or resources''. Why
do you disagree?
Answer. We are currently using disease management, case management,
clinical guidelines and other techniques to both improve the quality of
care and to achieve more appropriate utilization of the resources we
have. As stated in the preceding answers, the shortfall in
uncontrollable current services (inflation and payroll increases) for
1998-2002 requires the ability to generate new revenue (medical
collections and Medicare receipts) from additional patients served,
better utilization of excess capacity and the spreading of fixed costs
over a larger patient base and doing a better job of providing more
efficient care. We estimate these actions plus a straight-line
appropriation and alternative revenues will help us achieve our
targeted goals.
Question. Earlier this year, the VISN directors completed their
business plans. Do these plans reflect the specific activities the
networks will undertake to achieve the 30-20-10 goal? If not, how can
we be confident your goals are feasible?
Answer. The Network plans were primarily one to three year plans--
while 30/20/10 is a five year strategy. The Under Secretary for Health
issued planning guidance to the Networks on July 8, 1996, preceding
development of the 30/20/10 performance targets. The 30/20/10 goals
were released for consideration late in 1996, after most of the VISN's
had already completed their formal planning processes which are
reflected in the current Network plans. Consequently, only a few of the
networks were able to consider or express in these plans how they would
address the 30/20/10 goals. Many of the Networks, however, were aware
of the general direction the Under Secretary wants the system to take
and included definite movement to reach the objectives. The full
implications of the 30/20/10 goals will be more completely reflected in
the next VISN strategic business plan cycle which begins in the summer
of 1997.
Cost per patient reductions in the range of 30 percent are
consistent with what is occurring in other integrated health care
systems, as well as what has occurred in VA in the past two years where
bed days of care have been declining and ambulatory care has been
increasing.
Question. To what extent is per-patient cost projected to decrease
based on bringing in healthier Medicare-eligible veterans?
Answer. It is not possible to precisely quantify how much of the 30
percent reduction in unit cost is dependent on bringing in healthier
Medicare-eligible veterans and ``spreading the base'' over optimally
utilize fixed cost assets; however, it is expected to account for a
reasonably small part of a reduction in unit cost.
Question. Do you believe that by 2002, all of the possible
efficiencies will be squeezed out of the system?
Answer. Depending on whether Congress allows us to manage our
resources as they should be, we would expect most of the efficiencies
to be accomplished by 2002.
MEDICAL CARE COST RECOVERY
Question. In testimony provided for the record today, GAO states
that VA's projections for insurance collections may be difficult to
meet. GAO says ``VA may be able to retain its revenue goals only by
attracting thousands of new users who have high incomes or public or
private insurance''. Do you agree?
Answer. In part, yes. While they may be difficult to reach we
believe they are achievable if Congress gives us the needed tools and
allows the system to be appropriately managed.
Veterans with higher incomes and insurance would certainly make the
task a lot easier. Increased workload alone will not make up the
necessary revenues to meet the MCCR recoveries contained in the
President's Budget. MCCR through program improvements and increased
workload will be able to increase recoveries to reach the levels
contained in the President's Budget.
VA is pursuing ten initiatives that should allow us to increase
recoveries. Implementation of these improvements will occur over the
next several years.
INITIATIVES FOR INCREASING REVENUES FOR MEDICAL CARE
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Projected
Initiative Description recovery
----------------------------------------------------------------------------------------------------------------
Insurance Identification (Pre- Pre-registration: Involves contacting patients 75
registration, HCFA Match). scheduled for outpatient visits to remind the
patients of their appointment and to update patient
information. $6.4 million was recovered from
insurance from 10 medical centers in one year.
Assuming average recoveries of $500,000 per each of
150 medical centers, $75 million in new revenues
could be generated.
HCFA Match: Approximately 5 percent of the Medicare 60 to 97
eligible population possess third party primary,
full coverage, reimbursable insurance as a result of
their full time employment or the employment of a
spouse. MCCR is pursuing a match of Medicare and VA
records to identify primary payer data. If the
estimate is correct and VA mirrors the private
sector, potential recoveries from this group may
total between $60 to $97 million.
HCFA Medicare Remittance Notices......... Since VA presently cannot receive reimbursement from \1\ 42
Medicare for eligible veterans, MCCR has not been \2\ 8
able to submit claims to Medicare Supplemental
insurers similar to those of Medicare providers that
have an accompanying remittance notice from a
Medicare Fiscal Intermediary or Carrier. Certain
payers are withholding payment of Medicare
Supplemental claims. HCFA and VA are negotiating an
agreement to allow VA to utilize existing Medicare
contracts to obtain the remittance notices to
satisfy payer requirements. A one time recovery of
$42 million in outstanding unpaid claims and a
recurring annual $8 million in additional revenue
are expected as a result of this contract and change
in processing.
Utilization Review....................... In fiscal year 1995, approximately $159 million in 15 to 30
non-Medigap inpatient claims and $44 million in non-
Medigap out-patient claims were denied by payers.
Utilization review staff, familiar with third party
criteria, such as admissions, lengths of stay,
discharges, pre-certification, continued stay
reviews, etc., could negotiate payments for many of
the denied claims. UR staff have recovered as much
as $400,000 per medical center in previously denied
claims. If we assume a possible average success rate
of between $100,000 and $200,000 for each of the 150
medical centers, recoveries from proper training and
assignment could amount to between $15 and $30
million.
Universal Billing (TRICARE, Sharing, As a consequence of Public Law 104-262, eligibility 25
etc.). reform legislation, expanded sharing contracts,
including support of TRICARE is expected to result
in $25 million in new revenues annually.
SC/NSC Documentation and Billing......... Approximately 3.3 percent of service connected 11
inpatient care and 2.5 percent of service connected
outpatient care for adjunct conditions is
inappropriately being coded as treatment for
adjudicated service connected care. Properly coding
this care as adjunct and billing insurance carriers
will result in an additional $1 million per year.
Salary and Benefit Offset................ An IG audit determined that by referring delinquent 3
patient copayment and means test debt for salary and
benefits offset, an additional $3 million in
revenues can be recovered. The MCCR program
currently utilizes IRS offset for delinquent debt
and is implementing referral of debt over 90 days
old to the Debt Management Center in St. Paul.
Annual Total....................... ..................................................... 239 to 291
Point of Service Contracts............... In order to remain competitive, traditional HMO's ( \3\ )
recently began offering their enrollees the option
of obtaining health care outside the HMO network.
The enrollees agree to bear larger copayments and
providers receive reimbursements that are less than
customary and usual. Aggressive identification and
recovery from these HMO plans will be pursued.
Network Incentives....................... Network retention of revenues recovered will result ( \3\ )
in better managed local recovery efforts.
Restructuring Reimbursement Rates........ Restructure reimbursement rates to more accurately ( \3\ )
reflect the costs related to the actual services
provided; and facilitate new revenue streams from
public and private health insurance programs such as
Medicare, Medicaid, CHAMPUS, and Sharing agreements.
Initially a DRG rate schedule will be developed for
inpatient care, to be used with an automated
multiple rate schedule pricer in Integrated Billing.
Outpatient procedure rates are planned in late
fiscal year 1998.
AICS..................................... Increases efficiency, reducing program costs to ( \4\ )
identify, bill and collect the cost of outpatient
care services. Implementation of Primary Care
Management module has been completed. Training on
scanning and scheduling changes continues.
Implementation of Version 3.0 is scheduled in Spring
1997.
----------------------------------------------------------------------------------------------------------------
\1\ One time.
\2\ Recurring.
\3\ Undetermined.
\4\ Human resources dedicated to increased insurance identification initiative.
Question. How many new, insured users would VA need to attract in
each of the next 5 years to meet revenue projections?
Answer. Projections of increases in unique patients users between
3.5 percent and 5 percent a year or workload increases of 20 percent
over 5 years as contained in the President's budget should be
sufficient. This increase in workload, along with increases in the
number of current users that are identified with insurance, will allow
VA to reach the recovery levels anticipated from third party insurers.
Currently, 20 percent of all inpatient users have insurance while only
8.5 percent of the outpatients are identified with insurance. Through
the use of the ambulatory data capture initiative and better insurance
identification procedures, it is anticipated that by fiscal year 2002
this number should be closer to 16 percent for outpatients.
Question. VA recently re-estimated downward by 32 percent its
anticipated third-party reimbursements for fiscal year 1997 because
health insurance companies apparently have been making overpayments
totaling about $150 million. Are you confident in your projections for
fiscal year 1998, which represent an overall increase of 11 percent
over fiscal year 1997?
Answer. Department of Veterans Affairs is confident that the
assumptions contained in the 1998 President's Budget are accurate in
the short term. Long term, they are less reliable because of the
rapidly changing environment. In developing third party recovery
estimates we relied upon the Center for Health Care Quality, Outcomes,
and Economic Research, Bedford, MA. With their assistance MCCR has
refined the projection methodology, and in the next few months will be
reassessing the environmental effects, which are constantly changing.
These are the best estimates given the fast-changing trends in workload
and mode of treatment. Other environmental issues include the effects
of eligibility reform or other legislation, such as authorization to
bill Medicare.
Question. Given that inpatient workload is diminishing while
outpatient workload is increasing, shouldn't recoveries decrease--since
outpatient care costs less than inpatient care?
Answer. Yes, here are some things we are doing to try to address
the dynamics:
--The first being workload. Projecting increases in unique patients
users between 3.5 percent and 5 percent a year (workload
increase of 20 percent total) while supporting declining
inpatient workload of approximately 4 percent and increasing
outpatient workload of over 6 percent, the MCCR third party
recoveries will be able to reach the levels contained in the
President's fiscal year 1998 budget based on the following
factors.
--Increases must occur in the number of current users that are
identified with insurance as well as new users having insurance
in the same or greater portions as current users. Currently, 20
percent of all inpatient users have insurance while only 8.5
percent of the outpatients are identified with insurance.
Through the use of the ambulatory data capture initiative and
better insurance identification, it is anticipated that by
fiscal year 2002 this number could be closer to 16 percent for
outpatients.
--Restructuring reimbursement rates charged for services are another
important factor. It is anticipated that, even under the
current per diem rate system, increases will occur
conservatively for both inpatients and outpatients at a rate
exceeding one percent a year.
--Another critical area is the gap between receivables and
collections. It is anticipated that the ratio between
receivables and collections can be narrowed. Currently, we
collect 31 percent of receivables for inpatients and 33 percent
for outpatients. We expect our collection rate to improve to
approximately 35 percent for both inpatient and outpatient
receivables.
For the above assumptions to be realized, VHA has developed 10
initiatives that will enable it to reach or exceed those levels.
Question. What are your contingency plans should VA's projections
turn out to be too high?
Answer. If recovery estimates are not met, the veterans health care
services would have to be reduced to levels that can be afforded within
available resources, in accordance with the priorities for care
contained in the Veterans' Healthcare Eligibility Reform Act of 1996,
Public Law 104-262.
Question. The user fee proposal is said to give VA managers
incentive to increase collections, since such collections currently are
not retained by VA. Will collections be retained by individual
hospitals? If not, why would there be any incentive to increase
collections?
Answer. The allocation of funds from MCCR recoveries to facility/
VISN has not been determined. Several proposals have been developed and
the Under Secretary for Health has been in discussions with the Network
Directors on this issue. The possibilities range from including the
recoveries as part of the VERA model to allowing each facility/VISN to
retain what they individually collect. As VA moves toward relying upon
non-appropriated funding it is critical that all VISN's are treated in
an equitable manner. No matter which method of distribution is
selected, the incentive that will be created by allowing VHA to retain
collections will be the greatest catalyst for increased receipts.
VHA believes that if the networks are able to manage recoveries,
the local medical center recovery efforts will become better managed
and more efficient, maximizing the benefits of the new resources. The
networks will have the ability to consolidate certain parts of the
medical collection processes to make the most of automation, and to
make the most of the human resources. MCCR believes that a presence at
the individual medical center or access point is essential, as direct
personal contact enhances the likelihood of obtaining insurance
information and answering patients' questions satisfactorily. The VHA
Chief Financial Officer and MCCR Program managers will provide
nationwide support to the networks through initiatives designed to
increase revenue and efficiency.
Question. GAO states ``VA has not provided sufficient information
to permit a full understanding of the implications of its proposal.
Delaying a decision on VA's legislative proposals until critical
information is available, including a plan describing how the system
will look and operate in 2002, may result in a better legislative
decision on VA's budget proposal.'' Do you care to comment on GAO's
assertion that VA's proposal should be put on hold?
Answer. GAO's comments ignore the nature of healthcare
restructuring today. No one in healthcare can predict five years out.
Putting these legislative proposals on hold only fosters continued
reliance on the appropriation and increases competition for
discretionary funding. No matter how long we wait, legislation will
never be perfect. The requested proposals will give VHA a course now
and provide the tools necessary to reach our long-term targets. We will
continuously monitor and request changes in the future if fine-tuning
is needed.
OUTYEARS
Question. It is my understanding that this year's budget includes
realistic outyear projections. Are the outyear projections then real
planning tools?
Answer. The VA and OMB have reached a 5 year agreement on the
budget resources and policies requested for Medical Care. In the
Government Performance and Results Act (GPRA) effort of integrating
budget with planning, these resource levels will be included in the
updated Network Business Planning process. VISN's will plan within
these resource targets considering the long-term goals and targets
established.
Question. For fiscal year 1999, VA is showing an increase in
obligations of only $100 million over fiscal year 1998. How is it
possible that in fiscal year 1999, VA could manage to increase the
numbers of patients served with an increase in obligations of only $100
million?
Answer. For 1999, with passage of the requested legislative
proposals, we estimate an additional 6 percent per patient cost
reduction (second installment towards the 30 percent goal by 2002)
coupled with an additional 3.4 percent workload increase (towards the
20 percent goal). In addition, we estimate we will reach approximately
one-half our goal of 10 percent funding from non-appropriated sources.
Question. Will the networks be working with these outyear
projections in revising and updating their business plans?
Answer. Yes, these outyear projections will be integrated into the
Network Business Planning process.
ELIGIBILITY REFORM
Question. Dr. Kizer, last year you told us that eligibility reform
legislation was a critical tool in restructuring VHA and becoming more
efficient. This legislation was enacted last fall, after years of
debate.
How is eligibility reform legislation allowing VA to make savings,
do you have an estimate of savings associated with the new authorities
and to what extent is your goal of a 30 percent reduction in per-
patient cost is made possible through the new authorities?
Answer. VHA has always contended that it would manage eligibility
reform in a cost-neutral manner. This legislation legitimizes the
continuing transformation of VHA into a system that is changing its
practice patterns from inpatient to outpatient care when it is
appropriate and cost-effective. While there may be small ``savings'' in
some areas, e.g., the ``hotel'' costs of inpatient care or decisions to
contract for some services, these resources are shifted to other areas
to produce required services, e.g., outpatient staff, prosthetics,
initiatives to improve access and quality. Our goal is that by 2002,
VHA will have decreased its unit costs by 30 percent, increased the
number of veterans treated by 20 percent, and opened up increased
revenue streams outside the appropriation by 10 percent. Eligibility
reform is helping VHA to make progress toward meeting these goals. We
expect to continue decreasing bed days of care while increasing
ambulatory surgery and preventive medicine. Reduction in per-patient
cost is made possible through the new authorities?
Question. In the past, Congress has been concerned that eligibility
reform would increase costs by attracting a substantial new patient
population. Has this happened--is eligibility reform generating
significant new demand?
Answer. Even though veterans will now be able to receive whatever
outpatient, as well as inpatient care is needed, we believe that
efficiencies gained through the transformation of VHA will provide for
treating veterans under the Act's provisions. Our data already shows
that with the increase in outpatient visits, primary care enrollment,
clinic availability and ambulatory surgeries, there is a concurrent
decrease in admissions, bed days of care, and operating beds with no
adverse outcomes.
Question. Eligibility Reform legislation greatly expands the size
of the population eligible for unrestricted ambulatory care.
Prescription drugs are a part of ambulatory care. What has been the
effect of Public Law 104-262 on VA's expenditure for prescription
drugs?
Answer. Currently, VA's data base regarding pharmaceutical
utilization and cost in the ambulatory care setting does not track
expenditures to a specific patient and diagnosis. We are, however, able
to track gross utilization and pharmaceutical costs in the outpatient
setting by facility, network and nationally. This information allows us
to make inferences regarding the impact of shifting care from the
inpatient setting to the outpatient setting relating to pharmaceutical
expenditures. Although the cost of pharmaceuticals for treating
patients on an outpatient basis is expected to increase, we are
confident that the total cost per patient in the outpatient environment
is less than inpatient care for such patients. This is consistent with
the private sector experience. As we link the gross utilization data
with patient specific information, we will be in a much better position
to address this type of question with greater accuracy. We are in
process of developing the software necessary to create the necessary
linkage.
Question. Eligibility reform legislation provided VA with the
authority to sell services to the private sector. What are VA's plans
with respect to selling health care services to non-veterans?
Answer. Under the authority of prior law, VA facilities had entered
into a limited number of sharing agreements under which specialized
medical resources, such as radiation therapy, sleep studies, substance
abuse, and transplants, were provided on an inpatient basis to the
patients of our eligible sharing partners. Typically, these sharing
agreements were with our University affiliates or with the Indian
Health Service. These agreements remain active. However, since 1994,
VHA has not established any new agreements to provide inpatient care to
non-veterans, and has no plans to do so at this time.
Under the authority of Public Law 104-262, VHA does expect to sell
outpatient care, health care support, and administrative services to
eligible sharing partners, assuring that veterans will receive priority
under such agreements. Furthermore, such agreements must be necessary
to maintain an acceptable level and quality of service to veterans, or
result in the improvement of services to eligible veterans at that
facility.
Question. What policy guidance has been--or will be--issued to the
VISN's to clarify when health care services should be sold?
Answer. VHA Directive 97-015, dated March 12, 1997, contains
initial policy guidance. VISN or medical center directors must
specifically certify in writing for each contract (a) that veterans
will receive priority for the services being provided, and (b) that the
contract is necessary either to maintain an acceptable level and
quality of service to veterans, or will result in the improvement of
services to veterans. Further guidance will be developed and issued.
Question. How will VA address concerns regarding competition with
the private sector?
Answer. VA is very much aware of concerns regarding competition. We
presently are developing more detailed policy guidance for the field on
selling services and are focusing on this sensitive issue. We do not
intend to compete unfairly or to ``under cut'' the private sector.
Question. What are VA's plans with respect to selling non-health
care services to the private sector, such as laundry services?
Answer. The recent legislation clearly gave the VA authority to
sell health care support and administrative services, as well as the
use of space or equipment, to support veterans' health care. We would
not expect to sell these services to individual non-veterans but do
expect to sell these services to other eligible sharing partners.
Question. Does VA have the authority to compete with the private
sector without limitation? If not, please explain what the limitations
are imposed.
Answer. VA has the authority to sell any health care service, or
administrative service required for the operation of a health care
facility to support veterans health care. Until detailed policy
guidance is issued, all requests from VA facilities to sell
administrative resources, the use of medical equipment or space,
prosthetics, supplies or laundry services, regardless of service or
dollar amounts, are individually reviewed by a headquarters team
composed of staff from VHA, Office of Acquisition and Materiel
Management (OA&MM), and General Counsel. Each proposal is individually
discussed with each facility by the review team, who emphasizes VA's
sensitivity to the issue of competition and the need for fair pricing.
This same information has been conveyed to the field on monthly
conference calls and on national satellite teleconferences.
Question. Has the VA conducted any studies concerning the effect of
VA resource sharing on the ability of private sector companies to
compete with the VA?
Answer. No studies have been conducted. While policy guidance will
be provided by VHA headquarters, actual decisions to sell services will
be made locally within the policy framework.
Question. Has the VA conducted any studies which reflect the amount
of business which the VA intends to displace from the private sector?
Answer. No studies have been conducted; however, the VA intends to
compete fairly in providing quality services to support veterans'
health care.
Question. Has the VA developed any projections on how much revenue
it will generate from resource sharing?
Answer. No specific projections have been developed, however, the
expanded provisions under Public Law 104-262 will help us achieve the
10 percent collection goal.
Question. How will VA determine the cost of VA services provided to
the private sector?
Answer. VA will look at both total costs and incremental costs. We
also will take into account comparable market prices for the same
services in determining an appropriate price for VA services that will
be in the best interest of veterans' health care and of the Federal
government.
Question. What are VA's plans with respect to selling excess
capacity to help other federal agencies meet their beneficiaries'
health care needs?
Answer. VA encourages its facilities and VISN's to offer available
services to other Federal agencies. The only restriction currently
imposed by the Secretary precludes new agreements that would provide
inpatient care at VA Medical Centers to non-veterans other than DOD
beneficiaries. Our plans include expanded sharing with all Federal
agencies and with DOD's TRICARE contractors. We have negotiated
standard provider agreements with each TRICARE contractor to facilitate
the development of facility-specific TRICARE agreements.
ACCESS POINTS
Question. To date, VA has been given approval to open 51 community-
based outpatient clinics. Currently pending is a request for an
additional 38 clinics. VA has assured the Committee that the access
points meet a number of criteria, including that the ``host'' medical
center will fund the clinic out of existing resources. VA has yet to
let the Committee know of its long-term plans for access points--how
many more are needed nationally to ensure equitable access to medical
care for veterans and over what time frame will they be activated?
Answer. It is not known exactly how many CBOC's are needed
nationally to ensure equitable access to medical care for veterans.
Overall, the Community Based Outpatient Clinics will facilitate the
transition of VA from a hospital bed-based system of care to a more
efficient health care system rooted in ambulatory and primary care. The
CBOC review process is open-ended, and VISN's will continuously
identify appropriate sites in their geographical areas and develop
business plans and proposals for submission to VA Headquarters.
Question. Why are only 19 of the 51 approved access points
operational at this time?
Answer. The proposals which were submitted for review are plans
and, therefore, conceptual in nature. Indeed, one of the criteria for
submitting these for approval is that no definitive agreements will
have been effected (e.g., leases, contracts, etc.). Upon notification
that a proposal has been approved, it is necessary for the parent
facility to enter into the formal process of finalizing the preferred
alternative. In the case of setting up a VA staffed clinic in leased
space, it is necessary to solicit bids for the space, negotiate the
costs associated with any required modification or renovation, acquire
necessary equipment, and contract for ancillary services. If a clinic
is to be a contract for service, the negotiation process to assure that
the requirements as set forth by the parent medical facility are met,
requires careful analysis and review to assure that all associated
costs are reasonable.
Question. How many additional access points are needed to meet VA's
goal of attracting 600,000 new users by 2002?
Answer. There is no specific number of CBOC's that directly
correlates to the goal of 600,000 new users. However, the primary
criteria for establishing CBOC's is to improve access to care for
existing workload.
Question. VHA plans to bring in 600,000 new veterans by the year
2002. For fiscal year 1998 the budget assumes a 4.6 percent increase in
patients at cost of $774.7 million--which amounts to about 135,000
patients. Are these new patients expected to come primarily through the
new community-based outpatient clinics?
Answer. Although some new patients may be expected at the CBOC's, a
larger share will initially come from current medical center users who
choose to receive outpatient and ambulatory medical care at a CBOC more
convenient for them. In establishing CBOC's nationwide, the focus is
not on how new veterans are brought into the system; but rather, a
concern for providing quality care in the most appropriate setting,
whether the care is at a medical center or a CBOC.
MEDICAL AFFILIATIONS
Question. How will the cost-efficiencies that you anticipate impact
VA's affiliations with 105 of the nation's medical schools? Are major
changes to the affiliation agreements needed to being about the
streamlining that is needed?
Answer. VA is in the process of executing revised affiliation
agreements with all of its medical school academic partners. While VA
has made a number of changes in the affiliation agreement documents to
reflect the changes in the structure and operation of the veterans
health care system, it is difficult to predicate how future cost
efficiencies will impact VA's medical school affiliations.
Currently VA and its medical school partners are conducting
substantive reviews of the affiliation relationship. The most important
parts of these reviews will be mutual strategic planning and the
identification of opportunities for improvement and measurable outcomes
to track future progress. The products of the reviews will be an
assessment of the affiliations and plans for the future of the academic
partnerships. (See the attached Academic Partnership Policy
Instruction.)
Memorandum From the Department Veterans Affairs
February 26, 1997.
Subject: Academic Partnership Policy Instruction
Chief Network Officer (ION), Chief Academic Affiliations Officer (14),
Network Directors, Facility Directors, and Associate Directors,
Facility Chiefs of Staff, and ACOS for Education
1. As VHA moves forward with formulation of the health care system
for tomorrow, a number of operational and policy changes are needed to
bring the management of our academic affiliations into line with
today's and tomorrow's expected needs. The provision of health care
professional education and the conduct of research are two important
missions of the Veterans Health Administration and are intricately
associated with the direct delivery of care by VA treatment facilities.
The unique challenges of these missions must be addressed in our re-
engineering to make them consistent with specific VHA changes that have
been effected since 1995.
2. As outlined in my first Academic Partnership Policy memorandum
of October 7, 1996, it is anticipated that a number of ``Academic
Partnership Policy Instructions'' will be issued by the Office of the
Under Secretary for Health in order to accomplish these goals. The
attachments to this memorandum continue this series and include the
following:
--97-01 Academic Partnership Policy: Affiliation Review and Execution
of Revised Affiliation Agreement Documents outlines the process
for a substantive review of the affiliation relationship
between VA and its school of medicine academic partners and the
execution of revised affiliation agreements. This process will
include participation from the local, network and headquarters
components of VHA as well as our academic partners.
--97-02 Guidelines for Review of Affiliations constitutes the
framework within which the effectiveness and value of the
academic partnership is measured. It is anticipated that the
reviews will be the basis for long-term planning for academic
affiliations with medical school partners and will identify
measurable outcomes to track future progress. The actual
reviews of the facility-medical school relationship will take
place at the local level, with the attendant documents
submitted to the network leadership for concurrence or
revision. The Network Director will ensure that an appropriate
review process has been formulated to accomplish a
comprehensive review of academic affiliations, and through the
Network Academic Partnership Councils monitor the follow-
through of the process.
--97-03 Academic Affiliation Agreements provide the model template
and language for updated affiliation agreements. Any deviation
from the model template must be submitted to VA General Counsel
for review and approval before execution. During fiscal year
1997, revised affiliation agreements will be executed for
institutions sponsoring the 105 medical school partnerships
with VHA. New affiliations with other academic partners may be
executed using the new templates, but it is not necessary to
prepare new affiliation documents for non medical school
partnership agreements in fiscal year 1997. These will be
executed in fiscal year 1998, after the recommendations of the
Associated Health Professions Review Sub-Committee of the
Special Medical Advisory Group have been received and
implementation decisions made.
3. The Chief Academic Affiliations Officer shall provide guidance
and assistance to network directors and treatment facilities regarding
these issues. The initial point of contact for questions should be the
Office of Academic Affiliations.
Kenneth W. Kizer,
M.D., M.P.H.
______
Under Secretary for Health's Academic Partnership Instruction
97-01 (february 26, 1997)
ACADEMIC PARTNERSHIP POLICY: AFFILIATION AND EXECUTION OF REVISED
AFFILIATION AGREEMENT DOCUMENTS
INTRODUCTION
VA is the nation's largest provider of health professions education
and training; and as such, it is obligated to lead in the development
of a health professions work force that meets the current and future
needs of both veterans and the nation. The educational impact of VA
relies on its partnerships with many of the nation's leading academic
institutions. The basic foundation for VA partnerships with academic
health care programs was espoused in Policy Memorandum Number 2 issued
in 1946. The key objectives of this unique document were to maintain
and improve health care for veterans, to assist in recruitment and
retention of the highest quality staff at VA facilities, and to create
a patient care environment characterized by an academic atmosphere of
inquiry. Much of that document is as applicable today as it was when it
was conceived 50 years ago.
Nonetheless, medical science, the manner in which health care
services are delivered, the training of health care professionals, the
health care manpower needs of VA and the nation, and the structure and
operation of the veterans health care system have all dramatically
changed since Policy Memorandum Number 2 was promulgated. A number of
operational and policy changes are now needed to bring VA academic
affiliations in step with the health care environment of today and
tomorrow and to make the management of them consistent with specific
VHA re-engineering changes that have been effected since 1995.
Therefore, VHA will renegotiate its academic affiliations over the
course of the next two years. The process will be carried out in two
phases. Phase One will encompass a substantive review of the
affiliation relationship between VA and its academic partners and the
execution of a revised affiliation agreement. Phase One will
concentrate on those institutions sponsoring the 105 medical school
partnerships. Phase Two will address the other 4,000-plus affiliation
agreements that VHA maintains for its associated health professions
training programs. Phase Two awaits the finalization of a policy that
will be anchored in the recommendations of the Associated Health
Professions Review Subcommittee of the Special Medical Advisory
Committee. Accordingly, Phase Two will be implemented after the
Associated Health Professions Review Subcommittee has completed its
work and action on its recommendations has been determined.
This document addresses the principles and process for Phase One
and includes, (1) direction for the completion of a review process for
affiliations between VA and its medical school affiliates and, (2) the
process for execution of revised affiliation agreement documents
between VA and its academic affiliates.
PRINCIPLES
The following set of principles guides the linked processes of
review and execution of revised VA and medical school affiliation.
1. Health care work force training, medical education, and research
are most beneficial to patient care and most valuable to learners, when
they are aligned with the best models of patient care.
2. Education and research should be accountable to health care
system needs. Accordingly, they should be managed with performance
expectations and outcomes measures.
3. VA's educational offerings should emphasize areas of greatest
need to society and to those of its veterans. They should be especially
concentrated in areas for which VA has special expertise. The numbers
and types of health care professionals should be determined by the
needs of the system and the needs of the nation.
4. Academic affiliation agreements with VA should be fair and
equitable to all parties.
PROCESS FOR REVIEW AND EXECUTION OF REVISED VA-MEDICAL SCHOOL
AFFILIATION AGREEMENT DOCUMENTS
The general conditions and expectations listed below will guide these
processes.
1. The linked process of review of affiliations and execution of
revised affiliation agreement documents will take place under the
guidance of the Chief Academic Affiliations Officer. The Network
Director will provide guidance to individual treatment/training
facilities regarding Network strategy and goals with reference to
affiliation agreements and shall approve all affiliation agreements.
Specific negotiation regarding operational and logistical details will
be negotiated by the facility.
2. A set of guidelines (attached) will serve as the basis for the
review. The review process will begin concurrently with the process to
execute revised affiliation agreement documents. Because the prowess of
executing new affiliation agreement documents will renew existing
affiliation agreements with new standard language, it is expected that
the new master affiliation agreements and new School of Medicine
affiliation agreement documents will be signed within 120 days. The
review process may extend beyond this deadline, because it is
anticipated that the review will lead to ongoing planning,
implementation strategies and outcomes analysis.
3. The template affiliation agreements will apply to all VA-
university affiliations. There shall be no informal or special
arrangements that are not in accordance with VA policy or sound
management practices as outlined by the template agreement. Any wording
change from the template must be approved by General Counsel in VA
Headquarters.
The sequence and implementation of the review and execution of revised
affiliation agreement documents processes is shown below.
1. General.--The Chief Academic Affiliations Officer will convene
the Network Academic Affiliations Officers to initiate the processes of
review and execution of revised affiliation agreement documents. The
review process will be based on guidelines that have been developed by
VHA educational and administrative leadership as well as leadership
from VHA's academic partners. The VISN will initiate these processes
for each medical school partnership in its network. The Network
Director will be responsible for the direction of the processes. The
Network Academic Affiliations Officer will be responsible for
coordination of the processes.
2. Revised Affiliation Agreement Documents.--The Revised
Affiliation Agreement Documents provide the model template and language
for updated affiliation agreements. Any deviation from the model
template must be submitted to VA General Counsel for review and
approval before execution. During fiscal year 1997, revised affiliation
agreements will be executed for institutions sponsoring the 105 medical
school partnerships with VHA. New affiliations with other academic
partners may be executed using the new templates, but it is not
necessary to prepare new affiliation documents for non-medical school
partnership agreements in fiscal year 1997. These will be executed in
fiscal year 1998 after the recommendations of the Associated Health
Professions Review Subcommittee of the Special Medical Advisory Group
have been received and implementation decisions made.
There are three types of affiliation agreements: master affiliation
agreements, school of medicine affiliation agreements and educational
program affiliation agreements.
--Master Affiliation Agreement.--There will be one Master Agreement
for each college/university with which a facility has an
agreement. It will be signed by the Facility Director, the
leading official at the educational institution, and the
Network Director. The generic umbrella of the master
affiliation agreement constitutes both the philosophical and
legal basis for numerous specific corollary agreements that may
be executed among components of VA and the affiliates. Such
corollary arrangements may address academic programs as well as
health care delivery arrangements that may be executed under
the enabling umbrella of the master affiliation agreement. They
may talk the form of contracts, memoranda of understanding,
performance guidelines, leases, written agreements which cover
academic or research partnerships, as well as shared services,
facilities, equipment or other resources that support the
affiliation. Additional agreements may include VISN-wide
coordinating agreements, or local multi-affliate sharing
agreements where relevant. Failure to agree on the details of
one or more corollary agreements made as a part of an
affiliation agreement should not necessarily preclude approval
of the master affiliation agreement, but should constitute the
basis for planning and for future interaction.
--School of Medicine Affiliation Agreements.--The Medical School
Memorandum of Affiliation specifies unique aspects of
affiliations between VA and schools of medicine and will be
signed by officials in the medical school and the university as
well as VA officials at the facility and network levels.
--Educational Program Affiliation Agreements.--The Educational
Program Affiliation Agreement applies to an individual program
in a medical school and to all other non-medical school
affiliations. This includes a separate educational program
agreement for each discipline-specific educational program that
sends trainees to VA. It will be signed by the VA Network
Director or his/her delegates and the responsible official at
the educational program.
3. Review process.--To accomplish a comprehensive review of
academic partnerships, the VISN will convene a meeting of facility and
medical school leadership to discuss the rationale and goals of the
review guidelines and their network level and facility level relevance.
Rational expectations for the review will be discussed. The review will
incorporate all relevant areas of partnership between VA and the
academic affiliate. Cross-cutting issues as well as opportunities and
challenges for VA/affiliate partnerships will be addressed. The Network
Director will assure that an appropriate review process has been
formulated to accomplish a comprehensive review of academic
affiliations. When the facility-medical school review process has been
completed, the attendant documents will be submitted to the network
leadership for concurrence or revision. Upon completion of the network
level review, the documents will be submitted to Headquarters for
review and comment. The time line for completion of the review will be
determined by each VISN. In any event, it is to be completed no later
than September 30, 1997.
4. Follow-through of the Review Process.--The review process is not
an end unto itself. It is anticipated that it will be the basis for
long-term planning for academic affiliations with medical school
partners. Therefore, as part of the discussions surrounding the review
process, a set of future strategies will be developed to address the
guidelines. It is expected that the Network Academic Partnership
Councils will play an important role in the follow-through of the
review process. They will coordinate the tracking of measurable
outcomes that emerge from the review.
5. Execution of Revised Affiliation Agreement Documents.--
Concurrent with the review, the process leading to the signing of a
master affiliation agreement and accompanying school of medicine
affiliation agreement will take place. It will include participation by
facility leadership--to include at least the Facility Director, Chief
of Staff, and Associate Chief of Staff for Education--and the academic
affiliate's leadership--to include the medical school dean and the
university president or his/her delegated representative. The Network
Director will be the official designated to approve the affiliation
agreement for VA.
6. Time line for Approval of Master Affiliation Agreement.--It is
anticipated that the execution of the master affiliation agreement and
school of medicine affiliation agreements--from convening of the
network-level leadership to final review--will take no more than 120
days.
97-02 (february 26, 1997)
THE VA-MEDICAL SCHOOL PARTNERSHIP: GUIDELINES FOR REVIEW OF
AFFILIATIONS
INTRODUCTION
VA is committed to its education and research missions. The review
of VA-medical school affiliations designed to strengthen those missions
in the context of the change that is occurring in the larger health
care environment. If VA-academic partnerships are to continue to be
mutually beneficial, both entities must work to strengthen this
partnership.
VA is in a unique position to support effective change in medical
education. First, it provides financial and organizational support for
a large proportion of medical education in the United States. Second,
because of the medical and social complexity of the patients VA serves,
only the best in medical skills and the most effectively integrated
system will meet veterans' health needs. This context provides a
singular opportunity to help prepare future physicians for a changing
health care system currently dominated by managed care.
These guidelines for review of affiliations are intended to
constitute the framework within which the effectiveness and value of
the partnerships are measured. The guidelines have been developed to
reflect the shared goals of the partnerships and to provide a mechanism
for tracking their success into the future. Of necessity, the vision
for the future held by the partnership leaders will be evolutionary. It
is assumed that not all partnerships will be at the same point in the
development of a strategy that deals effectively with the changes that
are occurring in medicine today. Nevertheless, this process of
assessment should reflect the attitudes and plans as they exist
currently and the mechanisms to effect valuable change going into the
future.
APPLICATION
The review of VA-medical school partnerships differs from other
accreditation and standards-based reviews. It is not so much a ``report
card'' as it is a foundation for planning and establishment of goals.
The review will incorporate all relevant areas of partnership between
VA and the academic affiliate. The value of the partnership to both VA
and the school of medicine should be addressed together with the status
of the strategic plans of each partner that may have an impact on the
future of the partnership. Opportunities for improvement and for the
development of new partnerships should be addressed. The reviews will
be the basis for long-term planning for academic affiliations between
VA and medical school partners, and they will identify measurable
outcomes to track future progress.
The reviews of the facility-medical school relationship will take
place at the local level, with the conclusions submitted to the network
leadership for concurrence or revision. The Network Director will
ensure that an appropriate process has been formulated to accomplish a
comprehensive review of academic affiliations. Each Network Academic
Partnership Council will monitor the follow-through of the process.
While the review will initially focus on the local VA facility-
affliated school of medicine partnership, it will also incorporate the
emerging changes that are taking place in the VA health care system,
including systems planning for patient care delivery within the context
of the population-based Veterans Integrated Service Networks. Recent
changes in VA administrative structures and processes may help to
enable previously untapped opportunities for neighboring schools of
medicine to share in VA partnerships.
The review process is expected to be the basis for long-term
planning for VA's academic affiliations with medical school partners.
Therefore, as part of the discussions surrounding the review process, a
set of strategies will be developed to address the future goals of the
partnership. It is expected that the Network Academic Partnership
Councils will play an important role in the follow-through of the
review process. They will coordinate the tracking of measurable
outcomes that emerge from the review.
EXPECTATIONS
The product of the review of affiliations should be an assessment
of the current strengths and weaknesses of the partners' relationship
and a short-and long-range plan for the future of the academic
partnership. The broad headings included below are intended to help
focus the review around major conceptual areas of the partnership as
embodied in the affiliation agreements. Varying degrees of integration
are found in the many VA-medical school partnerships. The specific
questions included with each conceptual area are intended to be
examples of representative questions that may be relevant for a subset
of affiliations. They are not intended to be an exhaustive list of
specific uniform measures applicable to all situations. Rather, they
are to serve as examples that may help to characterize the partners'
relationship.
GUIDELINES FOR REVIEW OF AFFILIATIONS: CONCEPTUAL AREAS OF THE VA-
MEDICAL SCHOOL PARTNERSHIP
Mission/vision
The provision of education future healthcare providers and the
conduct of research are statutorily defined missions of the Veterans
Health Administration. Building on the long-standing, close
relationships between the U.S. Department of Veterans Affairs (VA) and
the nation's academic institutions, VA seeks to play a leadership role
in reshaping the education of future healthcare professionals to help
meet the rapidly changing scope and complexity of the nation's health
care delivery system. (Memorandum of Affiliation Master Agreement.
Preamble)
Examples of Representative Questions.--A shared vision of the
future is important to a successful partnership. How do the University/
Medical School and VISN/facility leadership reflect congruence in their
commitment to clinical care, education and research within a vision for
the future state of the national, regional, affiliate and VA health
care systems? What are the collaborative strategies to deal with the
emerging clinical work force and the nation's changing health care
delivery system? In what ways can VA and medical schools collaborate in
response to the emerging environment? What do VA and medical schools
expect of each other? How can these expectations be met?
Physician faculty issues
At its finest, an affiliation agreement articulates a ``one
campus'' concept for the two parties. To the extent possible, it
establishes the goal of one standard for patient care, one standard for
resident and student education, one standard for research, and one
standard for faculty appointments. (Memorandum of Affiliation Master
Agreement Preamble)
Examples of Representative Questions.--The VA school of medicine
partnerships results in medical school physician faculty having
appointments at the VA as staff physicians. These appointments vary in
the percent of time spent at each institution. What is the overlap in
physician appointments? Are there physicians that are considered VA-
based? If so, are VA-based faculty academically productive, as
reflected by peer-reviewed publication, external grant funding (NIH,
merit review, educational grants, etc.), and medical student and
resident teaching? How do they compare in these areas to comparable
non-VA-based faculty? How is commitment to care of veterans
demonstrated by VA-based faculty? What leadership positions do VA-based
faculty hold in medical school educational programs? How many are on
the medical school curriculum committee? What VA-based faculty have
received awards for outstanding contributions to education and research
from the medical school? What VA-based faculty occupy positions of
influence in the medical school? How many VA-based faculty carry
university administrative positions? Which ones?
Medical care of veterans and the education and research partnership
It is the intent of VA to maintain its long-standing practice of
effective affiliations with educational institutions for the purposes
of contributing to continued excellence in VA patient care and
conducting joint academic programs that address health manpower needs
throughout VA and the nation. (Memorandum of Affiliation Master
Agreement Preamble)
Examples of Representative Questions.--How well does VA rank among
students and residents as a preferred site for education? It is
recognized that the shift of workload and teaching to the ambulatory
setting creates new complexities and challenges. How have the partners
collaborated to develop innovative strategies for student and resident
supervision and curricula for ambulatory care? Given the climate of
resource constraint, what consideration is being given by the
partnership to the support of the education and research missions? Are
VA and non-VA ambulatory/continuity experiences integrated? How is the
economic aspect of medical practice reflected in the student and
resident curricula? How is access to care facilitated in clinics/
practices in which residents and students learn? How is patient
satisfaction tracked among patients cared for by students and
residents? How do the facility and medical school support the clinics/
practices where students and residents learn? What is the mechanism for
planning and tracking such support? Does the collaboration foster
education in primary care? How? Are there efforts to move toward models
of primary care training that are interdisciplinary? In what ways does
the affiliation foster VA's research mission?
Business relationships
The generic umbrella of the affiliation agreement is critical to
the affiliation because it forms the philosophical and in some cases,
the legal basis for numerous specific agreements that may be executed
between components of the affiliate and VA. Affiliation agreements with
individual academic institutions may lead to agreements in a number of
different academic programs and for a number of different health care
delivery arrangements that may be executed under the umbrella of the
affiliation agreement. The success of the affiliation must be judged in
the aggregate--that is, a balanced judgment of the tradeoffs and values
of all the arrangements entered into between the affiliated parties.
(Memorandum of Affiliation Master Agreement. Corollary Agreements)
Examples of Representative Questions.--What is the process for
initiation of sharing agreements relative to patient care, education
and research? What sharing agreements exist? How are the outcomes of
such sharing agreements tracked? What other business agreements exist
between the partners?
Network-wide issues
This agreement, when duly executed and approved by the Department
of Veterans Affairs (VA), authorizes its Veterans Integrated Service
Networks and the listed VA facilities, to affiliate with academic
institutions for the purposes of enhanced patient care, education and
research. VA and the affiliated academic institution have a shared
responsibility for the academic enterprise. (Memorandum of Affiliation
Master Agreement. Terms of Agreement)
Examples of Representative Questions.--What is the evidence that
there is a collaborative relationship among the affiliated deans in the
network? How have efficiency and savings been realized by consolidated
programs? What is the evidence for joint planning among affiliated
deans and VISN leadership?
VA/University governance
VA treatment facilities, or groups of VA treatment facilities as
appropriate, will establish an Affiliation Partnership Council made up
of representatives of the affiliated health professional schools. The
Council will act as the strategic planning and coordination body for
all academic matters involving VA and the affiliates, and will
coordinate the tracking of measurable outcomes that emerge from reviews
of the academic partnerships. The Council will inform VA of affiliate
matters such as strategic planning, program direction or budgetary
issues affecting VA. Topical or discipline specific subcommittees to
address specific management or strategic interests may be developed as
needed in collaboration with the academic and VA leadership.
(Memorandum of Affiliation Master Agreement. Terms of Agreement)
Examples of Representative Questions.--Who constitutes the current
Academic Partnership Council? How does the Academic Partnership Council
track defined outcomes? What are those outcomes? How does the
leadership of the medical school, the facilities, and the VISN
demonstrate collaborative management among departments, e.g., number of
joint projects in care delivery, interdepartmental research projects
and grants, joint faculty appointments, coordination among teaching
programs? What is the mechanism to establish goals and to track their
achievement as a result of this current review of the academic
partnership? Does the leadership of the medical schools and the VISN
perceive each other's governance systems as a possible basis for moving
to overcome hindrances to effective change?
______
97-03 (february 26, 1997)
ACADEMIC AFFILIATION AGREEMENTS
Revised academic affiliation agreements provide the model template
and language for updated affiliation agreements. Any deviation from the
model template must be submitted to VA General Counsel for review and
approval before execution. During fiscal year 1997, revised affiliation
agreements will be executed for institutions sponsoring the 105 medical
school partnerships with VHA. New affiliations with other academic
partners may be executed using the new templates, but it is not
necessary to prepare new affiliation documents for non medical school
partnership agreements in fiscal year 1997. These will be executed in
fiscal year 1998, after the recommendations of the Associated Health
Professions Review Subcommittee of the Special Medical Advisory Group
have been received and implementation decisions made. There are three
types of affiliation agreements: master affiliation agreements, school
of medicine affiliation agreements and educational program affiliation
agreements.
--Master Affiliation Agreement.--There will be one Master Agreement
for each college/university with which a facility has an
agreement. It will be signed by the Facility Director, the
leading official at the educational institution, and the
Network Director. The generic umbrella of the master
affiliation agreement constitutes both the philosophical and
legal basis for numerous specific corollary agreements that may
be executed among components of VA and the affiliates. Such
corollary arrangements may address academic programs as well as
health care delivery arrangements that may be executed under
the enabling umbrella of the master affiliation agreement. They
may take the form of contracts, memoranda of understanding,
performance guidelines, leases, written agreements which cover
academic or research partnerships, as well as shared services,
facilities, equipment or other resources that support the
affiliation. Additional agreements may include VISN-wide
coordinating agreements, or local multi-affiliate sharing
agreements where relevant. Failure to agree on the details of
one or more corollary agreements made as a part of an
affiliation agreement should not necessarily preclude approval
of the master affiliation agreement, but should constitute the
basis for planning and for future interaction.
--School of Medicine Affiliation Agreements.--The Medical School
Memorandum of Affiliation specifies unique aspects of
affiliations between VA and schools of medicine and will be
signed by officials in the medical school and the university as
well as VA officials at the facility and network levels.
--Educational Program Affiliation Agreements.--The Educational
Program Affiliation Agreement applies to an individual program
in a medical school and to all other non-medical school
affiliations. This includes a separate educational program
agreement for each discipline-specific educational program that
sends trainees to VA. It will be signed by the VA Network
Director or his/her delegates and the responsible official at
the educational program.
memorandum of affiliation master agreement between the department of
veterans affairs (va) and the undersigned educational institution
VA
NETWORK:______________________________________________________________
VA TREATMENT FACILITY (OR FACILITIES):________________________________
NAME OF EDUCATIONAL INSTITUTION:____________________________________
preamble
The provision of education for future healthcare providers and the
conduct of research are statutorily defined as missions of the Veterans
Health Administration. Building on the long-standing, close
relationships between the U.S. Department of Veterans Affairs (VA) and
the nation's academic institutions, VA seeks to play a leadership role
in reshaping the education of future health-care professionals to help
meet the rapidly changing scope and complexity of the nation's health-
care delivery system. It is the intent of VA to maintain its long-
standing practice of effective affiliations with educational
institutions for the purposes of contributing to continued excellence
in VA patient care and conducting joint academic programs that address
health manpower needs throughout VA and the nation.
From its first forging in 1946, the purpose of affiliations has
been to enhance the delivery of patient care. Within this purpose the
education and research missions are intricately interwoven and
complementary to the patient care mission.
At is finest, an affiliation agreement articulates a ``one campus''
concept for the two parties. To the extent possible, it establishes the
goal of one standard for patient care, one standard for resident and
student education, one standard for research, and one standard for
faculty appointments. The parties to the affiliation agreement also
seek to avoid duplication of academic assets and where mutually
beneficial to enter into legal agreements to share patient care
delivery services, facilities, equipment, and other resources that
support the affiliation. The parties enter into this affiliation in a
spirit of mutual benefit to be achieved through an equitable
contribution of resources.
COROLLARY AGREEMENTS
The generic umbrella of the affiliation agreement is critical to
the affiliation because it forms the philosophical and in some cases,
the legal basis for numerous specific agreements that may be executed
between components of the affiliate and VA. Affiliation agreements with
individual academic institutions may lead to agreements in a number of
different academic programs and for a number of different health-care
delivery arrangements that may be executed under the umbrella of the
affiliation agreement. The success of the affiliation must be judged in
the aggregate--that is, a balanced judgment of the tradeoffs and values
of all the arrangements entered into between the affiliated parties.
One or more corollary or related specific agreements may be entered
into between the parties to the master affiliation. These arrangements
or agreements may involve any component of the Academic Medical Center,
College or University and the local VA health-care facilities and may
be in the form of contracts, memoranda of understanding, performance
guidelines, leases, or other written agreements which cover academic or
research partnerships, shared services, facilities, equipment or other
resources that support the affiliation. Additional agreements may
include Veterans Integrated Service network--wide coordinating
agreements, or local multi-affliate sharing agreements where relevant.
These may include any of the following:
--memorandum of affiliation with a school of medicine
--disbursement agreements for the payment of medical residents while
at VA facilities
--sharing agreements or scarce medical specialist services agreements
with the affiliate or is faculty
--consulting and attending arrangements
--research agreements
--authorized arrangements for the use of space
--memorandum of affiliation with associated health educational
programs
--general education agreements
--specific programmatic education agreements
--other agreements that may be advantageous to the affiliated parties
TERMS OF AGREEMENT
This agreement, when duly executed and approved by the Department
of Veterans Affairs (VA), authorizes VA, its Veterans Integrated
Service Networks and the listed VA facilities, to affiliate with the
academic institution for the purposes of enhanced patient care,
education and research. VA and the affiliated academic institution have
a shared responsibility for the academic enterprise. In coordination
with VA staff, the faculty of the academic affiliate has primary
responsibility for the assignment and supervision of students and/or
residents in their academic program(s). VA retains full responsibility
for the care of patients, including the administrative and professional
functions pertaining thereto. While in the VA facility, students and
residents are subject to VA rules and regulations. Students will
receive an orientation to the VA facility. Faculty members and facility
staff supervisors are to evaluate the student's performance in mutual
consultation and according to the guidelines outlined in the approved
curriculum.
VA treatment facilities, or groups of VA treatment facilities as
appropriate, will establish an Affiliation Partnership Council made up
of representatives of the affiliated health professional schools. The
Council will act as the strategic planning and coordination body for
all academic matters involving VA and the affiliates, and will
coordinate the tracking of measurable outcomes that emerge from reviews
of the academic partnerships. The Council will inform VA of affiliate
matters such as strategic planning, program direction or budgetary
issues affecting VA. Topical or discipline specific subcommittees to
address specific management or strategic interests may be developed as
needed in collaboration with the academic and VA leadership.
The affiliate complies with Title VI of the Civil Rights Act of
1964, Title IX of the Education Amendments of 1972, section 504 of the
Rehabilitation Act of 1973, Title III of the Older Americans Amendments
of 1975, the Americans with Disabilities Act of 1992, and all related
regulations, and assures that it does not, and will not, discriminate
against any person on the basis of race, color, sex, creed, national
origin, age or handicap under any program or activity receiving Federal
financial assistance.
Nothing in this agreement is intended to be contrary to State or
Federal laws. In the event of conflict between terms of this agreement
and any applicable State or Federal law, that State or Federal law will
supersede the terms of this agreement. In the event of conflict between
State and Federal laws, Federal laws will govern. Nothing in this
agreement grants to the educational institution or the Partnership
Council any legal authority to exercise control over any VA program or
facility. Ultimate responsibility for the control and operation of VA
facilities and programs rests with VA.
Periodic reviews of academic programs and policies will be
conducted as necessary under the auspices of VA's Chief Academic
Affiliations Officer.
This agreement is in force until further notice; it may be
terminated in writing at any time by mutual consent with due
consideration of patient care and educational commitments, or by 6
months advanced written notice by either party. [IF APPLICABLE: The
affiliation agreement previously agreed to on (DATE) is hereby
rescinded.]
__________________________________________
Name and Title of Responsible Official
for the Educational Institution (date)
__________________________________________
Name and Title of Responsible Official at
VA Health Care Facility (date)
__________________________________________
Network Director
Department of Veterans Affairs (date)
memorandum of affiliation school of medicine agreement between
department of veterans affairs (va) and the undersigned school of
medicine
VA
NETWORK:______________________________________________________________
VA TREATMENT FACILITY (OR FACILITIES):________________________________
NAME OF SCHOOL OF MEDICINE:__________________________________________
This agreement, when duly executed and approved by the Department
of Veterans Affairs (VA), authorizes VA, its Veterans Integrated
Service Networks and the listed VA facilities, to affiliate with the
university school of medicine for the academic purposes of enhanced
patient care, education and research. VA and the affiliated school have
a shared responsibility for the academic enterprise. The school accepts
primary responsibility for the integrated education programs conducted
with VA; and VA retains full responsibility for the care of patients,
including administrative and professional functions pertaining thereto.
Responsibilities are to be shared as follows:
1. The Medical School
a. Nominates membership for the VA Affiliation Partnership Council
and its subcommittees; membership will include the Medical School Dean
and senior faculty members from appropriate divisions of the medical
school.
b. Nominates faculty to serve as VA medical staff in the number and
with the qualifications agreed to by the school and VA.
c. Through the VA facility Director and the medical staff,
participates in the supervision of integrated academic programs at VA.
VA staff members who are also faculty members are responsible for
student and house staff supervision for educational purposes but may
delegate responsibility to non-faculty VA staff members under unusual
circumstances.
d. Nominates residents and fellows for academic programs operated
jointly by VA and the affiliated school; residents and fellows shall
have the qualifications agreed upon by the school and VA.
e. Consults with the Director in medical school decisions such as
strategic planning, program direction and budgets that may directly
affect VA.
2. Department of Veterans Affairs, its Veterans Integrated Service
Networks and component VA facilities
a. Operate and manage the VA facility.
b. VA treatment facilities or groups of treatment facilities as
appropriate will establish an Affiliation Partnership Council made up
of representatives of affiliated health professional schools. The
Council will act as the strategic planning and coordination body for
all academic matters involving VA and the affiliates, and will
coordinate the tracking of measurable outcomes that emerge from reviews
of the academic partnerships. The Council will inform VA of affiliate
matters such as strategic planning, program direction or budgetary
issues affecting VA. Topical or discipline specific subcommittees to
address specific management or strategic interests may be developed as
needed in collaboration with the academic and VA leadership to address
specific management or strategic interests.
c. Appoint qualified physicians, dentists, and other health care
professionals, as appropriate, to full-time and regular part-time staff
of the facility. Receives nominations from the Medical School Dean for
faculty appointments to VA staff and welcomes medical school
nominations for non-faculty staff positions. The appointed VA staff,
including chiefs of service, are responsible to their immediate
supervisors.
d. Consider the attending and consulting staff end trainees for
appointment who are nominated by the school.
e. Cooperate with the medical school in the conduct of appropriate
academic programs of education and research.
3. Director, VA Health Care Facility (or equivalent title)
a. Is responsible for the operation of the facility.
b. Cooperates with the Affiliation Partnership Council and its
subcommittees in the conduct of academic programs and in the evaluation
of participating individuals and groups.
4. Chief of Staff, VA Health Care Facility (or equivalent title)
a. Is responsible to the Director for the professional health care
operations covered by the affiliation agreement.
b. Cooperates with the Affiliation Partnership Council and its
subcommittees and the affiliated education institutions in the
direction and conduct of academic programs.
5. Chiefs of Services, VA Health Care Facility (or equivalent
title)
a. Are responsible to their superiors in VA for the conduct of
their services.
b. With the assistance of the health care facility staff, and in
cooperation with consulting and attending staff, assist faculty members
in the supervision of the academic programs that are the subject of
this agreement and are within their respective services.
6. Full-time and Part-time VA Staff
a. Are responsible to their supervisors in VA for the discharge of
their responsibilities.
b. Participate in the academic programs within their respective
services. Those staff with faculty appointments are responsible for the
supervision of the education of students and house staff on their
service, and may only delegate supervision in unusual circumstances to
non-faculty staff. All VA staff who are delegated such supervision must
be appropriately credentialed and privileged.
7. Attending Staff
a. Are responsible to the respective chiefs of services while
serving as attending physicians for the VA facility.
b. May be full or part-time staff, consulting and attending, or
without compensation.
c. Accept responsibility for the proper care and treatment of
patients in their charge, including the supervision of students and
house staff.
d. Cooperate in achieving the education and research objectives of
the academic programs in which they participate.
e. Hold faculty appointments in the medical school, or are
outstanding members of the profession with equivalent professional
qualifications acceptable to VA.
8. Consultants
a. Are members of the faculty, have professorial rank or have
equivalent professional qualifications acceptable to VA, and are
subject to VA regulations concerning consultants.
b. As representatives of the school, participate in and are
responsible for the integrated academic programs of the affiliated VA
health care facilities subject to current VA policy and regulations.
c. Make available to the Director, Chief of Staff, and the
appropriate chief of service the benefit of their professional advice
and counsel.
TERMS OF AGREEMENT
The affiliate complies with Title VI of the Civil Rights Act of
1964, Title IX of the Education Amendments of 1972, section 504 of the
Rehabilitation Act of 1973, Title III of the Older Americans Amendments
of 1975, the Americans with Disabilities Act of 1992, and all related
regulations, and assures that it does not, and will not, discriminate
against any person on the basis of race, color, sex, creed, national
origin, age, or handicap under any program or activity receiving
Federal financial assistance.
Nothing in this agreement is intended to be contrary to State or
Federal laws. In the event of conflict between terms of this agreement
and any applicable State or Federal law, that State or Federal law will
supersede the terms of this agreement. In the event of conflict between
State and Federal law, Federal law will govern. When furnishing
professional services covered by this agreement, protection of faculty
members and students of the affiliated institutions from personal
liability while at VA health care facilities will be that which is
provided under the Federal Tort Claims Act, as implemented by 38 U.S.C.
7316. Nothing in this agreement grants to the educational institution
or the Partnership Council any legal authority to exercise control over
any VA program or facility. Ultimate responsibility for the control and
operation of VA facilities and programs rests with VA.
Periodic reviews of academic programs and policies will be
conducted as necessary under the auspices of VA's Chief Academic
Affiliations Officer.
This agreement is in force until further notice; it may be
terminated in writing at any time by mutual consent with due
consideration of patient care and educational commitments, or by
written notice by either party 6 months in advance of the next training
experience. [IF APPLICABLE: The affiliation agreement previously agreed
to on (DATE) is hereby rescinded.]
________________________________________
Name and Title of Responsible Official
for the School of Medicine (date)
________________________________________
Name and Title of Responsible Official at
VA Health Care Facility (date)
________________________________________
Name and Title of Responsible Official
for the Educational Institution (date)
__________________________________________
Network Director
Department of Veterans Affairs (date)
memorandum of affiliation educational program agreement between the
department of veterans affairs and the undersigned educational program
VA
NETWORK:______________________________________________________________
VA TREATMENT FACILITY (OR FACILITIES):________________________________
NAME OF EDUCATIONAL INSTITUTION:____________________________________
PROGRAM AND DEGREE:____________________________________________________
This agreement, when duly executed and approved by the Department
of Veterans Affairs (VA), authorizes VA, its Veterans Integrated
Service Networks and the listed VA facilities, to affiliate academic
purposes of enhanced patient care' education or research. The faculty
of the affiliate has primary responsibility, in coordination with VA
staff, for the assignment and supervision of students and/or residents
in their academic program(s). VA retains full responsibility for the
care of patients, including administrative and professional functions
pertaining thereto. While in the VA facility, students are subject to
VA rules and regulations. Students will receive an orientation to the
VA facility. Faculty members and facility staff supervisors are to
evaluate the student's performance in mutual consultation and according
to the guidelines outlined in the approved curriculum.
VA treatment facilities or groups of treatment facilities as
appropriate will establish an Affiliation Partnership Council made up
of representatives of affiliated health professional schools. The
Council will act as the strategic planning and coordination body for
all academic matters involving VA and the affiliates, and will
coordinate the tracking of measurable outcomes that emerge from reviews
of the academic partnerships. The Council will inform VA of affiliate
matters such as strategic planning, program direction or budgetary
issues affecting VA. Topical or discipline specific subcommittees to
address specific management or strategic interests may be developed as
needed in collaboration with the academic and VA leadership to address
specific management or strategic interests.
The affiliate complies with Title VI of the Civil Rights Act of
1964, Title IX of the Education Amendments of 1972, section 504 of the
Rehabilitation Act of 1973, Title III of the Older Americans Amendments
of 1975, the Americans with Disabilities Act of 1992, and all related
regulations, and assures that it does not, and will not, discriminate
against any person on the basis of race, color, sex, creed, national
origin, age or handicap under any program or activity receiving Federal
financial assistance.
Nothing in this agreement is intended to be contrary to State or
Federal laws. In the event of conflict between terms of this agreement
and any applicable State or Federal law, that State or Federal law will
supersede the terms of this agreement. In the event of conflict between
State and Federal laws, Federal laws will govern. When providing
professional services covered by this agreement, protection of faculty
members and students of the affiliated institution from personal
liability while at a VA health care facility will be that which is
provided under the Federal Tort Claims Act, as implemented by 38 U.S.C.
7316. Nothing in this agreement grants to the educational institution
or the Partnership Council any legal authority to exercise control over
any VA program or facility. Ultimate responsibility for the control and
operation of VA facilities and programs rests with VA.
Periodic reviews of academic programs will be conducted as
necessary under the auspices of VA's Chief Academic Affiliations
Officer.
This agreement is in force until further notice; it may be
terminated in writing at any time by mutual consent with due
consideration of patient care and educational commitments, or by
written notice by either party 6 months in advance of the next training
experience. [IF APPLICABLE: The affiliation agreement previously agreed
to on (DATE) is hereby rescinded.]
______________________________________
Name and Title of Responsible Official
for the Educational Program (date)
__________________________________________
Network Director or delegates
Department of Veterans Affairs (date)
STATE HOME PROGRAM
Question. VA's budget would cut the state home construction grant
program by $6.4 million, down to $41 million. VA's reported cost for
providing care in VA nursing homes is considerably higher than its
costs for doing so in state veterans homes. While VA's daily per
patient cost was $213.17 for veterans in VA homes in fiscal year 1995,
it was $35.37 for veterans in state homes. Why is VA cutting this cost-
effective program for which there is almost $200 million in priority
projects awaiting funding?
Answer. The level requested was determined on the need to balance a
number of priorities given overall resource constraints.
VETERANS EQUITABLE RESOURCE ALLOCATION SYSTEM
Question. VA recently changed its resource allocation methodology
to ensure similar access to care for veterans who have similar
eligibility priority. VA should be commended for taking the important
step of improving the fairness of its resource allocation methodology.
However, concerns remain that ``VA has not determined the `right'
amount of dollars that need to be shifted to ensure equity of access,''
according to GAO. GAO is concerned that ``VA has not adequately
determined the reasons for differences between VISN's in costs per
veteran-user. Without a better understanding of why the costs vary, VA
cannot, with any certainty, determine the appropriate amounts of
resources to shift among VISN's''. We know that differences in
efficiency are a major factor in cost-per-patient, but not the only
factor.
What is VA doing to explore other factors that might explain why
certain networks have lower costs per patient-user?
Answer. As explained in the VERA Briefing Book, age of veterans,
energy, labor and pharmaceutical cost were evaluated in the planning
stages of VERA to determine if additional adjustments to the national
price were warranted. It was found that there was little variation in
the average and median age of patients among networks; energy as a
percent of total costs varied little among networks, and in fact
constituted a very small portion (1-2 percent) of the network budgets
and; over 90 percent of pharmaceuticals are purchased through the
federal supply system--resulting in equal network pricing. However, it
was recognized that some factors affecting the cost of a patient's care
vary by geographic region and cannot be controlled by VA management. To
account for such differences, adjustments were made to the fiscal year
1997 national price to reflect differences in the cost of labor.
Additional allocations to account for the differences in support for
education, research and equipment and non-recurring maintenance are
also made as components of the VERA methodology. Also, to the extent
veterans are sicker and require more health care, the networks will get
more resources by virtue of the Special Care price. Networks receive
$35,707 for each veteran with more intensive health care needs. For
example, VISN 3 in New York received $366.1 million--more than any
other network--for Special Care patients in fiscal year 1997.
Question. Does VA plan to ``fine-tune'' VERA in fiscal year 1998
and beyond?
Answer. There are several mechanisms for adjustments to the
resources allocated to networks through VERA. Annually, as new data
about the historic workload patterns for each network become available,
resource allocations for future fiscal years can be estimated. In May
1997, new workload and cost data will be available for incorporation
into simulations for the fiscal year 1998 allocation. Secondly, there
are workgroups that are looking at each component of the VERA model
(workload volume, special programs, care across networks, geographic
prices, education support, research support, equipment and non-
recurring maintenance, and data validation). The majority of the
recommendations from the workgroups will impact the fiscal year 1999
budget allocation, and there are a few changes under consideration for
the fiscal year 1998 allocation that amount to ``fine-tuning'' research
support, education support, equipment and non-recurring maintenance. In
addition to these annual mechanisms there is a third process, which
while not directly impacting the funding allocated through the VERA
model, does impact the allocations to the networks. We are maintaining
a funding reserve in headquarters to assist networks in the unlikely
event that the current level of patient care is threatened. The
reserves will be used, if needed, to maintain quality and level of
services.
Question. How is VA addressing the questions raised by GAO about
the VERA model and its March 18, 1997, testimony to the House Committee
on Government Reform and Oversight?
Answer. VA's position is that GAO's comments overlook many of the
improvements that VERA makes over past resource allocation methods.
Specifically, VERA is designed to correct past funding inequities,
simplifies complex resource allocation processes, and is understandable
to all VA stakeholders. GAO's chief criticisms of VERA are that it may
not distribute the ``right'' amount of dollars, that VA has not
adequately determined the reasons for differences between VISN's in
costs per veteran user, and that the allocation model is not based on
total veteran population.
VA contends that there is no way of knowing the ``right'' amount of
dollars. We do know that past methods failed to allocate dollars in an
efficient manner. For example, under the old system VISN 3 spent $6,500
per patient while VISN 18 spent $3,000. VERA bases per patient spending
on a national price with an adjustment for differences in the health
care needs of veterans, in the cost of labor support for research and
education, equipment, and non-recurring maintenance. We have also
spread the impact of VERA over several fiscal years so that VISN's can
continue to serve current users at the same level of quality.
DECISION SUPPORT SYSTEM
Question. According to GAO, there continues to be concerns with
VA's Decision Support System. DSS is a software system to help provide
managers data on patterns of care and patient outcomes as well as their
resource and cost implications. The usefulness of the system depends on
the completeness and accuracy of the data going into the system and GAO
has stated in recent testimony ``VA still has not adequately focused on
improving the completeness and reliability of data entered into the
feeder system. Although the draft business plans developed by the 22
VISN's generally discuss goals and timetables for implementing DSS
throughout the network, they identify no plans for improving the
completeness and accuracy of the data feeding into DSS''. What is VA
doing to address these important concerns? How will VA ensure the
networks make this a priority?
Answer. This is an ongoing issue, especially during the first
twelve to eighteen months of technical implementation. The Chief
Network Officer and the Network Directors have improved the DSS system
report with DSS staff to identify facilities which need to place
greater emphasis on this program and the supporting data input.
VETERANS BENEFITS ADMINISTRATION PENDING CLAIMS
Question. Pending claims are projected to increase at the end of
1997 relative to the end of 1996 by 5 percent to 360,000 claims.
Furthermore, productivity--measured by the number of claims completed--
is tending downward for each of the years from 1996 to 2002.
Why is the backlog increasing and productivity decreasing?
Answer. The Compensation and Pension Service (C&P) fiscal year 1998
Business Plan projected a pending workload of 360,000 at the end of
fiscal year 1997. As of March 31, 1997, six months into fiscal year
1997, the pending workload was 393,240 and it is unlikely that we will
be able to make any substantial timeliness improvement during the last
six months of fiscal year 1997.
A number of factors contributed to this latest performance trend.
During the first six months of fiscal year 1997, a substantial number
of hours was invested in the training needed to move toward the
consolidation of Adjudication and Veterans Services Divisions, a
necessary investment for long-term service improvements; the number of
reopened compensation claims received increased by approximately 20
percent due primarily to change in hospital eligibility criteria; and
labor intensive reviews were conducted on approximately 4,485 Persian
Gulf War claims.
Because of the above referenced circumstances and the resultant
growth of pending work during the first half of the fiscal year, it is
unlikely we will attain our fiscal year 1997 interim goals. We have
identified new dollars out of general operating monies for overtime and
are distributing those to the field at this time. We intend to use
overtime funds to process rating related claims and reduce our
appellate workload. We will also continue to aggressively broker the
workload between regional offices to ensure maximum utilization of
resources. These efforts will move us back toward target in fiscal year
1998, although perhaps not as quickly as originally envisioned.
Through our Business Processing Reengineering (BPR), we expect an
improvement to the totality of the product we deliver. We expect the
quality levels to improve to at least a 97 percent level of accuracy
and the timeliness of claims processing to improve to levels that meet
customer and stakeholder expectations.
In addition, we can well expect a higher level of satisfaction for
the veterans with our service and a higher level of satisfaction for
our employees. All these performance measures are important to the
compensation and pension product we deliver. Production alone, that is,
claims produced during a given period, is not the whole product.
BUSINESS PROCESS REENGINEERING
Question. VBA is projecting significant improvements in the time it
takes to process a claim, through the implementation of business
process reengineering in each of its 58 regional offices, which is to
be fully implemented by 2002.
As I see it, BPR is in large part what this Subcommittee has
advocated for years--a streamlining and simplification of the
adjudication process through case management, and a focus on improving
the quality of work the first time around.
According to your BPR plan, a 20 percent improvement in
productivity can be achieved. Where it currently takes 123 days to
process an original compensation claim, it would take 53 days once BPR
is fully implemented.
While we support the goal, we haven't seen any analysis as to how
it could result in such improvements.
Can you explain how BPR will result in such dramatic improvements?
Answer. The answer to the question is in two parts: the first
involves the analysis we have done using a sophisticated simulation
model to represent the effects of proposed changes and the second has
to do with the specific initiatives that we propose and why.
Workload model analysis.--During early 1996, data was collected on
1,200 active claims at four regional offices. Three of those offices,
St. Louis, Milwaukee, and Des Moines, were selected because they were
the offices which performed among our best in fiscal year 1994 under
the current procedures and measured by current indicators. The
reasoning for selecting these stations was that if they characterized
the best that could be achieved with current processes and management,
and if we could affect improvement in them, then we could assure system
wide improvement. The concern was that if we modeled stations that were
not our top performers we ran the risk of fixing local processing
inefficiencies that would not generate system wide improvement. A
fourth station, Baltimore was included for administrative purposes.
During the data collection period we collected information on the
``task time'' for completing various tasks associated with awards, the
time cases wait for an employee to work or ``queue time'' and we were
able to identify what are called the ``transition probabilities'' of a
case moving from one work station to another. Finally, we collected a
sample of cases from each regional office where we asked them to
provide us with specific information on the kinds of development (i.e.,
service medical records, private medical evidence, VA examinations,
income, service verification, etc.) undertaken. We asked when the
evidence gathering began, what kind, when and whether we got an answer.
From this exercise we were able to develop what we refer to as ``wait
time.'' With these four key elements and a sound modeling of the
current process we were able to closely replicate actual performance
for the nation in 1994. This data model demonstrated in the ``as is''
environment that there was a significant amount of rework in our system
as well as significant queue times. It identified development as a
potential weakness, it clearly identified the consequences of the
highly complex nature of the current pension program, and it showed the
multiple hand-offs that exist in the current system and the resulting
built in queue times throughout the system.
Based on the information that we received from the model,
stakeholder interviews, benchmarking with public and private sector
leaders in various phases of our business process, Internet searches,
and discussions with other nations regarding their veterans claims
process, we developed a series of high level requirements that, if
fulfilled, potentially would result in better service. Those changes
were run through a ``to be'' model which was a model created with the
recommended changes in process, technology, training and partnership
built in. We then input into that model projected workloads to
determine the processing times. The model suggests that we can achieve
the kinds of performance improvements in our plan.
The model suggests that there is a synergistic effect from the
implementation of all the changes which is greater than the whole of
all the individual initiatives. Likewise, the model's performance
projections are based on the assumption that VA will successfully
implement all of the changes recommended. Should individual elements of
the plan not be accomplished the model would have to be re-run to
determine the impact on projected performance.
Process changes.--Based on the high level of rework demonstrated by
the model, six necessary changes in current process were identified.
Those changes are enhanced training with certification to improve the
skills of the work force. Second, a reduction in the number of hand-
offs to no more than three positions rather than the current eight that
deal with claims processing. The current process makes no one
individual or limited group of individuals accountable for the timely
processing of a complete claim. Rather, numerous individuals complete
pieces of the claim process without full understanding of the affect
their efforts have in delivering service. In addition to improved
accountability, by reducing the number of hand-offs we believe that we
can significantly reduce queue times since all necessary actions will
be accomplished by one individual rather than a series of hand-offs
where the case would again sit in employee's queues. Third, the amount
of rework, especially when examined in the cases requiring rating,
strongly suggested that it is essential to greatly enhance the skill
level of those individuals who initially handle claims so that
essential claims development is accomplished--correctly and promptly--
at one time. This drove the view that it was essential to more actively
engage both the veteran and his/her service representative in a
personal dialogue to insure that all issues were clearly identified,
all sources of evidence identified, and that there was an understanding
among all parties about which parts of the development could be done
more efficiently and timely by the claimant and/or the representative
than the VA, while recognizing that VA would do the development
independently as well. This together with a case management approach
designed to keep the claimant advised of the status of the pending
claim with realistic time estimates will, we believe, significantly
reduce the amount of time needed to resolve claimant inquires.
Fourth, we recognized that the appeals workload was increasing in
complexity and frequency while extending significantly in processing
length. The creation of the Decision Review Process with difference of
opinion authority will, we believe, allow us to resolve many issues
much earlier in the process without the need for them to go to the
Board of Veterans Appeals (BVA). Those that do go will go quicker and
with clearer issues under consideration.
The extremely high rework rate among income based awards and the
very high number of FTE (full time employee equivalent) tasked to
administer this program when compared to the much larger compensation
program called for the fifth effort which involves pension
simplification and rule clarification. This effort is seen as a source
for additional resources to process compensation claims while
concurrently improving service in pension with fewer overpayments.
Likewise, in this fifth effort, certain modifications to rules were
seen as greatly reducing the amount of handling required for a number
of types of claims. Examples of these include changing the burial
process to become an automated sub-routine of First Notice Death
processing. This adaptation would reduce the number of burial claims
requiring manual processing by about 90 percent and issue payment in
one day. Similarly we would change some match program requirements for
due process. We would propose replacing pre-determination due process
with concurrent due process which will significantly reduce the number
of second handling of award adjustments while at the same time reducing
the size of overpayments. Pension simplification holds the potential of
greatly reducing the number of award adjustments needed and making the
income stream of our beneficiaries more predictable and certain. Again,
task time is saved that can be devoted to other claims.
Finally, initiatives to insure the deployment of a new relational
data base, award processing and payment system--VETSNET--is essential
to the vision. Without VETSNET, it will be difficult to achieve the
following:
--A better interaction with veterans.
--The ability to address a large number of veteran inquiries with
automatic voice response.
--The ability of employees dealing directly with claimants to have
full on-line information on pending claims.
--The ability to collect and analyze critical data needed for process
management and strategic planning.
Traditionally, the regional offices have resisted central office
directives on how they should do business.
Question. Have the regional offices ``bought into'' this new
process?
Answer. The senior management of all regional offices, Directors,
Adjudication Officers and Veterans Services Officers were brought
together in December 1996 and thoroughly briefed on the process. We
solicited volunteers from across the country to participate in the
implementation planning phase of the process and received far more
volunteers than we were able to utilize. We have provided each employee
in VBA with a detailed written explanation of what is transpiring.
We have also provided a video for them to view with comments from
senior management on our movement and why it is necessary to achieve
world class customer service. We believe that the efforts of local
offices to go to customer service centers, the heightened awareness of
the need for improved quality and service and the recognition by all
parties of the declining resource base indicate that most staff
everywhere accept that this is a sound plan.
NAPA's testimony says ``VBA nationally operates in too permissive a
manner with little accountability for the achievement of specific
results across all 58 regions. There are numerous cultural short
circuits to accountability.''
Question. How can we be confident there will be consistent
implementation of the new system you plan, and how will you ensure
appropriate accountability for results?
Answer. Our implementation plan identifies specific over the next
five transition years. Many of our initiatives will be tested at two
laboratory stations, Seattle and Houston, to document the level of
service enhancement. This will also insure that each change is the most
efficient and consistent process possible prior to exporting it to
other offices. We believe that we are building a rollout protocol which
will accurately demonstrate the effectiveness of initiatives, modify
those that don't work as originally conceived and provide data about
the system consequence if specific initiatives are either not funded,
passed or fail. Finally, customer service elements are being inserted
into all employee's performance standards.
VHA is a much larger and complicated organization than the VBA, yet
it has managed to implement a major restructuring in the last few
years, with cost-savings, more veterans served, and improved patient
care.
Question. Are there lessons-learned from VHA that VBA will be using
to improve the success of transition?
Answer. Yes, VHA's lessons about the need for communication with
stakeholders, veterans and employees is recognized. A special
transition and communication task force has been established to insure
that the high level of communication needed will occur. Lessons learned
in enhanced cooperation with VHA and insuring that we maintain close
ties to them are essential so that, together, we can deliver a seamless
line of benefits to veterans. In addition, we too, like VHA, will
ensure that goals and objectives of VBA managers are derived from and
support national goals and objectives and are part of the performance
plans for these managers at all levels. This is a recommendation of the
Adjudication Commission--certainly in concert with Government
Performance and Results Act (GPRA)--that VBA fully endorses.
Question. Does VA's budget include sufficient funds to undertake
the information technology investments recommended in the BPR plan?
Answer. The fiscal year 1998 budget contains sufficient funds to
implement the information technology (IT) needs that can be
accomplished next year. However, it should be noted that external
evaluations of VBA (such as those conducted by the Veterans Claims
Adjudication Commission and NAPA) could cause delays in VBA's IT plans
as program recommendations are studied and assessed.
Question. What is VA's long-term training strategy to address the
human resource element of BPR, and are adequate funds requested?
Answer. Our long term training strategy involves the creation of
three service delivery positions, rather than the current eight, each
of which will have a sophisticated, validated and testable training
protocol which will result in certification that a graduate of the
training is knowledgeable in his or her position. Attainment of the
journeyman status in each position will require certification testing.
The first phase of that training--training for rating specialists--
is currently under construction. We anticipate having the very first
portions of that training available for use in the field in 1997. The
training package for veteran service representatives--the front end
job, is currently awaiting funding will be requested in the 1999
budget. The training package for Decision Review Officers is likewise
awaiting initial funding in the 1999 budget.
The training packages that we are developing utilize the rigorous
ISD (instructional systems design) methodology which is a rigorous one
requiring substantial development time. We believe however that it is
the best approach to adult learning available. The VSR (Veteran Service
Representative) and Rating VSR packages will require approximately
three years to develop while the Decision Review Officer course will
take about 18 months.
During the interim we have identified some existing materials which
will aid us in making the transition.
Last fall, the Congressionally-chartered Veterans' Claims
Adjudication Commission--known as the Melodosian Commission--made
recommendations for improving the veterans claims processing system.
The Commission concluded ``The problems of the adjudicative and appeals
processes cannot be solved by fine tuning. The system has become
cumbersome and outmoded.''
Question. Do you believe your Business Process Reengineering
efforts go beyond fine-tuning?
Answer. The C&P redesign is a radical overhaul of the way VBA does
business. It eliminates the assembly line approach to claims
processing, designates responsibility and accountability, provides the
training tools needed for staff to become fully competent, forges a new
relationship with veterans and service organizations, seeks to
streamline rules and procedures and takes advantage of modern
information, telecommunication and rules based technology to deliver
benefits on time, without hand-offs from multiple access points. While
the basic elements of the adjudicative process remain the same--receipt
of claim, development of evidence, decision and notification--the
manner in which these steps occur is significantly different.
The Commission recommended a major overhaul of the process.
Question. What are your plans with respect to implementing the
recommendations of the Melodosian Commission, and what is the time
line?
Answer. The Department is developing a detailed implementation plan
with respect to the recommendations of the Melodosian Commission. It
should be noted that the Secretary has indicated that a large number of
the recommendations of the Commission will be handled through the BPR
process.
The BPR process is in the final stages of the ``implementation
planning'' phase which we expect to be completed in the near future.
During that intensive effort, teams put specific detail, costs,
benefits and timelines on the higher level vision found in the ``Case
for Change.'' The result of the teams, work ``Blueprint for Change''
will be available for stakeholder review in June.
With respect to NAPA's concerns regarding VBA's ability to deliver
on its BPR promises and that the BPR efforts need to be improved and
broadened, NAPA's detailed views have not yet been widely available in
the Department nor have we had an opportunity to analyze them and
evaluate their validity. Needless to say, as indicted earlier, a
detailed implementation strategy is in the final stages of production
and will be available shortly.
NAPA is not optimistic about VBA's ability to deliver on its BPR
promises, citing little improvement in VBA's ability to develop a
clear, prioritized business plan within which resources are allocated
only to critical priorities and the lack of capacity for strategic
management. NAPA also says the BPR efforts needs to be improved and
broadened.
Question. How do you respond to NAPA's criticisms, and what are
your plans to remedy the fundamental management and leadership
shortcoming NAPA identified?
Answer. VBA has not received the full, final NAPA report. When we
receive it, we will review it with the Department and other appropriate
stakeholders and develop a plan of action.
REGIONAL OFFICE RECONFIGURATION NEEDED
Question. NAPA recommends a reconfiguration of field operations,
stating ``the current structure of 58 regional offices is difficult at
best to manage with any uniformity of policy implementation, and such a
structure prevents optimal allocation of staff resources to service
needs.'' NAPA recommends consolidation of the regional offices while
maintaining the availability of local access by veterans to small,
well-trained adjudication staffs dispersed throughout the nation.
What are your plans to meet this recommendation?
Answer. As we stated above, when we receive the full, final NAPA
report, we will review it with the Department and other appropriate
stakeholders and develop a plan of action.
PENSION PROGRAM SIMPLIFICATION
The BPR plan indicates the pension program needs to be simplified
as VBA is spending more than 5 times as much administering pension than
compensation. The program is unduly complex and simplification will
reduce costs and improve customer service. The Melodosian Commission
also recommended changes to the pension program.
Question. When will VA submit proposed legislation to Congress to
simplify the pension program?
Answer. The BPR business plan incorporated pension simplification
as part of its vision for claims processing. In January 1997, VBA
created six BPR implementation planning teams. One of these teams was
the Compensation and Pension (C&P) Service rules team. This team was
tasked with preparing a legislative proposal to simplify the current
pension program. The team completed its assessment in April 1997 and is
finalizing the report which recommends specific pension simplification
proposals. These recommendations will be reviewed by top VA management
who will determine the legislative initiatives that will be submitted
to Congress. We anticipate that pension simplification legislation will
be submitted with VA's fiscal year 1999 Budget submission.
As part of the implementation planning phase a detailed data based
analysis of the pension program was conducted and alternative
approaches analyzed. A series of recommendations have been developed to
simplify pension which will be included in the ``Blueprint for
Change.''
REGULATORY CHANGES NEEDED
Question. The BPR plan notes, ``Since 1911 COVA has been building a
body of case law that often differs from VA's intent in preparing
regulations.'' VBA has been in the mode of reacting to COVA decisions,
rather than revising its regulations. The BPR report recommends
``Rather than continuing to adapt to the Court's views in all cases,
VBA should revise vague provisions to clarify and specify VA's
position, relying on OMB and public review of proposed changes to
surface, clarify and accommodate stakeholder concerns. VBA's concerted,
short-deadline review and if needed, revision of key regulations will
enhance accurate, fair and predictable claims processing decisions with
fewer delays in delivering services to veterans.''
What are VBA's specific plans to meet this aspect of the BPR
recommendation?
Answer. In January 1997, VBA created six BPR implementation
planning teams. One of these teams was the C&P Service rules team. This
team was tasked with analyzing current regulations and their underlying
statutes to determine what changes are needed to achieve the claims
processing vision outlined in VBA's report titled: ``Reengineering
Claims Processing: A Case for Change.'' The team also reviewed rule
changes that would clarify existing VA policy or enhance or simplify
the claims process. Many of these issues were identified in the BPR
business plan. The team completed its assessment in April 1997 and is
finalizing the report recommending rules changes. These recommendations
will be reviewed by VBA management, which will determine a course of
action based on the team's recommendations.
As indicated in the previous answer, as part of the implementation
planning phase a detailed analysis of regulations was conducted. A
series of recommendations has been developed with respect to
regulations which will be included in the ``Blueprint for Change.''
YEAR 2000
Question. What is VBA doing to ensure it will be Year 2000
compliant by January 1999--to allow for a year of testing? Is VA
confident that it will be compliant in a timely manner? What is
requested in the budget to address Y2K problems, and is this
sufficient?
Answer. Long before the Year 2000 (Y2K) problem received the
publicity it has today, VBA computer specialists realized there was a
unique problem associated with this event. We have been making program
changes in our benefit payment systems since the 1970's.
In 1991, VBA completed an initial analysis of all application
systems to determine the extent of the problem. In 1993, work began on
fixing our debt management systems, and in 1995 work began on making
our Insurance system compliant.
In 1996, VBA set up a dedicated project team to manage the Y2K
effort. A project manager was appointed and a team chartered. The first
draft of our Y2K plan was prepared in July 1996. This plan is
continually revised, enhanced and maintained. We also established an
inventory of all of our applications, third party products, and
interfaces (data exchanges with other agencies).
VBA is in the Renovation phase of our Y2K project. As of 1 May, VBA
has an estimated 158 applications and 9,088,343 Lines of Code (LOC).
There are 30 applications that are currently compliant and in
production. There are 10 applications that have been retired or
removed. The percentage of compliant applications is 25 percent.
VBA set a goal of having all operating systems, applications and
third party products, etc., compliant and tested by December 1998. This
will allow one year to correct problems and to monitor the
applications' execution.
On April 14, 1997, the first VBA payment system was fully certified
and installed as Y2K compliant. The Restored Entitlement Program for
Survivors (REPS) provides restored Social Security Administration
benefits to approximately 48,500 beneficiaries. VBA pays this benefit
to surviving spouses and children of veterans who died while on active
duty prior to August 13, 1981, or who died as a result of injuries
sustained while on duty before that date. The first payment cycle after
``Year 2000'' installation ran on April 24, 1997.
Third party vendor issues are of special concern to us, as well as
the rest of the government. We continue to follow-up with our
contractors in their efforts to determine whether their products are
compliant.
To accelerate and provide more support for our compliance efforts,
we are supplementing our staff with contractor support. We are in the
process of putting contract vehicles in place for some of our
applications requiring support in making them Y2K compliant. In
addition, we created an oversight team that includes a senior
technology expert from the Office of Management and VBA, assisted by
contractors to oversee our Y2K effort. They will regularly report on
the projects' progress to the Assistant Secretary for Management and
the Under Secretary for Benefits, as well as Deputy Secretary Gober.
For 1998, VBA estimates a total of $11 million to address the Y2K
compliance. This exceeds the amount requested in the President's budget
submission by $4.5 million. This increase in the estimate is due to our
need to accelerate our efforts by expanding the use of contractors, the
need to replace third party software products, and personal computers
that are not Y2K compliant.
BOARD OF VETERANS APPEALS
Question. Why is BVA's employment projected to decline, after
several years of requesting increases? How will BVA produce 37,250
cases next year with 6 fewer staff?
BVA's cost-per-case has been declining for the past several years,
yet is projected to increase in fiscal year 1998. Why?
Answer. Due to the significant improvements made in BVA's work
process through previous staffing increases and other initiatives such
as geographic realignment, VA decided not to request an increase in
staffing for the Board in fiscal year 1998. VA wanted to ensure that
total resources are maximized.
At the midpoint of the fiscal year, BVA productivity exceeded
expectations as a result of overtime and other initiatives, and it is
on course to decide around 41,200 appeals during fiscal year 1997--over
3,000 more than the current budget estimate. The following table shows
how critical workload details would change if BVA is able to sustain
this production level.
----------------------------------------------------------------------------------------------------------------
1997
1995 1996 1997 Actual 1998
actual actual estimate through estimate
revised 3/31/97
----------------------------------------------------------------------------------------------------------------
Appeals pending--start................................... 47,148 58,943 60,120 ......... 53,920
Appeals received......................................... 39,990 35,121 35,000 ......... 35,000
Total workload........................................... 87,138 94,064 95,120 ......... 88,920
Appeals decided.......................................... 28,195 33,944 41,200 20,787 37,250
Appeals pending--end..................................... 58,943 60,120 53,920 ......... 51,670
Average BVA response time................................ 763 596 478 ......... 506
----------------------------------------------------------------------------------------------------------------
The 37,250 decisions projected for fiscal year 1998 assumes an FTE
of 494 and is derived from the same mathematical model which projected
that 38,000 decisions would be produced with an FTE of 500.
Question. The number of appeals decided per FTE in BVA has been
increasing steadily, to the current of 76 in fiscal year 1997. For
fiscal year 1998, BVA estimates a slight decline to 75.4. Why is
productivity projected to decline?
Answer. The model used by BVA to develop productivity projections
is built around a fixed level of staffing devoted to all positions
other than decision-making and decision-writing Board members and staff
counsels. Through fiscal year 1995, as the transition was made to its
current realigned structure, BVA reduced its administrative and
professional support positions, together with its management and
executive staffing requirements, to a combined base of 183 of its then
current total staffing of 449 FTE. This support component remained a
constant as the overall FTE rose during fiscal years 1996 and 1997. The
number of decisions decided per FTE calculation is a BVA-wide per
capita figure. Therefore, as only Board member and staff counsel
positions--those directly involved in decision-making--were being
increased, per capita productivity was projected to rise, and did rise,
accordingly. Conversely, as BVA reduces from 500 to 494 FTE in fiscal
year 1998, it will lose 6 positions directly related to decision
production from the staffing mix. As the percentage of BVA's staffing
composition directly involved in decision production declines, we
project a slight decline in the BVA-wide per capita decision
production. However, if BVA continues to exceed productivity
expectations evidenced through the midpoint of fiscal year 1997, the
appeals decided per FTE will increase.
Question. What is an appropriate number of appeals decided per FTE,
and when do you believe BVA will attain that goal?
Answer. It is not possible to identify, in absolute terms, an
``appropriate'' number of appeals decided per FTE that can remain fixed
in time due to a variety of uncontrollable variables. These variables
individually and collectively affect the amount of Board member and
staff counsel time, BVA's basic unit labor components, consumed in
producing decisions on appeals. Among these variables are the number of
individual issues appealed, the complexity of the issues, and the
effects of precedential decisions of the Court of Veterans Appeals.
Other variables that cannot be predicted or controlled include the
volume and types of personal hearings that must be conducted. For
example, conducting hearings at sites geographically removed from BVA's
offices requires considerable travel time by Board members and,
consequently, a reduction in Board members' time available for case
review and decision-making.
For the fiscal year 1998 budget submission, the Board's performance
objective in this area is to decide 75.4 appeals per FTE. We believe
the decisions per FTE goals based on recent historical performance
represent the most realistic productivity targets we can devise.
Establishing annual per capita productivity goals allows the Board to
adjust, at least partially, to changing dynamics in the decision-making
environment.
Question. BVA's cost per case has been declining for the past
several years, yet is projected to increase in fiscal year 1998. Why?
Answer. Cost per case is inversely related to decisions per FTE.
Thus, the same factors that have resulted in a slight decrease in the
projected number of decisions per FTE will result in a commensurate
increase in cost per case.
Again, if BVA continues to exceed productivity expectations
evidenced through the midpoint of fiscal year 1997, the cost per case
will decline.
MAJOR CONSTRUCTION
Question. No new medical construction projects are proposed in the
budget request. Does this reflect a new administration view that such
projects should be put on hold until the VHA reorganization has been in
place for a few years?
Answer. VHA is in a period of rapid internal and external change in
healthcare delivery systems. The networks require additional time to
assess the projected impact of the new resource allocation system
(VERA), the reallocation of resources to primary care, the
transformation from a facility-based system of care to a network-based
system of care, and the eligibility reform legislation, among other
things. Capital planning supports the results of this assessment and
planning, and in this period of rapid change VHA is not at the point to
assess the long range impact on capital requirements. In the first
cycle of network planning, networks have focused on establishing a
baseline of capital assets available, identifying each network's
patient base and the healthcare services required by those patients.
VHA will assess the progress made in the next planning cycle in
translating the results of these analyses to action plans that may
include the need for major construction.
Question. What are VHA's long-range major construction priorities?
What is VA's new method for prioritizing construction projects
conceived by the VISN's?
Answer. Potential capital projects to be implemented through the
major construction program will be recommended by the Network
Directors. The focus of the projects is anticipated to be on meeting
the Mission Goals described in the Prescription for Change largely in
the areas of shifting the emphasis of health care delivery from an
inpatient orientation to a primary care/managed care, outpatient based
system as well as to upgrade reduced but needed inpatient bed space.
Nationally, the priority of each project will be determined on the
basis of its value to the VHA system in implementing the Strategic
Plan. The current VA Major Construction Prioritization System is being
examined and revised to reflect the broad set of performance objectives
contained in the Strategic Plan. This will include both quality and
cost/benefit factors.
Question. Why is VA proposing funding for the Cleveland veterans
cemetery when Detroit ranks higher according to VA's prioritization
list, and has received initial EIS funding?
Answer. For the last decade, VA's policy on the establishment of
new national cemeteries has been based on the findings in two Reports
to Congress, one in 1987 and another in 1994. The Reports each
identified ten areas of the country most in need of new national
cemeteries based on concentrations of veteran population. The rankings
in each report were not a priority listing, but a list depicting
veteran population. Cleveland and Detroit were ranked in the top 10 in
both reports (Cleveland was 4th in 1987 and 3rd in 1994 while Detroit
was 5th in 1987 and 2nd in 1994).
Milestones in new cemetery projects develop at varying rates as
steps in the process are completed. Cemeteries are not constructed in a
specific order nor must one cemetery project be completed before
another begins. As a segment of the development process is completed
for a specific cemetery, such as the EIS or land acquisition, funding
is usually requested for the next phase.
The schedule for the Cleveland cemetery project was ahead of
Detroit. Congress provided EIS funds for Cleveland in fiscal year 1988,
site acquisition funds in fiscal year 1991, and design funds in fiscal
year 1997. No earmarked appropriation has ever been provided for an EIS
for the proposed new cemetery in Detroit; funding for the EIS was
provided from the VA's Advance Planning Fund. In April 1994, the
Secretary advised the Michigan Congressional delegation, the Governor,
and major veterans organizations that VA budgets will not support a new
national cemetery in the Detroit area.
In June 1993, the Secretary reiterated and approved VA's policy to
establish new national cemeteries in Albany, Cleveland, and Seattle and
to continue progress to establish new national cemeteries in Chicago
and Dallas/Fort Worth. The approval of these five sites permits VA to
increase a level of service delivery consistent with veterans'
expectations. By concentrating the locations in major metropolitan
areas, the burial needs of large numbers of veterans will be served.
The President's fiscal year 1998 budget includes funding for the
construction of a new national cemetery for the Cleveland, Ohio area.
If funds are provided for this project, we anticipate opening the
cemetery in the fall of 1999. This will be the sixth VA national
cemetery to be constructed in those areas identified in a 1987 Report
to Congress as most in need of burial sites for veterans. San Joaquin
Valley National Cemetery in California was opened in 1992. Tahoma
National Cemetery near Seattle is projected to open in September 1997.
We expect to open Dallas/Fort Worth National Cemetery, Saratoga
National Cemetery near Albany, New York, and a national cemetery near
Chicago in the summer or fall of 1999.
The opening of these five new VA national cemeteries within a two-
year time frame is unprecedented since the Civil War. VA must ensure
full operation of these new cemeteries as its priority and assess their
impact on the system.
MINOR CONSTRUCTION
Question. I understand VISN's are currently reviewing, prioritizing
and selecting capital initiatives for the minor construction program
for fiscal year 1998. What are the criteria for project selection? Does
the VISN select the criteria, or does central office? Do the network's
business plans include long-range minor construction priorities?
Answer. Capital initiatives for the minor construction program are
expected to reflect the values and strategic objectives of the Veterans
Health Administration (VHA) as set forth in VHA's Vision for Change,
the Prescription for Change, and the Secretary's Performance Agreement
with the White House. These documents identify specific values and
objectives which have been incorporated into the respective performance
plans for the network directors. These values and objectives are
subsequently incorporated into the network strategic business plans and
a capital strategy for implementation of the plan is included. This
Capital Strategy includes capital initiatives in the major
construction, minor construction, NRM, leasing, and enhanced use
programs as well as capital equipment initiatives. Headquarters
provides guidance to the networks with regards to any expected areas of
special emphasis such as Outpatient Improvements and Patient
Environment. The network then identifies those capital initiatives and
a capital strategy which best enable them to achieve these objectives
within their local health care environment. Proper criteria for
selection of capital initiatives include whether the initiative is
consistent with the network's strategic business plan, how well it
meets one of the network's stated values or strategic objectives, and
the return on invested capital (in terms of either dollar savings or
services provided). The Networks determine specific qualitative and/or
quantitative methodologies to assess how well a capital initiative will
meet these criteria.
BONE DISEASE RESEARCH
Question. In the fiscal year 1997 VA-HUD conference report, support
was expressed for additional research activity focused on men with bone
diseases at the VA. Further, the Committee urged the Department to
prepare a long-term strategy for research in this area. Can you comment
on the status of this request and the research activities the agency
has initiated with respect to these diseases?
Answer. Osteoporosis and related bone disease remain areas of
special emphasis for funding. In particular, osteoporosis and related
bone disease fits into two of our current Designated Research Areas
(DRA's)--Aging and Geriatrics; and Chronic Diseases. Our DRA's are in
response to October 1996 recommendations made by the Research
Realignment Advisory Committee. Post traumatic osteoporosis due to
injury is an area of expanded collaboration with the Department of
Defense. Projects in this area are taking place at the Rehabilitation
Research and Development Center, located in the VA Palo Alto Medical
Center. This Center focuses on degenerative bone disease and joint
reconstruction and often partners with the National Aeronautics and
Space Administration. In fiscal year 1996, VA investigators
collaborated with the National Institutes of Health on seven projects
in the area of degenerative bone disease. In fiscal year 1997, VA
investigators are participating in over 100 projects in the areas
associated with Osteoporosis.
REGIONAL OFFICE ADJUDICATORS' PERFORMANCE CRITERIA
Question. In this Subcommittee's report explaining appropriations
for the Department of Veterans Affairs for fiscal year 1997, we
directed the VA to establish performance criteria, including measures
of technical proficiency and work quality, for regional office
adjudicators. Have you developed and disseminated such criteria?
Answer. In previous discussions of this topic we have noted that
performance standards do currently exist for each individual employee
as a part of each person's Performance Plan. We have also said the
sound performance plans include both quality and timeliness elements.
These performance standards will continue until we move further into
the transition/implementation phase of our BPR effort. Each employee
does receive an annual appraisal of his/her performance based on the
indicators in the Performance Plan. But as noted earlier, VBA will
ensure that goals and objectives of VBA managers are derived from and
support national goals and objectives and are part of the performance
plans for these managers at all levels. These performance expectations
will cascade down to those processing the claims. This is a
recommendation of the Adjudication Commission--certainly in concert
with GPRA--that VBA fully endorses.
Question. And, if so, are regional office adjudicators now
operating under these new standards and what quality improvements have
been attained?
Answer. The Human Resources task team for the implementation of the
BPR vision has developed position descriptions, a transition plan, and
performance evaluation policies to properly develop, reward, and train
employees in the re-engineered claims processing environment. The task
team's proposal will be presented to the VBA Strategic Management
Committee at its June 1997 meeting.
CHANGE IN CURRENT CLAIMS PROCESS
Question. Your Business Process Reengineering Plan, which is
incorporated in your GPRA business line plan in your budget submission,
includes changing the current claims process to one which involves more
direct interaction between VA employees and veterans and more
personalized customer service to veterans. Logically, it would seem
that this would require a greater investment of time in each claim by
VA personnel and, as a consequence, require more staffing. Yet, your
budget proposes to reduce staffing in the VBA by 543 FTE in fiscal year
1998 and reduce staffing in C&P alone by 100 FTE. How do you reconcile
this seeming contradiction?
Answer. The attainment of the vision is predicated on the
successful implementation of a number of BPR initiatives which are all
interactive, a number of which emphasize closer, more personal, and
frequent contact with veterans and greater responsiveness to their
concerns.
In the vision, a partnership is forged with the veteran and his/her
representative. This partnership implies increased accountability for
certain actions, not only by VA personnel, but veterans and their
representatives as well. The claimant is asked to assist in the claims
process. VA will rely more on Veterans Service Organizations and County
Service Officers for the up-front part of the claims process.
The VSR (veteran service representative), consulting with the
veteran, focuses the issue, identifies all sources of evidence, and
explains the claims process. Rule-based technology supports the VSR in
this process to ensure the quick resolution of the claim. Routine
actions are handled quickly, often at the initial contact. In addition,
the vision emphasizes on-line electronic interfaces with internal and
external entities. Most status calls will be answered through an
automated voice response system.
Regulatory and legislative changes are needed to achieve the claims
processing vision. We will seek these changes. Assumptions were made in
C&P's 1998 Business Plan that these changes would be accomplished.
We believe that we can attain the vision with fewer FTE in the
outyears if all BPR initiatives are funded and successfully
implemented. During fiscal year 1997, we have experienced a temporary
set back in the progress we are making toward reaching our timeliness
goals and reducing our claims backlog. At the end of fiscal year 1996,
the average processing time for original disability compensation claims
was 144 days with 342,683 claims pending. As of March 31, 1997, six
months into fiscal year 1997, the average processing time for original
compensation claims was 132 days with a pending backlog of 393,240.
A number of factors contributed to this slippage, including the
following:
--During the first six months of fiscal year 1997, over 228,000 hours
were invested in training, as we move toward the consolidation
of Adjudication and Veteran Service Divisions into Veteran
Service Centers.
--During the first six months of fiscal year 1997, there was a
significant increase (approximately 20 percent) in the number
of reopened compensation claims received when compared to the
first six months of fiscal year 1996 (primary cause--change in
hospital eligibility criteria).
--During the first six months of fiscal year 1997, approximately
4,485 Persian Gulf War claims were re-reviewed. These reviews
are labor intensive with an average review task time of 8 hours
per review (total review time of 35,800 hours).
For the following reasons, we do not expect marked improvement in
timeliness or a reduction in the backlog during the last six months of
fiscal year 1997:
--Continued consolidation of Adjudication and Veteran Service
Divisions into Veteran Service Centers which will require over
280,000 additional hours of training.
--The issuance of 230,000 outreach letters to DIC widow(er)s.
--The issuance of triennial EVR's.
--The adjudication of approximately 4,250 tobacco-related claims with
a total projected task time of 46,200 hours.
--The completion of approximately 6,250 additional Persian Gulf War
re-reviews and additional Persian Gulf War workload demands
based on new information, amended regulations, or policy
directives.
--The adjudication of Spina Bifida claims (approximately 2,000
cases).
--Dedication of resources to reduce remands and other appeal work.
Although it is unlikely that we will attain our fiscal year 1997
interim goals of 117 days for original compensation claims with 360,500
claims pending, we expect to be back on target in fiscal year 1998. We
intend to use available overtime funds to process rating-related claims
and reduce our appellate workload. We intend to continue aggressively
brokering the workload between regional offices to ensure maximum
utilization of resources. We intend to continue the re-allocation of
available resources to the rating activity, consistent with our BPR
vision.
COURT OF VETERANS APPEALS
Question. The Court of Veterans Appeals, on previous occasions, and
recently in an order in the case of Ehringer v. Brown, has found it
necessary to remind VA that it has the responsibility to devote
sufficient resources to its counsel to fulfill its duty as an officer
of the court to make timely filings in cases pending before the Court.
The Court cited the well established principle that a government agency
must bear ultimate responsibility when the staffing pattern in that
agency is sufficient to meet judicially imposed requirements. It is
indicated that your Professional Staff Group VII attorneys routinely
file multiple motions for extensions of time in cases in which
proceedings are awaiting your briefs and other filings. At a time when
the number of appeals to the Court is increasing, your budget would
reduce staffing in the Office of General Counsel by 26 FTE. Can you
explain this in light of the ongoing problems your General Counsel has
had meeting VA's legal mandate to represent your interests before the
Court?
Answer. The Office of General Counsel (OGC) is acutely aware of the
impact the increasing caseload has had on the Professional Staff Group
VII's (PSG VII) ability to serve the Secretary's interests before the
Court. While this group has experienced increasing workloads, other
elements within the OGC have also experienced substantial increases in
their workload, most notably in the personnel and EEO categories. Every
effort has been made to balance the level of legal support among all
elements within the Department.
To assist us in making a determination on what is the optimal level
of resources to dedicate to the appellate function, OGC has recently
awarded a contract to a consultant to study the operations of PSG VII.
The consultant's charge is to make recommendations on what procedural
changes or resource increases are needed to address the current
workload backlogs. Once these recommendations are offered and reviewed,
necessary actions will be taken, within the parameters of the
President's Budget, for implementing those recommendations and the
resource supplementation that may be required. In the meantime, OGC has
increased staffing for PSG VII and has authorized limited amounts of
paid overtime to help address the backlog problems.
NATIONAL CEMETERY CONSTRUCTION PROJECTS
Question. It is my understanding that the VA has made a decision to
complete national veterans cemetery project in Seattle, Cleveland,
Dallas, Chicago, and Albany, while national veterans cemetery projects
in Oklahoma, Pittsburgh, Detroit, and Miami will be terminated. Is this
correct?
Answer. It is VA policy not to request Federal funds to construct
and operate new national cemeteries once the new cemetery projects in
Seattle, Cleveland, Dallas, Chicago, and Albany are completed. However,
the fiscal year 1998 budget proposes to enhance the State Veterans
Cemetery Grants Program so that it can help states obtain full funding
to establish a complete and fully equipped cemetery for veterans. The
proposal will increase the Federal share of funds to States through the
State Veterans Cemetery Grants Program from 50 percent to up to 100
percent of the costs of construction. This proposed legislation will
also authorize funding of up to 100 percent of all initial equipment
costs. It is anticipated that this proposal will achieve VA's goal of
expanding veterans cemetery access.
In the Spring of 1994, the Secretary advised the Michigan, Florida,
Oklahoma, and Pennsylvania Congressional delegations, their Governors,
and major veterans organizations that `` * * * construction of national
cemeteries in Detroit, Miami/Fort Lauderdale, Oklahoma City, and
Pittsburgh before the year 2000 was not feasible.'' VA has not
requested funding for any further action at any of these sites.
Instead, VA will establish an enhanced partnership with the States for
new or expanded state veterans cemeteries through the State Veterans
Cemetery Grants Program.
The proposed new national cemetery in the State of Oklahoma has
been the subject of congressional action as funding has been earmarked
several times during the 1990's. In fiscal year 1991, $250,000 was
provided for advance planning including an Environmental Impact
Statement (EIS). In fiscal year 1995, $250,000 was provided for design
purposes. Legislation authorizing the Department of Army to transfer
400 acres at Ft. Sill to VA for a new cemetery was enacted as part of
Public Law 104-201. In February 1997, the Secretary signed the Record
of Decision which completed the EIS process.
Of the amount appropriated in fiscal year 1991, a total of $118,000
has been obligated for the completion of the EIS process. In April
1997, VA requested that the total unobligated project balance of
$382,000 be reprogrammed to the Major Construction working reserve. The
Appropriations Committee in the Senate rejected the request. The VA is
now proceeding to use the $382,000 for master planning.
Question. Has any funding, in fiscal years previous to fiscal year
1998, been identified, earmarked, set-aside or otherwise designated for
any aspect of the study, design, construction or any other stage that
is deemed necessary to the locating, planning, design and construction
of a national cemetery in Oklahoma, Pittsburgh, Detroit, and Miami? If
so, how much has been designated for these projects, for what stage of
the cemetery project were they designated, in what fiscal year was that
funding identified, and how much has been obligated?
Answer.
Oklahoma.--
--$250,000 appropriated for Advanced Planning/EIS in fiscal year 1991
($118,000 obligated for EIS).
--$250,000 appropriated for Planning and Design in fiscal year 1995
(no funding obligated).
Pittsburgh.--$250,000 appropriated for Advanced Planning in fiscal
year 1991 ($103,000 obligated for EIS).
Detroit.--No funding appropriated ($71,000 provided from VA APF
working reserve for EIS).
Miami.--$250,000 appropriated for Advanced Planning in fiscal year
1992 ($92,000 obligated for EIS).
Question. Of those funds identified in my previous question, how
much of those funds, and for what projects, has the VA requested to be
reprogrammed for other projects?
Answer. Of the total $500,000 appropriated for the development of a
new national cemetery in Oklahoma, VA requested in April 1997, that the
total unobligated project balance of $382,000 be reprogrammed to the
Major Construction working reserve. The Appropriations Committee in the
Senate rejected the request. The VA is now proceeding to use the
$382,000 for master planning.
Question. Would the VA be willing to allow those national cemetery
projects where funding has been spent and a site identified, to be
completed with the understanding that after these projects are complete
the VA is to build no more national veterans cemeteries?
Answer. It is VA policy not to request Federal funds to construct
and operate for new national cemeteries other than for the five now in
progress. Our paramount concern is not the upfront capital investment
required to build national cemeteries but the long-term commitment of
providing recurring operational dollars to maintain the cemetery in
perpetuity. We have also forwarded legislation to expand the State
Veterans Cemetery Grants Program to support construction of veterans
cemeteries in locations that are currently, or may become underserved.
Should Congress appropriate funds for new national cemeteries beyond
these five, VA will obviously comply with the law.
______
Question Submitted by Senator Barbara Mikulski
BONE DISEASE RESEARCH
Question. In the fiscal year 1997 HUD, VA, Independent Agencies
Appropriations Report, the Conferees expressed their support for
additional research activity focused on men with bone diseases at the
Veterans Administration. Further, the Conferees urged the agency to
prepare a long term strategy for research in this area. Can you comment
on the status of this request and the research activities the agency
has initiated with respect to these diseases?
Answer. Osteoporosis and related bone disease remain areas of
special emphasis for funding. In particular, osteoporosis and related
bone disease fits into two of our current Designated Research Areas
(DRA's)--Aging and Geriatrics; and Chronic Diseases. Our DRA's are in
response to the October 1996 recommendations made by the Research
Realignment Advisory Committee. Post traumatic osteoporosis due to
injury is an area for expanded collaboration with the Department of
Defense. Projects in degenerative bone disease are taking place at the
Rehabilitation Research and Development Center, located within the VA
Palo Alto Health Care System. This center focuses on degenerative bone
disease and joint reconstruction, often partnering with the National
Aeronautics and Space Administration. In fiscal year 1996, VA
investigators collaborated with the National Institutes of Health on
seven projects in the area of degenerative bone disease. In fiscal year
1996, VA investigators collaborated with the National Institutes of
Health on seven projects in the area of degenerative bone disease. In
fiscal year 1997, VA investigators are participating in over 100
projects in the areas associated with Osteoporosis.
______
Questions Submitted by Senator Tom Harkin
VETERANS EQUITABLE RESOURCE ALLOCATION SYSTEM
Question. I wanted to ask you about the Veterans Equitable Resource
Allocation system--VERA. I must say the name sounds good. But, we must
be assured that it is truly equitable.
The GAO has examined the system and had some very real concerns.
Their statement says in part on page 13: ``Although VERA adjusts for
differences in regional case mix with its basic and special care
patient categories and adjusts the allocations for differences in
regional labor costs, it assumes that all of the remaining differences
are based on differences in efficiencies. While inefficiency is a major
factor in these cost differences, other factors may play a role. For
example, to the extent that veterans are sicker and need more health
care services in different parts of the country, additional case mix
adjustments may be necessary to fully explain regional cost
differences. As we have said in the past, VA needs to provide more
information on why costs vary throughout the country. VA officials told
us they plan to examine this further.''
What are the specific plans for the further examination of these
factors and what is the expected timing of those analyses? Can you
provide the Committee with a complete listing of the factors being
looked at?
Answer. As explained in the initial VERA Briefing Book, a variety
of factors such as age of veterans, energy, labor and pharmaceutical
costs were evaluated in the planning stages of VERA to determine if
additional adjustments to the national price were warranted. It was
found that there was little variation in the average and median age of
patients among networks; energy as a percent of total costs varied
little among networks, and in fact constituted a very small portion (1-
2 percent) of the network budgets and; over 90 percent of
pharmaceuticals are purchased through the federal supply system--
resulting in equal network pricing. However, we will continue to
evaluate the labor adjustment index and will monitor the implementation
of VERA for potential associations between resource allocation and
quality of care and workload. We welcome any specific thoughts the
Committee may have on what other factors should be examined to
potentially improve VERA.
Question. I am told that you only look at the age levels of the
population in the ``special'' classification. For that classification,
to what extent is the weight of the more elderly veteran population
considered--those over 80 and over 85 years of age? Can you provide the
Committee with exact methods involved?
Answer. Due to the significant healthcare needs of the ``oldest
old'' population, the vast majority of such patients are reflected in
the projection of workload for the special care group. Under VERA, the
most resource intensive patients that we treat, including the high-cost
elderly, are funded at a special rate of $35,707. Thus, networks with
proportionately more of the ``oldest old'' veterans using VA health
care will receive relatively more funding through the special care
rate.
Question. For the basic classification, costing an average of
$2,596, there is no adjustment at all for the variation of more elderly
populations. Can you provide the committee with a detailed set of
reasons for that decision?
Answer. In the VERA model, patient needs determine resources
regardless of age. The three year user basic care population includes a
wide range of patient healthcare needs, outcomes, and ages. Age was not
used as an adjustment because there was little variation between the
average and median age of patients among networks and it is not always
the cause of health care needs or costs.
Question. Frankly, I fear that some of the underlying assumptions
in VERA could be in serious error and that could provide considerable
misallocations of resources in the veterans health care system. To what
extent does the Veterans Administration desire to implement VERA in
fiscal 1998?
Answer. To best answer this question we would need to know which
assumptions you believe could be in serious error. With regards to
fiscal year 1998, VA plans to implement VERA under the same parameters
as fiscal year 1997. However, VERA is a dynamic process that may be
refined as it is implemented. For example, there are workgroups that
are continuing to look at each component of the VERA model (workload
volume, special programs, care across networks, geographic prices,
education support, research support, equipment and non-recurring
maintenance, and data validation). At present, there are a few changes
under consideration that amount to ``fine-tuning'' the components for
research support, education support, equipment, and non-recurring
maintenance.
REIMBURSEMENT FROM PRIVATE HEALTH PLANS AND MEDICARE
Question. I understand that the VA budget assumes that some of the
budgetary shortfalls will be made up by collecting money from the
private health care plans of veterans and Medicare. Depending on the
details, I support this idea. However, I have my doubts that the VA
will be able to collect funds at the level projected. It is my further
understanding that VA requires a statutory change in order to collect
these funds for VA use.
If Congress does not approve the needed statutory authority, how
will VA make up the shortfall in funding? What will this shortfall mean
for current programs?
Answer. VA would have to reduce workload below 1997 levels if
Congress does not approve this alternative source for collections. VA
might not be able to treat as many as 105,000 veterans in 1998, with an
even more severe impact in the outyears. The following chart reflects
the VA model for the budget year and provides an approximation of
impact of various key indicators. These estimates were generated by
simply using national averages of past resources and workload. They do
not reflect the actual outcomes and efficiencies that would result
through Network planning and implementation.
----------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Shortfall ($000)................ ($648,985) ($1,319,015) ($2,027,789) ($2,696,992) ($3,475,791)
Unique individuals.............. (105,423) (214,265) (329,400) (438,108) (564,618)
Inpatients treated.............. (35,421) (69,220) (102,325) (130,858) (162,159)
Outpatient visits............... (1,179,000) (2,304,000) (3,406,000) (4,356,000) (5,398,000)
FTE............................. (6,643) (12,983) (19,192) (24,546) (30,417)
----------------------------------------------------------------------------------------------------------------
GULF WAR ILLNESSES--DELAY IN PRESUMPTIVE PERIOD RULE CHANGE
Question. The Congress and the Department of Veterans Affairs is
well aware of the strange health problems facing many of our military
personnel who served in the Gulf War. I know the VA continues to work
toward a better understanding of the causes of Gulf War illnesses. I
also understand that the VA is bearing most of the burden for treating
those suffering from these illnesses.
As you know, many Gulf War veterans were denied access to treatment
due to a very limited time period in which they could have applied for
help. Unless a veteran suffering from Gulf War illnesses had applied
for treatment within two years of the conflict, they were automatically
denied. In March, the Administration decided to extend the presumptive
period for veterans suffering from Gulf War illnesses to ten years. I
applaud this action. As you may know, I was a supporter of legislation
introduced earlier this year that pressed for the ten year extension of
the presumptive period.
Unfortunately, the policy change has not yet been implemented.
Apparently, the VA has yet to promulgate the presumptive period
extension rule change to its network of medical facilities and regional
centers. This delay has caused some confusion in the VA regional
offices and in the veteran community.
When will the rule be promulgated?
Answer. As to the new rule, an interim rule with request for
comments was published in the Federal Register on April 29, 1997. (See
62 FR 23138-9). The rule was effective November 2, 1994, the effective
date of ``The Persian Gulf War Veterans' Benefits Act,'' Title I of
Public Law 103-446.
Question. Have you notified your medical staff and regional centers
of the pending rule change?
Answer. We would like to point out first of all that the
presumptive period applies only to monetary benefits. VBA notified its
regional offices of the revised rule on May 1, 1997, and began
processing claims under the revised regulation the same day. Hospitals
are aware that Persian Gulf veterans have special eligibility for
comprehensive medical care with medical problems thought to be possibly
related to hazardous exposure during the Persian Gulf War.
Question. How do you plan on reaching out to the veterans community
when the rule is finalized?
Answer. VA has issued a press release announcing the revised
requirements which has generated a number of newspaper articles. The
next issue of the VA's Persian Gulf Review will also publicize the
revised requirements and veterans may receive information on this issue
by calling VA's toll-free number 1-800-PGW-VETS. VBA will also review
all claims previously denied because the symptoms of undiagnosed
illnesses did not manifest within the previous two year presumptive
period to determine whether the veterans who filed those claims qualify
for compensation under the revised criteria.
GULF WAR ILLNESSES--RESEARCH FUNDING
Question. I note that your fiscal year 1998 budget includes a
decrease in funding for VA medical research. What will the decrease in
VA medical research mean for your investigations of Gulf War illnesses?
Answer. No reduction in support for study of Gulf War illnesses is
contemplated.
NEW RULES FOR DISCRETIONARY VETERANS
On October 1, 1996, new rules went into effect at the Veteran's
Administration (VA) with regard to who ``may'' and ``shall'' have
needed care furnished to them in a VA facility. These new rules have
had the effect of ending VA care to a number of veterans who are
``discretionary'' or Category ``C''. I understand the budgetary reasons
for such changes to the rules governing veterans care. As I am sure you
know, these rule changes have caused problems for a lot of category C
veterans who can no longer receive medical care in a VA facility.
However, I have received reports from Iowans about the difficulties
and administrative problems with even determining who is eligible to
receive care at a VA facility. For instance, one of my constituents
contacted me when the VA denied him further treatment for several
conditions for which he was receiving ongoing treatment. In the end, we
were able to get him his continuing treatment, but it took intervention
by my office and his doctor at the VA.
We have heard of these types of problems before. Even the best of
staffs can make mistakes. However, it appears to me that these mistakes
are being made because of inconsistencies in the application of the VA
eligibility requirements due to a lack of understanding by the staff
and veterans.
For instances, in order to help my staff better help constituents
who have been denied care at the VA, the VA distributed a ``VA Medical
Care Fact Sheet'' (See the attached VA Healthcare Fact Sheet.) However,
this fact sheet is very confusing to veterans. It was also
indecipherable to my caseworkers and veterans policy staff.
VA MEDICAL CARE FACT SHEET
Public Law 104-262 dated October 9, 1996, made significant changes
in veterans' eligibility for VA medical care. A major feature of this
new law makes eligibility rules the same for both inpatient and
outpatient care. Public Law 104-262 eliminated many of the complicated
eligibility rules governing outpatient care that previously existed.
Eligibility rules for nursing home care remain unchanged.
Public Law 104-262 establishes two eligibility categories: The
first category includes veterans to whom VA ``shall'' furnish needed
hospital and outpatient care, and ``may'' furnish nursing home care,
but only to the extent and in the amount that Congress appropriates
funds to provide such care. This group is composed of those veterans
who were previously referred to as ``Category A'' veterans, but
excludes 0 percent noncompensable service-connected (SC) veterans
needing care for a nonservice-connected (NSC) disability. This group
includes veterans:
Under the authority of Title 38 USC Section 1710(a)(1)
--for a service-connected disability
--who have a service-connected disability rated at 50 percent or
more,
Under the authority of Title 38 USC Section 1710(a)(2)
--who have a compensable service-connected disability;
--whose discharge or release from active military service was for a
compensable disability that was incurred or aggravated in the
line of duty;
--who are former prisoners of war;
--who are veterans of World War I;
--who were exposed to Agent Orange in Vietnam, ionizing radiation, or
environmental hazards in the Persian Gulf (care for this group
is limited to certain disabilities);
--who have annual income and net worth below a specified threshold
(based on results of ``Means Testing'');
--who are 0 percent Service Connected and require treatment for their
service-connected disability.
The second category includes veterans to whom VA ``may'' furnish
needed hospital care, outpatient care, or nursing home care, but only
to the extent resources and facilities are available, and only if the
veteran agrees to pay VA a copayment for that care. This group includes
all those not listed above and are primarily nonservice-connected
veterans with incomes and net worth above the established threshold
based on the results of ``Means Testing.'' These veterans must agree to
pay VA a copayment to receive their care. This group also includes 0
percent noncompensable service-connected veterans needing care for any
nonservice-connected disability if they are not otherwise eligible for
cost-free care. This group is provided treatment under the authority of
Title 38 USC Section 1710(a)(3).
ELIGIBILITY ASSESSMENT PROCEDURES
Public Law 99-272, The Veterans Health Care Amendment of 1986, and
Public Law 101-508, The Omnibus Budget Reconciliation Act of 1990,
established eligibility assessment procedures, based on income levels,
for determining whether or not certain veterans who have no other
special eligibility, are eligible for cost-fee medical care. These
income levels will be adjusted on January 1 of each year by the
percentage that VA pension benefits are increased.
Veterans who are not subject to the eligibility assessment (Means
Test) are as follows:
--Service-connected (compensable) veterans.
--Former prisoners of war.
--Veterans who were exposed to herbicides while serving in Vietnam,
to ionizing radiation during atmospheric testing and in the
occupation of Hiroshima and Nagasaki, or exposed to an
environmental hazard while serving in the Persian Gulf Theater
and need treatment for a condition that might be related to
such exposures.
--Veterans receiving a VA pension.
--Veterans of World War I.
--Veterans eligible for Medicaid.
The eligibility assessment, which follows, applies to all other
veterans without special eligibility, regardless of age:
Your hospital care, medical services and nursing home care (when
provided) are cost-free if:
--You are not subject to the eligibility assessment (as listed
above): or,
--You are a nonservice-connected veteran or 0 percent non compensable
service-connected veteran seeking care for a non service-
connected disability and your combined household income is
$21,610 or less and your income plus net worth is less than
$50,000, if single with no dependents: or your combined
household income is $25,935 or less and your income plus net
worth is less than $50,000 if married, or single with one
dependent (add $1,445 to the income level for each additional
dependent.)
Your hospital care, medical service and nursing home care (when
provided) will require your agreement to pay VA a deductible (also
referred to as Co-payment) amount for that care equal to what you would
have to pay under Medicare, as adjusted annually, if:
--Your combined household income is $21,611 or above if single with
no dependents.
--Or, $25,936 or above if married or single with one dependent, plus
$1,445 for each additional dependent.
If you are required to pay a deductible for your medical care, you
will be charged a co-payment, for which you will be personally
responsible, as follows:
--A co-payment equal to the Medicare deductible, currently $760, for
the first 90 days of hospital care during any 365-day period.
(In addition to this co-payment, you will be charged a fee of
$10 per day for inpatient hospital care.)
--For each additional 90 days of hospital care, you will pay half the
Medicare deductible plus the additional charge of $10 per day.
--For each 90 days of nursing home care, you will pay the full
Medicare deductible. (In addition to this co-payment, you will
be charged a fee of $5 per day for nursing home care.)
--A co-payment of $38.80 will be charged for each outpatient visit.
Note. The Medicare and outpatient co-payment are adjusted annually.
HOW INCOME IS ASSESSED
Your total income and net worth under the eligibility assessment,
include social security; U.S. Civil Service retirement; U.S. Railroad
retirement; military retirement; unemployment insurance; any other
retirement; total wages from all employers; interest and dividends;
workers' compensation; black lung benefits; and any other gross income
for the calendar year prior to your application for care.
The income of your spouse and dependents as well as the market
value of your stocks, bonds, notes, individual retirement accounts,
bank deposits, savings accounts, cash, etc. are also used.
Your debts are subtracted from your assets to determine your net
worth. However, your primary residence and personal property are
excluded from this assessment.
You will not be required to provide proof of income or net worth
beyond filling out VA Form 10-10f, Financial Worksheet, at the time you
apply for care; however, VA has the authority to compare information
you provide with information from the Department of Health and Human
Services and the Internal Revenue Service.
Note. The Department of Veterans Affairs is authorized to bill
insurance carriers for the cost of Medical Care furnished to all
veterans for nonservice-connected conditions covered by health
insurance policies. Veterans are not responsible and will not be
charged for any co-payment or co-insurance required by their health
insurance policies.
Note. The Omnibus Budget Reconciliation Act of 1990 provides that
veterans receiving medications on an outpatient basis from VA
facilities, for the treatment of a nonservice-connected disability or
condition, are required to make a co-payment of $2.00 for each 30-day
or less supply for medication provided. Veterans receiving medications
for treatment of a service-connected condition, veterans rated 50
percent or more service-connected, and veterans receiving VA pension or
whose income is at or below the maximum VA pension rate are exempt from
the co-payment requirement for medications.
Question. What are the VA's plans to help clarify this confusing
situation? Do you have any plans to establish a clear set of guidelines
as to which veterans can receive care? Could you examine your current
materials intended for public use and design more clear fact sheets and
other documents?
Answer. It has been recognized that the current material available
to the general public regarding VA health care benefits is inadequate.
With passage of Public Law 104-262, it is imperative that our clientele
clearly comprehend what their eligibilities for VA health care are and
that they can make informed decisions regarding seeking their medical
care from the VA. In order to develop sensible solutions to these
concerns, a focus group has been formed and charged with developing
pamphlets, fact sheets and other materials for dissemination, which
will assure that clear and understandable information is available to
our veterans and their various representatives. It is hoped that these
newly developed informational materials will be available by early
July.
CORRECT TRIAGE BY MEDICAL PERSONNEL
Question. Another issue that has been brought to my attention by
Iowa's veterans is the issue of proper triage at VA medical facilities.
Under the current system, a veteran who is category C or discretionary,
can, under certain circumstances, get medical attention from a VA
facility. For example, the VA can see discretionary vets for life
threatening medical problems or if adequate resources are available.
Unfortunately, my staff has found that the VA staff making the
determination may not always be a medically trained individual.
For instance, a veteran complaining of a headache, might be having
a stroke or have suffered a concussion, but the receptionist might not
feel it is a legitimate emergency and deny them an appointment. I do
not believe that any vet with a medical problem should be turned away
for administrative reasons. They should at least have the right to
proper triage, where personnel with medical training can determined if
an emergency exists.
Do you think such a triage based admission system would be
possible? Do you believe such a system would be safer and better for
the health of our veterans?
Answer. When a veteran, who has never been seen before, comes to a
VA facility for treatment, there are two triage process that he/she
must go through: The first is an administrative process to determine
eligibility for care and the second is to identify the need for
treatment. However, if the patient is in obvious acute distress, i.e.,
life threatening, (not breathing, hemorrhaging, convulsive), then there
is no question that the patient would be clinically assessed and
provided emergency care. This would occur before any assessment is made
to determine eligibility. This practice is in concert with the private
sector.
Providing medical triage to every individual who presents at the
admission desk would certainly be ideal. However, the resources
required would be significant and would not be good use of our scarce
staff and funds.
KNOXVILLE FACILITY
Question. There is a building at the Knoxville, Iowa Veterans
Hospital (Building 74) that is currently vacant. Marion County would
like to lease this facility as a minimum security county jail. This
would address the number one concern of the Marion County Board of
Supervisors which is adequate prison space. Would your office allow
this to occur?
Answer. To allow the establishment of a correctional facility
primarily for the incarceration of convicted individuals in space that
is under the control of the Department of Veterans Affairs is contrary
to the mission and vision of this agency as a health care provider.
Question. Would it also be possible for your office to look into
setting very strict guidelines to only allow minimum security jails,
such as the one in Marion County, to lease vacant VA property? This
would have a very positive impact on the Marion County community faced
with the task of finding adequate space for their jail.
Answer. Since the issuance of IL 90-96-1, dated November 13, 1996,
titled ``Interim Acquisition Guidance for Health Care Resources Sharing
Authority'' and VHA Directive 97-015, dated March 12, 1997, titled
``Enhanced Health Care Resources Sharing Authority,'' the VA has
further interpreted the intent of the policy to disallow the use of
space for correctional purposes regardless of the crime or court order.
This activity, as well as using space for abortion clinics, any type of
gambling, partisan political activities, or the selling of inpatient
services, is contrary to the mission and vision of this agency as a
health care provider.
subcommittee recess
Senator Bond. We thank you very much, and this hearing is
recessed.
[Whereupon, at 3:50 p.m., Thursday, May 1, the subcommittee
was recessed, to reconvene subject to the call of the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MAY 6, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Burns, Mikulski, Harkin, and Boxer.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
STATEMENT OF DANIEL S. GOLDIN, ADMINISTRATOR
ACCOMPANIED BY:
MALCOLM L. PETERSON, COMPTROLLER
MICHAEL D. CHRISTENSEN, ASSOCIATE ADMINISTRATOR FOR
HEADQUARTERS OPERATIONS
SPENCE M. ARMSTRONG, ASSOCIATE ADMINISTRATOR FOR HUMAN
RESOURCES AND EDUCATION
JOHN D. SCHUMACHER, ASSOCIATE ADMINISTRATOR FOR EXTERNAL
RELATIONS
JEFF LAWRENCE, ASSOCIATE ADMINISTRATOR FOR LEGISLATIVE AFFAIRS
WILBUR C. TRAFTON, ASSOCIATE ADMINISTRATOR FOR SPACE FLIGHT
ROBERT E. WHITEHEAD, ASSOCIATE ADMINISTRATOR FOR AERONAUTICS
AND SPACE TRANSPORTATION TECHNOLOGY
WESLEY T. HUNTRESS, ASSOCIATE ADMINISTRATOR FOR SPACE SCIENCE
ARNAULD E. NICOGOSSIAN, ACTING ASSOCIATE ADMINISTRATOR FOR LIFE
AND MICROGRAVITY SCIENCES AND APPLICATIONS
ROBERT L. GROSS, INSPECTOR GENERAL
WILLIAM F. TOWNSEND, ACTING ASSOCIATE ADMINISTRATOR FOR MISSION
TO PLANET EARTH
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The committee will come to
order.
The subcommittee meets today to review the budget request
of the National Aeronautics and Space Administration, and we
welcome Daniel Goldin, NASA's Administrator, and his staff.
NASA's budget request totaled $13.5 billion, $200 million
less than fiscal year 1997's enacted level. Not only is NASA
the only major agency in the VA-HUD-Independent Agency
Subcommittee jurisdiction that has requested a reduction from
the fiscal year 1997 level, but NASA is also to be a
contributor to the recisions put forth in the 1997 emergency
supplemental appropriations bill. You cannot be much better of
a team player than that. We appreciate NASA's willingness to
step up to the plate and actually do more with less, instead of
just talking about doing more with less sometime in the future.
Compared to last year at this time, NASA's future looks a
lot better. The out-year numbers contained in the President's
request appear to be at levels the agency and Congress can live
with. And NASA has presented us with awe-inspiring visions,
allowing us to picture the far reaches of the universe, to see
the birth of stars and galaxies, and to imagine the possibility
of life existing throughout the universe.
On the other hand, last year has also raised new concerns,
particularly over the construction of the international space
station. We appear to have run into problems, both with United
States contractors and with the commitments from our Russian
partners. Obviously, this will be an area we want to explore
during the hearing.
But we also have been surprised that the shuttle program,
which had allegedly cut to the bone, was able to come up with
an excess of $200 million in fiscal year 1997 to be used as
part of the shortfall in the space station program. I am very
concerned that it appears that NASA has built up an internal
bank of uncosted carryovers to allow the agency to bail out
other programs, despite the purposes for which Congress
appropriated the funds. The committee needs to understand
NASA's use of uncosted carryovers, both for NASA's credibility
and for us to understand the actual funding costs of these
programs.
To make matters worse, this is another difficult year for
the subcommittee. We have human scale problems ranging from
medical care for veterans to housing for low-income Americans
to relief for victims of disasters. We are not far enough along
in the budget process yet to have an allocation for this
subcommittee, and we have noted with great relief that all
sides and all parties finally appear to recognize that the
costs of assisted housing, particularly section 8 housing,
require additional funding, particular budget authority, and if
there is agreement and recognition of that, our lives, and
consequently your lives, will be somewhat easier.
But nevertheless, it is still somewhat premature to discuss
the levels of funding that may be available to NASA. The one
thing we know for sure, regardless of the budget agreement, is
that budgets will be tight, and, therefore, we will be asking
questions to get a better understanding of NASA's funding
priorities for its programs.
We are living in a rapidly changing world. If you achieve
the goals you recently laid out in your aeronautics and space
transportation technology enterprise, Mr. Goldin, the pace may
become even more rapid, with no excuses for a plane not landing
due to fog and flights to Alaska so fast that our chairman will
be spending every weekend in the State. But in any event, we
look forward to exploring that future with us.
Let me now call on my distinguished ranking member, Senator
Mikulski, for her opening statement.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman, and
good morning, Dr. Goldin. I am really looking forward to this
hearing this morning, and would like to say that first of all I
am very pleased that the budget request by the President is
$13.5 billion. We view that as the minimum acceptable level to
maintain NASA in terms of it being able to fulfill its mission.
I want to thank Chairman Bond, as well as you, OMB Director
Frank Raines, Leon Panetta, and the Vice President, for really
dealing with the outyear question that was raised at last
year's rather intense hearing. As you recall, I kind of gulped
when I saw that in a few years the budget dipped to 11.6, and I
was afraid that for fiscal reasons NASA would be hollowed out.
Now I believe that we have a stable budget request for over 5
years. It is not exactly what we would all hope, but at least
the certainty and reliability of that I think will help NASA be
able to plan, and so we are very relieved about that.
What that calls for, because it will be the minimum
acceptable level, is really wise use of our Federal dollars.
And I know your mantra has been quicker, faster, better,
cheaper. But let me lay out a couple of the yellow flashing
lights that I hope we will see addressed in your testimony
One, I am concerned about the space station and its ability
to eventually come to fruition because of the shaky nature of
the Russian participation. I in no way question the technical
competency of our Russian counterparts, but their financial
situation. The same types of concerns that were raised by our
colleague in the House, Mr. Sensenbrenner, parallel mine. So we
look forward to hearing your commentary.
I was a bit concerned to hear about $200 million from the
space shuttle could be going in to develop alternatives should
the Russians fail to complete their commitment. I am concerned
because I do not know what that means to the shuttle, and I
believe that the No. 1 priority of the chairman and myself will
always be the shuttle and its safety. Without the shuttle and
safety on the shuttle, we really do not have the kind of NASA
that I believe we need for the 21st century. So we will be
looking at shuttle safety.
Second, we note in the budget that mission to planet Earth
enjoys funding, and we appreciate that, but one of the other
areas I will be interested in is the EOS DIS, the Earth
Observatory DIS part, which ultimately we could gather the
greatest information in the world about the Earth. But if all
we are is a catcher's mit that just then throws something to a
space dugout where it just becomes a data mortuary, then what
the hell are we doing it for, you see? So we are not out there
for intellectual curiosity. We are out there for intellectual
curiosity that could be moved into a greater availability for
information. So we will be interested to hear how EOS DIS is on
target. We understand one of the contractors has suffered
significant problems.
And last but not at all least, of course, we are very much
interested in space science, and we will be interested to hear
what your vision is for space science, and particularly the
origins project which I think ties in ultimately with all that
we are doing.
So those are really kind of my concerns that I hope to hear
more about this morning, and I look forward to hearing your
testimony and once again working with you, and I want to thank
you for really the collegial and cooperative way I think we
have been working.
Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Mikulski.
Senator Campbell will not be able to attend today's
hearing, but requests that his statement be made part of the
record.
[The statement follows:]
Prepared Statement of Senator Ben Nighthorse Campbell
Thank you, Mr. Chairman, for holding this important hearing on the
National Aeronautics and Space Administration's fiscal year 1998 budget
request.
I would like to welcome Dr. Dan Goldin, the NASA Administrator, to
today's hearing and thank him for appearing before us today to this
important part of America's research into the future. I know most of us
are quite familiar with many of the ``spin offs'' of space technology
and research into our every day lives. Also, with NASA's Mission to
Planet Earth program, we anticipate the possibility of immense benefits
to our Nation in new knowledge and tools for improved weather
forecasting, natural resource monitoring, agriculture, urban and other
land-use planning, as well as other economic and environmental
benefits.
My home state of Colorado has been and continues to be a major
player in the space industry. We have several small businesses that
have a great interest in the commercialization of space. Of course,
there are some larger contractors, employing hundreds of people who
have an interest in what is happening to NASA. I also understand that
almost every college and university within Colorado has some degree of
participation on the part of not only their faculties, but their
students as well and, in fact, this participation even extends into
many of the high schools of our state. These are accomplished through
the Colorado Space Grant Consortium which is partially funded through
NASA. It is estimated that for every NASA dollar invested, $3 of cash
and in-kind contributions are added to the program.
We are all aware of the need to balance our federal budget and NASA
has been prepared to come to the table and play a part in that effort.
At the same time, we do hope that we can continue to support this
important aspect of our Nation's research.
I understand that there are problems with the level of
international cooperation as well as some problems with the abilities
of some of our own U.S. contractors to meet their time and financial
agreements. I am looking forward to today's testimony by Dr. Goldin to
learn how he intends for NASA to address some of these concerns and
continue with our world-leading efforts in space research.
Mr. Chairman, I will close my remarks for now to leave plenty of
time for today's testimony. Thank you.
Statement of Daniel S. Goldin
Senator Bond. Mr. Goldin.
Mr. Goldin. Mr. Chairman, I would like, if it is OK with
you, to submit my written testimony for the record, and just
summarize in a brief statement which I have prepared.
Senator Bond. We would be happy to do so. Without
objection, your full statement will be made part of the record.
We do appreciate your willingness to summarize, and we will
keep the record open for further questions from our colleagues
who are not able to be here today.
Mr. Goldin. Mr. Chairman, I am pleased to take this
opportunity to appear before you today. I want to start by
thanking you, Mr. Chairman, and the ranking minority member and
the subcommittee for the level of support and guidance that
have been critical to NASA.
NASA has undertaken some Herculean tasks. We are
restructuring and downsizing, which has saved taxpayers more
than $40 billion. We are moving away from operations back to
cutting edge R&D. We are driving bold science and technology
initiatives. We are working with our international partners to
build the space station. Your input and support have been
enormously valuable to NASA as we transition to a new era in
Government and a new era in space and aeronautics.
I would like to thank the subcommittee leadership
specifically for your support on a number of key issues: First
is virtually full funding of the fiscal year 1997 budget
request. This was a very important step toward stability for
NASA. You also gave us the flexibility we needed to do what
made most sense programmatically. We are putting more resources
into science and technology and aeronautics, as you encouraged
us to do. You have a strong, balanced program today.
Second, gaining transfer authority to meet space station
funding needs was crucial. We are able to focus more fully on
station development during a critical peak period in hardware
production and integration. There was a real need here, and
this subcommittee responded.
Third, the multiyear buyout authority has helped us
downsize in the least destructive manner possible. This made a
tremendous difference to the morale and dignity of our
employees. We expect to continue to use this authority in a
targeted way to meet our goal of just under 18,000 employees by
fiscal year 2000.
Fourth, your support for stable out-year funding has been
critically important. It has allowed us to maintain a balanced
program and our core mission objectives. The President's fiscal
year 1998 budget request reflects this stability, as well. It
fully supports the space station and the shuttle. Shuttle
safety will continue to be our No. 1 priority.
We are also excited about the Origins Program, new
technology-driven mission to planet Earth initiatives, and the
aeronautic safety program. While the NASA out-year budget is a
reduction in real terms, we are confident we can deliver a
robust space and aeronautics program for America.
Chairman Bond and Senator Mikulski, you have been rigorous
in scrutinizing the NASA budget and programs. We appreciate
your concern and vigilance. You have held us to very high
standards over the years. You have been right to do that. The
result is a NASA that is stronger, more efficient, and more
relevant to the American people.
Thank you.
[The statement follows:]
Prepared Statement of Daniel S. Goldin
Mr. Chairman and Members of the Subcommittee: Last May, I told this
Subcommittee about the amazing year NASA had completed. I reported that
NASA had requested that the Administration provide the Agency a stable
budget submission for fiscal year 1997 and that the Administration had
done that. NASA's fiscal year 1997 budget request of $13.8 billion was
the same as our budget in fiscal year 1996. We had just completed
1995--a year of upheaval for NASA. We had made a commitment to the
President to identify another $4 billion of savings in fiscal year
1997-2000 and we delivered, bringing to $40 billion the savings in
NASA's multiyear budget NASA has identified for the American taxpayer.
The 1995 Zero Base Review had consumed the energy and attention of the
NASA workforce. But the Zero Base Review was only partly about finding
budget savings. At its heart was a fundamental challenge to the NASA
workforce to prepare the Agency for the next millennium. To sharpen
NASA's focus on cutting edge technology. To commit NASA's Centers to
becoming Centers of Excellence. To do more with less by cutting out
duplication and overlaps, and ensuring that NASA's energies are
directed at those things only NASA does best. Let the private sector
take over those activities that they are best equipped to do, and get
NASA out of the way. The Zero Base Review was the sprint. Following
that extraordinary exercise, we requested that the Administration
provide us stability to catch our breath, to continue the serious
implementation of new ways of doing business, and to continue to
fulfill our promise to the American people--to deliver astonishing
science and aeronautics missions which provide history-making
discoveries. The President gave us that year.
The Congress, led by this Committee, also gave us that stability in
fiscal year 1997. We are indebted to this Committee for its support and
its key role in ensuring stable funding for NASA's aeronautics and
space efforts over the past several years. With this Committee's help,
we have been able to sustain our core activities and maintain a balance
among them. The Committee's favorable action on NASA's fiscal year 1997
budget request was a vote of confidence. It provided the stable funding
support that we are convinced is fundamental to NASA's delivering on
our promises. Last year, I believe we demonstrated convincingly that
what NASA does is relevant to the lives of the American people.
Last year, NASA's fiscal year 1997 budget request was stable, but
the outyears were lower than we expected. I told you then, we hoped we
could do better. I am happy to report that we have. The President's
fiscal year 1998 budget request for NASA of $13.5 billion, and the
funding plan for the outyears, are proof of the President's commitment
to the Nation's space and aeronautics program. This budget plan is a
vote of confidence from the President and his Administration that NASA
has done what it needed to do, technically, scientifically, and
organizationally. We have reached out to our solar system and our
Universe seeking answers to fundamental questions:
--How did the Universe form?
--How do galaxies, stars, solar systems and planets form and evolve
and how does this knowledge relate to rewriting chemistry,
physics, and biology textbooks?
--How did life form and evolve?
--How do we develop knowledge of our own planet so we can predict
climate, weather, and natural disasters?
--How do we use the uniqueness of space in Earth orbit and on
planetary bodies to understand the fundamentals of chemistry,
physics, and biology, and how do we use this knowledge to live
and work in space and benefit life on Earth?
--How do we have revolutionary advances in air and space so that
travel will be safer, more economical, and more environmentally
friendly so we can open the air and space frontier?
--What are the cutting-edge technologies, the processes and design
tools that we need to solve the above questions?
--How do we communicate this knowledge to the American public to
inspire young people to reach for heights and be proud of their
country?
NASA's goal this year is the same as it was last year--to implement
a space and aeronautics program that is balanced, relevant, and stable.
NASA has made a remarkable transition in the last few years. We
have turned around our budget overruns. In 1992 a General Accounting
Office survey identified an average cost growth of 77 percent on our
major programs. Today, 5 years later, we are underrunning our program
cost estimates by 6 percent.
This turnaround has taken several years. In 1992, technical
performance was rewarded while the contractor's practice of ``buying
in'' and NASA's habit of adding program requirements went unaddressed.
I told program managers as well as the contractor community when I
became Administrator 5 years ago that these practices would be
tolerated no longer. The message has obviously been received because
NASA program managers are turning in terrific performances. Actually,
the pendulum has swung in the opposite direction and resulted in the
growth of uncosted balances between fiscal year 1995 and fiscal year
1997. Program managers have become extremely conservative in their
obligation and cost plans for the year, biasing their numbers to cover
unrealistic procurement award schedules or low probability development
threats. This may be an overcorrection, but we are taking advantage of
this excellent cost performance across the Agency. In the Shuttle
program, we are accelerating the development and delivery of upgrades
to hardware and software systems, which will enhance the Shuttle's
safety. We have proposed increases for the New Millennium program and
TIMED for fiscal year 1997 which took advantage of uncosted balances in
excess of program funding requirements. One of the major contributors
was the Cassini program, where we have spent far less than we
anticipated of our program reserves. There is no lack of exciting work
to be done if additional funds are available through increased
efficiency, without going back to the taxpayers.
We also know that these large balances made us more vulnerable to
budget reductions for fiscal year 1997 and fiscal year 1998. We are
taking action to correct this problem. We are building our budgets to
minimize uncosted obligations at the end of the year. We are increasing
management awareness of the need for accuracy in planning by stressing
personal accountability and interdependence. We are adjusting how we
internally track the actual cost performance of our programs against
their monthly plans by eliminating from these plans unsupported
estimates about how program reserves will be expended. Finally, we are
identifying program priorities midway through the year that we
determine are unaffordable, and reallocating funds from programs that
aren't using them. Through all of these actions, we are demonstrating
that credible, accurate obligation and cost plans are something that
management rewards.
In addition to addressing cost overruns, NASA needed to streamline
its workforce. In 1993, we had 24,900 civil service employees at NASA.
At the end of fiscal year 1996, we had a workforce totaling 21,000.
Today, we are under 20,000. By fiscal year 2000 we will have 17,979.
We also have made great strides in cutting the cost of spacecraft.
From 1990-1994, the average cost per spacecraft launched was $590
million. For 1995-1999, it will be $190 million. Our goal beyond the
year 2000 is $77 million. At the same time we are achieving reductions
in average development time per spacecraft. For 1990-1994 it was 8.3
years. For 1995-1999, it will be 4.6 years. For 2000 and beyond, our
goal is 3.1 years. Because we are reducing the cost and time for
development, we can launch more missions. For fiscal year 1990-1994,
NASA averaged 2 flights per year. For 1995-1999 it will be 9 flights
per year. For 2000 and beyond, our goal is 16 flights a year. It truly
is faster, better, cheaper.
NASA determined several years ago that we must transition from
larger to smaller spacecraft. Galileo is an extraordinary program. It
is providing us unprecedented information about Jupiter and its moons,
changing the way we think about the largest planet in our solar system.
But the development of Galileo was expensive. Development of the
Galileo spacecraft started in 1981, when the approach to space missions
was ``a one time shot,'' in which a mission was designed to achieve a
maximum number of scientific objectives because it was deemed to be a
single flight opportunity. It is no wonder Galileo's total life cycle
cost, from development through mission operations, is $2 billion
dollars.
Today, NASA has revolutionized the way we build spacecraft. We have
created a group of small planetary missions. Between fiscal year 1996-
2001, NASA expects to launch 11 of these small missions which,
combined, will cost less than the single Galileo mission. NASA is
thrilled with Galileo and the science it is returning, but the days of
bigger and bigger spacecraft are over.
NASA remains unwavering in our commitment to improving Shuttle
safety. It has been our highest priority. In 1991, the probability of
catastrophic loss on ascent for the Shuttle was one in 78. Today it is
one in 248. NASA has achieved a 50 percent reduction in the number of
in-flight anomalies per flight since fiscal year 1993, from 14.3 to
6.8. The Agency also has reduced the number of monthly mishaps during
Shuttle processing at the Kennedy Space Center almost 50 percent, from
0.9 in fiscal year 1993 to 0.5 in fiscal year 1996. At the same time,
the Agency has worked diligently to reduce Shuttle operating costs. In
fiscal year 1993, it had been $4.1 billion dollars. Today it is $3.1
billion. The number of people required to operate the Shuttle--
contractors and civil servants--has been reduced nearly 22 percent
since fiscal year 1993. At the same time, we have made the process more
efficient. Since fiscal year 1993, the amount of overtime has been
reduced 37 percent. This means our teams on the line are not overworked
and susceptible to making mistakes, and that we are meeting our
budgetary commitments.
Today, NASA is focusing on programs that make the most sense. We
are not rushing off to initiate a program every time a new discovery is
made. Before NASA commits to a program, it must show real promise for
answering important questions about the Universe, planet Earth, or
aeronautics. The technology we are developing is cutting edge and is
linked directly to accomplishment of our scientific goals. NASA's
measurements of success are profoundly different than in the past--by
our output, by the science achieved, not by the level of dollars going
in. As you can see, by all measures, NASA has achieved great success.
Witness NASA's outputs for 1996. It was an amazing year. The
scientific discoveries, the missions, were astounding.
Last August, I had the opportunity to introduce a finding at a NASA
press conference which forever changed the way people view themselves
and the Universe. The cause for all of this excitement was a rock, a
meteorite from Mars which suggests that primitive life may have formed
there more than 3 billion years ago.
NASA's reaction to this announcement is one of careful fascination.
The implications are profound, but the inferences are not conclusive.
Much more work needs to be done to confirm, or refute, the conclusions
of this team of researchers. While the potential for life on early Mars
adds emphasis to our current planning for the scientific exploration of
Mars, an important first step is to focus more work on the Martian
meteorites.
A logical next step is to confirm what we have here on Earth. Other
scientific teams must attempt to replicate the findings of the McKay
team to ensure the validity of its findings. McKay and other scientists
must look to other avenues of inquiry, such as evidence of sub-cellular
structures, to augment and expand the areas of analysis. And we need to
continue to identify more meteorites from Mars, and to examine the
other eleven we already have, for any light they may be able to shed on
this area of scientific inquiry.
In this regard, NASA and the National Science Foundation (NSF) are
jointly funding the Ancient Mars Meteorite Research Program. NASA and
NSF released research announcements for this program last November and
we received proposals in late January 1997. We will conduct a
coordinated peer review and selection process shortly; we anticipate
announcing awards in mid-May. This joint program will allow the broader
scientific community to investigate whether the preliminary conclusion
reached by the McKay team is valid, to see if other meteorites offer
similar opportunities for understanding life, and to open this area of
inquiry to new methods and ideas. We expect that in a year or two a
clear scientific consensus will have emerged on the intriguing question
of whether we have found evidence of life beyond Earth.
As this research continues, we also are launching a number of
missions to help address these questions about past life on Mars. Two
historic missions to Mars were launched in 1996. The Mars Pathfinder
and the Mars Global Surveyor will reach the Red Planet in 1997. Both of
these are part of the 11 small planetary missions, the ones with
quicker development time and much smaller life cycle costs.
Galileo made a lot of history of its own this year. When Galileo's
probe made its way into the violent atmosphere of Jupiter, we learned
new information on the extent of its water, clouds, and chemical
composition. One of Galileo's most exciting reports last year was that
Europa, a moon of Jupiter, may have once had, or perhaps still has
``warm ice'' or even liquid water beneath its icy crust. On Ganymede,
Jupiter's largest moon, Galileo recorded three-dimensional images of
giant, icy fissures and evidence of a magnetic field. Galileo's data
gathered from the moon Io found it had changed substantially since the
volcanically-active moon had been observed 17 years ago by the Voyager
spacecraft. The new data we have gathered from Galileo's mission to
Jupiter means that astronomy books all over the world will be
rewritten.
The Hubble Space Telescope had an impressive year in 1996. It
studied the surface of Pluto and the birth of stars. Hubble took a
cosmic movie of the Crab Nebula. It found the Nebula even more dynamic
than previously understood. Hubble surveyed the ``homes'' of quasars
and found they live in a remarkable variety of galaxies often violently
colliding.
These discoveries set the stage for an even more exciting quest to
find answers to questions about the Universe and Life which are as old
as human thought. The study of Origins follows the 10- to 15-billion-
year-long chain of events from the birth of the universe at the Big
Bang, through the formation of chemical elements, galaxies, stars and
planets, through the mixing of chemicals and energy that cradled life
on earth, to the earliest self-replicating organisms and today's
profusion of life.
Human Space Flight activities hit the record books in 1996.
Astronaut Shannon Lucid set a new American record for continuous space
flight during her 181-day stay on the Russian space station Mir.
Astronaut Lucid conducted vital microgravity and life sciences research
as well as providing a model for international cooperation in space.
Our continuing program of joint activities with the Russians is setting
a foundation for the International Space Station. The Space Shuttle
successfully completed seven missions, including 3 visits to the Mir,
two Spacelab missions, deployment of the Tethered Satellite System, and
the fourth Spacehab mission. NASA and the United Space Alliance (USA)
signed the Space Flight Operations Contract, making USA the single
Space Shuttle prime contractor. This was the first step in the
consolidation of multiple ground and flight operations contractors into
a single contract.
As part of the Mission to Planet Earth, the NASA Scatterometer was
launched aboard the Japanese ADEOS satellite in 1996. It is providing
new data on wind velocities over the oceans, allowing researchers to
study the interaction of the oceans with the atmosphere on a global
scale.
In 1996, NASA successfully flight tested a new collision avoidance
radar system intended to help helicopter pilots fly more safely when
operating close to the ground or in poor weather conditions. This
sensor, designed to detect obstacles in an aircraft's flight path and
provide a cockpit display to help avoid them, has potential uses for
all types of aircraft.
Lockheed Martin was chosen to build the X-33. It is a one-half
scale prototype of the Reusable Launch Vehicle. The X-33 will be used
to demonstrate advanced technologies that should dramatically increase
reliability and lower the costs of putting payloads into space.
We can all agree 1996 will go down in history as a year of record-
breaking discoveries. I predict 1997 will also be spectacular. No one
knows what discoveries we have in store, but that is the serendipitous
nature of exploration.
Next, I would like to address NASA's fiscal year 1998 budget
request. If the fiscal year 1993 NASA budget were projected through
fiscal year 1998, NASA would have planned for a fiscal year 1998 budget
of $20.8 billion. The actual budget request for 1998 from the President
is $13.5 billion. That's a world of difference. But we are making it
work. I will now discuss the plans of NASA's Enterprises and how the
fiscal year 1998 budget request supports NASA's continuing efforts to
deliver better programs for less.
HUMAN SPACE FLIGHT
We are now into our fourth year of development since President
Clinton asked NASA, in the spring of 1993, to redesign the Space
Station. Since then, the International Space Station (ISS) Program has
moved steadily and aggressively forward, overcoming many challenges to
develop this unprecedented international orbital research facility, the
doorway to the future of human space exploration.
We have gained much from our collaboration with Russia in
preparation for ISS assembly and operations and from continuous
presence of American astronauts onboard Mir. We have flown five
successful Space Shuttle/Mir docking missions, and one rendezvous
mission. We have just recently completed the first year of continuous
U.S. presence in space, through the Phase 1 Program, with U.S.
astronauts living and working aboard Mir. We have successfully
performed joint U.S. and Russian operations on the ground and in orbit
and demonstrated that scientific research will benefit greatly from the
ISS. On-orbit experiments such as those to be flown on the
International Space Station have already provided new insights that may
help support ground-based research in the search for treatments for
cancer, AIDS, influenza viruses, and other diseases.
With regard to the Mir, I know that recent press reports have
raised some concern about the viability of Mir and the safety and
health of the crew. Let me say as strongly as I can that no one is more
concerned about the safety and well-being of our astronauts than NASA.
And I believe our Russian colleagues share that concern. We have flight
surgeons monitoring the Mir missions, just as we do Shuttle missions,
and their responsibility is to protect the health and safety of the
crew members. Our Phase 1 Program Manager, Frank Culbertson, is
conducting his own internal review of the Mir status and the question
of maintaining our presence there. In addition, an independent
assessment is being conducted by a group led by Tom Stafford. Make no
mistake. Mir has been experiencing mechanical problems; it is an aging
spacecraft. Those problems are being addressed and repaired as they
occur, and the crew has the ability to come home early if necessary.
But there is no emergency. We will keep the Congress informed with
respect to our activities and findings and assure you that we will not
compromise the safety of our astronauts. We have learned much through
the Mir program. The problems incurred have actually increased our
acceptance of Russian operations philosophy, through confirmation of
their decisions through our own review. The exchange of U.S. crew on
the Russian Mir station is a main element of the program, which we
expect to continue.
While the foundation being provided through Shuttle-Mir cooperation
in developing on-orbit assembly and operations capabilities for the ISS
remains an unequivocal success, Russia's challenges in providing
hardware contributions as an international partner have been a
continuing cause for concern. This is addressed later in the testimony.
Our other international partners--Canada, Europe and Japan--have
proven their commitment to this international venture for humankind,
investing nearly $6 billion to date for design and development of their
hardware contributions. The European Space Agency (ESA) has entered
into the largest single contract in ESA history for development of the
Columbus Orbital Facility (COF). ESA has confirmed its commitment to a
three-component ISS contribution: the COF, the COF utilization plan and
the Ariane Automated Transfer Vehicle. The Japanese program is solid
and on track with its contributions of the Japanese Experiment Module
(JEM), the JEM Exposed Facility, and the JEM Experimental Logistics
Module. Canada is also making good progress, with Canadian government
approval of funding for the Special Purpose Dexterous Manipulator
(SPDM) having been secured. The SPDM will augment the robotics system
already being provided by Canada with additional capabilities to carry
out on-orbit maintenance and operation of the Space Station. The
Canadian decision to fund the SPDM, in spite of constrained budgets,
underscores its commitment to this program. Relative to non-partner
international involvement, the Italian Space Agency remains on schedule
for delivery of the first Mini-Pressurized Logistics Module to the
Kennedy Space Center in 1998. There are now a total of 15 countries
participating in the International Space Station Program, and interest
is expanding. NASA and the Brazilian Space Agency have agreed to
conduct feasibility studies to explore mutual interests relative to
Station.
The largest international, scientific research facility in history
is rapidly becoming a reality. The ISS Program has now passed the 59
percent milestone completion mark, having built over 184,000 pounds of
U.S flight hardware. As testing of more design units is completed, we
are seeing production runs of hardware and software increase. The final
quarter of calendar year 1996 marked the largest increase in the amount
of flight hardware built since the Program's inception, over 30,000
pounds. Design and fabrication of flight elements for the first six
American flights are almost complete. Qualification testing is well
underway across the program and flight hardware is being assembled and
checked out. Integrated test and verification planning is progressing
well and steps are being taken to provide even more integrated testing
at the Kennedy Space Center. The NASA/industry team has worked long
hours and demonstrated a true commitment to the American people in
delivering the International Space Station. I am proud to say that I
have no doubt that, had we chosen to, we would have launched the FGB
and first U.S. Node later this year. The delay we have announced is not
the result of technical development problems or manufacturing
difficulties.
The Space Station Program continues to demonstrate a high level of
performance, completing approximately 97 percent of scheduled work at
approximately 103 percent of budgeted cost. Given the breadth and
complexity of the ISS Program, and taking into account the experiences
of other major Government development programs, we are convinced that
we have demonstrated strong performance. Change request activity is
subsiding, with most major cost drivers definitized. Nevertheless, the
performance of the ISS prime contractor has not improved as well as
planned, which is negatively impacting the program's total performance.
While the differences seen between development targets and the prime
contractor's actual level of performance are to be expected in a
program of this complexity, the continued cost growth and performance
problems have strained near-term reserves. Recovery plans will mitigate
our cost and schedule variances, but these variances will continue to
require the use of reserves.
ISS program management has been innovative and creative in
addressing and resolving many of the challenges, but significant issues
remain. We are now in a critical phase where a considerable amount of
hardware is being assembled and tested, and software is being
developed, integrated and checked out. Peak manufacturing and testing
activity is occurring through fiscal year 1997 and fiscal year 1998.
During this timeframe, the potential for unforeseen challenges to our
cost and schedule targets will remain high. The program had adequate
reserves built into the total development estimate to address these
anticipated challenges. However, delays in delivery of Russian
contributions have required us to develop and maintain contingency
capabilities that are diverting these resources.
The Russians are facing tremendous economic challenges and are
experiencing serious difficulties in meeting their commitments. Russia
has missed a number of development milestones for its contributions to
the International Space Station due to funding shortfalls. Delivery of
the Service Module (SM) has been delayed from April to December 1998.
The funding issue was addressed at the February 1997, meeting between
Vice President Gore and Russian Prime Minister Chernomyrdin, and by
Presidents Clinton and Yeltsin in March. Russian leaders have committed
that adequate funds will be provided in 1997 to keep Russian elements
on track.
We continue to believe it is important that Russia remain a partner
in the International Space Station; however, we must not be overly
dependent on them, or any of our other partners. This is a partnership
based on mutual benefits. We receive the benefits of a mature and
experienced space program. And it is important to remember that before
the Russians joined the partnership, the cost of the space station was
$2 billion more and would have started a year later, even with the
current change in the first element launch.
We are continuing to closely follow developments in Russia with
respect to funding for the Service Module. A NASA team, led by General
Thomas Stafford, recently completed a visit to Moscow where its members
gained further insight into the Russian funding status. The team
received assurances of the Russian government's commitment to
participation as planned in the ISS. The team was advised that the
first increments of ISS funds would be dispersed to the Russian Space
Agency by the end of May.
As the Committee is aware, NASA has been reviewing a number of
options to mitigate the impact of the Service Module slip. In order to
allow the Agency to work around the current delay of this key Russian
module, we are rescheduling the launch of the first element, the
Functional Cargo Block, to no later than October 1998. To launch
hardware to orbit simply to maintain our baseline schedule exposes the
flight hardware to unnecessary risks. This is because FGB on-orbit
avionics and fuel reserves would be stretched to support any additional
Service Module delays. As designed, the FGB cannot adequately provide
control functions for the assembly sequence to continue beyond the
arrival of the U.S. Node. Going beyond that point requires the arrival
of the Service Module, which will provide critical capabilities for the
control and stability of the Station prior to arrival of the U.S.
Laboratory Module. The Service Module also provides crew habitation and
life support systems for early human occupation of the Station.
Faced with the potential for further delay of the Service Module,
we have initiated a contingency plan to ensure that we can continue the
ISS assembly process. We are now pursuing two hardware options to
address the delay in the Service Module. First, we will modify the FGB
to enhance its attitude control capabilities and make it refuelable.
Second, we will pursue the development of an existing, proven system
built by the U.S. Naval Research Laboratory, as an interim control
module, or ICM. The ICM will provide command, attitude control, and
reboost functions. The FGB modification and the ICM addition would
provide control capability even if the Service Module were delayed even
a year longer than planned--up to December 1999.
We are currently evaluating options to address further potential
perturbations to the program which could result from Russian schedule
delays. These evaluations include assessing the possibility of
advancing life support systems from the U.S. Habitation Module to the
U.S. Laboratory Module to enable earlier human presence. In addition,
we are evaluating options to provide a longer term propulsion
capability to guard against further delay or non-delivery of the
Russian Service Module. We are continuing the technical evaluations,
assessing the schedule implications, and completing the cost estimates
necessary to support a decision if necessary on these issues, in
consultation with our international partners, the research community,
and the Congress.
NASA and its partners have agreed to baseline a revised assembly
sequence at a Space Station Control Board meeting in mid-May.
Baselining the Service Module launch for December 1998 remains NASA's
preferred approach. We have told RSA that the factors we will be
looking at in making this decision are: first, whether Russian
contractors are receiving promised funding; second, the completion of a
Service Module General Designer's Review, and; third, satisfactory
progress by Service Module subcontractors to support a December 1998
launch. A significant delay in these events would necessitate the
baselining of the ICM for launch in December 1998. NASA intends to
preserve the ICM risk mitigation capability in either case.
ISS funding is flowing in Russia through two different mechanisms.
Over 100 billion rubles of RSA ISS CY 1997 budget funding has been
received and disbursed to RSC-Energia and subcontractors for work on
the ISS, particularly the Service Module. Additional funding is flowing
through a Ministry of Economics investment allowance of 1.5 trillion
rubles, specifically targeted for the ISS. Of this allowance, over 200
billion rubles was made available to RSA on April 30; this amount is
expected to increase to 800 billion rubles by mid-May. A schedule of
payments on the remainder of this allowance is expected to be finalized
by mid-June 1997.
The Service Module General Designer's Review was held on April 24,
1997, with RSA, RSC-Energia, Krunichev and all major subcontractors
(over 40 companies). NASA senior managers were also in attendance
during this open and candid review which focused on technical issues.
Schedule milestones were reviewed in detail and all Russian parties
stated that the current Service Module schedule for a December 1998
launch is feasible if the promised funding is forthcoming. They then
committed to the schedule execution necessary to hold this launch date.
As a result of the General Designer's Review, we now have a signed
overall Service Module schedule and detailed delivery schedules for the
subcontractors.
Based on the positive and concrete progress we have observed in
Russia since February, I am increasingly optimistic that we can
baseline the Service Module for a December 1998 launch at the upcoming,
mid-May meeting of the Space Station Control Board (SSCB). However,
progress must continue to be demonstrated. NASA has made it clear to
RSA that we fully intend to build the ICM as a prudent measure, and
that a decision by the international partners to maintain the Service
Module launch date of December 1998 will ultimately be based on an
increased confidence in Russia's commitment, gained through
substantiated actions. We will, of course, confirm that funding
continues to flow to Russian contractors for the Service Module before
the SSCB, which includes participation of all of the ISS international
partners, makes a decision to baseline the Service Module instead of
the ICM for launch in December 1998. We will continue to monitor the
situation and make appropriate adjustments to our baseline assembly
sequence, per our contingency plan, as required based on Russia's
ability to continue to meet their commitments.
The costs associated with NASA's contingency efforts to offset the
Service Module delay are being minimized wherever feasible, but NASA
will certainly require resources outside the planned program to
undertake these changes and minimize delays. NASA has submitted to the
Committee a revision to the fiscal year 1997 Operating Plan to
reallocate $200 million within NASA's budget for step one of this
contingency effort. It is important to note, however, that NASA must
secure $130 million of the planned $200 million reallocation by May 15
in order to implement this contingency effort; the full $200 million
reallocation must be undertaken by the end of May. I want to be clear
that, to the extent we use uncosted Shuttle funds for this purpose, it
will have no effect on Shuttle safety. The reallocated funding will be
the source of funds to address specific U.S. program requirements
resulting from delays on the part of Russia in meeting its commitments
to the ISS program and uncertainties about future Russian performance.
NASA is also seeking continuation of the U.S./Russian Cooperation and
Program Assurance budget line in fiscal year 1998, with a placeholder
amount of $100 million within the President's total request of $13.5
billion. The exact amount and source of the funding for fiscal year
1998 will be determined after a careful review of any potential
additional hardware requirements needed to offset possible further
Russian delays on the Service Module and its other programmatic
commitments. We will keep the Committee apprised of our deliberations
in this regard.
NASA is meeting its commitments to the Congress and the American
people in building the ISS. The ISS program continues to identify ways
to maximize program efficiencies and leverage investments to enhance
the capabilities of the Space Station. Ongoing discussions with the
International Partners have resulted in some U.S. hardware development
being performed by the International Partners to offset Shuttle launch
cost for International Partner hardware. After delivery, the United
States will own and utilize this hardware. Examples of this hardware
include: Nodes 2 and 3, which ESA has agreed in principle to provide,
and the Centrifuge Accommodation Module, Centrifuge Rotor and Glovebox
which we are currently negotiating with Japan.
NASA, the Administration and the Congress recognized the risks and
challenges involved in undertaking a partnership on the International
Space Station with the Russian Federation, but agreed that the risks
were outweighed by the tremendous benefits. We have already learned
much from the Shuttle/Mir Program. The International Space Station
remains a much more capable and robust laboratory facility than it
would be without the Russian contributions--we will gain incredible
scientific capabilities; we will develop cutting-edge technology. As I
have said earlier, the American taxpayer has gained by the Russian
involvement, and would stand to lose a great deal if Russia does not
continue as part of the program. The Russian funding shortfalls have
presented challenges. Now, in conjunction with our international
partners, we have developed the necessary plans to move ahead, while
still providing the opportunity for the Russians to participate in the
program. With the support of this Committee and the Congress, we can
enhance program stability and adapt to the realities that have come
with Russia's involvement.
The International Space Station is an initiative of significant
size and complexity, offering enormous returns. It is a demonstration
of America's leadership in the development of peaceful cooperative
ventures entering the 21st century. Humankind's thirst to expand its
knowledge and desire to explore the unknown are essential elements to
our continued growth as a Nation and as a world community. The Space
Station is our opportunity to prove America's commitment to lead the
way.
The Life and Microgravity Science and Applications (LMSA) program
leads the Nation's efforts in space biological, physical and chemical
research and aerospace medicine. We support technology development and
use the space environment to advance knowledge, to improve the quality
of life on Earth, and to strengthen the foundations for the continued
exploration and development of space. The LMSA program supports ground-
based research and definition studies upon which flight experiments are
based. Major initiatives underway include continued cooperation with
the National Institutes of Health and the National Science Foundation.
The fiscal year 1998 budget request for the LMSA program is $214.2
million.
The fiscal year 1998 budget request for the Space Shuttle program
supports two major activities: Safety and Performance Upgrades ($483.4
million) and Space Shuttle Operations ($2,494.4 million). Safety and
Performance Upgrades funding supports the modifications and
improvements to the flight elements and ground facilities, including
expansion of safety and operating margins, enhancement of Space Shuttle
capabilities to meet customer requirements, replacement of obsolete
systems, and upgrades required to meet environmental regulations. We
are continuing the program of selected upgrades to increase reliability
and maintainability of the Shuttle systems, and continuing studies to
assess the feasibility of implementing more state-of-the-art
technologies into the system. The upgrades allow us to support our
customer's requirements through 2012. Upgrade examples include updating
the launch processing system, implementing Global Positioning System,
Orbiter avionics improvements, and orbital debris modifications.
Shuttle Operations funding supports hardware production, ground
processing, launch and landing, mission operations, flight crew
operations, training, logistics, and sustaining engineering to maintain
and operate the Shuttle fleet of four vehicles. The transition of
operations to the Space Flight Operations Contract will continue
through fiscal year 1998. The Shuttle manifest includes eight flights
in fiscal year 1997 and six flights in fiscal year 1998. Highlights of
the fiscal year 1997 flights include: a Wake Shield experiment, which
was successfully flown in November 1996; the successful second
servicing visit to the Hubble Space Telescope replacing two current
science instruments with ``second generation'' instruments and
refurbishing some telescope support system components; three more
resupply flights to the Russian Space Station Mir; a development flight
test of components that will be part of the Japanese Experiment module
on the International Space Station, and; the Microgravity Science
Laboratory mission (MSL), which was designed to study protein crystal
growth, combustion, and material science experiments. A problem with
one of three Shuttle fuel cells forced curtailment of this mission. The
fuel cell has been removed from the orbiter, returned to the vendor and
is undergoing numerous tests and analyses to discover the root cause of
the problem. We plan to refly MSL, and to continue its important
scientific research, in July of this year. Six flights are planned for
fiscal year 1998, including the last Spacelab (NEUROLAB), deployment of
the Advanced X-Ray Astrophysics Facility (AXAF) and two flights to the
Mir Space Station. A mission including a Microgravity payload package
of experiments in the Orbiter cargo bay and a SPARTAN X-ray astronomy
experiment using a retrievable free flyer also is manifested. We will
also be ready for the assembly of the International Space Station to
begin during this timeframe.
The fiscal year 1998 budget request for Payload and Utilization
Operations ($227.4 million) supports the processing and flight of Space
Shuttle payloads and payload carriers for space experiments; retention
of core science and technology capabilities supporting a variety of
programs and the Human Space Flight Centers, and advanced research
programs activities. Funding also is included to continue support of
the X-38 vehicle, which is an in-house technology demonstration program
for a prototype vehicle which has multiple applications and
evolutionary options. Primarily, it is a pathfinder for the Crew Return
Vehicle (CRV) for the International Space Station.
Discussions are underway with the European Space Agency exploring
the commonality of design between the CRV and European Crew Transfer
Vehicle and on the ability to launch the CRV on the European's Ariane
expendable launch vehicle. The Japanese Space Agency has expressed
interest in participating in the X-38 and CRV programs and we are
jointly looking at the possibility of their providing launch capability
on their H-2 expendable launch vehicle.
An agreement has been reached with DOD to collaborate on the X-38
to validate technologies which may be required for the Air Military
Space Plane. Design and test capabilities which the Air Force could
contribute to the X-38 have been identified. The Air Force has agreed
to perform a 6-degree-of-freedom flight simulation of the X-38,
miscellaneous additional design reviews and evaluations, as well as
developing an experiment to fly as a payload on the X-38. Additional
areas for potential collaboration are being discussed.
SPACE SCIENCE
The highlight of the fiscal year 1998 budget request of $2,043.8
million for Space Science is the Origins program. The Origins Program
was designed to answer questions about the Universe. For the first time
in the history of humankind, we have the technology, or we will soon,
for answering many of the questions about the beginning of the Universe
and our solar system. Origins is going to look at many facets of the
Universe, from its creation to the formation of chemical elements,
galaxies, stars, and planets. Through this unique program, we will be
unraveling the mysteries of the events and their sequence that led from
the creation of the Universe to life on Earth.
The fiscal year 1998 budget request for Space Science includes
increases for several Origins-related programs. These include:
--an increase for the Mars Surveyor program to allow for the launch
of a Mars sample return mission in the middle of the next
decade, and to increase the scientific robustness of the
program;
--a new Exploration Technologies Development program, to enable bold,
new, low-cost experiments on the surface of solar system
bodies;
--augmentations to the New Millennium program to enable aggressive
development and demonstration of new technologies for the
highly demanding new Space Science missions;
--full development of the Keck II ground-based interferometer, to
enable direct detection of planets around other stars; and
--an increase in astrochemistry/astrobiology research and analysis,
to support the multidisciplinary study of the origin and
evolution of pre-biotic material, the origin and distribution
of life, the adaptation of life to space, and space studies of
life on Earth. The science content of this program will be
further defined in the coming year.
The Space Science program is moving forward on a number of
scientific and flight programs, building on scientific successes of the
recent past and preparing for the launch of significant missions which
were started a few years ago and are nearing the end of their
development. Cassini will be launched in October 1997. In 2004 it will
begin exploring Saturn and surrounding objects, including Saturn's moon
Titan. This mission should give us unprecedented knowledge about Saturn
and its moons.
On July 4, 1997, America will be returning to Mars when the Mars
Pathfinder lands a single vehicle with a microrover and several
instruments on the surface. The microrover will be providing ground
truth on the surface, while the Pathfinder explores Mars from orbit,
using instruments to study geology, surface morphology, geochemistry,
the magnetic and mechanical properties of the soil, and a variety of
atmospheric investigations. In September 1997, the Mars Global Surveyor
will reach Mars and begin its orbits. Approximately every two hours, it
will circle the planet, gathering information about Mars that it will
relay to Earth. During each orbit the spacecraft will be over a
different part of Mars, filling in the blanks in our knowledge about
the Red Planet. Together, these missions should give us the most in-
depth information we have ever had about Mars.
Galileo will continue its mission of studying Jupiter and its
system. A Galileo Europa Flyby occurred on February 20 and another is
scheduled for November 1997. During the February flyby, Galileo
captured spectacular images of chunky ice rafts and relatively smooth,
crater-free patches on Europa which suggest a younger, thinner icy
surface than previously believed. We were intrigued by these blocks of
ice, similar to those seen on Earth's polar seas during springtime
thaws. These features lend credence to the idea of hidden, subsurface
ocean, and that some motion caused Europa's crustal plates to break up.
Scientists hope to find answers to some of the questions surrounding
Europa and its possible oceans as Galileo continues its journey through
the Jovian system. Galileo will also have two flybys of Ganymede in
April and May.
This budget request includes funding to continue the robust program
spacecraft development activities underway in the Discovery, Explorer,
New Millennium and Mars Surveyor programs. The program management
philosophy underlying these programs, which emphasizes limited science
objectives, short development times and strict adherence to cost caps,
exemplifies the acceptance of the ``faster, better, cheaper''
philosophy by NASA and the scientific community. The fiscal year 1998
budget request also provides for continued stability in the Space
Science Research and Analysis (R&A), Suborbital Program, and Mission
Operations and Data Analysis (MO&DA) accounts.
MISSION TO PLANET EARTH
We are requesting $1,417.3 million in fiscal year 1998 for Mission
to Planet Earth, a basic research program seeking an understanding of
how the Earth system works and changes, both naturally and in response
to human activity. This effort has huge potential to improve the
quality of life on Earth, from the basic scientific research and also
from strengthening the American economy by developing new science and
technologies that are essential to a broad community of civil,
commercial and national security users. The comprehensive, long-term
focus on understanding and eventually predicting changes in the Earth
system is only possible with today's air and space-based observation
and information processing technologies. Understanding the interactions
of the oceans, atmosphere, continents, ice caps and biomass will be a
revolutionary advance in Earth science. While much of our funding is
looking toward the long-term goal, a significant portion of this
funding is focused on producing near term results. In the near term, we
are in the business of improving weather prediction on seasonal to
interannual time scales, and increasing the efficiency of producing and
using water, food, timber, rangeland, and other natural resources. Our
scientists produce research results which reduce the threats that
unexpected environmental changes pose to America and other nations of
the world. This aspect of the program has become increasingly more
important given that the seven largest economic losses from natural
catastrophes have occurred in the last seven years. Mission to Planet
Earth also conducts basic science and technology research that benefits
the American remote sensing industry.
An Integrated Program Incorporating New Science & Technology.--The
Earth Observing System (EOS), the centerpiece of Mission to Planet
Earth, is a program of multiple spacecraft and instruments (AM, PM,
CHEM series spacecraft and multiple small missions) designed to provide
a sustained 15 year data set on 24 key measurements needed to
understand global climate change. The first EOS satellite launches
begin in 1998. The EOS implementation strategy has undergone a profound
transition in the past few years. The size of the initial satellites to
establish the system has been greatly reduced. Future missions will be
increasingly responsive to technology advances, evolving scientific
understanding, and commercial opportunities. In addition, to ensure the
ability to stimulate new scientific discovery and respond to science
questions on shorter term time scales, a parallel series of small,
rapid-development Earth System Science Pathfinder (ESSP) missions has
been incorporated into the program within the available funding. Two
ESSP missions were selected last month. The first selection, The
Vegetation Canopy Lidar Mission (VCL) seeks to provide the first global
inventory of the vertical structure of forests. The second selection,
Gravity Recovery and Climate Experiment (GRACE), is a satellite-to-
satellite microwave tracking system between two spacecraft to measure
the Earth's gravity field and its time variability over at least two
years. One alternate was chosen if either of the above missions does
not stay within cost guidelines--the Chemistry and Circulation
Occultation Spectroscopy Mission (CCOSM), which would attempt to better
understand when and where pollutants are released from the surface and
mixed into the lower atmosphere, the distribution of Tropospheric
ozone, and atmospheric circulation control and seasonal change. VCL
will be ready for launch in 2000 and GRACE will follow in 2001.
Data from MTPE missions, both current and future, are captured,
processed into useful data products, and broadly distributed by the EOS
Data and Information System (EOSDIS). EOSDIS will ensure that data from
these diverse missions remains available in active archives for use by
current and future scientists. We are currently experiencing some
schedule problems in the EOSDIS Core System (ECS), the data processing
and active archiving system which comprises approximately one-third of
the EOSDIS. We are working aggressively to ensure no adverse impact to
the near-term launches while working with Hughes, the implementing
contractor, to resolve the issue. In the longer term, following the
recommendation of the National Research Council, MTPE is exploring the
creation of a federation of Earth Science Information Partners in
academia, industry and government to broaden the participation in the
creation and distribution of EOSDIS information products.
The intellectual capital for these missions, and the key to
generating new knowledge from them, is vested in an active program of
research and analysis. MTPE's science research program funds over 1,700
researchers from nearly every state. These researchers develop Earth
system models from MTPE data, conduct laboratory experiments, run
aircraft campaigns, develop new instruments, and thus expand the
frontier of our understanding of our home planet. In 1996, MTPE
published its first Science Research Plan which lays out an integrated
strategy of satellite, aircraft and surface-based observations and
research to address five key questions. The Plan also outlines some
twenty related areas of research which round out the MTPE contribution
to Earth System Science. The research program is also the basis for
generation of applications pilot programs which enable universities,
commercial firms, and State and local governments to turn scientific
understanding into economically valuable products and services.
Partnerships Make It Possible.--The challenges of Earth System
Science, sustainable development, and protection of people, property
and the environment from natural disasters require collaborative
efforts among a broad range of national and international players. NASA
participates with 12 other agencies in research coordinated by the U.S.
Global Change Research Program. MTPE has extensive collaborations with
the National Oceanic and Atmospheric Administration (NOAA) on seasonal-
to-interannual climate prediction, and MTPE develops the NOAA-operated
operational environmental satellites. NOAA, NASA and the Department of
Defense are collaborating on a convergence of the civilian and military
weather systems. MTPE collaborates with the U.S. Geological Survey on a
range of land surface, solid Earth and hydrology research. NASA, NOAA
and USGS collaborate in the Landsat 7 program, and NASA, DOD and USGS
are working together on a third flight of the Shuttle Radar Laboratory
modified to yield digital terrain data on most of the Earth's surface.
Internationally, MTPE participates in the World Climate Research
Program, the International Geosphere/Biosphere Program, and the ozone
assessments of the World Meteorological Organization. Most of MTPE's
satellite missions have international participation, ranging from
simple data sharing agreements to joint missions involving provision of
instruments and spacecraft. International direct contributions to MTPE
missions total $4 billion, while cooperative agreements on data
exchange provide access to U.S. researchers to $4.7 billion in other
foreign programs. In total, our international partners' contributions
exceed NASA's investment, and we are working aggressively to improve
the integration of our joint efforts as their contributions increase.
MTPE includes a growing web of commercial partnerships, ensuring a
broader distribution and use of MTPE science results while stimulating
the U.S. commercial remote sensing industry as a byproduct of MTPE
activity. The worldwide market for remote sensing products was
estimated at approximately $1 billion in 1995, and may grow to $10-$15
billion in the next 10 to 20 years. In 1997, a commercial firm is
planning to launch a satellite instrument to measure global ocean
``color'' (phytoplankton concentration) to satisfy both MTPE research
needs and to sell data to commercial fishing concerns. Also in 1997,
two satellites built by industry in partnership with NASA (Lewis and
Clark), will demonstrate hyperspectral and high resolution land imaging
technologies and will test the market for such data. A new and growing
industry of ``value-added'' data processing companies is taking data
from MTPE satellites and combining them with other data to produce
information products for sale to timber companies, State and local
governments and others with a need for geographic data. Many of these
NASA/industry partnerships are implemented through the Earth
Observation Commercial Applications Program (EOCAP) managed by NASA's
Stennis Space Center. Mission to Planet Earth released its Commercial
Strategy last month, which is designed to foster these partnerships.
Other creative partnerships also further the application of MTPE
data to practical problems. MTPE is assisting the City of Scottsdale,
Arizona, to apply remote sensing data to a broad range of needs such as
flood management, urban planning, and environmental compliance; we are
also working on final definition of a pilot program that develops local
government applications of satellite imagery in Cayuga County, New
York. NASA and several partner agencies are planning a series of
regional workshops in partnership with regional authorities and local
universities to look at hydrology in the Southeast, and perhaps
fisheries in the Northwest, and agriculture in the Midwest.
Staying on the Cutting Edge of Science and Technology.--MTPE has
adopted an evolutionary approach to fulfilling its mission and goals.
During 1995, NASA conducted a comprehensive review of the entire MTPE
enterprise. The goal was to enable: a focus on near-term science and
associated applications; explicit provision for new technology
infusion; reduction in life-cycle cost of the EOS program; provision of
new science opportunities through smaller, quicker and less expensive
missions (the genesis of ESSP); and closer participation with other
Federal agencies (especially NOAA), commercial firms and international
partners. The result of this review is an EOS which is lower in life-
cycle cost, more flexible in implementation, and of greater utility to
the science and commercial communities. Our basic approach has been
endorsed by the National Research Council (NRC) through its Board on
Sustainable Development.
Out of this review came planning for MTPE involvement in the New
Millennium Program which conducts the development and flight
demonstration of advanced, smaller instruments which will significantly
reduce the cost of later phases of the EOS program. We are beginning a
companion Instrument Incubator program to encourage the development of
advanced instruments that may not require a flight demonstration, and a
program to extend these advanced technology gains for polar-orbiting
spacecraft to existing geostationary spacecraft programs. Additionally,
we have recently initiated a study to examine the benefits of using a
Principal Investigator-mode of implementation for EOS-Chem-1, the first
in the CHEM series of EOS missions to study atmospheric chemistry. In
this management mode, the Principal Investigator who has designed the
scientific instrument, is empowered to make design tradeoffs among the
spacecraft, instrument, and ground system capabilities to get a more
optimum implementation approach. This mode shows promise for yielding
additional cost savings across the space and ground aspects of our
missions. We continue to refine this plan and seek the advice of the
NRC and other external groups as we progress. In 1997, NASA will
conduct the first Biennial Review of MTPE. The Biennial Review will
examine all aspects of MTPE with a view toward incorporating new
scientific understanding, technology development, commercial
opportunities and expanded collaborations with national and
international operational and research satellite systems. The product
of the Biennial Review will be reviewed by a panel of independent
external experts from the commercial, technology, and scientific
communities, and will be the basis for MTPE's fiscal year 1999 budget
request development.
aeronautics and space transportation technology
In 1996, NASA combined its Aeronautics and Space Transportation
Technology programs, creating a strategic alliance between them to
develop, in partnership with industry, advanced technologies in
aeronautics and space transportation, and to facilitate the transfer
and commercialization of these technologies. It is not NASA's job to
build operational vehicles, either for aviation or space
transportation. It is NASA's job to reduce the technology risk enough
so that industry can produce vehicles for use by both the government
and commercial sectors. To this end, NASA conducts enabling, risk
reducing research, along with some focused technology demonstrations.
The application of this research supports NASA mission requirements
while improving U.S. economic competitiveness. The Aeronautics and
Space Transportation Technology budget request for fiscal year 1998 is
$1,469.5 million.
As we combined these two programs, we worked with our partners in
government, industry and academia to develop a strategic framework to
guide our research over the next two decades. I challenged this
community to develop revolutionary goals for the future; goals for
pioneering, high-risk, innovative concepts and technologies to break
old paradigms and create new markets for U.S. industry. They met this
challenge, and on March 20 I unveiled three technology ``pillars'' that
will shape this Enterprise in the decades to come: Global Civil
Aviation, which focuses on issues of safety, affordability of air
travel, and environmental compatibility for subsonic aircraft;
Revolutionary Technology Leaps, which tackles these challenges for a
new generation of both subsonic and supersonic aircraft, and; Access to
Space, which will incorporate aeronautics technologies and operational
efficiencies with revolutionary new space propulsion, control and
structural technologies for launch vehicles to reduce the cost of
launching payloads to Low Earth Orbit and geosynchronous orbit. Each
pillar has 10- and 20-year goals that will stretch the boundaries of
our knowledge and capabilities.
In Aeronautics, NASA's work goes well beyond vehicle technologies
as we focus on the long-term safety, efficiency, and environmental
compatibility of aircraft and the system in which they operate.
Developing technologies that cannot be utilized in the system or that
do not add value is not a good use of taxpayer dollars. NASA works
closely with the FAA, DOD and U.S. industry to ensure NASA develops the
high-payoff, critical technologies that can be used in future vehicles
and systems.
The High Speed Research (HSR) program addresses precompetitive,
high-risk, make-or-break environmental and economic ``barrier issues''
that currently prevent any manufacturer from making a commitment to
build a High Speed Civil Transport (HSCT). Industry trade studies
indicate that a substantial market exists for an HSCT that would travel
at more than twice the speed of sound, provided that stringent noise
and emissions standards can be met and that ticket prices will be
roughly equivalent to those on subsonic aircraft. Successful U.S.
leadership in this next-century market could mean $200 billion in sales
and 140,000 high-quality jobs in the U.S. NASA is working on the
technologies that should make U.S. leadership possible in this next
arena of global competition. The fiscal year 1998 budget request for
the High Speed Research program is $245 million.
Regardless of the success of a future HSCT, subsonic aircraft and
the system in which all aircraft operate will remain the foundation for
air travel in the next century. The Advanced Subsonic Technology (AST)
program provides a focused technology base to ensure continued U.S.
leadership in aircraft manufacture, aviation system safety, capacity
and efficiency, and protection of the environment. This work will help
assure that the anticipated tripling of demand for air travel over the
next 20 years will not be unnecessarily constrained. NASA's safety
research includes both aircraft and air traffic system work to assure
the greatest possible safety gains throughout the system. The AST
program also focuses on reducing the environmental impact (both noise
and engine emissions) of the growing fleet. Further, NASA is developing
technologies that could lower both the manufacturing and operating cost
of new aircraft, resulting in better U.S. competitiveness and
ultimately lowering airfares to the traveling public. The fiscal year
1998 budget request for AST is $211.1 million.
NASA's High Performance Computing and Communications (HPCC) program
is part of the multi-agency effort to boost supercomputer speeds one
thousand-fold to at least one trillion arithmetic operations per
second--one teraflop--and communications capabilities one hundred-fold.
Throughout government, we have applications and requirements for these
capabilities. For NASA, teraflop capability should allow us to begin to
model the complete physics of an aircraft and develop a 100-year ocean-
atmospheric model for climate change. Clearly, to get to the full
fidelity of these models, we may need speeds of a thousand to a million
times faster than a teraflop--and we will continue to work in this
arena. We also will embed this capability in future spacecraft and
remote exploration vehicles, greatly expanding the scientific return.
The DOE recently demonstrated teraflop capability; however, this
demonstration is at the theoretical peak performance which is relevant
for only 4 or 5 percent of potential applications. For the majority of
applications, we are at about 10 percent of our goal and significant
progress needs to be made. HPCC efforts are funded in the Aeronautics,
Space Science, Mission to Planet Earth and Education programs. NASA is
also contributing $10 million to the Administration's Next Generation
Internet initiative. The total fiscal year 1998 NASA budget request for
HPCC is $73.8 million.
The Research and Technology (R&T) Base has been reorganized into
six systems-oriented, customer-driven programs that serve the needs of
the full range of aeronautical vehicle classes. A new emphasis on
flight research has been added within the R&T Base, to ``build a
little, test a little, fly a little,'' in order to advance
technologies. The new organization is reflected in the fiscal year 1998
budget request of $418.3 million. The R&T Base continues to serve as
the vital foundation of expertise and facilities that meets a wide
range of challenges and provides revolutionary new aerospace concepts.
The new organization allows the R&T Base to remain focused on long-term
technology needs while being more flexible and responsive to customers.
NASA's Advanced Space Transportation Technology program is focused
on developing and demonstrating pre-competitive next-generation
technology to enable the commercial launch industry to provide truly
affordable and reliable access to space. This in turn should enable the
U.S. to recapture leadership in worldwide commercial space
transportation in the early decades of the next century. The
consequences of today's high launch costs are unacceptable--it is
choking off the scientific, commercial and national security potential
of this Nation's space program.
The Reusable Launch Vehicle (RLV) technology program, comprised of
the X-33 large-scale Advanced Technology Demonstrator and the X-34
Small Reusable Demonstrator, is a partnership between NASA and industry
aimed at radical improvements in launch system cost and performance. We
are focusing on six parameters: reusability, operability, reliability,
safety during abort, mass fraction, and affordability. It is the goal
of this program to reduce launch costs to $1,000 per pound of payload.
NASA is playing a unique role in the X-33 program, which is based
on industry-led cooperative agreements. As a result of industry's
leadership of the program, the Government is not playing the
traditional role of overseeing and directing the work of the industry
contractors. Instead, Government participants are acting as partners
and subcontractors, performing only those tasks which offer the most
effective means to accomplish the program's goals. The Government
participants report costs and manpower to the industry team leader
(Lockheed-Martin Skunkworks) as would any other subcontractor. Most
NASA Centers have negotiated roles in the X-33 program. The industry-
led cooperative arrangement allows a much leaner management structure,
lower program overhead costs, and increased management efficiency.
The Advanced Space Transportation Program (ASTP) focuses on a
broader spectrum of technological advances than RLV, with the potential
to reduce launch costs well below RLV goals. The RLV is not the end of
this process; it is only the beginning. We must continue to push
technology to make space transportation as easy, reliable and
affordable as it can be, to allow the fullest utilization of the space
environment for research and commerce. The ASTP aims at a cost-to-orbit
measured in hundreds, not thousands, of dollars per pound. Major near-
term efforts include the Low-Cost Booster Technology project and
Advanced Reusable Transportation Technologies project.
SUPPORTING ACTIVITIES
NASA's request for Space Communications continues the critical
services essential to the success of every NASA flight mission, from
interplanetary spacecraft to the Space Shuttle to aeronautical flight
test. The fiscal year 1998 budget request for these activities is
$646.5 million. Funding for components of the basic NASA infrastructure
and institutional facilities is included in the Construction of
Facilities budget. The fiscal year 1998 budget request for these
activities is $159.4 million.
NASA's civil service workforce is at its lowest level since the
early 1960's. The overwhelming success of two buyouts conducted in the
past two years, and an aggressive constraint on hiring, has allowed
NASA to achieve unprecedented reductions in the civil service
workforce, and meet the Administration's streamlining targets earlier
than planned. NASA is committed to continuing its downsizing efforts,
to reach an FTE level just below 18,000 by fiscal year 1999. The fiscal
year 1998 budget request for Research and Program Management, which
includes the salaries, travel and supporting infrastructure for NASA's
civil servants is $2,070.3 million.
The fiscal year 1998 budget includes several initiatives to improve
the planning and budgeting for the acquisition of flight projects. The
President's budget request includes a request for advance
appropriations for several of NASA's programs. These programs include
development of the International Space Station, development and launch
of the Space Infrared Telescope Facility (SIRTF), development of the
Stratospheric Observatory for Infrared Astronomy (SOFIA), the X-33
experimental launch vehicle, and development and launch of the Tracking
and Data Relay Satellite Replenishment spacecraft. The incremental
budget authority required in fiscal year 1998 for these projects is
included in NASA's budget request. The Administration is requesting
approval of language which would appropriate fixed amounts in future
years to complete development of the projects.
One of the Zero Base Review recommendations was to manage NASA's
programs on a ``full cost'' basis, including direct and overhead costs.
Although there is no other way in the private sector, the NASA
financial and program managers have been working hard to make this
management philosophy a reality within NASA. NASA traditionally has
considered funding for its programs separately from funding for the
civil service workforce and institutional support. Under full cost
management, the total cost of any activity--including direct, indirect
service pools, and agency overhead costs--will be captured together.
Management on a ``full cost'' basis will improve NASA's decision
process by motivating managers to operate more efficiently and allowing
a more compete analysis of the true cost of project activities.
Implementation of full cost management is integral to the management
changes that we have instituted over the past year. The designation of
Lead Centers for program activities, and the movement of program
management authority and responsibility out of Headquarters to the
field centers will be completed with the implementation of full cost
budgeting and management in NASA. We will work closely with the
Congress as we implement our plan to accomplish this.
CONCLUSION
Since 1918, NASA has been a terrific investment for the country. We
do very real things to make life better for all Americans. Whether the
concern is the environment, health care, the economy, or our children's
education, NASA is making a unique contribution. One way we do that is
by preserving U.S. leadership in cutting-edge science and technology.
Our past work has led to tremendous breakthroughs in such diverse areas
as mobile communications, air transportation, biomedical research,
information systems, and new industrial tools. These types of new
technologies mean a stronger America, but not without the workforce of
the future to support the new technologies. NASA nurtures America's
students to give them better opportunities for the future; our
education programs reach more than 3 million people each year, from
elementary students to post-graduates. NASA is an investment we must
continue to make, so future advances can keep our country strong and
benefit our citizens.
Some will say the NASA budget request for fiscal year 1998 is not
enough. I do not agree with that. When I look at the President's budget
submission, I see a vote of confidence from the President. The
President's request indicates that he recognizes what it takes for NASA
to do its job.
This is an extraordinary time for civilization and this Nation. For
the first time, we have achieved the level of understanding and
technical capability that allows us to grasp the full meaning of our
origins, our history, and our context in the Universe. For as long as
humans have been able to think, we have been explorers, inventors, and
dreamers, pondering how the Universe came to be as it is, how the
richness of life on this planet developed, and whether life on Earth is
unique in the cosmos. In the past, these questions were answered by
speculation and myth. Now they can be addressed with the scientific
soundness of evidence and quantitative analysis.
We are nearly ready to begin construction of the International
Space Station, ushering in a new era of living and working beyond the
confines of Earth's gravity. We eagerly await the discoveries and
inventions we cannot yet imagine that will be made possible by this
orbital research facility.
We also stand at a new threshold in the understanding of our
planet, as Mission to Planet Earth already is providing groundbreaking
new information on the systems at work on Earth. We are working toward
a future where we understand Earth's systems and the influence and
impact of the human race on them; the benefits for humankind will be
diverse and far-reaching.
In Aeronautics, thanks to NASA research the early part of the next
century may see the advent of the first affordable supersonic transport
aircraft, with its attendant benefits for the global community and the
U.S. economy. Air travel on the whole will become even safer, less
harmful to the environment, and more convenient.
NASA technology will enable a whole new generation of launch
vehicles that will make access to space affordable and reliable,
allowing the proliferation of new uses for the space environment, many
of which we cannot yet imagine.
NASA is ready to deliver on this vision for the future. We will
continue to work closely with the Congress over the coming months as we
implement our programs for the benefit of the American people. We
believe they will see the value of the work NASA is doing and the work
we did to get here.
INTERNATIONAL SPACE STATION
Senator Bond. Thank you very much, Mr. Goldin.
Let me begin with some of the major questions we have.
Senator Mikulski and I both have mentioned the current problems
with the construction in the international space station.
Although we do not like to think of worst case scenarios, were
the Russians to fail to deliver the promised hardware and
services for the Space Station Program, including the service
module and other obligations such as the science power platform
and resupply launches, what additional budgetary resources,
what additional dollars would be needed to complete the Space
Station Program?
Mr. Goldin. To answer that I would like to give you a
phased approach which we have developed, if that is OK. Based
on activities in Russia in the last 6 months, we have made a
decision that we must move out immediately and build an interim
control module with the Naval Research Laboratory, and make
modifications to the American-owned FGB tug, and make
appropriate modifications to the shuttle to handle refueling in
orbit. We believe this is prudent, and we are proceeding with
that. Our estimate to complete that will be about $250 million.
We set up a set of criteria with the Russians, and said we
are going to have a meeting of the Space Station Control Board
on May 14 of this year, and at that time we have to decide
whether to baseline the service module or the interim control
module for launch in December 1998. We set up three criteria.
Criteria one, did the Russians get 400 billion rubles in April
of this year; second, did they hold a general designers review
with all their subtier suppliers validating that they could
meet the December schedule, and convincing us that they were on
track; and third, has the money flowed to the subtier
suppliers. We will be reviewing all this data.
The preliminary data says from the Russians they have
received 473 billion rubles as of today, so they met the first
threshold. We had the general designers review, but we want to
validate the money has flowed to the subtier suppliers. So we
have a team in Russia that is validating that now. So on May
14, it is a decision time.
Following May 14 there are two other milestones they have
to meet. By July we expect that they will have the remainder of
the funding that they requested. We are assuming by the end of
May they will have 800 billion rubles. By July we would expect
that they will have the remaining 700 billion rubles. If that
is the case, we keep the service module baselined and proceed.
At the end of September, they are supposed to ship the
service module, which is through assembly at Krunichev, to the
RSC-Energia factory for final integration. If they meet that
milestone, we will proceed.
Now, if they miss any of the other milestones, we will make
a decision to baseline the interim control module and start
phase two--if they miss the July deadline or the September
deadline. That would be the commitment of an additional $50
million, and if we deem it necessary to go ahead and build an
additional interim control module and the associated equipment,
then the funding could get very high, to be a fraction of $1
billion.
In 1998, if the Russians still do not perform, and we have
no reason to believe that they will not, but if they still do
not perform, we would then have to start thinking about
purchasing crew rescue vehicles and providing the
infrastructure with the United States and our other teammates,
which would drive the cost up even further.
But that is the structured plan that we have. We have very
specific milestones at which we review the data, but we have
already committed to build the interim control module and
associated equipment.
SPACE STATION FUNDING CAPS
Senator Bond. NASA has agreed to certain caps on the
construction of the space station, including annual caps of
$2.1 billion and an overall cap of $17.4 billion. Where do you
stand relative to these funding caps? At what point would you
have to seek congressional authorization or change in those
caps? You have indicated several stages. When do you get beyond
the capacity to fund that out of the caps that have been laid
out?
Mr. Goldin. First, let me say that I think having a funding
cap of $2.1 billion for the last 4 years has been terrific. It
has forced the discipline into NASA. We have gone through 4
years, and we have held the program on schedule and on budget.
We had a few problems--the Russians. When we set up the
funding cap, we did not assume that we would have to cover lack
of performance by the Russians, and our comptroller tells us
that over the last 4 years, out of our reserves, which we set
aside for our own contractors, we have had to cover about one-
half-billion dollars of additional costs to American
contractors to cover the Russians. This has caused our reserve
situation to be very, very spotty. In fact, we believe we are
going to make it through 1997 with just some tens of millions
of dollars of reserve left at the end of the year for that
year, and our reserves for 1998 look thin, but we are not
giving up.
At this point in time, we are going to try and live within
this $2.1 billion cap. We have just under $1 billion in total
program reserves. We do not intend to do anything stupid. If we
do feel we are beginning to get to the point where we have to
pull out-year reserves into the present year, we will come and
seek approval from the Congress. But I want you to hold our
feet to the fire until that point in time comes.
The last point I want to make is with regard to handling
this present Russian situation, the $250 million that we are
talking about to cover the interim control module and
associated equipment is outside of what we had agreed to do, so
we are proposing to transfer funds within the human space
flight account and other accounts to cover that money, and we
view that as outside our commitment on the $2.1 billion.
Senator Bond. Thank you, Mr. Goldin. I can assure you we
will be required to hold your feet to the fire. We do not have
room to do anything else.
Senator Mikulski.
Senator Mikulski. Thank you, Mr. Chairman.
I am not going to reiterate the questions that the chairman
has raised about the space station. I think we all need to
stand sentry on this issue and see how this develops with the
Russians. But you know, you work very hard, as does your team,
to come up with $200 million in savings, which I think is
outstanding and appreciated. But now we have $200 million that
are going to accrue to the benefit of the Russians rather than
to us. This $200 million that is now being used as a backup, of
course, will accrue to ensure the fact that we will have a
space station, that we will have an evacuation vehicle, that we
will be able to get into the orbit we need. So I guess it
accrues to us, but I sure had hoped that with all the faster,
better, quicker, cheaper, $200 million in savings, that it
would have gone into science or some of the other areas rather
than a backup to them.
You can understand my disappointment, particularly when
from this time last year till January we were really foraging
for NASA's future. We were foraging. So I am not going to go
over that, but I am not happy about the situation, and I know
you are not. And if this is going to be a foreign policy issue
rather than a NASA issue, then we have to then look at other
ways to back it up rather than taking savings to accomplish
that objective.
Did you want to comment on that, Mr. Goldin?
Mr. Goldin. Senator Mikulski, you are absolutely right. I
am highly frustrated. I am very goal-oriented. I want to tell
you our NASA employees and our contractors have been pouring
their hearts out. They have been working night and day. They
were ready to launch on time, and to have this occur is very
disappointing.
I come from a world where people are supposed to do what
they say they are going to do, and I am very, very frustrated
about what has happened.
Saying that, we are committed to making this happen. And
all I want to say is you are absolutely right in being upset,
and we will do the right thing.
EARTH OBSERVING SYSTEM DATA INFORMATION SYSTEM [EOSDIS] STATUS
Senator Mikulski. Well, let me go on to mission to planet
Earth, which I understand is on budget, and also for the first
time the House has actually included it. And we appreciate
again Mr. Sensenbrenner and the House participation. Let me ask
you--here are my concerns: I understand that while we are
looking at how to gather Earth Observatory information there
has been a problem at EOSDIS due to high contractor work force
turnover. And then you have had to again jump in and bailout,
provide the backup to this.
Could you tell us the status of EOSDIS? Who is really going
to be doing EOSDIS? Is it going to be a private contractor or
NASA staff, and is this really one of the fragile parts of this
whole endeavor? Because to me, without this there is really
question about why to have the program, other than say we have
gathered data.
Mr. Goldin. First, let me say this is a case where a U.S.
contractor did not do what they said they were going to do.
They wrote a nice glossy proposal, and month after month they
made loads of promises. But one of the things that is wonderful
about NASA is we have a terrific civil servant work force. We
descoped the program. We took work away from the contractor so
we could hold the program on schedule and on budget, and the
employees at NASA Goddard are saving this contractor. And I am
very, very proud of them, and very displeased with the
contractor.
Senator Mikulski. So where does that, then, leave us?
Mr. Goldin. We are going to be on time and we are going to
be on budget. What we have done is we have broken the contract
down into smaller pieces, and we have very focused outputs from
the contractor. We are going to be testing a series of releases
in the next few months with the scientific community to get a
headstart. And because of the reduced workload on the
contractor, for immediate deliveries which the civil servants
took on, and we told them do not worry about the follow-on
business because we do not know if we are going to give it to
you, you just focus on the deliveries for the EOS AM1 platform
and Landsat, and if you convince us that you know what we are
doing maybe we will allow you to complete the contract.
Otherwise we will recompete it.
Senator Mikulski. Do you also feel, though, that the
software science is such that it will lend itself to truly
being able to catalog, archive, and organize the data in a way
that it will be available not only to scientists or
universities, but also for commercial applications?
Mr. Goldin. The answer is yes, but I want to tell you, I
have been in this business 35 years. This is one of the most
difficult software jobs I have ever seen, and we have had
advice from our Advisory Committee, who are suggesting to us
that we go to more of a federated approach and involve our
scientific investigators in some of the data processing
activity, they believe that we will get closer to that goal by
having the scientists closer to the data than the contractor.
So we will be rebalancing this over the next year.
We have a biannual review this summer by our Advisory
Committees, and we will be able to keep it on focus. But I am
optimistic it will happen.
There is one last point I would like to make. The software
business has mushroomed with companies like Microsoft and the
other companies that are in the software. They are hiring our
contractor employees and our civil servants at an alarming
rate. They are paying them salaries well beyond what the
aerospace community could afford, and over the next 2-3 years I
am very, very concerned about this. And it is good for America,
but for NASA, with our limited budgets and what we could pay
people and our contractors and what they could pay people, this
is the only thing that I am worried about, Senator Mikulski.
Senator Mikulski. Well, Mr. Goldin, I see that my time is
up. I am worried about it, too. First of all, in my talks with
our European counterparts, they really are targeting the
commercial applications of Earth Observatory data. And we are
No. 1. We are going to be No. 1 in gathering it, and I believe
we should also be No. 1 in the commercial applications, knowing
that information should be free to certain segments in our
society which is so terrific.
But I think also, and this is not the hearing to go into
this, but I am continually hearing about software engineer
shortages, as well, in the private sector. And at the same
time, I have people graduating from very fine universities in
my own State and even in this metropolitan area with degrees in
physics, with degrees in mathematics, and they cannot get jobs.
They bought this National Science Foundation jazz about
shortages, and now you have this. You have a very disgruntled
group of young people with excellent undergraduate degrees and
some even masters degrees.
Now, I do not know if you and the science advisor and the
Science Foundation need to get together and talk about a crash
program for software engineers, the ability to quickly retool
those people in physics and engineering. I mean, we do these
things when we have air traffic control shortages, and I am not
trying to--I mean, I do not know enough. I am not drawing these
comparisons. But I do know that there are people with excellent
degrees in math and in science that cannot get jobs. Then we
have the software shortage. They are so saddled with student
debt that they cannot go to get that. And then here we are.
And what I find from the Science Foundation and so on, kind
of this rocky approach that says oh, we are behind and we
compare ourselves to other countries. But I do not find a
quickstep approach to solving that. And I hope that you talk
with that leadership to see what we are going to do. But we
have got some big problems. And it shows itself up here. I
think we have a big problem in terms of our attitudes, the way
universities are training people, what they are advising
people.
I know the chairman wants the red light to flash a little
bit more for me, but I feel very strongly about this and, Mr.
Chairman, I have people who really went way out to get
undergraduate degrees in science because they were told that
they were needed. Now they find that maybe they are and maybe
they are not. But where there are needs we have no way then of
quickly moving them perhaps into a graduate program almost like
an officers candidate school in software engineering.
Senator Bond. Thank you, Senator Mikulski.
Normally we go back and forth, but Senator Boxer was here
earlier and has another hearing. She had just a couple of quick
questions, so I will recognize Senator Boxer.
NASA BUDGET
Senator Boxer. Thank you very much. And, Senator Burns,
thank you for your indulgence. I will not take my full 5
minutes because I am late for a Banking Committee hearing.
Senator Bond. Do not worry about it.
Senator Boxer. Let me just say, Mr. Chairman, that in
general I think this budget request is a good one. Last year's
NASA budget request called for steep declines in several key
programs, and the cuts would have been particularly hard on the
space science budget and could have caused irreparable harm to
NASA's basic research program. Having said that, I would like
to ask unanimous consent to put my full statement into the
record.
Senator Bond. Without objection.
Senator Boxer. And I will not read it.
PLANS FOR RESEARCH AIRCRAFT
California is a space State, and it is not only that we
have Government employees working there, we have a tremendous
private sector, as you know, Mr. Goldin. And we are getting to
the point where our space infrastructure is as important as our
bricks and mortar in the State that I represent.
I have one question I would like to ask, and then I will
submit others for the record. Could you specifically comment on
your plans for research aircraft currently housed at NASA Ames
Research Center?
Mr. Goldin. Yes; we are studying the most expeditious way
of performing our research with aircraft. We are probably a
week or 2 away from a final decision on the disposition of this
aircraft. We are coordinating this with the Office of
Management and Budget and the administration, and I think we
should be prepared to have a final decision within 1 week or 2.
AIRCRAFT CONSOLIDATION PLAN
Senator Boxer. Would you agree not to make any aircraft
moves, if, in fact, that is the recommendation, until the GAO
is able to conduct an independent review of the conflicting
data?
Mr. Goldin. I think that the time has come to make a
decision yes or no. We are just running out of time. There is a
very bad situation developing because we do not have this
disposed. People do not know where they are going to live. We
are worried about if we let this go on much longer we are going
to have a potential problem in aircraft safety, and we believe
a decision has to be made in the next few weeks.
The inspector general has done a study at NASA. They have
validated that moving the planes from northern California to
southern California will save us money. It will cost about $9
million up front. The payback is about $3 million a year. So
within 3 years we are revenue neutral, and we will be saving $3
million a year after that.
Should the decision be positive, we believe we will have to
move out on this. Otherwise I am just worried it will go on a
little longer.
PREPARED STATEMENT
Senator Boxer. Well, I will not take up any further time in
deference to my colleagues, but, Mr. Goldin, there are a lot of
conflicting numbers out there. One says it is $3 million, one
says something else. So I hope you and I could talk before the
final decision. I would appreciate that.
Mr. Goldin. I am committed to that.
Senator Boxer. Thank you very much.
Thank you, Mr. Chairman. Thank you to my colleagues.
[The statement follows:]
Prepared Statement of Senator Barbara Boxer
Thank you Mr. Chairman, and thanks also to our Ranking Member,
Senator Mikulski. I may be called to leave this hearing early, so I
will try to keep my opening remarks brief.
I believe this budget request is generally a good one. Last year,
NASA's budget request called for steep declines in several key programs
in coming years. These cuts would have been particularly hard on the
space science budget and could have caused irreparable harm to NASA's
basic research programs.
This year's budget request has addressed these issues by providing
a stable budget forecast for the next five years. This stable budget
environment has enabled NASA to accelerate the Origins Program and
several other important initiatives which I strongly support.
Mr. Chairman, California is very much a ``space state.'' True, many
NASA employees and programs are based in my state, but space commerce
in California extends far beyond that. Space-related industry and
commerce is now an integral part of the California economy. Our
telecommunications, entertainment, software, and computer industries
depend as much upon space and satellite technology as traditional
industries depend upon bricks and mortar.
I am especially pleased by the progress of NASA programs which
recognize the leadership role of industry in space technology
development. The best example of such a program is the X-33 reusable
launch vehicle. In my view, the X-33 will forever change the way new
generations of space transportation systems are developed. I look
forward to hearing from Administrator Goldin on this and other issues.
As I mentioned in my opening statement, I strongly support the
additions made in this year's request for space science research. Could
you tell the Committee about the new programs NASA has launched as a
result of this new budget outlook?
I believe that a key NASA objective for the next decade and beyond
must be to reduce the cost of access to space. Could you tell us how
far you believe the cost of access to space can fall? What are the
implications of lower space-launch costs for NASA, other government
agencies, and the private sector?
Senator Bond. Thank you very much, Senator Boxer.
Senator Burns.
Senator Burns. I have got a great idea. Move the airplanes
to Montana. [Laughter.]
Senator Boxer. That is not in the mix.
Senator Burns. I will save you lots of money.
Senator Boxer. No, you do not get it. We do not want them
to move to Montana. Let us be clear on that. [Laughter.]
Senator Bond. Senator Burns.
NASA BUDGET/RESERVES
Senator Burns. First of all, Mr. Goldin, thank you very
much, and thanks for this budget. I think we are still very,
very tight, and it is the belief of this Senator that we are on
the nub. I do not think we can complete our missions that we
want to and still continue this funding. In fact, I am thinking
one of these days we are going to have to take a better look.
I am not at all concerned about the $200 million in
reserves, pending that should the Russian situation
deteriorate. I am a believer in reserves. I think every
department in this Government should have reserves. We maintain
reserves at every other level of government in this country in
preparation of some things that may come unraveled, and we are
not coming back for a lot of supplemental appropriations or
trying to explain exactly what is and what is not the case with
certain situations.
SCIENCE MISSIONS
I have just got one question in particular. Scientists have
been visiting my office with concerns that there is a
disconnect between the views of the scientific community and
the picture presented by NASA. One issue that is after the 1998
NEUROLAB mission, there are no planned science missions until
the station is operating. They are concerned that they are
going to have a hard time hanging on to the scientists that
they have in the interim, and pending some funds, I understand.
Could you address that for me, please, and bring me up to date,
and are you aware of that situation?
Mr. Goldin. Yes; I am. I think the scientists are correct.
We are doing two things. First, we are continuing to build a
scientific base for ground-based research supporting the space
station, and we are going to ramp up from 650 scientists at
present to 850. That ramp-up continues on a continuing basis.
We are exploring the possibility of between two or three
additional shuttle flights because the Russians have slipped
the up-front schedule, and one of those flights we are
considering will be a life sciences flight. In fact, there is
so much good science on NEUROLAB--I mean, it was so hard
picking that science, we think that there is enough good
science from the proposals we got for a follow-on to NEUROLAB.
And that is one of the missions we are considering. We are
looking at another microgravity mission, and in the months
ahead we will be able to finalize that.
But I agree with your concern, and we will be addressing
it. We will be trying to find the money, which is very, very
important, because at NASA the rule is we are committed to
fiscal responsibility, so for every upper we must find a
downer. So we are searching the budget to figure out how to pay
for it.
MISSION TO PLANET EARTH
Senator Burns. In the area of mission to planet Earth, I
think it was pointed out in particularly the last 6 months,
that we are, in our sensoring capabilities. I am glad that
mission to planet Earth has been funded. The information and
science now make a lot more sense, that we are gathering, than
it did 1 year ago, as everything takes a while. We just did not
know what we were going to do with all the information that we
got, to be honest with you, and how that pertained to our
mission to planet Earth.
I think with some revelations in our forestry, in our
agriculture, and in our water supplies--now, I realize that you
will have a hard time telling the folks in Grand Forks, ND,
that there is a shortage in some areas, but nonetheless, those
problems continue to plague this country and the management of
our natural resources. And I just happen to believe that the
mission to planet Earth is very, very important and will play a
key role, especially in forestry. The images that we are
getting now and the sensoring that we are getting now are very,
very good, and we are establishing, I think, our inventory of
what our resources really are, our growth rate, and this type
of thing. And that is very, very important to the wood products
industry of this country. So I am very, very happy about that.
NASA/RUSSIAN SITUATION
I am concerned with the Russian situation. I think all of
us are concerned about the Russian situation. And knowing the
internal problems that the Russians have, I do not see this
situation getting any better in the near future. If we can just
maintain somewhere close to where we want to be, I think we
will be very, very fortunate. I do not know how it could
deteriorate any further, but I continue to monitor that, and I
am very, very concerned about it.
NASA'S OUTREACH PROGRAMS
And that is all the questions I have. Your outreach
programs are very, very good and they are doing what they are
supposed to do. I think it continues to be an agency that, even
though Senator Mikulski has some concerns about our math and
our science people that are motivated to go into those subjects
of study, and because of our outreach in this society, we can
still use a few engineers over in agriculture. So maybe
sometimes these young people are going to have to focus maybe
not on space, but they could help us in other parts of this
American economy.
I get the biggest kick out of--this is an old story of Kika
de la Garza, and I continue to say this to be true about when
they built the first nuclear submarine, and it could make its
own air, it could do everything, they could stay under,
submerged for long periods of time. And one of the captains, I
asked how long can you stay under? And he says until we have to
come up for food. So we do not want to forget that that is an
infrastructure that is very, very important to this, too.
But I appreciate the work you are doing, and that is all
the questions I have. I might have a couple more, but we can
work those out.
MISSION TO PLANET EARTH
Mr. Goldin. Could I respond to that, Mr. Chairman?
Senator Bond. Please.
Mr. Goldin. There are three important points you made.
Senator Mikulski expressed a concern about taking the results
from mission to planet Earth to the people. It is very
important. And I would like to thank you and Senator Dorgan for
the support for a program we are working on in the High Planes
area with Montana, Wyoming, North and South Dakota, and Idaho,
to take the data from mission to planet Earth to the people, to
the farmers, to the forest products industry, to people that
are selling grains. And this is very, very exciting. It is
taking science in very abstract terms and putting it into terms
that people understand that help their pocketbook and help
raise their children. We have pilot programs around the country
like that and, Senator Burns, you have been very supportive of
this, and we appreciate that.
Senator Burns. Well, not only is it important that we get
the information and we understand the information, now we are
learning how to use it. But also is the extension, how do we
get that information on the ground where it makes it
applicable. And we have seen that grow since I have been on
this committee, and Senator Mikulski and I know there have been
a lot of us that have supported that. We have had a scrape or
two along the way, but nevertheless, I think it is paying very
handsome dividends.
The American people have got to understand that there is
more application to our space program than just going into
space or what Hubble has done, and that has been a marvelous,
marvelous advent into the space program, but we also want the
American people to understand that some of the science is
coming home, and it positions this country to do a lot of work
around this globe with regard to this little piece of mud that
we are whipping through space on.
So I appreciate your work because the outreach and the
extension is just as important as the gathering and
understanding of it.
Senator Bond. Senator Burns, thank you. You saved me one of
my questions. I was going to talk about partnering.
Mr. Goldin, you had some further comments, but right now
Senator Mikulski has to go to a hearing, and I want to give her
an opportunity to get in a couple more questions. Save those
good thoughts that you had in answer to Senator Burns, and when
Senator Mikulski finishes we can go back to that, and I might
even ask a question.
CONSOLIDATED SPACE OPERATIONS CONTRACT [CSOC]
Senator Mikulski. Mr. Goldin, I have to join Senator
Sarbanes in introducing the new Director of the CIA nominee for
his hearing. I have many questions, and look forward to talking
with you even after this hearing. But let me focus on something
called the consolidated space operations contract. Having just
looked through it, it seems to me that this could be one of the
most important procurement contracts to be issued by NASA, and
also because we are talking about a Space Operations Management
Office in Texas, I would have these questions: No. 1, what is
the consolidated space operations contract. No. 2, how will the
savings be achieved? Will it be achieved through more layoffs?
No. 3, will it also result in job shifts from existing centers;
for example, Goddard to Texas, which, of course, would be of
concern to me? Do you want to talk about this? Because I think
this is a little sleeper here.
Mr. Goldin. We have decided to run a competition to bring
together all our space operations. We have a lot of duplication
of facilities around the country. There are things that have to
be done in specific places. So to sort that out, we wanted to
get some of the leading contractors in the country working with
us. We have received some proposals. We have to evaluate them.
But the purpose is to streamline it.
The second approach is that we believe that there is some
tremendous opportunity to use this consolidated space
operations contract to cover a lot of commercial activities. I
am not sure whether it will be a downer or an upper, because if
the companies bid in an appropriate manner, instead of having
each of these new commercial activities which has an operating
contract build their own control center, there is opportunity
for consolidation. We are looking for creativity in this part,
too.
So I do not know whether in the total picture it will be
less people because the Government will be able to hopefully
take advantage of some commercial activities. But we do hope in
the long run to have the Government save dollars.
Senator Mikulski. Well, is that the focus of it, commercial
activities, or is this a closet kind of base closing commission
for NASA facilities?
Mr. Goldin. I do not see it as a closet base closing
activity, and until we have the proposals from our contractors,
I do not know exactly what the whole impact is. But we have
made estimates that we could save a significant amount of
money, and we want to have much more efficient, much more
vibrant operations of our spacecraft activity.
Senator Mikulski. And we all support that. But you can
appreciate the fact that there is a lot of water cooler talk
that comes into my office that this really means that it will
be downsizing and major shifts of jobs to Texas.
Mr. Goldin. I would be very surprised if people move jobs
just to Texas for the sake of moving it to Texas. But the thing
that we will be doing throughout this competition is we will be
working with the members who have an interest in this, keeping
them appraised of the directions that we are going, to make
sure we do the right thing for the American Government.
SPACE SCIENCE PROGRAMS
Senator Mikulski. Well, I want to talk with you further
about it.
I would like to just shift 1 second to space science, and,
of course, I think we are all tremendously excited about the
next generation of the space telescope; the Origins project, of
course, offers many new opportunities; and then, of course, we
have the new millennium funding. One of the things, though,
that I look at that much of the new science, about 85 percent
of it will go to JPL, is that right?
Mr. Goldin. I do not believe so, because it will be done by
contractors, it will be done in different NASA centers, and, in
fact, we have the folks at Goddard working with JPL on a lot of
the advanced technology activity.
The next generation Hubble telescope, which is part of
Origins, will be managed out of NASA Goddard, and there are a
broad range of activities that will be managed at Marshall,
Goddard, and Langley.
Senator Mikulski. Well, Mr. Goldin, I look forward to
hearing more about this. I know my time is up.
I learned a lot about the space program from Senator Garn.
And then through that then got connected to both Admiral Truly
and now you. What I feel I learned from you was a lot of your
private sector know-how that you brought to the management of
NASA, and I think ultimately you will be recorded as one of the
most innovative managers we have had since the creation of
NASA.
Having said that, you essentially introduced competition
even within NASA for better ideas, more efficiencies, and so
on, and we would hope that this kind of competition for
excellence, competition for efficiency which ultimately is
savings, better ideas, faster, cheaper, also continues to be
reflected in the space science so we do not end up with like
scientific cartels within NASA.
So I look forward to hearing more about it because I think
the management approach that you have often had, which is it is
not wedded to a particular facility but the outcome we seek, is
one that has really served NASA well.
Mr. Chairman, thank you, and we will look forward to
continuing this conversation. Thanks a lot.
Senator Bond. Thank you very much, Senator Mikulski. I
appreciate your kind words about Dan Goldin and his efforts.
And I second those and would agree with you on those words.
Mr. Goldin, you had some comments. Did you finish
responding to Senator Burns, or do you have others?
Mr. Goldin. Well, before Senator Mikulski leaves I would
like to say that she is absolutely right about her concern of
retraining, and I had not thought about that issue, and I will
be coming to see you after I have discussions with the senior
executives at the White House and our own sister agencies. This
software problem is not going to go away. It is only going to
get worse, and I am worried about the future of America's space
program. We will work with you on that subject.
Senator Mikulski. Well, Mr. Goldin, I want to be clear and
I want everyone in the room to be clear and the press here. I
in no way object to young people pursuing basic degrees in
science, whether it is physics or math or any of the other
wonderful endeavors. But often they are being educated to then
go get doctorates to then train other doctorates. I think not
only do we need to take a look at this shortage area, but I
think American universities need to retool their thinking and
help to get our students ready for the real world that they are
facing.
That is in no way to talk--but I think we need a multiple
kind of thinking in that the Ph.D.'s we need will not only be
in the universities but out there working with you on how to
translate and do the commercial work that we have talked about.
Senator Bond. Thank you, Senator.
Further comments that you had on your list?
RUSSIAN SITUATION
Mr. Goldin. Yes; I do. With regards to Russia, we have a
benefit of working with the Russians. I want to say for the
record that I am very, very favorably impressed by how the
Russian Space Agency--not the Russian Government--has been
resilient to work with us. We have been through some very tough
times with them, and they have turned out to be very good
partners.
My frustration is that the Russian Space Agency is not
getting the funding that they need. And this is a case where
the Russian Government is going to have to do what it says it
is going to do, because we cannot have international agreements
and keep looking over our shoulders.
Now, the news so far is good, that we think they are back
on track. But I want you to know that we are going to build
that interim control module. I think building the interim
control module has gotten some attention in Russia, because
everyone now sees we are going to build this space station no
matter what. We are no longer debating it.
The last point I want to make is that for the record I
would like to clarify. I think there is some sense that this
$200 million we are going to spend in fiscal year 1997, with
concurrence from your committee and the other committees that
oversee us, is not going to be all spent in Russia. Only about
$30 million will be spent in Russia. One hundred seventy
million dollars will be spent in the United States of America.
So I just wanted to correct that impression.
Senator Bond. I have your letter of May 5 indicating that
to fund that $130 million is going to come from the ``Human
space flight'' account, opposed to $200 million, and $70
million will come from the mission support appropriations to
human space flight.
Mr. Goldin. If the appropriation transfer is approved, that
is the way it will be.
SHUTTLE SAFETY
Senator Bond. I would just like your assurance that
reshuffling will not interfere with shuttle safety efforts or
undermine plans to launch scheduled payloads. Are you going to
be able to avoid those problems?
Mr. Goldin. I can say unequivocally yes.
Let me say this to you: There was a comment made that I
thought about, it was internal back of uncosted money. I would
like to correct an impression. NASA has built up additional
moneys in the uncosted area not because our people are bad, but
we have undergone tremendous change. This was an agency that
had 77 percent average cost growth on its top 29 programs just
a few years ago. And now we are underrunning 6 percent. We put
a very, very serious commitment into our employees and our
contractors to do what they say they are going to do. So as the
budget has been coming down, our employees are so determined
not to overrun contracts that they are perhaps overcompensating
on how they apply their reserves.
We are correcting this situation. Last year we believe it
had peaked out, and over the next few years we are going to
bring it back to historical levels. We have been tracking the
rate at which we have been obligating funds, and they are now
back to our historical average. In fact, it is a little bit
above that. So that was the first point I wanted to make.
Second, our people on the shuttle program have been doing
an outstanding job. In the past, if they had reserves there was
an attitude let us spend the money before the end of the year
or you will lose it. We have put a very serious focus on not
doing that. And it is really a good news story. And we are now
taking those reserves and applying them to things that are very
important to the program.
But saying that, I am absolutely committed to safety. We
are planning on spending an additional $100 million a year on
handling obsolescence problems in the shuttle which deal with
safety, and our safety metrics are terrific. As the budget came
down $1 billion a year on the shuttle, we have tripled the
reliability on ascent for that shuttle, and we have cut the
number of on-orbit anomalies one-half, and we have cut the
overtime, so every single metric we have says we are focused on
safety. So I commit to you that we will stick on that track.
SPACE STATION--OUTYEAR REQUEST
Senator Bond. With respect to the space station, the United
States side, if the Russians deliver as promised, which
obviously we hope they will do, the out-year request goes from
$2.1 billion today down to $1.5 billion by 2002. Are you
confident that the agency can, assuming the Russians stay with
their commitments, that the agency can accomplish the mission
with that declining resource for our United States portion?
Mr. Goldin. Let me say this is the toughest job I have ever
been in in my life. I have been in the aerospace business 35
years. It is a real challenge. I want to tell you, I am so
proud of this team. Four years ago we redesigned the station
and we took out some billions of dollars, and we have held the
schedule and held the budget. Each year the reserve looks like
a cliff, precarious. We have worked through it. We are now in
the toughest part of the program, because we are building
hardware, and next year we are going to be launching it. I am
cautiously optimistic that our reserves that are just under $1
billion will take us through and allow us to come down that
curve.
I recommended to you that you keep our feet to the fire,
and I am going to keep everybody else's feet to the fire on
holding that cap. It is going to be rough. We are going to face
some problems. If we feel we have come to a point where we have
an issue where spending a little bit of money above the cap
will save us in total dollars, we will come back. But right
now, I do not see that, and we will just keep on chugging.
Senator Bond. Thank you, Mr. Goldin.
We have been joined by Senator Harkin. Senator Harkin,
would you like to make a statement and/or ask some questions?
We are delighted to have you with us.
Senator Harkin. Thank you, Mr. Chairman. I just have a
quick statement.
Senator Bond. Proceed Mr. Harkin.
STATEMENT OF TOM HARKIN
Senator Harkin. I apologize for being a little late.
I would like to welcome again Mr. Goldin to the
subcommittee. I am new on this subcommittee. I have been on the
committee for a long time, but I decided to get on the
subcommittee, and one of the reasons I wanted to get on it was
because of my long-time interest in NASA and the space program,
having spent 10 years in the House of Representatives and
keeping somewhat in close contact with it through the
intervening years.
I have some questions, but I guess, Mr. Goldin, what I
really want to pursue is options. And without being at the
point of second guessing, but sometimes it is good to look back
and find out where we have been and ask tough questions as was
that really the right approach to take. Did we really take the
right course in the past? I am not going to go back and say,
well, we should--but just ask that, and then to use that
knowledge to see whether or not the course we are embarked upon
now is the right course.
SHUTTLE PROGRAM VS. SATURN PROGRAM
I look back, I remember when the Shuttle Program was
designed and we were moving ahead in the Shuttle Program, and I
wondered, and there were a lot of people then that were
questioning whether that was the right direction to go and
whether we should continue on with the Saturn Program and the
expendable vehicles that we had at that time rather than going
to a Shuttle Program. Of course, at that time all the ballyhoo
and the hype was on it is going to be cheap. We are going to
reuse all these things. It is going to be wonderful and
miraculous and all that kind of stuff. All of the savings and
costs that I think were talked about at that time, I do not
think much of that has materialized.
Now, I do not mean to downgrade the Shuttle Program. It is
a marvel of technology. And what the people did in coming up
with the shuttle and how it operates, it is just a
technological miracle above all else, and it works, and it
works wonderfully well. But in terms of four goals and what we
are looking at down the road, had it really aided us that much
in terms of space exploration?
SPACE STATION--YES OR NO?
We have had a lot of experience in near-Earth orbit. And I
guess what I am wondering about now is whether or not the space
station that we are talking about building is the right path to
pursue, and will it really add anything. I intend to continue
along this vein on this subcommittee and in the Senate in the
coming months to raise these questions. And I know a lot of
people have thought about it and there have been books written
on it and articles, everybody has thought about this thing. But
I just wonder whether or not we should not step back and take
another look at it.
$35 billion? Is that what the cost is now, estimated?
Mr. Goldin. 17.4 plus 10.2 is 27.6 for the development and
operations is about $13 billion on top of that.
Senator Harkin. About $35 billion. And given overruns, we
are talking about $40 to $50 billion.
Mr. Goldin. I am not signing up to any overruns.
SHUTTLE PROGRAM COST VS. SATURN/APOLLO PROGRAM COST
Senator Harkin. I understand. I am just talking about how
things happen in life. I am having some research done right
now--I have been on it for some time now--on the Shuttle
Program. With what the Shuttle Program costs to develop, build,
operate, what could we have done with that somewhere between
$12 and $20 billion? I cannot quite get a handle on the
dollars. And I am just wondering if we could not--someone
suggested to me not too long ago that for what we spend on the
Shuttle Program, that if we had kept up the Saturn Program and
the Apollo Program that we would have today for the same price
and the same money a fully operational 365 days a year manned
moon base on the moon, for that same amount of money, with all
that that entails. I do not know if that is true or not. I
would like to find out.
SPACE STATION BENEFITS
And I would like to find out if for this $40 to $50 billion
or $35 billion, whatever it is that we are looking at in the
future, what are we going to get out of this space station? We
have had space stations. We have had the Mir. We have done a
lot of low-weight experiments, long endurance flights, there is
a lot of data there. We are back, you know, to doing the rhesus
monkeys. They are still shooting these rhesus monkeys. Who
cares about that? We have got all that data.
And so I am just wondering if we are just not going ahead
on something that everybody seems to have signed off on, but
will it really add to our exploration of space, which is what I
am interested in, or is it just going to be another low Earth-
orbit space station, we are going to send people up there, they
are going to float around for a while, they will do experiments
ad nauseam, but is it really pushing the frontiers, really
pushing the frontiers of space exploration? Could we use that
money in a different way and for different form?
X-33 PROGRAM
Now we are talking about the X-33, and all of the arguments
I am hearing on the X-33 I heard on the space shuttle, every
single one of them. It is going to be cheap. It is going to be
reusable, go back and forth, all this.
So, Mr. Chairman, I just wanted to take a little bit of
time. That was sort of my opening statement.
Senator Bond. That was a good one. If Administrator Goldin
does not hit a long ball on that one I will be surprised.
[Laughter.]
This one ought to be interesting. I would say fasten your
seat belts and let us see what he says. [Laughter.]
SPACE STATION BENEFITS
Senator Harkin. We will. And there will be more coming down
the pike later on, too. But again, I just wonder about what
other systems could we have purchased for what we did, and what
could we purchase for the $35-plus billion that we are going to
put in their plus all the problems it looks like we are going
to have with the Russians and everybody else on this thing.
That is sort of an open-ended question, but it is the kind of
thing I know you like to deal with.
NASA'S RESPONSE TO PURSUING THE RIGHT PATHS/OPTIONS
Mr. Goldin. First, let me say it is a fact America has been
locked in Earth orbit for 25 years. Probably one of the reasons
I am the NASA Administrator is I expressed a high level of
frustration when I was in private industry over that subject. I
came to NASA in 1962 to take America to Mars sometime in the
late 1970's. I left NASA in 1967 because I said the bureaucracy
is setting in and we ``ain't'' going to go to Mars for a long
time, so I am going to work real hard, I might as well go make
money in industry, and I left.
For 25 years after the development of the shuttle, this
Nation did not develop one new rocket engine, this Nation did
not develop one new launch vehicle, and we watched 25 developed
in the rest of the world. It is not because we had bad people.
We have fabulous people. But somehow in the mid-1960's America
lost its heart and soul to do risky, bold, difficult things. We
analyze things to death. We involve all sorts of issues other
than opening the space frontier that are peripheral to where we
want to go in America. And I think that is the problem.
SHUTTLE PROGRAM
Now let us deal with the shuttle. I came back, by the way,
in 1992 in the hope that we are going to Mars, because I could
think of no other thing that could inspire young and old alike
that America is a great country, ready to be on the frontier
again.
Now, what are some of the issues? Let us go through the
shuttle point by point. NASA proposed building a shuttle, and
some of the bureaucracy set in, and one of the issues was NASA
had to survive after Apollo. That is not a reason to build a
shuttle, to keep people busy. A second issue was NASA wanted to
build a shuttle and a space station, and they were told you
could have one or the other. Well, you could not have a space
station without a shuttle, so they went to build the shuttle.
So let us not blame the NASA employees for that.
But the other part that I cannot get complete data on but I
will give you my feeling, NASA was set up. They were given a
program and they were asked to manage to a development and not
come up with a low operating cost system. So to live with a
smaller development budget they could not minimize the
operating costs.
Third, the shuttle was supposed to be designed to handle
DOD payloads and commercial payloads and civil space payloads.
Well, what happened was NASA now has to carry the full
infrastructure of just the civil payloads when DOD and the
commercial payloads are elsewhere. It is against the law for us
to fly commercial payloads on the shuttle. So that is part of
the problem.
The next part of the problem is----
Senator Harkin. Could you get me some more information on
that one aspect right there?
Mr. Goldin. It will be my pleasure. I am a rocket
scientist, and I have thought a lot and hard about this.
[Laughter.]
SPACE STATION PROGRAM
Now, there is another issue that I feel to be very, very
difficult. NASA needed something to do in the mid-1980's, so
they proposed a space station at $8 billion, and this space
station was much bigger than anything we have right now, and I
have a videotape which I will be happy to show you of the
program manager on that program saying you would think we would
build this for management efficiency. We did it for political
expediency.
That was the attitude in the formation of the space
station. The NASA employees were not bad, but the politics of
the situation were bad, and America has to decide who are we
and what are we as a country. Is it the purpose of a space
station to employ people around the country or is it the
purpose of the space station to open the space frontier.
Well, this $8 billion turned to $40 billion, and we went
for 8 years and spent $8 or $10 billion and did not build a
piece of hardware, but boy, did people make profits and did
they have fun.
I came to NASA in 1992, and I asked a very simple question:
Is this thing going to work? I was attacked. I then checked
into where all the work was being done. We had 2000 people in
Reston, VA, who were trying to manage five prime contractors.
Now, that is an oxymoron. It was unbelievable. The resistance
to change was incredible, and the thing would not work. They
did not build hardware, and spent $8 to $10 billion. Were the
people bad? No; they were terrified. The political process did
not allow NASA to go where it needed to go.
SPACE STATION INTERNATIONAL COOPERATION
So in 1992, first President Bush asked me to go to Russia
to see if we could begin the process with the Russians, and the
President Clinton had a summit with President Yeltsin where
they said this is crazy, the cold war is over, why are we
building competing space stations? So Russia and the United
States and the other countries, Europe, Canada, and Japan said
let us see if we could be sensible here, and not have an
Eastern Bloc space station in the post-cold war era and a
Western Bloc space station. So we made a commitment to do this.
Our partners are putting in a huge amount of money. We have
redesigned the space station. We have a program which I believe
is not building an engineering temple in search of questions,
but we are building a space station that is asking fundamental
scientific questions and then building the engineering to go
with it.
SPACE STATION
Now let me deal with the space station itself. We are
probably 60 percent complete. Our international partners,
Europe, Japan, and Canada, of a $9 to $10 billion commitment
have expended $6 billion. The Russians, with all their
problems, are building 300,000 pounds of hardware which we are
relying upon. On the Shuttle Mir Program, I want to tell you,
as much as the Russians have been in space and we have been in
space, we have learned a tremendous amount.
SCIENTIFIC BENEFITS
Let me tell you some of the scientific things we have
learned. We now at NASA have something called the bioreactor.
And the bioreactor is capable of building human tissue outside
the human body. We have built 1 to 2 centimeter pieces of human
cartilage in this bioreactor. And we did not have an
opportunity to do it for months until we got to the Mir Space
Station.
We have built colon cancer tumors in this bioreactor. We
have built tissue from the intestine and other parts of the
body. It is revolutionary, and now there is an institute, a
NASA NIH Institute for three dimensional tissue growth, that is
beginning to impact the medical science community.
We have been doing structured drug design on the Mir
Station and the shuttle, and we are getting unbelievable
results, and new drugs are now coming out on the market.
We are now finding out things of the human anatomy, and I
do take exception, the Russians have been in space 10 years, we
have been in space years, and we still do not know how to stop
bone loss in the human body, we do not know how to start
muscles from atrophying, we do not understand the depression of
the human immune system, we do not understand changes in the
cardiovascular system. We do not understand the impact of
gravity at the cell level, which is essential for future
studies in physiology on the surface of this planet.
We have an opportunity on this space station to do
fundamental scientific research in the absence of gravity. In
the absence of gravity there is no convection. You know, hot
air rises, and it does not allow you to rearrange atoms one at
a time. You have sedimentation, heavy things drop and buoyancy,
light things rise. That is with gravity. Without gravity, you
do not have it and you could break apart physical processes.
We have now validated two Nobel award winning theories
which had not been validated before because we have these
characteristics. One is a group renormalization theory and the
other has to do with phase transitions. It is called the Lambda
point. You cannot make those measurements on the ground.
Now what happens? Another problem has occurred in America.
I call it scientific cannibalism. As the science budget starts
compression, one scientist looks at some other scientist's
budget and with incredible knowledge, not knowing what is in
that field, says you cannot go do that. Microgravity research
is now having an impact. There are thousands of scientists and
in the area of combustion, for example, at the 25th combustion
symposium, which is the symposium in combustion, 10 percent of
the papers came from microgravity research.
There is a scientific community building, and if you look
upon the space station as a laboratory which happens to be a
couple of hundred miles above the Earth, in that laboratory
there is incredible research, and I submit we have 14 countries
involved in this research. Brazil is begging to become a part
of this, a country which has terrible economic problems wants
to join. The Ukraine which has a situation that is a problem--
OK, so we have these countries.
SPACE STATION BENEFITS
And my final point is on the space station we will
understand how people could live and work safely and
efficiently in space. On the space station we are developing
techniques for telemedicine and telepresence that will be
essential if we go to another planet responsibly. On the space
station we are going to understand how to develop
countermeasures. On the space station we are doing experiments
on integrating robots with people. We are developing robots
that will see, hear, smell, and have tactile feel. We need to
understand how to do this to realistically have low-cost
missions back to the Moon and on to Mars.
And my last point to you is if we want to go to the Moon
and Mars and have a splash, a one-shot feel-good mission, we
could do it with the kind of moneys we have. The object is to
have sustained presence in the solar system. And this is done
with very basic, fundamental science that takes time, it is
difficult and painful. And we have set an objective of seeing
how we could go back to the Moon and on to Mars for one-tenth
to one-thirtieth the cost in these days, dollars of what Apollo
cost. We do not want to brute force this, and the space station
is going to help us develop these techniques.
We, also, in the space station redesign, put a sunset
clause on the space station, so it would not go on for 30
years, which was the initial plan, and that after 10 years of
operation there will be a national peer review to see if we
have met the objectives on science, on exploration and
commercialization, and commercialization is a major part, to
see if we could then hand over the space station to commercial
activities that will be taking it over. That is the fundamental
issue.
X-33
Being in the space business these years, I believe this is
the right thing. But I also believe it is crucial that we now
look at other ways of getting into space. The X-33 is another
way of doing it. It is the first time in 25 years we are
developing a new rocket engine--first time. It is the first new
launch vehicle we have developed in 25 years, and maybe it will
crash and maybe it will not, but I want to assure you the X-33
program is not a Government program. Industry is putting in
roughly 25 percent of the cost of this thing. There is no cost-
plus-fixed-fee program, and we are going from start to launch
in a little over 2\1/2\ years, not 10 years with a huge number
of people.
We have a whole series of other programs in parallel with
the X-33 that are going to help us do this, too. And finally,
we have maybe 100 people in Houston, not 1,000, not 10,000
people, who have been charged with figuring out how to go back
to the Moon and on to Mars for numbers that would live within
the present budget we have, and as the space station gets
through its completion to live within the budget wedge that has
been specified, and I think you are going to see unbelievable
things.
MARS MISSION
My last point is we are not waiting to go to Mars. We have
10 missions going to Mars right now. The first one from the day
we started until we launch was 3 years. It was one-quarter the
cost of the spacecraft that took 10 years and just went into
orbit, and on July 4 of this year we are landing a robot on
Mars. And 2 years from now we are going to land a robot at the
polar cap on Mars and drill into the ice. We are going to be in
2005 bringing back rock samples from Mars, where in 2001 and
2003 we had robots walking all over the planet to make piles of
rocks, and we are going to then collect it and bring it back.
NASA--FASTER, BETTER, CHEAPER
We are doing things for a lot less money, and I want to
tell you, doing all this we turned back $40 billion, we cut our
budget 36 percent, our productivity went up 40 percent, we
started 38 new programs without asking for an extra nickel from
the Congress. This NASA is determined to open the space
frontier, and we are going to build opening the space frontier
on that space station. The shuttle is now $1 billion a year
less to operate, and in my tenure we have gone from $600
million a mission to $400 million a mission, and those crazy
folks at the shuttle are now saying they want to take a go in
the next 5 to 10 years to cut the cost by a factor of four. I
do not know if they will do it, but they are signing up and
improving their reliability by a factor of five, and they are
going to compete with the X-33. There will be competition and
there will be other approaches to do that.
So I submit this is an outstanding program that is going to
inspire young and old alike, and July 4 turn on your Internet,
because every child in America is going to see the mission from
Mars. It is not going to be for the scientists.
Thank you.
Senator Bond. Thank you very much, Mr. Goldin. If you want
to expand on your thoughts, I would be happy to admit those for
the record. [Laughter.]
Mr. Goldin. I am a little emotional. [Laughter.]
Senator Bond. I trust that Senator Harkin may have
additional questions for the record.
Senator Harkin. Excuse me, Mr. Chairman. I do have
additional questions. I will submit them in writing.
Senator Bond. If you would, please, we would be most
interested to receive the questions and the response. Thank you
very much, Senator Harkin.
X-33 PROGRAM
Senator Bond. Speaking of the X-33, we are obviously very
interested in that. Do you now know whether you would plan to
phase out the shuttle by 2010? I would be interested generally
in the status of the reusable launch vehicle and the
commercialization and privatization. Would you address the X-
33?
Mr. Goldin. Yes; the X-33 is a half-scale vehicle that will
go up to close to Mach 15 and fly suborbital flights over land
from California to places as far northeast of that as Montana.
Senator Burns is not here. That was a little commercial.
Senator Bond. If anybody wants to go to Montana.
[Laughter.]
That will teach Senator Burns to leave.
Mr. Goldin. It is an incredible program. We have taken a
new rocket engine. We are building an almost all composite
vehicle, and we are going to try and see if we could retire the
risk so it could be open to commercial activity.
But this is a new NASA. As Senator Mikulski talked about,
we want competition. So the shuttle team is all charged up
because they want to compete with it, because all of a sudden
you cannot charge anything you want, and we have set a goal
that within 10 years at NASA we want to get to $1,000 a pound.
So we intend to compete the shuttle against the X-33, because
the next step is a reusable launch vehicle. Maybe the reusable
launch vehicle will be a derivative of the X-33, maybe not.
Because in parallel with that we are working on a new set of
rocket engines, and we just awarded a contract for something
called HYPER-X, which is a vehicle which will fly between Mach
5 and Mach 10.
Somewhere around the year 2000 we are going to have a lot
more data, and at that point in time we will be in a position
to start making decisions based upon what the industry thinks
they could do. We view NASA's role as reducing technological
risk and not getting into marketing, and we will let the
shuttle compete against the reusable launch vehicle based on
the X-33, and hopefully that will be a heck of a competition,
and at that point we will be able to say whether we could
proceed with the commercial development.
Last point, we have been talking to investment bankers, and
we are trying to make NASA a place that is acceptable for
private capital, and over the next year we intend to really dig
in and support this. And, in fact, one of the possibilities
might be that we could not just go to a prime contract on the
shuttle, but the privatization and perhaps even
commercialization where private capital will then take it over.
And that is the best way to do it, not to have the Government
make those decisions.
AERONAUTICS PROGRAM
Senator Bond. Thank you.
With respect to the aeronautics side, this subcommittee, as
you know, has been a very strong supporter of the first A in
aeronautics. And we are looking at the aeronautic safety
initiative, and do you see any impact on other programs? What
will be the effect on the aeronautics research and technology
base, and would you describe generally the goals and the new
goals that you have in advanced subsonic technology and high
speed research?
Mr. Goldin. Yes; we felt that the aeronautics program was
drifting a little bit, and we were not telling the American
public what we were doing in terms they could understand. So we
set 10 very specific goals for 10 years and 20 years out. And
just a couple of them. In 10 years we intend to cut the crash
rate on planes involving fatalities by a factor of 5 in 10
years and a factor of 10 in 20 years. We intend to within 20
years have planes capable of going across the ocean so that you
could do business there in one day and come back, or twice the
speed we have right now. We intend to cut the emissions and the
noise levels of planes. We intend to cut the cycle time it
takes to develop a new aircraft by a factor of two. So we set
those goals.
Now, to start things off, we reprogrammed one-half billion
dollars out of existing resources. Remember, the rule is in the
declining budget you do not come back to the Congress and hold
your hand out, you reprogram and prioritize and you make a list
and the lowest priority drops off. We felt that the American
public wants safer planes. It is crucial to opening up the
Pacific rim, and it is crucial if we open the Pacific rim it
has an American flag on the tail of that plane.
Safety is very important. The crash rate for the last 20
years has been constant. And the number of planes will triple
in the next 15 to 20 years, so we must get the crash rate down.
So the first 5 years we programed within our own resources,
prioritized, the research and technology base is just as strong
but it is now focused, and we are telling them we want safety,
we want lower emissions, lower noise, faster planes, better
economics, and I think it is going to change aviation in this
country and have American flags on the tails of planes.
MERGERS AND CONSOLIDATIONS
Senator Bond. One final question and I will submit the rest
of my questions for the record. We all know that there have
been significant mergers and consolidations. One of those
affects the major employer in my State, McDonnell Douglas,
which may become a part of the Boeing conglomerate, and that
was discussed in this Sunday's business section of the
Washington Post. What kind of concerns do you have about the
maintenance of a healthy, competitive environment as these
mergers occur, in light of the fact you have to contract for
the space shuttle, for consolidated space operations? To what
extent do you see any problems for your space and aeronautics
efforts with these mergers and consolidation?
Mr. Goldin. First let me say that in the big picture I have
supported the mergers, because we were carrying an overhead
base that we could not afford. So on the one hand there is a
real reason. The capacity was much too great for the amount of
work that was involved, and that is a driving force.
Second, let me say that there is one giant already, and
that giant needs competition. So on the positive side this
latest merger will cause two giants so they will compete with
each other. So I think that is healthy.
Saying that, here is my concern: It is important that the
words of the CEO's be very clearly written down and all their
promises be very clearly written down and they be held
accountable, and that over a period of time if they have an
abuse of power where these companies start telling their
customers what to do because they are so big, I think
appropriate action will have to be taken.
But I am the optimist. I think it could work. But I would
hope to see a process where we have some touch points
downstream so we do not have to listen to the promises of today
and then have to listen to them downstream. Everyone knows that
downstream if something happens we, NASA, may have to come
forward and suggest a divestiture or two to get that power
away. I am worried about raw power, and I would like to see
some response by the industry to convince us that they are not
going to push around their customers. I have, you would be
shocked to know, seen this power play before.
Senator Bond. Mr. Goldin, since you are one of the major
customers, we would be interested to see what kinds of test
guidelines and parameters you might set on that. I hope you
will share those with us.
Mr. Goldin. We would be happy to participate in that, and
we will communicate with your staff our thoughts. But right now
we would like to see it go through. We believe people do what
they say they are going to do, but there is an old expression,
trust but verify.
Senator Bond. Thank you.
Senator Harkin.
X-33 PROGRAM
Senator Harkin. Mr. Chairman, thank you. I just have a
couple of short followups.
Mr. Goldin, you said that the X-33 program was not a
Government program. You said the private sector is putting in
25 percent. Who is putting in the other 75 percent?
Mr. Goldin. My terminology was improper. Let me correct
that. I am sorry. It is not a typical Government program.
UPGRADING EXPENDABLE LAUNCH VEHICLES
Senator Harkin. Has NASA studied the option of upgrading
its expendable launchers, including the development of a
nonreusable craft for human space flight in case the X-33 does
not prove cost effective?
Mr. Goldin. The answer is we now have executive direction
that the Department of Defense is responsible for expendables
and NASA is responsible for reusables. The Department of
Defense right now is developing a program called the EELV, the
evolved expendable launch vehicle, which is trying to take the
expendables to the highest possible reliability and the lowest
possible cost. It is my belief, being in the industry for 35
years, that if we are ever to have routine presence in space,
sustained presence in space, the expendables are not the
answer. It will have to be reusables, and let me explain to you
why.
If you take a look at an expendable rocket, 2 percent of
the total rocket mass goes into orbit. So 98 percent is thrown
away. Of that about 10 to 15 percent is high-value-added
machined and electronic hardware, and every time you launch you
throw it away. Given the kind of technology we have, I do not
see that there is a way with an expendable to ever change that
payload mass fraction. Maybe they will go up to 3 percent, but
they will never go higher than that. With reusable vehicles you
keep using that over and over again. This is what an airplane
is.
The other problem with expendables is they have multiple
stages. First the first stage and the second stage and the
third stage and the fourth stage, like on Apollo. We are
attempting to build a vehicle--which is a real stretch--that is
just like a plane. You do not have multiple stages. The
technology drives it, and as a result, you do not have to have
all that integration going on. In fact, there were some
thoughts early in the aviation business when we had jet
aircraft that maybe we would refuel them in mid flight. That
would be a two-stage system. That does not make sense from a
reliability standpoint or a cost standpoint.
We take on some very tough tasks, and it is our position at
NASA that ultimately within 10-15 years we will develop the
technology for reusables that will make expendables obsolete.
COST EFFECTIVENESS OF X-33
Senator Harkin. Well, again, it is all good theory, but I
am just wondering what happens if the X-33 does not prove cost
effective. And I am not going to get into that debate, I just
wonder. You say that DOD is responsible for expendables, NASA
is responsible for reusable. This is reusable. If it does not
prove cost effective, just throw up your hands?
Mr. Goldin. No; oh, we have a broader program.
Senator Harkin. Or are you going to make it prove cost
effective regardless.
Mr. Goldin. No; let me explain the broader program. The X-
33 is but one element of a very broad-ranging program we have
on reusables. The program has something called the X-34. That
is a vehicle that is a two-stage vehicle that goes up to Mach
8. The X-33 is an experimental vehicle. It is not a production
vehicle, it is not a program where we even know it is going to
end. We are just doing experimental flights like the X-1 up
through the X-15. These are experimental vehicles.
This is a program that has a 10-year goal and a 20-year
goal, and it is not a single program, but it is the sum of many
programs. So we have the X-34 which flies a year from now. We
have the X-33 which will fly a little less than 2 years from
now. And parallel with that we have the HYPER-X Program, which
is a series of small vehicles which will fly between Mach 5 and
Mach 10 with the pilot sitting on the ground. We have a program
called RBCC, rocket booster combined cycle, which begins to
feed in oxygen as a portion of the fuel from the atmosphere so
we can get the payload mass fraction up to perhaps 5 or 10, and
all these programs are going to be undertaken in the next few
years.
We have another program called the BANTAM lifter, which is
a reusable small launch vehicle. We are going to evaluate these
technologies every few years, we will look for which of the
ones that are progressing, which are the ones that are not
progressing, and constantly drive toward this goal of $1,000 a
pound which we set for 10 years from now.
So this is not a one-shot, and we were very clear on the X-
33. It may succeed or it may fail. But the problem we have had
at NASA in the past was we would take these major programs that
became organic, like the shuttle, and it was the shuttle or
nothing, now what we are saying is we want a broad diversity of
things going on, and instead of multibillion dollar programs,
we are doing programs that range between $30 million for this
HYPER-X up to $900 million for the X-33, under $100 million for
the X-34, so we are breaking it into small chunks, different
industrial teams, loads of competition, a tremendous amount of
intensity, but for the first time in 25 years we have five
different new rockets under development in this country, with a
much smaller budget than we ever did before.
So that is my point. The X-33, I hope it makes it. If it
does make it, we are saying to the contractor at some point in
time you pay for the development and then we will just be a
customer. But we are out of the business, at least right now,
of having the Government pay the full development costs, and we
are trying to amortize the development costs against the
commercial sector so the Government is only a participant. So
that is the concept we have, and maybe I did not explain it
correctly.
Senator Harkin. Thank you very much.
Thank you, Mr. Chairman.
Additional committee questions
Senator Bond. Thank you, Senator Harkin.
As I indicated, we will keep the record open for further
questions from members of the committee and further answers. As
I said, I am sure you want to expand on some of those answers.
[The following questions were not asked at the hearing, but
were submitted to the Administration for response subsequent to
the hearing:]
Questions Submitted by Senator Bond
MANAGEMENT AND AGENCY-WIDE
Question. In 1996 NASA abolished the Office of Space Access and
Technology (OSAT), redistributing responsibility for technology
development to other program offices. Coordination of these efforts is
being undertaken by NASA's Chief Technologist in the Administrator's
office. How will advanced technology development be undertaken within
the agency's offices? How will the Chief Technologist coordinate NASA-
wide technology development efforts? What are your plans for the
creation of a Technology Institute and what role would this institute
have in NASA's technology efforts?
Answer. First, when OSAT was dissolved, the specific technology
programs supported by that office were not dissolved. OSAT
responsibilities were reassigned to other offices along with budget and
personnel. Specifically, cross-cutting spacecraft technology, formerly
within the Spacecraft Systems Division of OSAT, was assigned to the
Office of Space Science which now has responsibility for basic
spacecraft technology in support of multiple program offices. The Space
Transportation Division, responsible for advanced launch and in-space
propulsion technology (including the reusable launch vehicle programs),
was transferred intact to the Office of Aeronautics, which has been
renamed the Office of Aeronautics and Space Transportation Technology
(OASTT). Similarly, the commercial technology programs were transferred
intact to OASTT. The Space Processing Division, which supports
activities in areas such as materials processing and biotechnologies
was transferred to the Office of Life and Microgravity Sciences and
Applications.
In addition, each NASA program office will support specific
technology programs to support their missions. The Office of Space
Science, for example, is initiating major new technology programs to
support its Origins Program (e.g., the Next Generation Space Telescope
and space interferometers that will eventually directly detect
planets--potentially earthlike--around other nearby stars) and deep
space planetary program (e.g., Mars exploration). The Offices of
Mission to Planet Earth and Human Exploration and Development of Space
are similarly developing plans for robust new technology programs.
The key instrument for technology coordination is the Technology
Leadership Council (TLC) which was established along with the Office of
the Chief Technologist at the end of fiscal year 1996. The Chief
Technologist will chair the Technology Leadership Council. This council
will include program office leaders, key HQ officials and center
directors. The TLC is chartered to advise the Administrator on
technology through the Chief Technologist, formulate Agency-level
technology policy and investment strategy, coordinate the technology
program within NASA, and address any and all issues related to the NASA
technology program. The Office of the Chief Technologist will also lead
and be responsible for the process that will be used to develop the
NASA Integrated Technology Plan.
The institute NASA is in the process of establishing is for
advanced concepts, not technology in general. The role of the institute
is to provide the Agency with an independent source of advanced
concepts that can have a significant impact on future missions. NASA
strongly believes that a robust program in advanced concepts is
essential for the long-term future of the Agency. The institute will be
established, competitively, at a host institution and will have
independent authority to solicit, fund and evaluate advanced concepts
across all NASA mission areas. The institute will be ``virtual'' in the
sense that it will not have a permanent technical staff, except for a
director. The director will be responsible for developing solicitations
and overseeing the evaluation process. The other ``members'' of the
institute will be the investigators selected for award. NASA's role
will be to assist the director in developing solicitations consistent
with the Agency's long term goals and to assure that institute awards
are similarly supportive of the Agency's overall mission and strategic
goals. This activity will augment individual advanced concepts
activities conducted within each program office. By complimenting the
internal activities with an independent external advanced concept
activity, NASA will significantly broaden the range of concepts that
can help the Agency do its job more effectively and at lower cost.
Question. NASA and the Air Force recently announced their intention
to coordinate efforts in several areas. What are the plans for agency
coordination? What areas are being addressed in the coordination study?
What impact might these efforts have on NASA's budget?
Answer. NASA and Air Force Space Command cooperative efforts are
outlined in the accompany press release.
Any budget impacts will be dependent on the implementation of
recommendations which have not yet been formulated. It is premature to
speculate what impacts might ultimately result.
Question. In 1997, NASA must begin complying with provisions of the
Government Performance and Results Act (GPRA). What progress are you
making in developing your strategic plan that must be submitted to
Congress by the end of September of this year? What roadblocks or
difficulties are you encountering in efforts to comply with the act?
What metrics will be used given the research nature of the agency?
Answer. NASA's efforts to develop a strategic plan and performance
measurement system predate the passage of the Government Performance
and Results Act (GPRA), as well as the National Performance Review.
NASA initiated a new Strategic Management System in 1992. Previous
attempts at planning did not align with budget reality or with national
policy priorities, and did not present a unified vision and direction
for NASA. NASA issued the first Strategic Plan developed under the new
system in 1994. The Plan has been updated in 1995, 1996, and the 1997
edition is now undergoing the congressional consultation process.
The NASA Strategic Plan articulates the vision, mission, goals and
values for the Agency and lays out a roadmap for the next 25 years. The
Plan describes what we do, identifies our customers, and articulates
where we are going and why. Most importantly, it provides a common
basis for the Administration, Congress, and NASA's management to make
decisions regarding the implementation of our programs and the
deployment of the resources needed to turn the Plan into reality. The
Plan describes four Strategic Enterprises as our core businesses that
include: Mission to Planet Earth, Space Science, Aeronautics and Space
Transportation Technology, and the Human Exploration and Development of
Space. The Plan also defines four crosscutting processes that are
essential to perform our mission. Specific goals are identified for
each Enterprise and the roles and responsibilities for each field
installation as a Center of Excellence or Center Mission are defined.
The NASA Senior Management Council approved the Strategic Plan that
covers the period beginning with fiscal year 1998 and will be submitted
with the fiscal year 1999 budget request. We are encountering no
roadblocks to comply with GPRA.
The metrics to measure the success of our programs will be
contained in a separate Performance Plan. Performance indicators will
be offered for NASA's four Strategic Enterprises and for the four
Crosscutting Processes. To develop the performance measures, NASA
initiated an internal pilot project in 1994 to assess program outputs,
outcomes, and operational efficiencies. The assessment of our
crosscutting processes measures outcomes associated with answering our
fundamental questions of research. NASA has cooperated with other
research and development agencies to identify metrics that take into
account the long term nature of realizing specific results from the
nation's investment in research, while accommodating the intent of GPRA
to ensure efficient short term success indicators. Two pilot
Performance Plans have been completed to date and have been discussed
with our advisory committees and external stakeholders. The first
official Performance Report will be submitted this fall with the fiscal
year 1999 budget request.
NASA's Strategic Management System has been recognized as a model
of excellence by OMB. A case study video tape documenting the NASA
process was developed and distributed by the Office of Personnel
Management and distributed to all government agencies and to Federal
education and training centers.
Question. Through the years NASA has built an extensive physical
infrastructure at its centers located throughout the nation. During
times of budget constraints, the physical plant of agencies is often
neglected. Does the agency have a plan to maintain the capability of
its physical plant? How much is requested in fiscal year 1998 for such
efforts?
Answer. NASA just completed a Facility Investment Study that tied
plant condition and performance with mission criticality from a risk
management perspective. We know where we need to make investments and
will sort that out in the upcoming budget builds.
The fiscal year 1998 budget request contains approximately $172
million for infrastructure investment including liquidating
environmental liabilities associated with the plant.
Question. What is the status of the 1995 Zero Base Review? Will you
be able to achieve the savings initially projected in the review? Are
all the consolidations and changes recommended in the review complete?
If not, what remains to be completed? Are there any plans to undertake
an evaluation of your efforts?
Answer. Since NASA's implementation of the recommendations
resulting from the Zero Base Review (ZBR), significant progress has
been made in changing the way the agency conducts business, and
reducing its size and infrastructure in concert with its future budget
projections. NASA is achieving the savings projected in the Zero Base
Review. The budget runout for fiscal year 1997-2000 included in the
fiscal year 1998 budget request is nearly identical to the budget
runout included in the Zero Base Review.
The following are examples of specific actions underway to
implement the ZBR recommendations:
--On October 1, 1996, NASA awarded a contract to operate the Space
Shuttle program to U.S. Alliance, a significant departure from
years of direct government management and control.
--Program management responsibilities have been transferred to Lead
Centers from NASA Headquarters, and Centers of Excellence have
been established for each NASA Center for more effective and
efficient decision-making.
--The fiscal year 1999 budget will implement full cost budget,
management and accounting principles which will further the
objective of more efficiently managing the public's fund based
on sound business principles.
--Through two successful buyouts, attrition and aggressive
restrictions on hiring the agency FTE workforce is 19,763 in
mid-fiscal year 1997. This is 1,175 FTE below the post-fiscal
year 1996 level. The fiscal year 2000 target has been increased
491 to 17,979 after careful analysis of agency requirements for
its programs, projects and skill mix, particularly in regard to
the Space Shuttle. The fiscal year 2000 target of 17,979 is a
reduction of over 3,500 FTE's (-16 percent) from the fiscal
year 1996 ZBR baseline of 21,555 FTE.
--Through fiscal year 1996, buildings and facilities with a current
replacement value of $1.5 billion have been closed. Other
actions at NASA in support of the ZBR recommendations which are
well underway are conversion to performance-based contracts,
decommissioning of excess aircraft, and efforts to privatize
communications services for NASA's low-Earth orbiting missions
at JPL and remote sensing data acquisition at the Stennis Space
Center. Procurement activities are underway which will
establish the National Space Biomedical Research Institute in
Houston, TX in June 1997.
In short, NASA is maintaining its stated goals of implementing the
ZBR recommendations within the timeframe established. Evaluation of our
progress in this implementation process is ongoing. No major programs
have been terminated. In fact, several significant, new programs have
been initiated in this timeframe which maintain the agency's leadership
in science and technology into the next century.
Question. Last year this Subcommittee provided NASA the authority
to conduct employee buyouts to help with downsizing efforts. How well
is the buyout effort proceeding and is there other legislation that the
Congress should be considering to help avoid a RIF situation?
Answer. With the passage of legislation granting NASA buyout
authority through fiscal year 2000, the agency once again possesses a
valuable tool to aid in downsizing and restructuring without the
adverse impact of involuntary separations and downgrades. Thus far,
most of the NASA centers have conducted their first round of targeted
buyouts, aimed at job categories where reductions need to take place.
As the fiscal year heads to a close, over 850 NASA employees have
separated with buyout under this authority. With careful management,
tailoring the use of buyouts to each center's specific downsizing
needs, we have significantly enhanced our voluntary attrition rate,
while avoiding major skills imbalances and program disruptions which
can result from reduction in force.
With continued availability of buyout and early retirement
authorities for the balance of our downsizing cycle, agency managers
anticipate achieving target staffing levels without the need for
additional legislation. NASA appreciates your continued interest and
support during the restructuring process.
SPACE STATION
Question. What were the results of the Russian General Designers
Meeting on April 24? Did that meeting give you any confidence that the
Russians are now willing to meet their commitments on the International
Space Station (ISS) program? If yes, why?
Answer. The Service Module General Designer's Review, held on April
24, 1997, with RSA, RSC-Energia, Krunichev and all major subcontractors
(over 40 companies) reconfirmed that there were no significant
technical impediments to completion of the Service Module in support of
a December 1998 launch. NASA senior managers were in attendance during
this open and candid review which focused on technical issues. Schedule
milestones were reviewed in detail and all Russian parties stated that
the current Service Module schedule for a December 1998 launch is
feasible. They then committed to the schedule execution necessary to
hold this launch. As a result of the GDR, we now have a signed overall
Service Module schedule and detailed delivery schedules for the
subcontractors.
At the Space Station Control Board held May 14, 1997, in
conjunction with all our international partners, we officially
baselined a new assembly sequence which places the Service Module
launch in December 1998. This decision reflected a renewed confidence
by all the international partners that Russia will deliver its
commitments on schedule based on events that have taken place in Russia
over the last few months, such as the fiscal year 1997 funding for the
SM being available. While not completely eliminated, the risk to its
delivery schedule has been sufficiently lowered. There were many
factors that the U.S. and the other partners considered in making this
decision, but, it was ultimately based on a visible and concrete
demonstration by Russia of their resolve.
Question. What return on investment have American taxpayers reaped
from having U.S. astronauts aboard Mir for more than a year? What will
be the return from the additional flights planned through 1998?
Precisely what are the scientific experiments the astronauts are
conducting?
Answer. The returns on the investment for having U.S. astronauts
live and work aboard Mir derive from pursuing the basic objective of
the Shuttle-Mir/Phase I program: namely, to capitalize on existing U.S.
and Russian space assets and know-how in the interest of the U.S., both
today and in future years. The benefits to us of the joint Shuttle/Mir
activities are accruing through three thrusts: (a) learning to work
with the Russians (and having the Russians learn to work with us); (b)
reducing the programmatic, technological, and assembly/operations
procedures risks on the International Space Station (ISS) program; and
(c) utilizing the space station Mir for conducting early science
research requiring longer durations than provided by Shuttle missions.
By exercising crew exchanges, science research, hardware delivery, on-
board repairs and servicing, and operational test and verification, we
have in all of these categories already gained much more from our
collaboration with Russia than many experts expected at the outset.
The early scientific experiments conducted by U.S. astronauts fall
in two major areas: Risk Mitigation Experiments (RME) and Mission
Science. The latter recognizes such areas as Fundamental Biology (FB),
Human Life Sciences (HLS), Space Medicine Program (SMP), Microgravity
Sciences (MG), and Space Science (SS).
Specific experiment programs in these disciplines include:
RME.--Mir Environmental Measurements (e.g., electric field);
Structural Dynamics Investigations; Dynamic Loads Measurements; Cosmic
Radiation Monitoring; Radiation Shielding Research; Volatile Organics
Measurements; Micrometeoroid/Debris Survey; ESA Proximity Sensor
Verification; Docking Evaluations; EVA Operations; Onboard Water
Experiments/Testing; and Hardware Verification Tests (e.g., treadmill,
personal computer system).
FB.--Insect Circadian Rhythms; Environmental Radiation
Measurements; Dosimetry Tests; Greenhouse/Plant Growth Experiments; and
Incubator Experiments.
HLS.--Bone Mineral Loss Investigations; Humoral Immune Function
Investigations; Renal Stone Risk Assessment; Human Autonomic
Investigations; Sensory-Motor Transforms Determination; Sleep
Investigations; and Magneto-resonant Imaging (MRI).
SMP.--Toxicological Assessments; Archival Water Sample Analyses;
Crew Microbiological Assessments; Mir Microbiological Measurements;
Metabolic Investigations (blood, urine, saliva, glands, centrifuge);
Cardiovascular Investigations (skin & core temperatures, blood
pressure, cardiovascular monitoring, physical fitness); and Orthostatic
Function Studies.
MG.--Space Acceleration Measurement System (SAMS); Colloidal
Gelatin Experiments; Microgravity Glovebox; Dialysis Crystallization
Experiments; Liquid Metal Diffusion Experiments; Flame Investigations;
and Biotechnology Systems Development.
SS.--Particle Impacts Measurements; and Mir Samples Assay, etc.
Question. Much attention has been focused on the problems with
Russian involvement in the space station program. However, the U.S.
prime station contractor, Boeing, also has encountered problems
resulting in cost increases and schedule delays. What is the current
status of Boeing's efforts? Are you satisfied with the prime
contractor's performance to date? What actions are being taken to deal
with the problems?
Answer. Boeing continues to make substantial progress on the
development of the hardware. The FGB and Node 1 were on track for
launch in late 1997, and now, due to the Service Module (SM) delay,
they are scheduled for launch in mid-to-late 1998. The U.S. elements
through 7A are completing design and fabrication, with qualification
testing and flight integration activities well underway. The program
has passed the 59 percent completion mark in major milestones. Of the
U.S. flight hardware to be produced, over 184,000 pounds of the total
720,000 pounds have been built.
As is expected with an undertaking of this complexity and
magnitude, problems have been encountered by Boeing, as the program
reaches the point of peak development activity. Boeing is addressing
the technical problems that have been identified to date and continues
to work very hard to solve the myriad of technical and programmatic
challenges that are encountered as the program moves through the
qualification testing and production phase of the development cycle.
Resolution of the technical problems, however, is achieved at a cost in
both schedule and cost performance.
Boeing's schedule variance is currently approximately 3.3 percent
($132M) through March 1997. This continuing schedule variance indicates
the Prime contractor is approximately 5 weeks behind plan. Although the
schedule variance has continued to worsen over recent months, we expect
to see slight improvements in schedule performance over the next 6
months as hardware and software qualification milestones are completed.
Schedule recovery plans are in place at the Product Groups and at the
Tier II subcontractors. The overall cost and schedule variances are
reported monthly at the Program Manager's Review. The near-term
schedule problems on flights FEL through 7A are statused to management
on a regular basis.
Boeing's cost variance is currently 7 percent ($291M) through March
1997. Boeing's cost projections indicate that this variance will
continue to grow over the remainder of the year. While this trend is of
concern to NASA and Boeing, it is important to recognize that the
program is now in a critical phase where a considerable amount of
hardware is being assembled and tested, and software is being
developed, integrated and checked out. During this timeframe, the
potential for unforeseen challenges to our cost and schedule targets
will remain high. The program had adequate reserves built into the
total development estimates to address these anticipated challenges.
However, Russian schedule uncertainties have required us to develop and
maintain contingency capabilities that has diverted a portion of those
resources at a time when they are critical for continued program
development. For that reason, NASA has reallocated $200 million to
support the contingency requirements, and enable the use of program
reserves as originally intended.
NASA and Boeing are also developing and implementing as rapidly as
possible a workforce destaffing plan that aggressively removes Tier One
and Two contractors from the work force as soon as hardware and
software development efforts are completed. Staffing projections for
the remainder of the year show substantial reductions in workforce
levels. NASA is also restricting change orders to the contract to only
those that are absolutely essential to the successful operation of the
Station. All changes currently in process are being carefully reviewed
to minimize near-term costs. Additionally, NASA has a very rigorous
award fee process in place that requires the contractor to meet
acceptable cost and schedule performance standards in order to earn
award fees on the contract. Failure to meet those standards could
result in a substantial loss of revenue to the contractor, and is
expected to incentivize excellent contractor performance.
Question. Why has the estimated number of spacewalks for the Space
Station during the assembly period tripled (from 434 hours to 1,519.5)?
Do you expect the number to continue growing?
Answer. The International Space Station is a large and complex
project which is assembled over several years and numerous flights. The
assembly requires a large number of EVA's; however, the total number of
EVA's or EVA hours is not a particularly useful tool in evaluating the
level of risk to ISS assembly. During the two Hubble Space Telescope
repair missions, NASA demonstrated the ability to accomplish complex
missions with multiple complex EVA's. The two most important issues in
assessing the risk of the assembly EVA's is the EVA margin available to
the program and the level of complexity of the EVA tasks. Experience
has shown that as we transition from a hardware development phase of
the program into crew training the EVA timelines become better defined
as task/design details emerge and other operational details are
integrated into the timelines. In some cases we expect the timelines to
grow because of this but in other cases the timelines will decrease as
the EVA crew members become more proficient with their tasks and/or
design details emerge where only assumptions about the EVA task were
previously made.
The 434 crew hours basically indicates an older estimate which only
included the hours for U.S. assembly of the ISS. The 434 hours does not
include: U.S. Assembly crew hour growth from 434 to the current number
of 905.2; U.S. external maintenance during assembly (currently at 200
crew hours); Russian assembly crew hours (currently at 270 hours); and
Russian crew hours required for external maintenance (currently at 144
crew hours).
The following table indicates the U.S. crew hours increase and the
Russian crew hours decrease from March 1996 to the current numbers
(April 1997).
------------------------------------------------------------------------
Crew hours
-------------------------------
U.S. U.S. RSA RSA Total
assy. maint. assy. maint.
------------------------------------------------------------------------
June 1995...................... 434.0 ...... ..... ...... 434.0
March 1996..................... 707.4 122 420 240 1,489.4
September 1996................. 808.2 126 324 144 1402.2
October 1996................... 810.6 162 324 144 1,441.6
January 1997................... 910.5 162 270 144 1,487.5
Current (April 1997)........... 905.2 200 270 144 1,519.2
------------------------------------------------------------------------
Examples of activities leading to U.S. EVA hour growth from March
1996 to the current numbers (April 1997) are provided below.
--Better definition of timeline and design maturity on Flight 7A
(Airlock assembly tasks) and other flights (+25.3 hr.)
--Added EVA to install Power/Data Grapple Fixture and cables on the
FGB to complete on-orbit software modifications. (+12 hr.)
--Battery move from P6 Truss to P4 without the previously planned
Special Purpose Dexterous Manipulator (SPDM) (+35.0 hr.)
--Manual relocation of the Battery Charge/Discharge Unit & Grapple
Fixture resulting from SPDM deferral as an assembly aid (+35.3
hr.)
--Additional EVA is required to remove Multi-Layer Insulation from
the JEM External Facility instrument (+12.0 hr.)
--Miscellaneous growth and timeline maturity (+12.0)
The U.S. growth in external maintenance activities using EVA has
occurred for the following reasons:
--Increases in the on-orbit spares, i.e., MDM's, RPCM's, etc.
--Changes in the current assembly sequence baseline.
--Better defined equipment and upmass allowances (Preventive
maintenance is just recently being addressed in the ISS
Program).
--Decision to defer SPDM by 7 months resulted in an increase of 40
EVA hours for external maintenance.
The reduction in Russian EVA assembly hours has occurred for the
following reason:
--The Science Power Platform (SPP) is now more fully integrated on
the ground, therefore, reducing the amount for SPP assembly
EVA's.
--Service module (SM) solar array augmentation was eliminated as a
requirement.
The reduction in Russian external maintenance using EVA has
occurred for the following reason:
--increased understanding of the Russian method of estimating
maintenance requirements. The earlier values included IVA tasks
as well as EVA tasks.
The current estimate of EVA hours required for ISS assembly while
large, represents a group of EVA's which are within NASA's experience
base and which are doable given the training planned and the margin
present. The estimate will continue to change as the assembly sequence
continues to mature, but appropriate margins will continue to be
maintained.
SPACE SHUTTLE
Question. When will you have a new assembly sequence for the Space
Station? Do you still estimate that approximately 30 U.S. Space Shuttle
launches will be required?
Answer. The International Space Station Control Board (SSCB)
approved a Rev. C assembly sequence on May 14, 1997. This updated
assembly sequence reflects a delay in the Russian provided Service
Module from April 1998 to December 1998.
NASA's estimate of the number of Space Shuttle flights required for
assembly is 34, which includes one launch for ESA's Columbus Orbital
Facility (COF) and portions of four launches for Japan's Experiment
Module (JEM).
Question. Within the past year the shuttle program has encountered
such problems, a stuck orbiter hatch, the discovery of un-insulated
water pipes, unexpected scorching of the solid rocket motors, and the
early return of a shuttle mission due to problems with a fuel cell. Are
these indications of a problem in the shuttle program given the
extensive changes that have been taking place by going to a single
prime contractor? How has United Space Alliance been performing since
the initiation of its contract?
Answer. Such anomalies have occurred throughout the space program
and will likely continue in spite of the most prudent and reasonable
precautions taken by NASA and its contractors. While certainly not an
excuse, the water pipes that were found to lack insulation have been in
that condition for many years--long before the advent of USA. In fact,
USA discovered the condition. Regarding the solid rocket motors, they
are the responsibility of Thiokol Corp. which is not a part of the USA
contract. The fuel cells and hatch are products of sub-contractors that
are checked for proper function, configuration, and integration by USA
prior to launch. The Shuttle team, both contractor and government
workers, work very hard to eliminate the occurrence of such problems.
Performance of USA is tracked by a number of metrics including problem
reports, mishaps, in-flight anomalies, cost rate, overtime, and
waivers--all of which indicate a trend of good and improving
performance by USA since initiation of its contract. The Aerospace
Safety Advisory Panel recently reviewed the transition of operations to
USA and confirmed that Shuttle safety has not been compromised and that
the transition is going well.
Question. What are your plans for Shuttle upgrades? Does it make
sense to pursue extensive space shuttle upgrades if the shuttle is
going to be phased out by 2012? With the potential to privatize the
shuttle, should not the current prime contractor United Space Alliance
be involved in funding shuttle upgrades? What might you have to do to
keep the shuttle flying well into the next century if an operational
RLV does not come into existence as currently envisioned?
Answer. We plan to continue to fund and implement those upgrades
that are required to fly the Shuttle safely until it is replaced by a
more capable, efficient vehicle. The decision to phase out the Shuttle
by 2012 and replace it with an operational RLV has not yet been made
and until that is decided, maintaining the option of operating the
Shuttle to 2020 or beyond is the prudent course, therefore, we plan to
continue to study those upgrades which would take the Shuttle
significantly beyond 2012. To continue to fly the Shuttle to 2020,
significant upgrades will be needed to the Shuttle system to increase
safety margins, mitigate obsolescence, reduce processing time, and
reduce operations costs. Work has already begun to define, demonstrate
and, where it makes sense, to implement component upgrades to the
Shuttle system. Examples of upgrades needed to continue use of the
Shuttle to 2020 include modernized avionics, computers, and displays/
controls; more efficient and robust fuel cells; engines and auxiliary
power units that burn less toxic fuel; and engine components and
thermal protection tiles that require less maintenance. Certainly, the
role of the operations contractor and the specifics of its involvement
in Shuttle upgrades are questions that must be addressed in the near
future. Keeping the Shuttle as safe as can be is NASA's number one
priority, no matter how much longer it remains in service.
Question. What are the savings from consolidation of space shuttle
contracts? Are these savings already included in NASA's outyear budget
estimates?
Answer. The Shuttle program anticipates savings of $360M through
fiscal year 2000 from its overall restructuring efforts. The $360M was
the remaining amount of unresolved reductions as submitted in the
fiscal year 1997 request. The total amount of budget savings that the
program achieved was over $1B through fiscal year 2000 from the fiscal
year 1996 request. Of the remaining $360M, $250M of that is to be
achieved by the Space Flight Operations Contract. The $360M of savings
were included in the fiscal year 1997 budget request to Congress and
has been reflected in our fiscal year 1998 request.
Question. What is the current status of DOD use of the space
Shuttle? Are there any plans in the future to fly a dedicated DOD
mission? Has DOD approached NASA with potential future missions that
could be flown on the shuttle?
Answer. Currently there are a number of secondary DOD payloads
scheduled to fly on the Shuttle throughout the manifest and the Shuttle
Radar Topography Mission (SRTM) primary payload is scheduled to fly in
fiscal year 1999. Also, we are working very closely with the DOD on
several additional primary payload flight opportunities, which may
include some of the remaining Defense Support Program (DSP) satellites.
Question. Some recent shuttle flights have had scorching on the
solid rocket motor nozzles to an extent that has not occurred
previously. What is the status of investigation into this anomaly? Can
the agency continue to fly the shuttle safely without full resolution
of this problem?
Answer. Scorching or pocket erosion was observed post-flight and
determined to have occurred on both the STS-79 (Sept. 1996) and STS-80
(Nov. 1996) Solid Rocket Motor nozzles. The investigation will be on-
going until a cause and corrective action is determined. The
phenomenon, however, is understood well enough and the existing margins
of safety provide sufficient rationale to allow safe continuation of
Shuttle flights.
Question. What metrics are being used or being developed to measure
the impact of downsizing on the safety of the space shuttle?
Additionally what metrics are being used to measure the impact on the
shuttle safety of transition shuttle operation to the single prime
contractor United Space Alliance? Is the agency satisfied that the
changes are not having a negative impact? Are there specific areas of
concern?
Answer. The SFOC contract has several metrics which monitor the
transition. So far, we are satisfied with the transition progress and
do not see any negative impacts. We are constantly monitoring and
communicating changes to our managers and workforce to ease this
transition period. One area of concern for both civil servants and our
contractors is in the area of software development and engineering.
With the expansion of the Internet and other computer applications, it
is difficult to compete with other industries to retain our best and
brightest in this critical area.
REUSABLE LAUNCH VEHICLE
Question. How significant is the weight growth and reduction in
mach number in the X-33 program? Do you believe the program can still
demonstrate by the turn of the century whether or not this is a viable
option for replacing the space shuttle?
Answer. Weight growth in a vehicle of this type, at this stage of
its detailed design work, is not unexpected. A special weights tiger
team has been established to assess where vehicle weight reductions
could be achieved and has to date identified in excess of 10,000 pounds
of candidate weight reductions. Additionally, the potential to achieve
higher Mach numbers through optimizing flight trajectories and applying
other technologies (e.g. densified propellants) are being assessed. The
goal of Mach 15 is still achievable through these various efforts;
however, falling short of that goal is not a serious problem. The
stated goal of Mach 15 was established prior to configuration
downselect as a conservative target to achieve ``real gas effects'' on
aerodynamics and aerothermodynamics for multiple vehicle shapes. We are
currently evaluating velocity requirements from an engineering
standpoint for this specific X-33 aerodynamic shape, and we believe
that the real requirements will be satisfied whether or not Mach 15 is
reached. We are confident that the goal of the X-33 program, to prove
that the concept of an operational reusable, single-stage-to-orbit
launch system is viable, will be accomplished by the turn of the
century.
Question. What is NASA's relationship with the Air Force in the
Reusable Launch Vehicle program, particularly the X-33? Is the Air
Force bringing its own funds to bear for work on the project? Does the
Air Force have any role in the X-33 test flights?
Answer. NASA and the Air Force are cooperating in the various
reusable launch vehicle programs. Specifically in the X-33 program, Air
Force personnel participated in the source selection process. Lockheed
Martin Skunk Works currently has X-33 task agreements in place through
which the Air Force laboratories are supporting development of the X-33
in areas where they have particular expertise. X-33 will be launched
from Edwards Air Force Base (EAFB), and EAFB personnel are
significantly involved in the range safety assessments. Air Force bases
have been identified as candidate X-33 landing sites. The Air Force
views the X-33 program as a source for technology developments which
they need for their own use; however, the X-33 program is not being
funded by the Air Force.
Current plans are for the higher Mach number flights of the X-34 to
be conducted in the Air Force's Eastern Test Range in Florida.
Additionally, NASA and Air Force Space Command have established a
partnership council to oversee expanded cooperation between the two
organizations. Several joint teams have been established including one
to develop an Integrated Space Transportation Plan which addresses a
complimentary mix of Air Force EELV programs and NASA RLV programs and
Air Force leveraging of NASA RLV technology for the military spaceplane
development.
Question. Has NASA begun discussions with Lockheed Martin or other
potential industry providers as to what the government role should be
in the development of an operational reusable launch vehicle (RLV) if
the X-33 program proves successful? Does the agency still assert that
an operational RLV will be financed solely by the private sector? What
role might the government take to facilitate private sector funding?
Answer. While the X-33 flight and ground test programs are
progressing, NASA, industry, and investment advisors are assembling the
business plan that will enable a commercial RLV. Such a business plan
may or may not require government support. At this point, the industry
team and their investment advisors have not finalized this business
plan. Therefore, speculation on a set of specific government actions is
premature. Our current schedule completes the first cycle of business
planning, including any potential government support, before the end of
1997. Whether or not government funding may be required and at what
level, if any, will be identified through these efforts.
Question. NASA recently added a second test flight vehicle to the
X-34 program. Are there plans for a second flight-test vehicle in the
X-33 program? What contingencies are in place in case of a flight
failure that damages or destroys the X-33 vehicle?
Answer. We do not plan a second X-33 flight-test vehicle. If a
vehicle is damaged or destroyed, an assessment would be made at that
time on how to proceed. Much of what we will learn from X-33 will
already have occurred in building the vehicle, integrating the
candidate advanced technologies, and processing and testing the vehicle
on the ground. Depending on when in the program such a hypothetical
loss might occur, many of the flight demonstration goals might have
already been achieved. This approach involves risks, but we chose this
path by weighing the additional risks versus the additional costs of a
second vehicle.
Question. The trade press has reported that Marshall Space Flight
Center is promoting a flight demonstrator, known as X-37, to be a
follow-on to the X-33 program. Is NASA planning a successor
experimental flight demonstrator to the X-33?
Answer. In keeping with the National Policy direction to balance
investment between existing space transportation systems and
development of future capabilities. NASA's Aeronautics and Space
Transportation Technology Enterprise has begun initial planning for a
continuing program of investment in space access technology development
and flight demonstration. There is potential for a future flight
demonstration vehicle, although no decision has been made regarding the
type and configuration of the vehicle, or the technologies to be
demonstrated.
The continuing space transportation development and demonstration
program is aimed at meeting access-to-space requirements beyond the
scope of the current X-33 program, and at continuing to reduce the cost
of all areas of space transportation over time, whether or not the X-33
leads to a commercial RLV. Experimental flight vehicles are a critical
part of the program, and they will be used when a near- or mid-term (1-
7 years) operational or development decision requires the use of X-33,
X-34 and DC-XA demonstrators. The flight demonstration program would
coordinate with, and draw advanced technologies from, programs such as
the Advanced Space Transportation Program (ASTP) and the Aeronautics
core. The technologies demonstrated would be aimed at meeting the full
gamut of commercial, international and government needs for space
access (e.g., Earth-to-orbit, orbit transfer, or interplanetary
transportation).
Question. As part of its NASA authorization bill, the House Science
Committee has approved $300 million in fiscal year 1998 for a new
experimental demonstration vehicle which is to be a ``complementary
follow-on'' to the X-33. The X-33 program currently has only one
experimental vehicle. A second X-33 is estimated to cost $330-360
million. Would you rather have additional funds to build a second X-33,
or a new follow-on vehicle as the House Science Committee directed?
Answer. If funding were to be added to the RLV program, that
additional fiscal year 1998 appropriation would be better spent on an
evolved, or next-generation demonstrator that adds newer or back-up
technologies, rather than on an identical duplicate of the X-33's
current design. This follow-on vehicle would complement the X-33 by
incorporating technology advancements that have been made since the X-
33 program was initiated and would take advantage of the lessons
learned.
As compared to an ``X-33B'', however, a new demonstrator could
offer significantly more advanced technologies, potentially including:
ultra high temperature thermal protection, very high hypersonic lift/
drag ratios, an integrated reusable upper stage, and very fast
turnaround. Such a demonstrator offers potential for global two hour
transportation, very low cost delivery to geostationary orbit, and
fully reusable earth-moon transportation systems.
SPACE SCIENCE
Question. NASA has put forth the ``Origins'' program as the focus
of its space science efforts, looking at the origins of galaxies and
stars, the origin and evolution of planetary systems, and the existence
of life. What is the Origins program and which projects comprise the
effort? Are all future space science efforts part of the Origins
program? Has the agency developed a roadmap and milestones to be met by
each mission identified as part of the Origins effort?
Answer. NASA's Origins Program is directed towards answering among
the most fundamental questions that we can ask: Where did galaxies,
stars and planets come from? Are there worlds like the Earth around
nearby stars? If so, are they habitable and is life as we know it
present there? What is the origin of the universe?
The current and planned space science programs of NASA begin the
next steps in the quest for origins and pose the scientific challenges
needed for subsequent steps. Missions now underway and in planning,
including the upgraded instrumentation for the Hubble Space Telescope,
are the Space Infrared Telescope Facility, the Stratospheric
Observatory for Infrared Astronomy, the Mars Surveyor series, and other
planetary and space astronomy and physics projects. These missions will
offer powerful tools for advancing NASA's Origins program.
At the same time, while the origins challenge provides a unifying
core for the space science program, neighboring disciplines will
address important problems of their own, and may unexpectedly
contribute directly, as was the case for the recent analyses of Martian
meteorites. These related activities span the broad panoply of
laboratory, field, and theoretical research conducted by NASA. The
fiscal year 1998 budget request captures a core Origins program
consisting of:
--an increase for the Mars Surveyor program to allow for the launch
of a Mars sample return mission in the middle of the next
decade, and to increase the scientific robustness of the
program;
--a new Exploration Technologies Development program, to enable bold,
new, low-cost experiments on the surface of solar system
bodies;
--an accelerated launch schedule (from September 2002 to December
2001) for the Space Infrared Telescope Facility (SIRTF) to
enable more overlap with the Hubble Space Telescope and the
Advanced X-ray Astrophysics Facility, and provide earlier
Origins results;
--full development of the Keck II ground-based interferometer, to
enable direct detection of planets around other neighboring
stars by analyzing for signs of the tug of intermediate-mass
planets;
--advanced technology funding for the Next Generation Space Telescope
(NGST) to peer far out into space and far back into time to
reveal the birth of galaxies and will peer into dusty stellar
nurseries, allowing scientists to study the formation of stars
and their families of planets;
--advanced technology funding for the Space Interferometer Mission
(SIM) to search for the tiny wobbles of a star's motion in
response to the tug of possible planets only a few times
heavier than the Earth. SIM has been targeted as a Phase C/D
new start in fiscal year 2001, with an anticipated launch in
late fiscal year 2005;
--an increase in astrochemistry/astrobiology research and analysis,
to support the multidisciplinary study of the origin and
evolution of pre-biotic material, the origin and distribution
of life, the adaptation of life to space, and studies of the
earliest life, and life in extreme conditions on Earth.
NASA has developed a roadmap and milestones for the Origins
program, which are currently being incorporated into the upcoming
revision of the OSS Strategic Plan, to be released in the fall.
Question. The National Research Council recently recommended that
NASA develop a plan for the safe return of samples from Mars. What are
the agency's plans in the area given that there are plans for a Mars
Sample Return launch in 2005?
Answer. At NASA's request, the Space Studies Board recently studied
and published, ``Mars Sample Return: Issues and Recommendations,
1997.'' NASA is now in the process of considering the following
recommendation for a receiving facility:
--A research facility for receiving, containing, and processing
should be established as soon as serious planning for a Mars
sample return is underway: operational a minimum of 2 years
before launch; with multi-disciplinary science staff for
development and procedures; and with an advisory panel of
scientists established for oversight responsibility.
The Planetary Protection Office initiated a study in 1996 which
included considering:
--Quarantine and testing of the returned sample: suitability of
current containment facilities for Mars sample return; and
review Apollo and new methods for biohazard testing.
There will be a Mars Sample Quarantine Protocol Workshop at Ames
Research Center, June 4-6, which will discuss containment practices and
facilities.
--This issue will be addressed in our fiscal year 1999 budget
request.
Question. Funding for near-Earth asteroid detection is currently
$1.5 million annually. The House Science Committee recently recommended
that the agency undertake a $3.4 million effort annually. Do you agree
with the increase in funds for this effort?
Answer. NASA does not agree with the proposal to increase this
effort to $3.4 million annually.
Total NASA funding for all NEO-related activities is approximately
$1.2 million in fiscal year 1997. Comparable amounts will be available
in fiscal year 1998, but the final funding level will be determined
based on the peer-review findings and the availability of appropriated
funds.
We estimate that it will take approximately 20 years to detect,
catalog and characterize 90 percent of the NEO's larger than 1
kilometer in diameter with the current program of approximately $1.2
million per year.
Funding for the NEO program comes out of a small and very
competitive budget for peer-reviewed science. Increasing funding for
NEO's to $3.4 million would eliminate funding for a significant number
of meritorious, peer-reviewed space science endeavors.
LIFE AND MICROGRAVITY SCIENCES
Question. The Bion program, which studies the biomedical effects of
the space environment on animals using Russian biosatellites, came
under severe criticism from animal rights activists and taxpayer
groups. You recently announced that you have suspended NASA
participation in the primate research aspect of Bion 12. Will you still
be participating in the other non primate aspects of the Bion 12?
Answer. At this time NASA is studying options which exclude non-
human primates for possible flight on Bion 12. Studies are currently
underway in both the U.S. and Russia to determine ways of taking
advantage of the investment to date by evaluating the possibility of
flying non-primate payloads utilizing as much of the existing resources
as possible.
Question. How much money remains unobligated for Bion 12?
Answer. In fiscal year 1998 and fiscal year 1999 approximately $6.1
million.
[In thousands of dollars]
------------------------------------------------------------------------
Fiscal years
------------------ Total
1998 1999
------------------------------------------------------------------------
Principal investigators...................... 900 900 1,800
Flight support............................... 1,793 701 2,494
Contract..................................... 1,780 ....... .......
--------------------------
Total.................................. 4,473 1,600 6,073
------------------------------------------------------------------------
Question. What are your plans for use of this money?
Answer. The Principal Investigators for Bion 11 are planning to
conduct supporting studies on the ground that will enable them to
derive the maximum scientific benefit from the flight data already
acquired from the flight on Bion 11. The Flight Support funds will be
used to support other flight activities and to study options for
flights of lower organisms (rodents, insects, cells, plants) on the
Cosmos Biosatellite, as a potential replacement payload on Bion 12.
Question. Does NASA intend to continue using primates in other
biomedical research efforts?
Answer. Yes. NASA plans to continue to use non-human primates where
their use is appropriate and justified. This research will continue to
be thoroughly peer reviewed and subjected to the highest standards of
animal care and use.
MISSION TO PLANET EARTH
Question. It has been past practice that the agency estimates MTPE
program costs only through fiscal year 2000. Since NASA's 5-year budget
includes fiscal year 2001 and fiscal year 2002, the agency may be in a
better position to estimate total program cost. What is the total life-
cycle cost of the MTPE program? What is the total life-cycle cost of
MTPE's major component, the Earth Observing System (EOS)?
Answer. Mission to Planet Earth is one of NASA's four basic
enterprises. Enterprises, by their nature, are long term commitments to
a research area or customer community. There is no life cycle cost, per
se, for Mission to Planet Earth. There are life cycle costs for
specific programs within Mission to Planet Earth. Short programs can
estimate life cycle costs with reasonable accuracy. The longer the
program, the greater the uncertainty in these estimates. Future
advances in technology, evolution in basic science requirements as
knowledge is gained, and changes in implementation strategy will
directly impact the real life cycle costs. Recognizing this
uncertainty, the Earth Observing System (EOS) program has maintained a
total program cost estimate through fiscal year 2000 as a key measure
of effectiveness. At inception the EOS program was to cost $17 billion
through this period. The current estimate for the same period is $6.7
billion. Savings were achieved through technology infusion,
streamlining requirements and increased international and interagency
partnerships (i.e. National Polar Orbiting Environmental Satellite
System (NPOESS) with reference to EOS-AM-2). In fiscal year 1996,
Mission to Planet Earth made a major commitment to define and estimate
the life cycle cost for EOS. Sufficient progress had been made in
defining the program implementation in the near term that future
estimates could begin to be made. The total costs were estimated
through fiscal year 2022, consistent with the stated objective of
providing a 15 year data set of key measurements necessary to
understand climate change.
In June 1995, the General Accounting Office (GAO) issued the
results of their study of long-term EOS costs. Basing their estimate on
a assumption that NASA would simply fly copies of the 1st phase EOS
instruments and spacecraft during the 2nd and 3rd phases, the GAO
predicted that the total long term cost of EOS (including operations)
would be approximately $33 billion. Cognizant of the problem with their
assumption, the GAO report acknowledged that NASA was actively studying
how the program could be evolved at a lower cost and posed some of the
challenges that NASA would face in achieving such savings. NASA noted
that the estimate did not reflect the likely actual cost of the
program, given agency intentions to incorporate new technology and
partnerships. Recognizing the potential to reduce the cost of second
series missions relative to the first, Mission to Planet Earth
initiated an aggressive technology infusion program. Funds were carved
out of the near term program to initiate an integrated technology
strategy that included a focused program for new instruments
(instrument incubator) and flight demonstrations (New Millennium). In
addition, efforts were expended to transition, when possible, Mission
to Planet Earth science measurements to existing operational
capabilities. As a result, the second and third series estimated costs,
through fiscal year 2022, were reduced 30 percent. NASA estimated that
the life-cycle cost of EOS would be $25.3 billion based on our new
approach to implementing the follow-on series. Additionally, the EOS
component of the Mission to Planet Earth program has been ``capped'' at
approximately $1 billion per year for the first decade of the 21st
century. The ability of NASA to achieve these cost savings in the
second and third generations systems for EOS is critically dependent
upon maintaining a stable funding environment for the program between
1998 and 2002, so that the necessary new technology can be developed/
demonstrated.
During the Biennial Review process, we are continuing to press our
implementation strategy. We previously committed to re-compute the EOS
instruments and investigators for the second series. Based on advice
from our Earth Systems Science Advisory Committee, we are now moving
toward revalidating the measurements on a recurring basis as scientific
knowledge advances. This is driving increased pressure to shorten
development time and to de-couple spacecraft development from
aggressive instrument technology infusion. We have not finalized these
results but they will clearly have an impact on future EOS life cycle
cost estimates.
Question. What is the status of the LightSAR program? Is there
funding available in the outyears to fund LightSAR? Does NASA expect to
fund the program in the future?
Answer. NASA has committed $6,250,000 of the fiscal year 1997
allotted $12 million. NASA is funding four studies at $700 thousand
each. Each of the four selected teams are making significant cost
sharing efforts on the study, ranging from just over $100,000 to just
under $1.5 million. In addition, NASA is also funding project work at
the Jet Propulsion Lab (JPL), Stennis Space Center (SSC) and a science
team. When completed, the studies will help us determine compatibility
between science requirements and commercial requirements, and the level
of investment industry is willing to make in a LightSAR-type mission,
as well as potential teaming arrangements between the government and
private industry through a better understanding of the potential
commercial market for SAR data products and services. The Stennis Space
Center will be managing the commercial applications support ($700
thousand) offered to each of the teams. Total funding for the studies,
commercial applications support, and subsequent core technology
development will not exceed the $12 million currently identified in
MTPE's 1997 budget. The LightSAR studies will produce final reports for
NASA in November 1997, for program review by year end. At that time, a
schedule for further LightSAR activities will be developed.
Currently there is no plan to fund LightSAR in the outyears.
LightSAR, would require approximately $150 million through fiscal year
2001, depending upon the configuration. A SAR was proposed for the
Earth System Science Pathfinder (ESSP) solicitation, but was not
selected as it exceeded the $90 million maximum cost allowed in that
process. SAR data might qualify as a candidate for the MTPE Scientific
Data Purchase, which was competitively announced on May 23, in which
case these additional funds would be available.
Any additional funding for LightSAR beyond the $12 million already
provided, and possibly the scientific data purchase will depend
significantly on the outcome of the funded studies which will be
completed in November of this year to determine if industry can absorb
a larger share of the mission costs. Results of these studies will help
define an appropriate implementation approach based upon affordability,
scientific priority, and industry cost share.
Question. Landsat 7 is scheduled for launch in 1998. Is the program
on schedule and within budget? Is the National Oceanic and Atmospheric
Administration providing funding for Landsat 7 operations, or will NASA
fully fund its operations?
Answer. NASA has committed to launch Landsat 7 by December 1998. It
is presently planning a launch date set for May 29, 1998. The program
is within its NASA budget guidelines of $387.4 million, projected total
at completion.
NOAA is committed to operating the Landsat program. NOAA is sharing
the cost for operations preparation and engineering support for fiscal
year 1997 and fiscal year 1998 with NASA. NOAA has committed $1.2
million for fiscal year 1997 and plans $2.45 million for fiscal year
1998. NOAA expects revenues from access fees and data sales to cover
the operations costs in fiscal year 1999 and beyond.
Question. What is NASA's role in the National Polar Orbiting
Environmental Satellite System (NPOESS)? Are there plans to use NPOESS
satellites for instrument deployment as part of EOS?
Answer. NPOESS is a tri-agency program among NOAA, DOD and NASA
designed to converge the military and civilian operational weather
satellite systems now run separately by NOAA and DOD. NASA's role is to
provide technology leadership for the NPOESS program. NASA, MTPE and
NPOESS/Integrated Program Office (IPO) personnel are actively engaged
in reviewing areas of synergism between the two programs. The most
fertile area for additional cooperation currently is the area of
atmospheric temperature and moisture soundings, in which NASA is
considering possible development of an Integrated Multi-Spectral
Atmospheric Sounder (IMAS) as a candidate for flight on NPOESS and
precursor operational NOAA satellites. NASA's participation is intended
to facilitate the development of smaller, less expensive instrument and
spacecraft systems for the converged program. Other promising areas of
cooperation include sensors for monitoring Earth's radiation budget,
total solar-irradiance, and ocean surface topography.
The first NPOESS satellite has a planned launch readiness date of
2007 to back-up the NOAA ``N'' satellite, with a probable launch date
of 2009. The NPOESS Integrated Program Office has recently released a
Request for Proposals for Phase B definition studies for several
instruments. We have already adopted as a baseline the plan to have
some EOS-PM2 requirements met by the first NPOESS satellite (and
perhaps a precursor).
Question. How much are NASA's international partners spending on
MTPE cooperative efforts with NASA? What countries and/or agencies are
involved and what are their major efforts?
Answer. NASA's international partners are spending approximately $4
billion in projects directly connected to MTPE through cooperative
agreements and another $4.4 billion in complementary missions during
the period 1990-2000. Direct cooperative contributors include
spacecraft carrying NASA instruments (e.g., NSCAT and TOMS on ADEOS-1),
instruments to fly on NASA satellites (e.g., HSB on EOS PM-1), foreign
launch of NASA satellites (e.g., TOPEX-Poseidon on Ariane, TRMM on H-
2), NASA launch of foreign satellites in exchange for data rights
(e.g., Radarsat), cooperative field campaigns involving ground-based
and airborne data collection (e.g., Boreas, Pacific Rim AIRSAR), and
data system interoperability to facilitate access to and sharing of
data resident in foreign data bases (e.g., DARA/DLR, Russian Academy of
Sciences).
For direct cooperative programs with NASA, Japan is the largest
contributor, and other significant partners are France, Germany,
Canada, Russia, and Brazil. The first chart below summarizes the
specific cooperative projects and their value. The second chart's
missions are defined and developed outside of NASA's formal programs,
but the data are acquired and used by NASA scientists in conducting
their research. Please note that the figures below should be considered
neither official nor exact; they represent the best approximations
obtained by NASA staff from various sources. Some figures are expressed
in terms of actual costs to foreign partners, others in terms of
comparable U.S. costs.
FOREIGN CONTRIBUTIONS TO EARTH OBSERVATIONS--ALREADY COMMITTED OR UNDERWAY
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Foreign
Country/region Mission/instrument Type of cooperation obligation
----------------------------------------------------------------------------------------------------------------
Japan................................... ADEOS-1 & -2; AMSR; ASTER; Satellite, launch, 2,030
ODUS; TRMM. operations, instruments,
data exchange, data
system interoperability.
Europe (individual countries and ESA CHAMP; CRISTA-SPAS; Satellite, launch, 841
combined). HIRDLS; MAS; Oersted; SAC- operations, flight
C (Den); SIR-C/X-SAR; opportunities, Shuttle
SOLCON; SOLSPEC; SRTM; payloads, sensors, data
TOPEX/Pos; Jason-1. system interoperability.
Canada.................................. BOREAS; MOPITT; RADARSAT; Satellite, operations, 656
SCISAT. sensor, field campaign.
Russia.................................. EOS-AERO; TOMS/Meteor-3M.. Flight opportunities, 56
science.
Brazil.................................. HSB; CIMEX................ Instrument, field 12
campaigns, shuttle
payload.
Argentina............................... SAC-C..................... Flight opportunity, 21
operations.
South Africa............................ SUNSAT.................... Flight opportunity, 6
operations.
Over 80 countries....................... Geodynamics............... Operation of ground-based 334
systems.
Total............................. .......................... .......................... 3,958
----------------------------------------------------------------------------------------------------------------
COMPLEMENTARY FOREIGN CONTRIBUTIONS TO EARTH OBSERVATIONS
[In millions of dollars]
------------------------------------------------------------------------
Foreign
Country/region Mission obligation
------------------------------------------------------------------------
Japan............................. JERS................ 500
GMS................. 1,000
Europe............................ ERS-1 & -2 & ENVISAT 3,900
METEOSAT & METOP.... 6,450
1Argos & SARSAT..... 200
Total....................... Without Operational 4,400
Metsats.
Total....................... Including foreign 12,050
operational systems.
------------------------------------------------------------------------
Question. Does the agency have a plan for infusion of new
technologies into the MTPE program? Please explain MTPE's New
Millennium program efforts and technology development efforts such as
the instrument incubator? What level of funding effort on an annual
basis is expected for technology infusion?
Answer. Mission to Planet Earth's technology program is focused on
advanced instrument development to enable smaller, less expensive
missions for the second series of the Earth Observing System, and to
enable new measurements in support of evolving scientific discovery.
The New Millennium Program is a jointly managed program of the Mission
to Planet Earth and the Space Science Enterprise. Its goal is to
provide flight demonstration missions for advanced spacecraft and
instrument technologies developed by integrated product development
teams comprised of industry and NASA personnel. By its nature, New
Millennium demonstrates integrated, system-level technologies. The
first such mission, designated EO-1, is scheduled for launch in the
Spring of 1999, and will fly an advanced land imager to demonstrate the
ability to meet the requirement for a post-Landsat 7 imager at a
fraction of Landsat 7's cost. A second mission, EO-2, will be chosen
this Summer, with competitive implementing solicitations to follow.
The Instrument Incubator is a companion advanced instrument
development program to fill the technology gap between core technology
components and flight demonstration-ready instruments. Thus, it focuses
on subsystem and system instrument-level development. The Instrument
Incubator program will enable the development of new measurement
techniques, as well as reduce the size of current instruments.
Technologies developed in this program may be candidates for New
Millennium flight demonstrations if in-space system-level
demonstrations are required.
Given the recent assumption of advanced technology development
responsibilities from the former Space Technology Enterprise, MTPE is
developing an integrated technology strategy. This document will be
completed later this year.
Within the Mission to Planet Earth Enterprise, the technology
infusion program planning runout is: fiscal year 1997--$46.7M; fiscal
year 1998--$65.5M; fiscal year 1999--$55.5M; fiscal year 2000--$65.5M;
fiscal year 2001--$65.5M; fiscal year 2002--$65.5M. This funding
includes the New Millennium Program, sensor and detector technology,
and Instrument Incubator. The EOSDIS budget includes funding for
prototyping efforts related to the data system.
In addition to the technology work within Mission to Planet Earth,
the Human Exploration and Development of Space Enterprise funds ground
systems technologies that directly contribute to MTPE, and the Space
Science Enterprise funds the advanced space technology program with a
primary goal of providing innovative technologies to enable ambitious
future space missions and to support development of the required space
technology base in the U.S. space industry through focused joint
technology efforts. Managed by the Human Exploration and Development of
Space and Space Science enterprises, to address joint technology needs
across all of the enterprises by working to develop crosscutting
technology products for future planetary, astrophysics, astronomy,
Earth observing, and human exploration spacecraft systems. These
products will dramatically reduce costs and increase performance to
enable new and more flexible missions.
Question. NASA often states that the key to MTPE is the science
that will come out of the program. The General Accounting Office, the
National Advisory Council, and several scientists have been critical of
the amount of funds that are available for research and analysis in the
MTPE program. How does the agency intend to address this concern? What
is an appropriate level of funding for research and analysis?
Answer. There is a necessary balance between spacecraft, data
systems and research. MTPE is providing spacecraft in order to obtain
the necessary observational measurements needed to perform research and
productive applications. These measurements will be used by the entire
Earth sciences research community as well as by MTPE funded
researchers. In a complementary way, researchers not only utilize the
data but they determine the requirements, develop the computational
algorithms, and validate the measurements. We are approaching the end
of the development of Landsat 7 and AM-1 (launching in mid-1998), and
are approaching the peak of development of PM-1. Recognizing that MTPE
measurements will be used by a number of federal agencies as well as
our international and commercial partners, we have placed a premium on
maintaining our performance and schedule commitments. We are proceeding
as planned with missions scheduled through 2001. Budget stability is
essential to keep these and several smaller missions on schedule and on
budget. For subsequent missions, we are developing new technical
approaches to reduce program costs and respond to new scientific
understanding.
MTPE research activities include the Research and Analysis Program,
mission science teams on existing spacecraft, and interdisciplinary
research teams, principally associated with the Earth Observing System
spacecraft. In total, MTPE funds approximately 1,900 principal
investigators plus their supporting graduate students, co-investigators
and research associates. The emphasis in MTPE research funding has been
shifting towards interdisciplinary research consistent with NASA's
focus on Earth Systems Science. As a result, the core Research and
Analysis Program funding has declined. The Research and Analysis
Program historically has provided the new instrument technologies,
discipline process understanding and research breakthroughs in Earth
sciences. There is a strong concern within the scientific community
that this activity must be maintained to enable the interdisciplinary
science as well as to fully utilize the new measurement capabilities to
be provided by the Earth Observing System. This has been a major
recommendation of our Earth Science Advisory Committee.
We have initiated a comprehensive review of the MTPE program known
as the Biennial Review. This process is designed to examine MTPE as a
whole, with emphasis on selected time-critical questions. This first
Biennial Review is intended to support decisions on the structure of
the Chem-1 mission, on implementation of EOSDIS, and on defining a
strategic approach to continuing critical measurements after the first
series of EOS missions. Additionally, the review will specifically
focus on addressing the balance between research and measurement
funding.
The review will be completed this Summer, with a formal report to
follow. We intend to use the results of the review to support the
development of the fiscal year 1999 budget. We will provide the report
to the staffs of our Congressional committees and to other interested
elements of the Congress as soon as it is completed.
AERONAUTICS
Question. The launching of the Lewis and Clark small remote sensing
satellites has been delayed and recent press reports indicate that cost
overruns with the Clark spacecraft may lead to its cancellation. What
is the status of these two spacecraft? When will they be launched?
Lewis and Clark are two of the first projects to incorporate the
smaller, faster, cheaper philosophy with greater involvement of the
private sector. Who has the rights to the data that will be gathered
from these satellites? Will the data be commercially available? Will
scientists funded by the government have to buy the data at commercial
rates? What if any lessons have been learned from this effort to date?
Answer. The Small Spacecraft Technology Initiative (SSTI) Lewis and
Clark missions were originally scheduled for launch in the 4th quarter
of fiscal year 1996. Both missions are experiencing unplanned delays in
launch. While the Lewis spacecraft development was completed on
schedule, it is now being held in storage at TRW waiting resolution of
launch vehicle technical problems identified through the failure of the
demonstration launch of the newly developed, low cost, commercial
Lockheed-Martin launch vehicle in the Summer of 1995. The launch
vehicle return-to-flight recovery has been protracted.
The SSTI contractors are totally responsible, under their
contracts, for the procurement of the SSTI launch services; however,
the launch services subcontracts make no provisions for oversight of
the development of the launch vehicles. The difficulties being
experienced through the delay in return to flight of the launch vehicle
are broad reaching across NASA programs, therefore, the Agency is
exercising direct oversight of flight recovery activities. Currently,
several high risk items remain to be resolved before return to flight;
however, it is anticipated that launch of the Lewis mission will be
during Summer 1997.
The original development costs for Lewis and Clark was $108.3M. The
fiscal year 1998 President's budget shows $122M through fiscal year
1997. The Lewis mission is a fixed price procurement with cost plus
provisions for launch delays caused by the launch vehicle. The launch
services are a fixed price subcontract; however, costs being incurred
for the storage of the spacecraft are covered under the cost plus
provisions. As of the February status assessment, it was projected that
another $1.3M will be required in fiscal year 1997 beyond that
currently planned for the program to defray the costs of launch delay
storage of Lewis.
The Clark mission is a cost plus procurement. Based on the February
assessment, the technical problems incurred by Clark new technology
developments have resulted in the need for an additional $5.7 million
above the plan in fiscal year 1997. Clark failed to meet its 2-year
development schedule requirement for reasons which include the
following: a large number of technology developments, a limited CTA
manpower base which has been unable to respond to technical problems in
system engineering, and an overly complex contractor decision structure
that has fostered slow responses to problems. Several recent
assessments indicate that the Clark mission may exceed the 15 percent
cost overrun threshold NASA has established for its programs. A
comprehensive program status assessment is in progress, being conducted
by CTA Management. We are awaiting this report for evaluation during
Summer 1997. The assessment will enable us to evaluate the strengths
and weaknesses revealed by this new way of doing business.
A major program objective for the dual missions is to proactively
promote commercial technology applications. However, all participants
must recognize and understand that Lewis and Clark is a research and
demonstration program, not an operational scientific or commercial
mission. The Earth remote sensing applications for both spacecraft are
intended to understand new technology and applications development,
risk assessment, and market expansion opportunities to support private
sector investment for future operational systems.
Another program is the data management and policy for ``tasking''
of on-board instruments for both science and commercial objectives and
distribution of, and access to, archived data sets. Four classes of
experiments requiring tasking of the spacecraft have been identified:
(1) commercial remote sending applications, (2) technology
demonstrations for both spacecraft and instruments, (3) science
demonstrations, and (4) education. Everyone who desires Lewis and Clark
data requiring tasking of the spacecraft will be required to have an
approved experimental plan and a mechanism to report on progress and
results. In addition, those participants not directly associated with
the SSTI program who desire tasking of the satellite will be required
to have a signed Space Act Agreement through NASA Stennis Space Center
(SSC). TRW (Lewis) and CTA (Clark) are responsible for all satellite
data acquisition for the first year of operation.
Once acquired from the satellites, all data sets and data fusion
products will be integrated through the Mission Data Management System
(MDMS) at NASA Stennis Space Center. These data sets include the
satellite state of health, technology demonstration data, and
instrument data, and will provide the baseline for all archival data
products and distribution of all data and data products. The
fundamental concept for SSTI data distribution is non-exclusivity of
data after validation and processing data to radiometrically corrected
status (Level 1R2). The MDMS will provide standard services associated
with distribution of Level 1R2 data to all approved users with tasking
rights. Level 2 through 4 processing of data will be performed on a
negotiated basis for SSTI and Space Act Agreement participants. Level
1R2 data will be distributed to the Eros Data Center (EDC). Level 2
through 4 data products will not be distributed to EDC. Access to Level
1R2 data from EDC will be provided on a nondiscriminatory basis to any
requester within the technical limitations of the system. Although NASA
retains ownership and all rights to the Level 1R2 data processed by
SSC, there will be no restrictions imposed by NASA on the subsequent
use, sale, or redistribution of data from SSTI spacecraft. The
permanent archive for the data sets will be kept at Eros Data Center
(EDC), where public access will be provided for the cost of
reproduction.
Question. What is the status of aircraft consolidation at Dryden
Flight Research Center? What are your plans for the DC-9 at Lewis
Research Center that is used for microgravity research? Is NASA going
to renew the DC-9 lease, and if not, why not?
Answer. NASA will move the aircraft currently located at Ames
Research Center to Dryden at the earliest opportunity, without
disrupting ongoing research programs. We believe consolidating the
California-based aircraft at Dryden will result in significant cost
savings. In addition, we believe it is critical to NASA's future that
Ames fully focus on its roles and missions as defined by the Zero Base
Review. In order to achieve this, Ames must move out of other mission
areas such as aircraft operations.
NASA is prohibited by law from using any fiscal year 1997
appropriations to consolidate aircraft based east of the Mississippi
River at Dryden. At this time, we have no plans to relocate any of
these aircraft to Dryden for purposes of consolidation. However, we are
proceeding, as planned, with decommissioning aircraft which are no
longer programmatically required, as recommended by the Zero Base
Review. The NASA Inspector General's final report of August 12, 1996,
recommended that ``NASA should immediately decommission all aircraft no
longer having a programmatic need to achieve an estimated $21.8 million
savings.''
After planned decommissionings at Langley Research Center (LaRC)
are completed by October 1, 1997, there will be five aircraft at LaRC
supporting a variety of programs. These are a T-34C, a UH-1H
helicopter, a BE-200, a T-38 and the B-757.
The new Wallops Mission 2000 includes plans for the Wallops
aircraft fleet to include one NASA-supported research aircraft, one
NASA administrative aircraft, and one aircraft jointly funded by NASA
and the Navy. Wallops will remain the deployment site for Mission to
Planet Earth science missions using various NASA research aircraft,
regardless of basing.
NASA is terminating its lease of the DC-9 microgravity research
aircraft located at Lewis Research Center at the end of the current
lease period, July 21, 1997. The reason is that NASA's current
microgravity research requirements for parabolic flight can be met
using the KC-135 aircraft which is based at Johnson Space Center in
Houston. Should additional capability be needed in the future, NASA
would first seek parabolic aircraft support via commercial means.
Programmatic requirements for all remaining NASA aircraft will be
continually reassessed to ensure NASA is using its resources in the
most efficient manner.
Question. Because of budget constraints and limited financial
support from industry, the Administration has decided to forgo the
construction of a new National Wind Tunnel Complex. Does NASA plan to
upgrade some of its current wind tunnels to meet future needs? Will the
issue of a National Wind Tunnel Complex have to be revisited in the
future?
Answer. While full achievement of the NWTC capability is not
affordable at this time, NASA believes that significant improvements to
the nation's testing capability can be made at relatively low cost.
Using $35 million in fiscal year 1995 NWTC funding, NASA has developed
the Aeronautics Design/Test Environment Program (ADTE) to address ways
in which wind tunnel testing may more effectively contribute to the
design process. Objectives include increasing confidence in wind tunnel
to flight extrapolation, reducing the cost and time associated with the
testing process, increasing the quality and quantity of data obtained
during test, and efficient conversion of data to knowledge that is
applied to the design process. These objectives are being met by a
combination of Information Technology (database management and mining,
user-remote access, condition-based maintenance), advanced
instrumentation and model design technologies, and computational
methods for predicting non-flight effects introduced by the wind
tunnel. Although these developments are initially being implemented
using facilities at Ames Research Center, results from this program
will have applicability to most of NASA's wind tunnels.
Further, NASA has engaged industry and the Department of Defense in
discussions to define facilities test technologies, research, and
development actions needed in the years beyond completion of ADTE to
further improve the Nation's aeronautical testing capability. These
activities are generally aimed at low cost improvements to existing
facilities, equipment, or test techniques.
In prior years NASA has identified and budgeted two major programs
to modernize and improve existing wind tunnel capability. These are:
The Aeronautical Facilities Revitalization Program, a $300 million
modernization program funded in fiscal year 1989-95. This program made
major productivity and reliability improvements to many of NASA's wind
tunnels, including the 12" Pressure Wind Tunnel and the Unitary Plan
Wind Tunnel at ARC, the National Transonic Facility and 14 Ft X 22 Ft
Wind Tunnel at LaRC, and the 8 Ft X 6 Ft and 9 Ft X 15 Ft Wind Tunnels
at LeRC.
The National Aeronautics Facilities Upgrade Program (fiscal year
1994), a $172 million program that in addition to funding studies and
design for the NWTC, makes further performance and productivity
improvements to the Unitary Plan Wind Tunnel at ARC; the National
Transonic Facility, 14 Ft X 22 Ft Wind Tunnel, and Transonic Dynamics
Tunnel at LaRC; and the Icing Research Tunnel and Composite Technology
Center at LeRC.
NASA does not currently plan to accomplish any further major
upgrades to current wind tunnels but will continue to pursue relatively
low cost improvements within available funds. While full achievement of
NWTC capability was not deemed affordable in the current budget
environment, we believe the issue will have to be revisited in the
future.
______
Question Submitted by Senator Mikulski
Question. I have been advised that NASA is considering relocating
CASI's activity from its existing location in Maryland. As the
Appropriations Committee indicated in its report (S. Rpt. 104-318)
accompanying the fiscal year 1997 Appropriations bill for NASA, I am
interested in all costs, direct and indirect, associated with
relocation. It is essential in this economic environment to ensure
taxpayer's funds are spent prudently. I urge you to seek savings at the
existing facility before you undergo the expense and personal
disruption that occurs with any federal relocation. We should seek to
avoid the disruption in the work of a facility and its employees unless
significant cost savings dictate otherwise.
Please provide to the Committee a status report on NASA's plan for
CASI. I would also like for NASA to keep the Committee informed on
significant occurrences regarding this important facility.
Answer. NASA already has sought, and achieved, significant savings
at the Center for Aerospace Information (CASI) located in Linthicum,
Maryland. Since May 1995, NASA has made significant improvements and
efficiencies in the services offered by CASI which have enabled the
Agency to reduce its utilization of the CASI facility. The facility
currently housing CASI operations is only 50 percent utilized and space
requirements will continue to decrease. The Headquarters Scientific and
Technical Information (STI) Program (primarily CASI) annual budget has
decreased from $12 million in year 1995 to $8 million in year 1997.
Reductions over the next four years will result in a budget of
approximately $6 million by year 2000. The current CASI facility costs
the Program $1.5 million annually, and cannot be supported on a $6
million annual budget without impacting the STI Program.
In February 1997, the current facility owner was notified of NASA's
interest in renegotiating the last year of the lease. In March 1997,
the current facility owner submitted a proposal to NASA based on
utilizing approximately one half of the current leased space. NASA has
also received proposals from each of the contractors responsible for
CASI operations (Computer Sciences Corporations and NCI Incorporated)
to provide a smaller facility in Maryland for CASI operations. NASA is
currently conducting a detailed cost comparison of these three
proposals which includes ongoing costs, moving costs, and associated
start-up costs. NASA anticipates concluding its review within the next
several weeks, and will inform Senator Mikulski of our findings.
SUBCOMMITTEE RECESS
Senator Bond. Thank you very much. The hearing is recessed.
[Whereupon, at 11 a.m., Tuesday, May 6, the subcommittee
was recessed, to reconvene subject to the call of the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MAY 13, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:40 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Christopher S. Bond (chairman)
presiding.
Present: Senators Bond, Shelby, Mikulski, and Leahy.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
STATEMENT OF ANDREW CUOMO, SECRETARY
OPENING STATEMENT OF CHRISTOPHER S. BOND
Senator Bond. Good morning. The VA, HUD and Independent
Agencies Appropriations Subcommittee hearing will come to
order. This is our last scheduled hearing of the fiscal year
1998 budget, and I welcome Secretary Cuomo and our other guests
for being with us this morning. This is essentially a rainout
date from a month ago. I am sure the additional month has
provided the Secretary in his new position with some fresh
insights into the many problems and issues that face the
Department.
As always, the hearing on HUD is one of our most important
hearings. This is an agency that administers some 240 programs
and activities, including such important programs as the Public
Housing Program, the Section 8 Program, the Community
Development Block Grant Program, the HOME Program, the McKinney
Homeless Assistance Program, the Sections 202 and 811 Programs,
and the FHA mortgage insurance programs.
Moreover, whatever the final terms of the budget agreement
to balance the Federal budget by the year 2002, this
subcommittee, I fear, is going to face another very difficult
year of budget decisions. We are faced with increased EPA
costs, including calls for increased funding for Superfund
cleanup, two NASA contingency plans, and costs for the
international space station, to increase veterans' medical and
benefit needs, to the skyrocketing cost of renewing HUD
expiring section 8 contracts.
INCREASE IN SECTION 8 COSTS
As Secretary Cuomo well knows, I continue to be very
concerned about the skyrocketing cost of the expiring section 8
contracts and the continuing Federal commitment to those low-
income families, many of whom are elderly and disabled. The
cost is staggering, and the need is dramatic.
As I have mentioned to Secretary Cuomo in the past, I
continue to be very much concerned and will be asking questions
about the Department's recent discovery of $5.8 billion in
section 8 contract reserves, which became the funding vehicle
for the supplemental. This discovery of additional reserves
comes at a time when the Section 8 Program faces ballooning
costs. How ballooning? Well, as most of us here who deal with
the budget know, the 1997 appropriation act provided $3.6
billion in budget authority to cover the cost of renewing all
expiring section 8 contracts for fiscal year 1997. The cost of
renewing all section 8 contracts for fiscal year 1998, a total
of some 1.7 million expiring contracts, will require an
appropriation of some $10.2 billion in budget authority for
fiscal year 1998. That is an increase of $6.6 billion in
additional costs to the Section 8 Program for just 1 year.
That cost of expiring section 8 contracts will continue to
increase to $11.9 billion for fiscal year 1999, $13.7 billion
for fiscal year 2000, $15.1 billion for fiscal year 2001, and
$16.4 billion for fiscal year 2002. While I am hopeful that the
budget agreement will address some or all of the section 8
costs, there also are many other critical issues facing the
Department.
NEED FOR HUD REFORMS
Over 2 years ago, I convened a series of hearings which
focused on HUD's management and fiscal deficiencies, including
program issues. This subcommittee and HUD have taken a number
of meaningful steps to reform HUD and HUD programs since those
hearings, but there remains significant HUD management programs
and fiscal deficiencies which still need to be addressed.
Because of these concerns, a number of Senators continue to
advocate eliminating the Department and devolving its
responsibilities to States and localities. To be blunt, Mr.
Secretary, we challenge you to make the necessary
administrative, management, and fiscal reforms that will
justify Congress's continued support of the agency and the role
of the Federal Government in providing affordable low-income
housing and programs targeted for the economic development of
our States and localities.
In the last 4 years, I have watched the Department continue
to reinvent itself. While there seems to be lots of movement,
HUD often seems to be on a hamster wheel, never moving forward.
In particular, GAO continues to designate HUD as a high-risk
area, the only Cabinet level agency ever designated agencywide
as a high-risk area, vulnerable to waste, fraud, abuse, and
mismanagement. GAO's concerns result primarily from four
longstanding departmentwide management deficiencies identified
as recently as February 1997. They are, No. 1, internal control
weaknesses, such as a lack of necessary data and management
processes; No. 2, poorly integrated, ineffective, and generally
unreliable information and financial management systems; No. 3,
HUD organizational problems, such as overlapping and ill-
defined responsibilities and authorities, including a
fundamental lack of management accountability and
responsibility; and No. 4, an insufficient mix of staff with
proper skills for the effective monitoring and oversight of
HUD's programs.
In addition, the HUD inspector general echoes GAO's
concerns with an emphasis on HUD's lack of capacity to carry
out its programs and initiatives. Also, the National Academy of
Public Administration July 1994 study, ``Renewing HUD, a Long-
Term Agenda for Effective Performance,'' advised that between
1980 and 1992 HUD statutory mandates increased from 54 to over
200 programs, and the HUD inspector general's best educated
guess on the number of existing HUD programs still exceeds 240
programs. The NAPA report also questioned HUD's ability to
achieve its mission because of an overload of programs that,
quote, ``saps HUD's resources, muddles priority, fragments the
Department's work force, creates unmeetable expectations, and
confuses communities.'' This is a harsh but real assessment.
Nothing has occurred at HUD yet that convinces me that HUD
has really taken to heart and addressed these concerns, and
that is something that the ranking member and I are
particularly concerned about. These concerns have to be
resolved. As a practical matter, HUD is one of the Nation's
largest financial institutions, with sizable commitments,
obligations, and exposures. HUD is responsible for managing
more than 400 billion dollars' worth of insured mortgages, $485
billion in outstanding mortgage-backed securities, and some
$180 billion in prior years' budget authority for which it has
future financial commitments.
I again urge the Department to work with Congress in a
bipartisan manner in assessing HUD's programs and how they
should work. We need to work on this together. We have made
some progress, as I indicated, but the Department's ultimate
success will depend upon a bipartisan approach and on
cooperation in defining and refining HUD's mission while
clarifying and consolidating the responsibilities and
requirements of HUD's programs and, most importantly, achieving
control and understanding of the Department's enormous fiscal
responsibilities.
REDIRECTION OF DECISIONMAKING TO LOCALS
Finally, I emphasize a continued need for the Department to
redirect the responsibility for HUD programs and activities
from the Federal Government to State and local decisionmaking.
There is already evidence of tremendous success through
programs like CDBG and HOME, where HUD is at most a junior
partner to the State and local decisionmaking in the use of
block grant funds. This is critical. No longer can, or should,
the Federal Government do it all. Programs like HOME, CDBG, the
low-income housing tax credit, the national community
development initiative, are successful because they leverage
State, local, private, and nonprofit resources to expand the
availability of affordable housing and to create new economic
development initiatives. Most important, the decisions are
State and local decisions that respond to State and local
needs.
The future success of HUD, in my view, will depend on
getting away from a one-size-fits-all, Washington-determined
approach to a partnership that relies on State and local
decisionmaking.
Before we turn to your comments, Mr. Secretary, I would
like to call on my distinguished ranking member, the Senator
from Maryland, Senator Mikulski.
STATEMENT OF BARBARA A. MIKULSKI
Senator Mikulski. Thank you very much, Mr. Chairman. I will
not either repeat or amplify your remarks. I know that first of
all we want to welcome Mr. Cuomo, our new Secretary of HUD. We
are looking forward to making sure that we fulfill the mission
of HUD, that there is the financial or money resources to do
it, and I know in our conversations your passion for improving
the management at HUD. So if we could focus on those M&M's, I
think that we would have a very successful next fiscal year.
I have now worked with four secretaries of HUD, Mr. Pierce,
Mr. Kemp, Mr. Cisneros, and now you, and I believe that our
focus, along with yours, is to make sure that HUD continues or
focuses on HUD as an empowerment agency where, whatever we do
through the Housing and Urban Development, we remember it is
housing and urban development. We give help to those that
practice self-help.
Let me say that what I am thinking about in terms of the
mission or the empowerment model is that one of our primary
goals is to promote home ownership for the middle class or near
middle class. FHA continues to be a very important tool for
people who are moving from welfare to work or in new
opportunities to leave public housing. I hope we would come up
with new thinking to promote home ownership even among those
normally left out of the opportunity to participate.
In terms of those, though, who will not be moving to home
ownership, that where we spend our subsidy money again gives
help to those that practice self-help, and will be looking at
ideas on, No. 1, how section 8 is truly an opportunity and not
a hollow opportunity for the poor. I have been deeply concerned
that often section 8 has been a hollow opportunity for the
poor, simply a voucher to say another decrepit, rundown, drug-
infested neighborhood with significant subsidies to landlords,
creating sometimes a new class for landlords without the
standing sentry over section 8 to both make sure that it is an
opportunity, that we are getting 1 dollar's worth of housing
for 1 dollar's worth of taxes, but most of all that it is open
opportunity.
We will be talking more, I know, in terms of the resources
for FHA, CDBG, and, of course, our big concern over section 8
and the ability to meet our contracts.
On the management issue, Mr. Secretary, I hope we can have
a dialog on where HUD is on implementing the NAPA, or the
National Association of Public Administrator recommendations,
on management reforms in section 8, how we are implementing
HOPE VI, and then also some new thinking particularly in
housing for the elderly. When Pat Harris was Secretary of HUD
under President Carter, I believe we had the most significant
advance in creating housing for the elderly. That has now been
21 years ago. Many of the seniors who moved into that housing
for the elderly, many in my own home town of Baltimore have now
aged in place. We have old buildings, and now people who moved
in when they were in their sixties are now in their eighties.
The buildings are starting to get frail and so are the elderly
living in them. I want to discuss with you how we could begin
to prepare for what type of activity needs to go on in those
particular, the aging housing for the elderly where both the
buildings and the seniors themselves are aging.
So this is what we are looking forward for, which is to
stick to the mission, let us make sure we make wise use of the
money, and really pursue those management priorities that I
know that you have in mind. I look forward to working with you.
Senator Bond. Thank you, Senator Mikulski.
Senator Leahy.
STATEMENT OF PATRICK J. LEAHY
Senator Leahy. Thank you, Mr. Chairman. I am delighted to
see Secretary Cuomo here. He may come from the more populous
side of Lake Champlain, but Vermonters know him very well and
know how helpful he has been to us. I have been struck by the
fact that the Secretary, even though he comes from one of the
most populous areas of the country, has never forgotten the
fact that we have homeless and housing needs in rural areas
like Vermont. I have been able to work with him a great deal
Mr. Chairman, especially on HUD's homeless assistance programs.
I think he brings more personal experience and commitment to
Federal homeless assistance programs than any of his
predecessors.
In my own State of Vermont, a State smaller than many
suburban towns in this area, 6,000 people every year spend at
least a night in our homeless shelters. This is in a State as
small as ours. I do not think I need to tell anybody how
important those shelters are when the temperature is at 20 and
30 below zero, as it often is in the middle of the winter in
Vermont. Just over 1 week ago, I was at a fundraising event for
the Committee on Temporary Shelter in Burlington, VT. It is
called COTS. Hundreds and hundreds of people came, raising
money to help other people less fortunate than themselves. In
fact, I think nearly one-half the money COTS raises is from
donations like these.
We are going to have to set priorities in the budget
battle, but I am very concerned that funding for the homeless
programs could become a casualty. I am also concerned about the
focus of homeless assistance. Often the services that our aid
organizations provide like job training and counseling and
child care are just as important as the shelter itself. Without
these kinds of services, the child care, the placement, the job
training, the person might go to temporary shelter and then be
right back out on the street with nowhere to go. Legislation
has been introduced in the House that would sharply limit HUD's
services for the homeless. I think funding for these activities
is not only appropriate for HUD, it is essential.
Mr. Secretary, I have other questions. I am going to be at
a chemical weapons hearing for awhile, but I will be back for
questions because I do want to work with you to make sure that
we do things to help those people who are temporarily homeless
and those people who are looking for shelters, but also looking
for a way to get into the work force. Mr. Secretary, I have
found that while sometimes those in your position have had a
focus solely on urban areas, you, sir, have always shown a
commitment to the rural areas, and in Vermont that is much
appreciated.
Thank you, Mr. Chairman.
Senator Bond. Thank you, Senator Leahy. It is always a
pleasure to be working with you. You certainly have a banner
day going back and forth between chemical weapons and HUD. We
will----
Senator Leahy. I just hope that I do not ask the wrong
questions at the wrong one. [Laughter.]
Senator Bond. They might apply in both places. [Laughter.]
We will await your return. With that, Mr. Secretary, if you
would proceed, please.
STATEMENT OF ANDREW CUOMO
Secretary Cuomo. Thank you, Mr. Chairman, Senator Mikulski,
and Senator Leahy. First, let me take the opportunity to thank
the committee for all the good work we have already done these
past few months. Although it is my first opportunity as
Secretary to appear before the committee, I have had the good
fortune to work with this committee over the past 4 years, both
on a staff level and on a principal level. I think the
relationship we have already struck bodes well for the future.
INTRODUCTION OF HUD STAFF
If I might just take a moment to quickly run through the
HUD team that is here, Mr. Chairman, to maybe put a face with
some of the names you may have heard bandied about. They are
seated behind me and I would ask them just to signal when I
mention their name. Margaret Sullivan is here, who is the new
Chief of Staff of the Department. This is her second week at
the Department of Housing and Urban Development, and I hope
this hearing does not dissuade her, push her toward an early
retirement.
We have Assistant Secretary Nic Retsinas who you know well,
Inspector General Susan Gaffney, Marilynn Davis, who is
Assistant Secretary for Administration, Michael Stegman, Policy
Development and Research Assistant Secretary, Kevin Chavers who
runs GNMA, Kevin Marchman, Assistant Secretary for Public
Housing, Paul Leonard, who is going to be helping us on the
charts today and is the Deputy Assistant Secretary for PD&R,
Mark Kinsey, who is the Acting Director for OFHEO, Bob
Hickmont, who is Counselor to the Secretary, and Cheryl Fox,
who is Issues Adviser to the Secretary.
Mr. Chairman, if it suits the committee I have a full
statement that I would offer to be put into the record, and for
the sake of time I will just abbreviate my comments.
Senator Bond. Mr. Secretary, we will include your full
statement in the record and would give you 10 minutes for your
opening statement, realizing we will have to cover much of this
in the questions and answers afterward. We appreciate your
summarizing the important points of your statement.
Secretary Cuomo. Thank you, Mr. Chairman. It is a
challenging time, indeed, to take the mantle of the HUD
leadership. There is a lot of good news. It seems like there is
more good news everyday, 12 million new jobs, crime is down,
poverty is down, unemployment is at its lowest in 24 years. We
now talk about balancing the budget by the year 2002, which a
few years ago would have been an unheard of, unprecedented
accomplishment.
But in the light of all this good news there are still real
problems out there, as the chairman pointed out in his opening
statement, and certainly problems that are on the horizon for
us. You still have 600,000 homeless Americans who sleep on the
streets at night. You have the Dow Jones hitting record
heights, but you still have one out of five children sleeping
in poverty. You have 5 million Americans who spend over 50
percent of their income for rent. You have millions and
millions on housing lists waiting for section 8 and public
housing who we have not even contemplated a solution for. All
this at a time when the cities are getting older, they are
getting more minority, they are getting poorer, and the poverty
in our cities today is becoming more isolating and more
concentrating. More and more the accumulation of wealth is
accompanied by flight to the suburbs. And all of this, again,
when the economy is working well, indeed in historic
proportions.
John F. Kennedy was right. A rising tide does lift all
boats. But I feel in this rising tide some are just treading
water, and that the high tide is actually covering some
obstacles that lurk just beneath. When this economy turns
around and when this economic cycle completes itself, which is
inevitable, and when the tide recedes, I fear it will expose
real problems that have been hidden just beneath the surface.
You have crumbling infrastructures, dysfunctional education
systems, loss of neighborhood economies, loss of affordable
housing stock, and on the shoals will be not just America's
cities but older suburbs, aging themselves and now experiencing
problems once thought to be the sole province of urban America.
HUD's role is indeed more critical than ever before, and I
would urge you, Mr. Chairman, not to abandon the worthy goals
of this Department to help needy Americans and communities just
because we are frustrated with the flaws in a bureaucracy
undoubtedly going through a transition.
PRIORITY--AVERTING SECTION 8 CRISIS
We have facilitated the presentation today with a few
charts. We will just organize an overview, and then we will get
to your questions. Mr. Chairman, there are four basic
priorities for the Department which I think we would all share.
The first is averting the so-called section 8 crisis, the
renewal crisis you know so well. The second is expanding
affordable housing opportunities. Third is making welfare
reform work, and fourth is restoring the public's trust in the
Department.
On the section 8 crisis, and again this committee has
brought it to the attention of the American public, we have
this wave of contracts which are expiring in 1998--
approximately 1.8 million units. This is not just important in
terms of units, but the number of Americans who actually live
in these units are staggering. This year 4.4 million Americans
are in expiring units. These 4.4 live all across the country,
every city, every community across the country. The problem
gets worse in the next few years, so solving it this year is
not the end of it, but it is the first step on a journey.
We do not come to you today asking you to renew all the
contracts and finding more money in a tight budget. We have
also done our part on the reform savings side to try to save
funds, and we have saved about $2.4 billion in fiscal year 1998
alone. Where we saved the money first of all is through ending
excessive subsidies to landlords. That is bringing down what we
call the out of whack rents. There is nothing more infuriating
to me than at this time of tight budget resources we should be
paying landlords more than a fair market rent. Cities like Las
Vegas, where the fair market rent is $380, we pay $820.
Chicago, the fair market rent is $435, we pay $849. Washington,
DC, fair market rent is $499, Government pays $734 for the same
apartment. It is indefensible, and you cannot explain to the
American people why we would be in this situation.
There was a so-called market solution which we proposed a
couple of years ago. The legislation did not go anywhere, as
the chairman knows well. There were two flaws in the
legislation. No. 1, we did not have a tax fix to make it work
and, No. 2, we did not have a good plan for extended
affordability. We have proposed legislation now called the
housing 2020 which has both a tax fix which will allow this
financial calculation to happen, and it extends the
affordability of the units that we secure for an additional 15
years. The housing 2020 legislation would save about $1.4
billion over the next 5 years.
Additional savings we get from increasing the number of
working families to fill vacant units, limiting the annual
adjustment factors for project-based units, maintaining what we
call the $25 minimum rents, reducing administrative funds to
the public housing authorities, and a host of smaller
miscellaneous savings.
PRIORITY--EXPANDING AFFORDABLE HOUSING
The next priority of the Department is to expand affordable
housing opportunities. The first word in our name is housing,
and that is our job. We again propose 50,000 new housing
certificates, remembering that all of this discussion of the
section 8 renewals only protects the status quo. You only house
those people who are currently housed. This is at a time when
you have millions on waiting lists all across the country that
we are not even beginning to talk about. Our stab in that
direction as far as an affirmative housing policy is to suggest
50,000 new certificates, which would be called incremental.
The second goal is to increase home ownership, as Senator
Mikulski pointed out. There can be no higher goal for the
middle class moving up through FHA and for people coming off of
the welfare to work experience and public housing experience.
We have an item in the legislation that I am very excited about
which would allow a section 8 certificate to be used for home
ownership. If a person can use a section 8 certificate to pay a
landlord's mortgage, why not pay their own?
Senator Leahy spoke about the homeless programs, and we
have had a good deal of success with them. We will keep them
going with our continuum of care program. With the
transformation of public housing, we will continue to go with
the HOPE VI Program which exists, thanks to the good work of
members of this committee. We have some suggested reforms for
HOPE VI which we think can make a good program a better
program. We have learned some lessons and we have some
suggestions for getting a handle on the costs of the units and
a way to move the money faster. We would continue to build on
the success of the HOME Program, which has constructed about
114,000 units, and continue to insure fair housing.
PRIORITY--MAKING WELFARE REFORM WORK
The next priority is making welfare reform work. While
welfare reform is not the obvious bailiwick of the Department
of Housing and Urban Development, it is the critical issue in
the cities and communities that we serve. To address welfare
reform, and to get on the economic development agenda, we have
a number of initiatives which the committee is familiar with
including the second round of empowerment zones and a $25
million brownfields initiative. There are about 450,000
brownfields in this Nation stopping development. This is a
joint initiative with EPA which would give us a real solution
to the brownfields problem. It will include the CDBG Program,
EDI funds, 108 loan guarantees, Youthbuild, and Bridges to
Work, which says maybe the jobs do not have to be in the
cities, maybe we can get the people from the cities out to the
suburbs where the jobs are, and again, 50,000 new housing
vouchers.
PRIORITY--RESTORING PUBLIC TRUST
The final priority, and probably in my opinion the most
important, Mr. Chairman, is restoring the public's trust, and
when we say public's trust we include the U.S. Senate in the
public. And that works on a number of levels: cracking down on
bad landlords, which we have done; ending the waste, fraud, and
abuse in the Section 8 Program and in the multifamily
portfolio. We have done 39 what are called debarments of
landlords so far this year, where they are kicked out of the
program. That compares to 24 of all of last year. We have a new
partnership with Attorney General Reno. We say if you think you
are going to rip off HUD any more, you had better think again.
We are doing it on that level.
We are cleaning up troubled housing authorities. In our
legislation, we have some tough new measures that say use it or
lose it. We are not going to leave the money in the pipeline.
If the public housing authority cannot spend it, we will take
it back. For troubled public housing authorities, we have a
very tough measure that says if you are troubled at the end of
1 year, you go to a judicial receiver to run the housing
authority. New changes to FEMA which would make it a better
grading system. We extend that to clearing out the drugs, the
gangs, and the crime, and we extend it to ourselves, Mr.
Chairman. We have taken a very aggressive stance on the
management of the Department.
PRIORITY--MANAGEMENT REFORMS
As I said to you during the confirmation hearings, I
understand the concern of this committee. Cleaning up our own
house is job one. You mentioned past efforts by the Department
and Secretary Cisneros. Secretary Cisneros had some very bold
reinventions which were primarily geared toward program reforms
but also required legislation that we never got. We have made
it a focus to address the issues that concern this committee,
the management issues, the financial issues. I think it is fair
to say that the Department has never begun a more sweeping
internal reform than the one we are going through, and I would
ask this committee to give us support for the legislation we
need and a window of opportunity to allow us to complete what
we have embarked on, all this at a time when the Department
will continue to downsize from a high of about 13,000 employees
when we started 5 years ago down to about 7,500 by the year
2000.
PREPARED STATEMENT
But again, management will be job one, Mr. Chairman. I am
looking forward to doing it with this good committee. Thank
you.
[The statement follows:]
Prepared Statement of Andrew M. Cuomo
Chairman Bond, Ranking Member Mikulski, Members of the
Subcommittee: thank you for inviting me here this morning. If it
pleases the Subcommittee, I would like my testimony entered into the
record. Thank you.
I am honored to have been chosen by President Clinton as HUD
Secretary at this decisive moment in the Department's history. I was
proud to serve with Secretary Henry Cisneros, whose leadership and
commitment to our mission transformed HUD into a vibrant, vital force
for the American people and their communities.
Today, HUD is a stronger, abler, leaner, more cohesive Department
because of Henry's leadership. He is, in my opinion, the best Secretary
in the history of the Department. While it will be difficult to fill
his shoes, it is my privilege to follow in his footsteps and build on
the good job he began.
I know that Secretary Cisneros had a positive working relationship
with members of this Subcommittee. I pledge to do all I can to make
sure that this productive, bipartisan relationship continues.
Mr. Chairman and members of the Subcommittee, I appreciate the
opportunity to discuss HUD's reform efforts and plans for the future.
It is my pleasure to present the Clinton Administration's budget for
the Department of Housing and Urban Development for fiscal year 1998--
especially in light of the historic balanced budget agreement that was
achieved just eleven days ago.
As the members of this Subcommittee know, I come to this hearing
today not just as the HUD Secretary, but as a person who spent more
than ten years working on these issues in the private sector. I entered
housing--not as a government official--but as a builder, operator, and
manager, responsible for meeting a payroll and balancing a budget. I
have known the joy and pain of building housing, creating jobs, and
filling out grant forms--from both sides.
To me, the mission of HUD--and the larger mission of this
Subcommittee--has never been more vital than it is today. The need to
create safe, decent and affordable housing for all Americans; the need
to create jobs and bring opportunity to our communities; the need to
empower our people and help them get the skills they need to lift
themselves up--these challenges are just as great and just as pressing
as they have ever been.
But today, we have an entirely new dynamic. We have to meet these
challenges while also meeting the very real challenge of moving
millions of our fellow citizens from welfare to work. As the department
responsible for housing more than a quarter of the families on welfare
today; as the agency with potentially the largest economic development
portfolio in government; and as the department that deals most directly
with cities, where most people on welfare live; welfare reform shines a
spotlight on HUD like never before.
We recognize that these challenges come at a time when the federal
government has fewer and fewer resources. If we had to make a choice
between fiscal prudence and meeting the needs of troubled Americans,
the choice would be difficult--indeed.
But in truth, we have no choice because we have an undeniable
responsibility to balance the budget. And, at the same time, we have an
equally undeniable responsibility to meet the challenges that lie
ahead. How do we do that? With a government that is smarter and
smaller--and a Department that is more sharply focused and better
managed.
We must be willing to admit that some programs do not work. We must
recognize the right roles for the government and private sector. We
must crack down on waste, fraud, and abuse wherever and whenever we
find it. We must understand that quick-fix solutions do not work--that
many of these challenges, as you have rightly pointed out, Mr.
Chairman--require long-term structural changes.
And, we must be willing to acknowledge that if we're going to solve
these problems, the answers will not just come from the top down, but
from the bottom up. In the last four years, we have learned: there are
no people who understand the needs of a community better than the
people who live in a community.
By listening to the American people, by working together the past
four years, we have proven that we can produce real results for
America. Today, because of all of our efforts, the economy is strong.
Jobs are up, homeownership is up, and cities are coming back. At the
same time, crime is down, poverty is down, and unemployment has hit a
24-year low.
Since President Clinton took office in 1993, the annual federal
deficit has been cut by nearly 80 percent, from $290 billion in 1992 to
a projected $70 billion in 1997. As a proportion of our economy, the
U.S. budget deficit is now the smallest of any major nation in the
world.
Now, we are at a turning point. The historic balanced budget
agreement we signed 11 days ago will help us finish the job we started
four years ago. We have come together--Democrats and Republicans--to
agree on a balanced budget with balanced values that will help
Americans buy a home, start a business, save for retirement, and send
their kids to college.
For America's cities, this budget comes at a crucial time. Despite
all our progress, today, one in five American children live in poverty.
One in four Americans who needs housing assistance gets it. Over five
million very low income families spend more than 50 percent of their
income on rent. The challenges are great but the response of this
budget agreement is strong.
But make no mistake about it: if the Congress, in a bipartisan
spirit, lives up to the commitments in the budget agreement, this
budget can be good for America's cities. For the people we serve at
HUD, for the people who are struggling to move from welfare to work,
who live in urban America, this budget can be a big win.
The aggregate level of resources in this budget agreement is
sufficient not only to renew Section 8 contracts, but also to provide
for other urban priorities. Failure to renew all expiring Section 8
contracts would likely put over 4 million people in the street. Full
renewal will help us maintain America's historic commitment to
providing decent, safe, affordable housing well into the next century.
This agreement also provides enough resources to meet other urban
priorities in the President's February budget. It does so by:
--Expanding our empowerment zones and enterprise communities. In less
than two years, 95 percent of our EZ/EC's nationwide have shown
substantial progress. Over $2 billion in private investment has
been leveraged nationwide. A second round of EZ/EC's will help
bring even more jobs back to our urban communities.
--Expanding the Brownfield Redevelopment Initiative. In cities across
America, abandoned factories sit vacant. This will help mayors
transform those properties into vital centers of the community.
--Maintaining the low income housing tax credit at its present level.
Millions of Americans have used this credit as a stepping stone
to a better life.
--Providing $2 billion to help move people from welfare to work in
combination with an expanded wage tax credit to help companies
create opportunities for long-term welfare recipients. On one
hand, this will help welfare recipients get the skills and
services they need to move into the workforce. On the other
hand, employers who hire them get a 50 percent credit on the
first $10,000 a year of wages for up to 2 years.
--Funding the America Reads initiative. A lot of kids who live in
public housing need help with basic skills. This initiative
will help mobilize a million tutors to help three million
children learn to read by the end of the third grade.
--Expanding health coverage for as many as 5 million uncovered
children. Many of these children are poor, and live in the
inner city. This new capped grant program will help strengthen
efforts to cover uninsured children that are already underway
in many states.
--Preserving food stamp benefits for people willing to work. While
maintaining the work requirements set out by the welfare reform
bill, this can supply funding for an additional 190,000 slots
to provide the help many inner-city residents need on the road
to self-sufficiency.
--Restoring disability and health benefits for legal immigrants, and
restoring Medicaid coverage for the children of poor legal
immigrants.
--Doubling funding to help schools bring the Internet to the inner
city. Many suburban schools today are moving to new technology
without our assistance. But many urban schools need our help--
particularly at a time when computer skills are becoming more
necessary to find a job. This will ensure that the information
superhighway does not bypass urban America.
All told, while addressing the full range of HUD's activities, this
agreement can help meet the needs of America's cities. We have agreed
in principle upon a budget that can help our families prosper and grow.
But now, Mr. Chairman, this Subcommittee moves to the very difficult
task of matching principle with reality, of matching budget outlays
with budget authority, and filling in the details of this budget.
We look forward to working with you closely on this task in the
days to come. Today, as we move to the next stage, allow me to expand
on this budget and focus attention on four pressing and immediate
challenges we at HUD expect to face in the months to come: (1) renewing
Section 8 contracts; (2) expanding housing opportunities for all
Americans; (3) making welfare reform work; and (4) restoring the
public's trust in the Department.
Let me discuss each one of these challenges in more detail and
describe HUD's response to them--not just in the short-term, but in the
long-term--and the long-term structural changes we are proposing to
make HUD work even better.
RENEWING SECTION 8 CONTRACTS
As this Subcommittee knows, a record number of Section 8 contracts
are beginning to expire, with contracts on 1.8 million units expiring
in fiscal year 1998. To put that in perspective: more contracts will
expire in the next year than in the previous five years combined.
Renewing these contracts was the absolute highest priority for me in
presenting my budget.
About 1.4 million of the Section 8 contracts expiring in 1998 are
tenant-based vouchers and certificates. Another 400,000 of the expiring
contracts are project-based. Of this number, some 167,000 units are in
markets where the government rate is sometimes twice as high as the
market rate. I will discuss this in more detail later.
American communities should not have to bear the high social costs,
and should not have to face the potential social chaos, of an
unprecedented explosion of homelessness that would surely arise if we
did not fully renew these contracts. None of us would advocate a policy
guaranteed to push hundreds of thousands of elderly, children, and
disabled Americans into homeless shelters and onto the streets of our
communities.
That is why I believe we must renew these contracts. And that is
why the budget agreement--which provides for sufficient resources to
renew all expiring contracts through 2002--represents such a great bi-
partisan accomplishment.
While the resources in the budget agreement are adequate to renew
all expiring contracts, we must strive to protect the remainder of
HUD's budget from the intense pressure caused by a limited pool of
domestic discretionary resources. We cannot tolerate a budget that
allows all contracts to be renewed while at the same time making severe
cuts in essential HUD programs like CDBG, public housing operating
support, homeless assistance, and many others.
This kind of ``cut-and-shift'' approach--robbing Peter to pay
Paul--would be short-sighted and self-defeating. While such an approach
would avert the Section 8 crisis, it would simultaneously trigger other
community crises in homelessness and affordable housing.
HUD's solution to the renewal crisis calls for both tough reforms
to control outlays and new spending authority. Our fiscal year 1998
budget provided a 30 percent increase in HUD's budget authority--a $5.6
billion increase in new budget authority--virtually all of which would
be used to renew the expiring Section 8 contracts. The budget also
proposes program reforms that would save substantial Section 8 outlays
in both fiscal year 1998 and over the next five years. In particular,
our approach stresses tough savings reforms:
--Increase the number of working families to fill vacant units.
--Limit the annual rent increases for project-based units.
--Maintain $25 minimum rents in public and assisted housing.
--Reduce administrative fees for public housing authorities; and most
importantly.
--End excessive subsidies to landlords by restructuring high-cost
assistance contracts.
This last point is especially crucial. In markets across America,
the rents government pays are out of whack with market rents.
A 1994 study by the General Accounting Office found numerous
examples. In Las Vegas, for example, the market rate was $380, the
government paid $820. In Chicago, the market rate was $435, the
government paid $849. In Washington, D.C., the market rate was $499,
government paid $734.
Why? Because twenty years ago, when we first offered contracts to
give owners incentives to build affordable housing in the inner city,
there were built-in escalators in the contracts. Since many of the
contracts lasted 20 years, it prevented us from cutting the rents. But
now that many of the contracts are expiring, we're caught in a catch-
22. If we just cut rents, many owners will go into default. Since the
properties are FHA-insured, taxpayers will get stuck with the bill. At
the social level, such defaults could lead to an explosion in
homelessness.
As I noted earlier, in 1998 alone, contracts will come due on
approximately 167,000 units with over-market rents. Over the next 12
years, some 500,000 FHA-insured units will come due. We are determined
to reduce these out-of-whack rents and reduce the cost to taxpayers--
but to do it in a way that protects families, preserves affordable
housing, and avoids massive defaults and foreclosures.
Over the past six months, HUD has worked closely with the
Department of Treasury to craft a sensible solution to this problem.
Our solution, which we call Housing 2020, will reduce rents, reduce
FHA-insured mortgages, and give owners more time to pay off their tax
burden. In return, we save taxpayers money, protect families, and
ensure affordable housing well into the next century.
Over the next five years, our Housing 2020 proposal will save over
$1.4 billion while maintaining more than 500,000 units for 850,000
people. We believe this is a good starting point for a constructive,
bipartisan dialogue with Congress about finding a long-term solution to
this structural problem of the Section 8 program. I look forward to
working with you, Mr. Chairman, and the members of this Subcommittee,
to enact a permanent solution to this inventory this year.
Mr. Chairman, you have also raised questions about the issue of the
Section 8 contract reserves. As you know, I have made the issue of
enhancing the management reform of the Department a critical priority.
This focus has already yielded significant benefits.
Last fall, we completed the first phase of auditing housing
authority Section 8 project reserve accounts. This effort yielded $1.6
billion in excess Section 8 project reserves. We promptly reported the
existence of these excess reserves to your committee in our operating
plan, and committed to using them to reduce our request for fiscal year
1998 appropriations for contract renewals. At that time, and when we
introduced our budget earlier this year, we explained that this was the
first result of an ongoing effort to review PHA reserve levels.
Last month, we reported the existence of additional Section 8
project reserves. The Department is continuing to review every aspect
of its budgeting for Section 8 renewals. We have asked Price Waterhouse
to review these estimates, and those efforts are ongoing. We are also
continuing to review issues that GAO has raised with respect to the
per-unit costs of Section 8 contracts. And, we have identified
imbalances within the project-based Section 8 program, where many
projects have insufficient funding to reach the end of the contract
term, while other contracts are expiring with budget authority
remaining on the contracts. As more information becomes available, we
will keep the Committee fully informed.
The Section 8 program was forged in a bipartisan spirit and it must
be fixed with the same bipartisan spirit. Democratic and Republican
Administrations have been working for years to put in place financial
systems to enhance the management of the Section 8 accounts. I pledge
to you to continue to improve these systems and look forward to working
with this Committee and this Congress to do so.
expanding housing opportunities for all americans
While solving the Section 8 crisis must be HUD's first priority,
our second challenge must be to expand affordable housing opportunities
for those not currently served. Our 1998 budget does that.
HUD's budget asks for 50,000 additional Section 8 certificates, and
links them to welfare reform. It moves to boost homeownership rates to
an all-time high. It continues to transform public housing and help the
homeless work toward self-sufficiency. It will keep building on the
success of the HOME Program. And, it provides more money for our Fair
Housing Initiatives.
As you know, our requests for additional Section 8 certificates for
fiscal year 1996 and fiscal year 1997 were not funded.
In the 1998 budget, our request is particularly compelling because
the 50,000 additional Section 8 certificates we're asking for will help
move people from welfare to work. We are targeting these certificates
to help welfare recipients move into jobs. With this targeting, we feel
we have found common ground with Congress to provide these
certificates.
A key part of our strategy to expand housing opportunities will be
to build on HUD's great success in expanding homeownership.
During President Clinton's first term, the homeownership rate
surged to 65.4 percent. There are two reasons why this happened. First,
the economy is strong. Together, we've created more than 12 million new
jobs, and interest rates are low--making it easier than ever to buy a
home. Second, at the President's request, HUD helped organize the
National Partners in Homeownership, an unprecedented alliance of 58
housing industry organizations dedicated to adding eight million new
homeowners by the end of the year 2000. These partners have worked
together marvelously to lower barriers to owning a home. They deserve a
great deal of credit and our continuing respect.
The success of the National Partners in Homeownership has
encouraged housing industry leaders in cities and counties across
America to form local affiliates that reflect the goals and values of
the National organization. In 1998, we will continue to promote these
local affiliates, adding 75 local homeownership partnerships for a
total of 225.
We will continue reforms at FHA that allow that vital agency to
help even more of the first-time buyers and minorities they serve
better than anybody else in the consumer mortgage field. With these
reforms, 75 percent of FHA's mortgage business, excluding refinancings,
will go to first-time home buyers in 1998. When President Clinton took
office, first-time buyers were just 65 percent of FHA's new mortgage
business. These reforms will help almost 500,000 families become new
homeowners.
Additionally, we will fund Ginnie Mae's efforts to stimulate $1
billion in mortgage lending to inner cities, and we will provide $50
million to help cities reclaim abandoned urban land by building
homeownership zones--suburban-style developments of single-family homes
to stabilize and reclaim neighborhoods in the shadows of downtown.
And we are making sure that Americans have full access to the homes
they want by increasing our budget for Fair Housing by $9 million--a 30
percent increase. These funds will increase enforcement and compliance
activities and build the America we all want, a land where opportunity
is available to all who seek it--no exceptions.
We will also expand affordable housing by building on the
transformation of public housing. I am encouraged by the progress that
both the House and Senate are making to enact an authorizing bill which
cement the transformation we have begun.
Even as we undertake to replace the 100,000 worst public housing
units in America, we must maintain sufficient operating and capital
funds for the 3,300 mostly well-performing public housing authorities
across America.
In 1998, we request $2.9 billion in public housing operating
subsidies and $2.5 billion in capital funds, equal to the fiscal year
1997 levels. These numbers, however, actually reflect an $85 million
increase in operating subsidies and a $162 million increase in capital
funds to public housing authorities, since funds that were once
included for Indian housing were separated out and put into their new
housing block grant. These funds are needed to keep sound buildings in
good shape--preventing them from deteriorating and needing to be
replaced.
HUD is beginning the process of shifting our focus in public
housing away from demolition to replacement housing. The 1998 budget
intensifies that move. For HOPE VI, the program that spearheads HUD's
public housing renovation effort, we are asking for $524 million in
1998--$103 million for replacement vouchers and $421 million for
demolition and revitalization activities.
Our goals are to increase the number of good quality units and to
expand housing choices. After all 100,000 demolitions are completed and
all the new units built, we will have 100,000 expanded housing
opportunities. Just over 40,000 of these are new opportunities
(vouchers and new units), since about 40 percent of the units in the
buildings that are being torn down are vacant.
For HUD's homeless programs, our proposed budget--$823 million, the
same as last year--will allow HUD to move forward with our ``Continuum
of Care'' strategy, a strategy that helps move people off the streets
toward self-sufficiency.
This is the right thing to do. A study released in December by
Columbia University found that in 1995 as many as 14 times more
homeless people were served by HUD programs as in 1992--this during a
period when federal funds only doubled. Communities are using HUD
homeless funds to leverage substantial local matching contributions. We
are getting funds out to every state across the nation, and we are
serving more homeless people with disabilities.
Shortly, we will introduce our homeless reform bill, which will
permanently consolidate our seven separate homeless programs into a
single performance-based program.
Our investment in helping the homeless work toward independence and
self-sufficiency is clearly the right thing to do.
MAKING WELFARE REFORM WORK
Our third major challenge, as I mentioned earlier, is our newest
one. We now have to respond to a new environment created by welfare
reform.
Under President Clinton's leadership, the American economy has
added more than 12 million new jobs in the last four years. Now he is
committed to moving another two million people from welfare to work by
the year 2000.
HUD's fiscal year 1998 budget recognizes that the Department has a
special ability to help welfare reform succeed. The people HUD serves
will be among the people who are most dramatically affected by the
changes that lie ahead.
Over the past four years, we have learned that housing is the
foundation of progress and stability, but housing alone does not
develop a community: jobs are the essential element needed to drive
people and families forward to self-sufficiency.
To fulfill our core mission of revitalizing America's communities,
we must work to do two key things: we must create housing, and we must
create jobs. HUD's economic development programs can play a vital role
in bringing opportunity to communities all over America in places where
there are not enough jobs.
The 1998 budget asks for $100 million to fund a second round of
Empowerment Zones and Enterprise Communities. These are designed to
encourage job creation and attract businesses to high-poverty areas
where many welfare recipients live. Communities use these funds to
leverage billions of dollars of private investment. After just two
years of a 10-year program, we have seen more than $2.6 billion in
private investment leveraged nationwide. This is one of the key
component's of the President s strategy to move people from welfare to
work.
In addition, the HUD budget asks for $100 million over the next
four years--including $25 million for 1998--to clean up and redevelop
abandoned Brownfields.
HUD is asking for stable funding for CDBG at $4.6 billion and $1.3
billion in Section 108 loan guarantee authority. Our $50 million
request for the Economic Development Initiative will help create jobs
and leverage private investment.
We will also help welfare recipients transition to work by
providing and leveraging service for them. Our budget asks for $20
million in counseling assistance to help Section 8 recipients--who are
welfare recipients--find rental homes that are new jobs and needed
support services. It asks for $30 million for Youthbuild, a program
that gives young high school dropouts a chance to learn, earn, and do
good for their community, all at the same time. Youthbuild places these
disadvantaged youngsters into apprenticeships that teach them valuable
construction skills while they work to renovate affordable housing.
The budget also requests $10 million to expand our Bridges to Work
demonstration, which pays for transportation and support services to
link central city residents to the suburbs, where the jobs often are.
And remember: the 50,000 new Section 8 housing certificates we're
requesting--at a cost of $305 million--will be targeted to help welfare
recipients move into the workforce.
These resources will help welfare recipients sign up for the best
social program that has ever been invented--a job!
RESTORING THE PUBLIC'S TRUST IN THE DEPARTMENT
At HUD, we are prepared to meet the Section 8 crisis, create
affordable housing, and move people from welfare to work. But we
recognize that our success in meeting these three challenges will
largely depend on our success in meeting a fourth challenge--restoring
the public's trust in HUD.
We must continue to demand accountability, not just from those who
benefit from HUD--tenants and landlords alike--but from ourselves as
well. We've made a lot of progress the past four years, but much work
remains to be done.
The public must have confidence that our partners at the local
level are spending HUD funds wisely, honestly, and efficiently. We are
well underway in our efforts to make 1997 the year we crack down on
waste, fraud, and abuse.
Seven weeks ago, HUD and Attorney General Janet Reno announced a
new joint ``Get Tough'' campaign to crack down on bad landlords who
were taking taxpayer dollars while forcing their tenants to live in
slums. In 1997, we have taken action against more than 39 bad
landlords--compared to 22 in all of 1996. Just last week, we took
action against one of America's most notorious slumlords--who accepts
more than $70 million in federal funds every year.
We will continue to crack down on bad landlords with a $50 million
effort to remove and punish those who run troubled HUD-assisted
properties. We will clean up troubled public housing authorities by
investing another $45 million for technical assistance and expertise
that they so badly need. These funds will also help smaller housing
authorities that are having problems.
We will also continue to target scam artists who take advantage of
people who participate in HUD activities. Last year, we started a
highly successful program intended to help keep elderly homeowners in
their homes. Our ``Reverse Mortgage'' program is targeted to senior
citizens who are house-rich but cash-poor, people who have equity in
their homes, but not enough money to pay their bills. This program
allows homeowners age 62 and older to borrow against the value of their
home. About 125 lenders participate in this program.
We were so successful that we spawned a handful of scam artists.
For the same information HUD provided for free, some companies were
charging up to $8,000 in fees. In March, we issued a letter to all FHA-
approved lenders to stop doing business with these companies. Last
month, I joined many of you here on the Hill to introduce legislation
to stop it. Together, we have forced these companies to retreat.
Our budget is also working to clean crime, drugs, and gangs out of
public housing. HUD is asking to double funding for Operation Safe Home
to $20 million. This highly effective crime-fighting partnership in
public housing is led by HUD, working together with the FBI, DEA, and
other state and local law enforcement to prosecute both violent crime
and white-collar fraud.
The HUD budget also requests $290 million in Drug Elimination
grants for public housing to fight drug traffickers and violence, and
to fund programs that give children growing up an alternative to the
crime they see every day.
But demanding accountability from others is just half of the
equation. For housing and economic development to work better, HUD must
work better as well. We are determined to get our own house in order.
As I said earlier, government must find ways to be smaller and smarter.
We must remain committed to worthwhile goals but not to failed means.
We must be willing to admit that some programs do not work. We must
recognize the right roles for the government and private sector.
HUD needs to continue to reinvent and adopt a private-sector
mentality. To that end, we will be targeting efforts to show that ``HUD
Means Business.'' The agency will borrow--for a limited time--business
executives and experts from leading companies to help us implement the
financial and management reforms we must take.
I am proud to continue the task that Henry Cisneros began four year
ago--bringing this agency back from the brink of public disrepute by
modernizing and preparing it for a new century. And, I also recognize
that while genuine progress has been made in the past four years--
progress acknowledged by a number of outside experts--much remains to
be done.
Let me note a few of the areas that most concern me:
--HUD continues to be listed as a high-risk agency by the General
Accounting Office. While the GAO acknowledges progress--citing
``substantial efforts over the past two years''--they are right
to say that a lot more must be done. In short, HUD's public
purpose is too vital--especially in this time of sweeping
economic and social transformation as we move from an
industrial to an information age--to compromised in any way by
waste, fraud, abuse, and poor management. We must go further.
--HUD continues to have problems with its financial control and
management systems. While we've made improvements in the past
few years, these changes are not quite sufficient if we are
going to make sure this agency effectively and efficiently
serves the nation.
--While HUD is right on target for reducing the size of its staff--
from 13,200 in 1992 to 10,400 today and ultimately down to
7,500 in 2000--we must, in the next few years, bring our long-
term mission in line with our reduced and dwindling resources.
As I pledged in my confirmation testimony a few months ago,
management reform is a top priority for me. It is perhaps a thankless
task, but I believe the moment is ripe--as the most recent GAO report
makes clear--for a close collaboration between HUD and Congress to
clean up the agency for the long-run. I will be introducing a
comprehensive management reform plan to address these long-term
deficiencies in the next few weeks.
CONCLUSION
We have made a lot of progress together the past 4 years, but we
have a long way to go. The traditional challenges faced by HUD--
providing affordable housing, increasing homeownership, promoting fair
housing, reducing homelessness, creating jobs, and helping our
communities develop and grow--are being challenged like never before by
shrinking Federal resources and the reality of moving millions of
Americans from welfare to work.
The historic balanced budget agreement provides a framework to meet
these challenges in a way that is good for our cities and good for
America. But we need to do more. We must continue to streamline,
reinvent, and crack down on waste, fraud, and abuse wherever possible.
We must be willing to admit that some programs have failed. We must
reach out to the private sector and nonprofit community to meet our
greatest challenges. We must trust our local communities to know best.
And, we must work together to prove to the American people--not only
that HUD means business--but we can meet these challenges in a
creative, competent, common-sense way.
Over the past 4 years, HUD and this Committee have worked in a
positive way to meet these challenges. I look forward to working with
all of you in the months to come to build on that relationship and meet
our housing and economic development needs as we head into a new
century.
Thank you.
______
Fiscal Year 1998 Priorities
I. Renewing expiring section 8 contracts.
II. Expanding affordable housing opportunities.
III. Making welfare reform work.
IV. Restoring the Public's trust in the Department.
[GRAPHIC] [TIFF OMITTED] T05MY13.000
The Problem Explodes in 1998
[In millions]
Fiscal year Americans
at risk
1997.............................................................. 1.5
1998.............................................................. 4.4
1999.............................................................. 5.2
2000.............................................................. 6.0
2001.............................................................. 6.2
2002.............................................................. 6.4
Reforms=Savings
Ending excessive subsidies to landlords.
Increasing number of working families to fill vacant units.
Limiting annual adjustment factors for project-based units.
Maintaining $25 minimum rents.
Reducing administrative funds to public housing authorities to
encourage efficiency.
Other savings.
Expanding Affordable Housing Opportunities
Providing 50,000 new housing certificates.
Increasing homeownership.
Helping more homeless move from the streets to self-sufficiency.
Continuing to transform public housing.
Continuing the success of the HOME Program.
Ensuring fair housing.
Making Welfare Reform Work
$100 million: Empowerment zones and enterprise communities ROUND II
(toward a new $2 billion Federal effort).
$25 million: Redeveloping brownfields ($100 million over 4 years).
$4.6 billion: Community Development Block Grants (CDBG).
$50 million: Economic development initiative (EDI).
$1.3 billion: Section 108 loan guarantees.
$30 million: Youthbuild.
$10 million: Bridges to Work.
$305 million: 50,000 new housing certificates.
Restoring the Publics Trust in the Department
Cracking down on bad landlords.
Cleaning up troubled housing authorities.
Clearing out drugs, gangs and crime:
--Drug elimination grants
--Operation Safe Home
--One-Strike and You're Out
--Reverse mortgages
HUD Continues to Downsize
Fiscal year FTE's
1992..............................................................13,194
1997..............................................................10,447
2000.............................................................. 7,500
Note: Totals do not include Inspector General, Working Capital Fund, and
OFHEO.
Senator Bond. Thank you, Mr. Secretary. We are delighted
you are utilizing some of the tools that we have given you. The
mark-to-market demonstration, you were not here at the time,
was initiated here and this committee came up with the
demonstration funds. We conferred with Mr. Retsinas and others.
We did not include the tax changes because we did not have
support for them. While this committee has been known to
authorize a little bit in an appropriations bill, we have not
yet attempted passing tax legislation here. That might be a bit
much.
MANAGEMENT TRANSITION PLAN
You mentioned addressing unmet needs for adding 50,000
units. I would note that we do have the HOPE VI Program which
does provide some additional needs. We believe HUD's existing
programs already are adding units successfully. We believe that
expanding home ownership opportunities and the housing needs is
being best accomplished by State and local partnerships with
HOME, through capacity building, through the Habitat for
Humanity, and many other programs that we think are doing an
excellent job.
I touched on, and you have mentioned, the problems that HUD
faces, the high-risk management problems. You have indicated
that this is job one, Mr. Secretary. For the record, I would
appreciate it if you would set out for this committee and for
the authorizing committees some benchmarks and timeframes, what
is it that you are going to do, when are you going to get it
done, how do we know it is done, what kinds of steps will be
taken to meet the criticisms and the significant questions
raised by the GAO, the inspector general, and others. I agree
with you, this has to be job one. We would like to know how we
can tell it is moving forward. As I said, we have seen a lot of
motion and we have spent a lot of time at these hearings
talking about reforming HUD. You come in with a fresh slate,
and we would like to see the reforms made and the steps to
sound financial and management controls taken by the
Department.
Secretary Cuomo. Mr. Chairman, it would be my pleasure to
go back and do a little quick work and sketch out a management
transition plan for this committee. I think you can see where
the Department is going if you look at the legislative agenda
we have put forward. We put forth a public housing management
reform bill, a housing 2020 bill, which is the section 8
management reform bill. We are going to do a homeless bill in
response to the House bill. That will change some policy but
will be a management reform bill. We have very real substantive
program reforms in each one of those bills which I believe will
bring a new level of management efficiency to those program
operations.
On top of that, we have to make sure our own house works.
We have some very real problems of financial management systems
in the Department--94 financial management systems that have
never been reconciled. There is no one, integrated financial
management system. You cannot go anywhere and push one button
and get the read out for the entire Department. I think we have
been experiencing some of that over the past several weeks. So
we have the program reforms, we also have the internal
organizational reforms. We have an aggressive agenda on both,
and I can provide the committee with the time line and
benchmarks so that we can see just how we are making progress.
Senator Bond. That would be very helpful. You talked about
some of the public housing reforms. Frankly, we have done that
in authorizing legislation. We have given HUD various authority
for dealing with underperforming or misperforming public
housing agencies. I am sure that there are many things that can
be done to improve the programs, but we are not looking at
things that primarily require outside legislation. We are
looking at management steps and management reform to make HUD
programs work.
And to be quite honest with you, it is not just this
committee that ought to be interested in the progress. You need
to have your own game plan and we want to see what your game
plan is. Also, I do not want something you just sketch out for
us. I want to see the standards, the goals, the objectives that
you establish for the Department under which you can tell and
we can tell whether the Department has made the improvements
and reforms that are needed.
SECTION 8 CONTRACT RENEWAL RESERVES
Let me address a particularly relevant question about
financial management. I have already laid out the problem with
section 8 and, with the ranking member, I have written letters
to the Budget and Appropriations Committee chairs and ranking
members telling them that we have a real crisis in the Section
8 Program and that we are going to need additional budget
authority to renew expiring section 8 contracts. But as we have
discussed at length, HUD, on April 17, found about $5.8 billion
in unobligated section 8 contract reserves. You advised the
chairman in the House of that. A good portion of that was
immediately grabbed up by the Appropriations Committee to fund
FEMA, to fund CDBG contracts, and I have got a problem with
that.
When we have tried to make some inquiries as to where those
reserves are and it is clear that those reserves are held by
the public housing authorities. Some 2,500 public housing
authorities that handle section 8 have section 8 reserves of
some kind. My sense is that even though you contracted with
Price Waterhouse to do a study, you do not know where those
reserves are or the amount of the reserves because we have been
making calls to public housing authorities. In some cases, the
public housing authorities do not know the status of their
section 8 reserves. A number of public housing authorities have
advised my staff that there are no rules and no regulations as
to the amount of section 8 reserves that they can hold. Some of
them say they do not have any reserves. On the other hand, the
Kansas City housing authority advises that it has approximately
5 months worth of section 8 reserves on hand.
I would like to know if you know specifically by PHA where
section 8 reserves are, how much they are, and how in the
dickens are you going to recapture them. We have just passed a
measure spending all those reserves and, I will be honest with
you, the more I look into it, I will be hard pressed to say how
we are going to recapture those and how we are going to put
them back into the bank so we can spend them on FEMA and CDBG
in the Dakotas. Where are they? How much are they? And how do
we get them back?
GAO ESTIMATE ON SECTION 8 RESERVES
Secretary Cuomo. Mr. Chairman, let me take a moment on
this, because I want to be clear. You have made some
statements, and I just want to make sure that we are
communicating clearly on this. First, I did not mean to imply
that we are going to embark on a management plan for the
Department in response to this committee. During the
confirmation hearings, and at one of the briefings you attended
with Senator Mikulski, it was made clear to me that job one had
to be a management reform plan, not just for this committee but
for every committee, and frankly for myself more than anyone
else. My priority as Secretary is to make this Department work
better than it now works, period. So it was not in response to
this request.
On the reserves, the chronology is important here. The
Department said nothing about any reserves. We did not raise
this issue. In the House, they moved the supplemental bill and
said they were going to take a certain amount of reserves which
were identified by GAO. The number they had I believe was $3.6
billion, and they were going to take this $3.6 billion from the
reserves. We had said nothing about the reserves. They then
called the Department and said how much do you have in
reserves, because we are taking $3.6 billion. GAO says you may
have about $5 billion. Please give us a number. I was reluctant
to provide a number for the very reasons that we discussed. We
have some financial systems that are coming on line and they
are providing numbers. I wanted to make sure before a number
left the Department that it was the right number, that it was a
vetted number, that I had and somebody's signature on the
number, frankly. But as the supplemental was moving through the
House, they said we are taking $3.6 billion because GAO said
you have up to $5 billion. What is your number, answer please
immediately.
We were reticent. There was a delay. Frankly, the House did
not like the delay. We provided, after that period of time, the
best estimate that we had at that time, which was about the
$5.8 billion which you refer to, Mr. Chairman. But we did not
prompt this conversation. We did not volunteer the reserves for
supplemental. It did not happen that way.
If anything happened, the criticism of the Department was
that we were lax in not responding more quickly to the
questions of how much money were in the reserves. That is
factually how that happened.
SECTION 8 RESERVES AND THE SUPPLEMENTAL BILL
As far as the reserves in general, there are two issues on
the reserves that I would bring to the attention of this
committee. No. 1 is again a housekeeping issue and how our
financial management systems work, how accurate the data is
when it came on line. As the chairman pointed out, we do have
Price Waterhouse who is auditing this number, and until I have
an audited number, frankly, Mr. Chairman, I am somewhat
reluctant to say here is a number, put a pin in it and I vouch
for the number.
Senator Bond. Well, I would urge you not to do it until we
know where they are and how we get them back, and that really
troubles me. We passed a great big bill, promised that we would
fund it from these reserves, and it is a really speculative
operation at this point.
Secretary Cuomo. But again, Mr. Chairman, the supplemental
was not premised upon any representation we made at the
Department. It was premised upon a GAO representation that we
were asked to backup. That is how that happened. And when you
asked me for the number I said again please let me get an
audited number, but this is the range, if we have to have a
range, a number today, and you push me, which they did. I said
this is about the range, about $5.8 billion. I was also quick
to say we are bringing in Price Waterhouse and they will audit
it, and we have housekeeping work to do on this financial
management system, and this is not found money. These are
reserves. You can have as little or as much as you want,
depending on what policy calls you are willing to make.
Do you want a 6-month reserve or a 4-month reserve or a 2-
month reserve? What do you want to set-aside for welfare
reform? What assumption do you want to make about the economy
next year? What does your crystal ball say tenant incomes will
be? Depending on all those calculations, you can keep a larger
or a smaller reserve.
This is a program that needs a reserve, make no doubt.
There are a lot of assumptions in there. The economy might
change, tenant incomes might change, welfare reform might have
an impact, public housing authorities may have put more
certificates and vouchers out there than we know about.
NEED FOR VARYING AMOUNTS OF SECTION 8 RESERVES
Senator Mikulski. Mr. Secretary, would you yield just a
second? Mr. Chairman, maybe I can offer first of all a sense
about why reserves were needed, and hopefully now we can get to
the bottom of something. When I chaired the committee and Jack
Kemp was Secretary, he came in one day ready for a hearing and
we thought we needed something, I will say $1 billion. I am
going to make up the numbers, I do not have my accurate records
here for section 8. As we then moved to markup in July, Mr.
Kemp, but really he sent Mr. Dellibovi, said he needed
something like $4 billion more, and the discrepancy between
what we were told at a hearing like this and then moving to
markup was about $3 billion. Then Mr. Kemp and Mr. Dellibovi,
the Budget Officer from HUD, we all huddled to see what we
could do.
What came out of that was there were no data management
systems standing sentry or monitoring the HUD contracts about
what was due when and how much would be due, when we would know
it would be due. We held a ponderous, laborious, technical,
dull, but nevertheless important hearing on that information
gap. We were promised then by Mr. Kemp, we would continue to be
promised by the Cisneros administration that they would be able
to have the data systems in place, and I believe at that time
Mr. Kemp and Mr. Dellibovi, anticipating that we would reach
the spikes, began to build a reserve. It was not to hide money.
Maybe it was not as easily visible, but we knew we would be
coming to like a section 8 Armageddon.
Now, what I do not know, Mr. Chairman, is whether that
money was set aside, which would be a bonafide purpose even
though we did not know about it, but the purpose was bonafide,
and No. 2, if those guys ever put those management systems in
place. But that is kind of where it first erupted, and I must
say in a rather volcanic situation, quite frankly, between Mr.
Kemp and myself, and then Mr. Dellibovi, obviously it is the
Italian diplomacy skills associated with the Vatican and the
Medicis--[Laughter.]
We tried to work this through. But that was the history.
You see a lot of old hands in the Department--but they promised
two things. No. 1, the information systems, and No. 2, that
they would have a way of dealing with it. I have a feeling that
is where some of the money came from. I do not know if you were
here----
Senator Bond. Senator Mikulski, I cannot believe that an
excited, heated conference between you and Secretary Kemp was
dull. [Laughter.]
Somehow that defines logic. But you have brought out this
problem.
Senator Mikulski. I think it went something like you need
what, and then there were other comments. [Laughter.]
Senator Bond. Too bad we did not videotape that one. But
seriously, there is a serious question about what rules, and
talking to people we cannot find that there are any specific
rules from HUD concerning the use of section 8, including the
retention of section 8 reserves. What worries me is the Senate
has gone on record, as has the House, in recapturing some of
this cloud bank of section 8 that is somewhere in the
stratosphere.
My time is up, and I apologize to my colleagues. But where
is it, how much is it, and how do you propose to get it back?
DEPARTMENTAL POLICY ON SECTION 8 RESERVES
Secretary Cuomo. Mr. Chairman, that is the question.
Senator Mikulski's recollection is the same recollection as has
been shared with me at the Department. The reserves actually
existed from the beginning of the program, but it was
heightened with the interchange between Senator Mikulski and
Secretary Kemp. People were very aware of the necessity to have
this program operated on means where they did not have a
shortfall, which meant the reserves became more important as
they went forward.
The Department has a policy on reserves. The PHA is
supposed to have 6 months in reserves, no more than 6 months.
Now, some PHA's have more, some PHA's have less. We are
actually in the process, Mr. Chairman, of going to all 3,400
PHA's and reconciling how much they have in the accounts. We
have the field offices all across the country going through the
books with those local PHA's. But the chairman's caution that
there may be a level of imprecision here I think is a good
caution, and that is why I was reluctant to come up with any
finite number. We have ranges, which I am more comfortable
with, and again we have Price Waterhouse auditing the numbers
so we can come up with a more solid number.
The second issue then is what policy do you choose to set
about the reserves. Is 6 months the right amount of time,
should it be greater, should it be lower? And depending on what
decisions you make, that reserve can be more or it can be less.
The smaller the reserve, the more you have for the renewals,
and in my opinion that was the tradeoff. This money was not
supposed to go to a supplemental to do floods. As worthy a
cause as that is, it did not make sense to me to displace
section 8 people so you could house people displaced by a
flood. We have to do both, but do not help the flood at the
cost of the Section 8 Program. That is what we said in a letter
to the House. But that reserve can be more, can be less,
depending upon the policy assumptions. We then wanted to take
that money from the reserves and use it against the renewals.
RECAPTURING SECTION 8 RESERVES
Senator Bond. With apologies to my colleagues, assuming
that this measure passes both Houses and the conference and it
is signed by the President, how do you get the money back? What
would you do?
Secretary Cuomo. We are proposing in our legislative
package a piece of legislation that would allow us to recapture
and reallocate.
Senator Bond. You cannot do it without legislation? You do
not have the authority to recapture it now?
Secretary Cuomo. Our counsel says we cannot reallocate
without the legislation, and we would need to reallocate so we
could distribute the funding, and that is why we put it in the
legislative package. But we would have to set the appropriate
reserve level. Again, we have an aggressive proposal that says
2 months, and then recapture and reallocate against that.
Senator Bond. If you are telling us, Mr. Secretary, that we
are basing our supplemental on the recapture of funds that
cannot be recaptured, perhaps somehow in the conference, at
some point we need to add the authorizing legislation. Because
from what you have just said, if I understand it correctly, we
have used as an offset something that you cannot do under
existing authority.
Secretary Cuomo. We cannot reallocate.
Senator Bond. Well, what is it that you need to--how do you
get the money back? If there is a rescission included in the
supplemental, how is that effectuated?
Secretary Cuomo. We believe we can recapture the money, Mr.
Chairman, which means we can get it back to the Department. We
can have the money in hand. We could not reallocate it among
the different public housing authorities, but we could
recapture it.
Senator Bond. But you can recapture it?
Secretary Cuomo. Yes.
Senator Bond. My apologies, Senator Mikulski. Senator
Mikulski, if you do not mind, Senator Leahy has to go back to
chemical weapons, and I thought that maybe we would defer to
him.
Senator Mikulski. First of all, I do know what Senator
Leahy is working on, and he is a great colleague. I would like
very much for him to go ahead and then I will wait my turn. I
just want to make Senator Leahy aware while he was waiting
patiently during this conversation----
Senator Leahy. I found this more exciting than chemical
weapons. [Laughter.]
Senator Mikulski. The reason this conversation is so
important is that if we do not deal with the unexpired section
8 contracts it could sink or eclipse the entire HUD budget. I
know, Senator Leahy, you have been a champion on housing for
the elderly, the homeless, that you want to pursue. And this is
why--this is so technical, but it really could eclipse every
good effort that we want to take. I will be happy to wait my
turn.
Senator Leahy. I thank both of you very much. I found the
discussion you were just having to be extremely important on
this whole issue. Of course, I always listen when they talk
about Machiavellian or Medici-type concepts, and I have always
thought what great things the Italians have given to politics
of our country. When I used to talk to the Secretary I only
talked about my mother's side of the family. If I were talking
to his spouse I would probably talk about my father's side of
the family. [Laughter.]
HOMELESS ASSISTANCE FOR SMALLER STATES
I have learned to cover every base I possibly can, Mr.
Chairman. Earlier when I spoke I talked about the fact that
even in a small State like Vermont, you have 6,000 people every
year that are going to be homeless at some point, that are
going to need a warm or dry or safe place to sleep. And that is
in a State where it can get 25 to 30 below zero during the
wintertime and even our summers are very short. Those numbers
point out the necessity of these homeless programs.
Last month those who provide these programs learned that
HUD will pay only 50 percent of the cost to renew their
service-oriented homeless assistance programs this year. It is
ironic because one of the Vermont groups affected by that
reduction only days before had received a Best Practices Award
from HUD for its excellent homeless assistance program. You pat
them on the back with one hand, and take the wallet out of
their pocket with the other hand. Because these programs, even
though they have enormous support from the community, even
though people contribute to it in fundraisers, the program
still needs HUD funding to survive.
The 1997 homeless grant competition does offer some
flexibility in determining State need for homeless assistance.
Is this flexibility available to be sure that States like
Vermont, that have significant project renewals, can receive
the funding they need for homeless assistance?
Secretary Cuomo. Thank you, Senator. First, let me take the
opportunity, if I might, to thank the Senator for all his good
work, especially on the homeless programs. His support over the
past 4 years has really allowed the Department to do the good
things that we have done, especially on the homeless side, and
we have. Even with the budget increase, when we came in, the
homeless budget was $300 million. Today it is about $823
million. When we came in we served about 20,000 homeless. Today
we serve as many as 280,000 homeless. So we really have made
progress on that front, and the Senator has been instrumental
in that.
Senator, on the question you pose about the renewal needs,
it is a very real question and a conundrum indeed. What is
happening is the renewals as we go forward, almost reminiscent
of the Section 8 Program, the renewals get higher and higher
every year on the program. The amount of funding, although it
is as high as it is, is insufficient to fund all the renewals
at 100 percent and fund new programs.
So what we have said is after the initial grant expires the
cap on the renewal will be 50 percent from HUD money, saying to
the organizations you have to find the 50 percent somewhere
else or the local government would have to subsidize the
difference. This is not a new policy, Senator, you should know.
This has been in operation for several years. But it is an
attempt to get at the issue that the chairman has been
addressing about renewals on these programs escalating, with no
way to renew and continue to do business.
But it is not a new policy. We have been using it. I would
obviously prefer to be in a position where I could say we could
renew everything 100 percent and we can do more good things
with more programs. It does not work that way, even on a
program where the budget went from $300 million to $823
million.
CONSOLIDATION OF HOMELESS PROGRAMS
Senator Leahy. I am just wondering, if we were to
consolidate homeless programs, what about the idea of at least
having a small State floor? There is a certain amount of cost
that goes into just administering a program, whether it is a
large State or a small State. If you consolidated them, could
you get at least a minimum level of funding, for small States?
We do this on a lot of other programs, as you know, not just in
HUD but in Agriculture, in Energy, and a lot of other areas.
Secretary Cuomo. Senator, we proposed a piece of
legislation that would do essentially that. We proposed it last
year. We anticipate proposing it this year. The House has put
forth a consolidation also of homeless programs this year. But
under our proposal it would accomplish essentially what the
Senator laid out. We would go to a formula called the ESG,
emergency supplemental grant formula, which is a subset of the
CDBG formula, and rather than running all of these separate
programs we would say to a locality this is the amount of money
you might be entitled to, it is not a formula grant but we use
a formula to tell the locality what they would be entitled to
if they came in with an application that was accepted. That
would tell a State like Vermont this is the amount of money
that you could get if you win the competition. The fairest
formula that we have found is basically the ESG, which is a
formula that is in operation now.
PROPOSED RESTRICTION ON HOMELESS SERVICES
Senator Leahy. The House wants to restrict HUD from paying
for programs that provide services for the homeless. Do you
have a position on that?
Secretary Cuomo. We are against that, Senator. The House
bill would limit initially 30 percent for services, and then it
goes down from there. The House bill is trying to end the
services portion of the homeless programs and move just to
housing. I think it flies in the face of the reality of the
homeless problem, which the Senator well knows is multifaceted.
You have mental health problems, you have domestic violence
problems, you have substance abuse problems. To say all we have
to do is provide a person with an apartment and then presto-
chango their life will change really is a fundamental
misunderstanding of what we are dealing with.
Senator Leahy. I found that back home these services have
been extremely helpful, and I appreciate that. I feel a little
bit better than I did when I first came into this hearing. Mr.
Chairman and Senator Mikulski, I thank you for your courtesy.
Senator Bond. Thank you very much, Senator Leahy.
Senator Mikulski.
ELDERLY CARE
Senator Mikulski. Thank you, Mr. Chairman. Once again, we
could spend all of our time talking about the reserves. I want
to pursue that for a moment, but there are a couple of other
issues I would like to raise. One, I would like to talk about
housing for the elderly. I know that what HUD and what we often
have to grapple with takes us to the emergency of the week or
the emergency of the session. Housing for the elderly is that
program that probably enjoys, other than community development
block grants and FHA, the largest public support for what HUD
does. FHA, CDBG, and housing for the elderly. What I want to
outline, Mr. Chairman, is just some things that I would like to
discuss with you about that at another time, and put it on your
radar screen.
No. 1, we have a good intention that has gone astray, which
is having disabled live in the same section 8 facilities as
housing for the elderly. We have a generation clash when that
occurs because the disabled are often a younger population who
want to lead the lifestyle of a younger population, and this
has often caused very prickly relationships between the elderly
and the disabled. We look forward to hearing from you as we
move forth on the appropriation what your ideas are on how we
meet our responsibilities to both very deserving constituencies
but not have prickly relationships and, therefore, not be able
to benefit.
The second is I would really like to, I see you have
reverse mortgages on your future way of empowerment. Reverse
mortgages are a fantastic idea, but I have been alerted by
attorneys general around the country that they are becoming a
subject of scam for the elderly, with a lot of fear, a lot of
misinformation, and people signing up for a reverse mortgage
which has caused them to lose both their home and their income.
So please, have your team work with FNMA and other groups to
make sure that this is an opportunity and not another scam.
Let me get then to my third point. I am really concerned
about the aging in place elderly, and aging in place section 8
facilities. We need to have a plan for that. I was really
heartened to see how you want to use section 8 with
flexibility. Catholic Charities in Baltimore is developing a
conceptual framework to convert some Section 8 to like an
assisted living framework. They are fleshing that out, Mr.
Secretary, but when they do we would like to be able to arrange
what we think is a new idea for discussion with your
Department, because I think you share this same idea which is
how do we deal with that population and yet deal with it
creatively, and not necessarily with new money but with new
flexibility and new resourcefulness.
I just wanted to lay those issues out because I know of
your longstanding commitment to the elderly, and we want to
make sure a good program that is working and enjoys public
confidence continues to do the same. Did you want to comment on
that?
Secretary Cuomo. Please, Senator. It would be my pleasure
to follow up with the Senator or her staff on the so-called
mixing of the populations, the elderly and the disabled. I
could not agree with the Senator more. It was a nice idea in
concept, it worked poorly in practice. They are different
populations, different needs. The Department has published a
rule saying how a housing authority, if it chooses, can have
separate buildings, elderly and disabled. As the Senator points
out, the challenge for us is to make sure we protect the rights
of both. We want good housing for the elderly, but we also want
good housing for the disabled. It did not work when we put them
together. How do we separate them and be fair to both? But we
put out a rule that does that. Housing authorities are now
coming forward, and that happens to be working well. It was a
misstep, however, in policy that I suppose the Department and
the Congress made together.
On the reverse mortgages, Senator, just let me affirm your
point. It has come to the Department's attention that there has
been a high level of fraud in the Reverse Mortgage Program. We
took quick action and we are getting the word out. There has
been legislation proposed that would make it illegal to charge
high fees on the seniors for the Reverse Mortgage Program. I
think we have abated that problem.
BROWNFIELDS
Senator Mikulski. Mr. Secretary, my time is going to be up
and all I did was want to give a conceptual framework if I
could, but we will follow through on that. I want to ask, if I
could, about your brownfields idea. We will pursue that. I do
not mean to cut you off.
Secretary Cuomo. That is fine. We will follow up later on.
Senator Mikulski. In terms of right now, I know President
Clinton is announcing a brownfields initiative, and neither you
nor I are there, but that is OK. We are giving him the
opportunity to announce that. I understand you have $25 million
as an appropriation request for brownfields. This could be a
really big breakthrough for empowerment communities. In my own
hometown we estimate that there are over 3,000 acres of land
around waterfront that could be claimed through brownfields.
Can you tell me what this money is going to buy in terms of
services or work with the private sector and how you are
coordinating with EPA?
Secretary Cuomo. Yes; I can. I will do it quickly because I
am cognizant of the Senator's time. There are about 450,000
brownfields across the country, probably no single greater
obstacle to urban recovery than brownfields. We have a joint
approach with EPA. Basically EPA will come in and do the
cleanup side of the site, the remediation side. We come in and
do the reconstruction side. It is an EPA-HUD partnership that
will----
Senator Mikulski. I do not know what that means. I do not
know what reconstruction means.
Secretary Cuomo. Well, redevelopment. For example, say the
city of Baltimore says we have 10 acres, it was a former
factory, we cannot do anything on it because it is a dirty
site. We have a store who would come in and open up a factory
shopping outlet if they could get it clean, certified, and if
they could get a loan to do the construction. EPA would come in
and do the cleanup and remediation side. We could come in and
do the economic developmental loan the way we now do under the
EDI Program, Economic Development Initiative Program, or CDBG,
an economic development loan that would facilitate the
reconstruction or development on that site.
Senator Mikulski. So this would be different than using
what CDBG could have been used for this?
Secretary Cuomo. It is generally the same types of purposes
as CDBG, because CDBG is very broad. CDBG can be used for
economic development. It is not the normal use of it, but it
could be. The EDI Program can be used for economic development,
and this $25 million would be used on the same general
activities.
IMPLEMENTATION OF NAPA RECOMMENDATIONS
Senator Mikulski. Well, we look forward, again, to working
with you on this. Mr. Chairman, if I could just have a moment
for reform. I know the chairman has talked about reserves, and
I will not go over that. As you know, we are deeply concerned
about the Armageddon getting ready to hit section 8, and look
forward to hearing then how we are able to pursue this
particularly since funds have now been moved to the
supplemental. What I am interested in, though, is just
listening to you now about CDBG. We went through EDI and you
listed a whole lot of programs. Do we have too many programs? I
mean, this comes back to the NAPA report where we had so many
programs, so many line items, and so many minuscule funding
around it. The NAPA report was commissioned in 1994, and I
believe Secretary Cisneros did it. Could you tell me where you
are on implementing the National Association of Public
Administrators report, and then also about consolidation,
because we can have so many micro tools that we do not solve
some of the macro problems, even though you and I know
solutions are local.
Secretary Cuomo. Senator, I could not agree with you more.
I think we are doing well on the NAPA report, and frankly I
think the reforms are even going to be more fundamental than
NAPA may have anticipated at the time. But on the NAPA report,
we are using that as a benchmark. We have completed about one-
half of their recommendations and we are working our way
through the list. What NAPA really said, which is really true,
and I can tell you just from the first few months in the
Secretary's position, there is a mismatch between staff
resources and program activity. That mismatch is becoming
exaggerated as we have been doing the downsize.
Four years ago we were about 13,000 employees. Four years
from now we will be about one-half that. When the work force
comes down that much, almost 50 percent, something has to
change. You cannot keep doing everything you were doing with
one-half the work force. You certainly cannot be doing more
than you were doing. You are going to have to allocate that
staff with your mission, and putting these small boutique
programs together with larger programs that are easier to
administer I think is going to be one of the hallmark
directions for us, getting the resources to the local
communities so they can implement them, not forgetting our
monitoring responsibility because the pendulum swings both
ways. I do not want to be before this committee and have
somebody say well, you gave them $2 million in CDBG, did you
watch what they did with it. We have to monitor also.
But let us get it into fewer programs that get the funds to
the communities. Let our role be to facilitate that, help
advise the community, and secondarily to monitor the
communities' use of those funds. That is the direction we are
headed. When I talk about management as job one, the
fundamental reconciliation is what do you do as a Department,
how many things can you do and do them well. We do a lot of
things now. We do not do enough things well.
HOPE VI REFORMS
Senator Mikulski. Mr. Chairman, I know my time is up. If I
could just ask Mr. Cuomo one last question. How do you want to
deal with the reforms of HOPE VI? What are they? I know Senator
Shelby is here. I am kind of the founding mother of HOPE VI. It
was meant to be an empowerment tool. It has worked in many
communities around combining, changing both the housing but
also self-sufficiency and community service. Do you want to
reform it?
Secretary Cuomo. We have suggestions to reform it, Senator,
because we have now been able to see how it works in operation.
We have the grants out there. As in any program, you have some
outstanding successes.
Senator Mikulski. What are the top three reforms?
Secretary Cuomo. I think we have to look at the cost of the
units that we are developing. The law allowed HOPE VI units to
be higher than what is called total development costs, TDC. It
allows HOPE VI to exceed those costs. What did the Congress
have in mind when it said you can exceed those costs, how much
do we want to pay for a unit? How about those HOPE VI grantees
who are not spending the money? At what point do we say enough
is enough, we are getting squeezed for money across the board,
we do not have enough money for renewals, and take it back?
Those would be the top two on HOPE VI. Where is the money
committed? How long will you allow it to stay out there?
Senator Mikulski. I would add one other. What is the
outcome we seek? Is it just to move people from one ZIP code to
another? Is it just to give money out so we can tear down
public housing but not buildup community? And ultimately, are
the residents better off? Have they greater tools of self-
sufficiency, and then is the community in which they live doing
that? Are we just building new federally subsidized empires, or
are we building communities in which residents have these tools
connected to empowerment or enterprise zones?
Thank you, Mr. Chairman, and thank you, Mr. Secretary.
Secretary Cuomo. Thank you very much, Senator.
SENATE MEASURE ON REVERSE MORTGAGES
Senator Bond. Thank you, Senator Mikulski. I am going to
turn for the questions to our dear colleague from Alabama. Just
a couple of observations. You mentioned the reverse equity
mortgage. A measure has passed the Senate to provide HUD with
additional tools to fight fraud and abuse in reverse equity
mortgages. We have passed through the Banking Committee, and I
believe through this committee, several directives to separate
elderly and disabled housing, and we are delighted to see that
is moving forward. I should note with respect to the
recapturing of the section 8 reserves, we have fenced some $5.8
billion that we have attempted to recapture. If we have fenced
more than is there, we need to hear about it.
ADDITIONAL HUD PROGRAMS
And finally, I want to reemphasize what Senator Mikulski
has said about the new programs. You are talking about a new
Brownfields Program. Please, let us not be continuing to add to
the 240 programs. I have something in the Small Business
Committee, a hub zone program to bring jobs to the distressed
inner city areas. We do not want HUD to feel like it has to do
everything. We would like you to stay focussed and, as a rule
of thumb, for every new program you propose if you could
recommend repealing at least two and perhaps more. That would
be a wonderful way, perhaps, to begin to get a hold on and a
handle on the responsibilities you have. If you want to repeal
5 or 10, I could be supportive of that.
Observations, for what they are worth, and now let me turn
to Senator Shelby. Thank you, Senator Shelby, for your
indulgence.
STATEMENT OF RICHARD C. SHELBY
Senator Shelby. Thank you, Mr. Chairman. Mr. Secretary, I
was not here earlier, I was detained at another meeting, and
you may have gone through this dealing with the integrated
disbursement information system. Have you gone into that?
Secretary Cuomo. We have not, Senator.
Senator Shelby. OK. I did not want to be repetitious. It is
my understanding, Mr. Secretary, that HUD is in the process of
mandating a computerized payment and reporting system for all
block grants, including the community development block grant
managed by State governments, according to my Governor in
Alabama's office. He has written us twice already on this. The
system was designed, they say, for entitlement cities and
cannot be adapted for State programs. I do not know this, I am
just relating it.
It says IDIS is complex and burdensome with respect to
time, personnel, and cost. They tell me that HUD's mandated
system is designed in such a way that existent data in the
State systems cannot be uploaded to HUD. As a result, that data
must be entered twice since HUD's system cannot be used for
accounting purposes. My Governor's office maintains that should
the system go forward as is, there will be substantial cost
involved for hiring, training, and equipping new employees. I
know HUD has established a committee to look at States'
concerns under your supervision and has postponed the
activation date. However, the system is going forward with
little or no consideration to the cost of States with respect
to manpower and equipment. That is my understanding. You might
have other information.
Now, where is the State pilot program in relation to the
concerns of the States with new integrated disbursement
information systems? Do you know off hand?
Secretary Cuomo. Senator, I know the pilot is ongoing. In
general we have to get management information systems in place
at the Department. Part of the conversation you did miss which
is relevant is the chairman expressed concerns about the data
collection, the information that we have, financial information
we have, and we are putting systems in place. One of the
systems we need is, the IDIS system which tracks CDBG, and how
much we have and how much the grantee has. It is fundamental
for us to know that, and we need a management information
system to do that. We have to move, even HUD eventually----
Senator Shelby. That is a must, is it not? You have just
got to have that.
Secretary Cuomo. Yes; we need to know the information and
it has to be on a computer. I also understand that in that
transition, while management information systems are the wave
of the future and technology is the wave of the future, there
is also a transition and there are fits and starts. Some of the
States are saying we are not ready to provide this information,
we are not ready to get on line, the flip side, Mr. Chairman,
of the conversation we were just having. What we have said is
we do not want anyone to implement a system that is not a
workable system and an intelligent system. We will design a
transition period to ease them into the process. We have
working groups with the State.
But, Senator, the system has to work and the transition has
to work and the training has to work, but we have to get to a
point where we do have the financial management systems
otherwise, especially as we have heard this morning, I do not
have the basic information to provide this committee to make
funding decisions and appropriations decisions.
Senator Shelby. Do you know, Mr. Secretary, if there has
been a cost benefit analysis of this project? And if you do not
know now, could you furnish that for the record?
Secretary Cuomo. I can find out, Senator.
Senator Shelby. We would be interested in the expected cost
to the States both in dollars and man-hours. I think that is a
consideration. I do agree with you that you need a system where
you can track everything that is going on with the States with
these community block grants and so forth. Otherwise you have
no oversight. There is no way in the world. But the question is
what is the best way to achieve that? I do not know myself, I
am just raising these questions on behalf of my State. We have
50 States to deal with, and you have got to have a product that
works. I guess that is the main line.
I am sure as the Secretary, this falls in your lap. You
want it to work. If you will make sure it will work and
accommodate the States, not as an impediment but to make it
work, that would, I believe, be good. Because without the
information that is going on, I do not know how you can monitor
anything.
MANUFACTURED HOUSING
Manufactured housing. I do not know if you got into this at
all earlier. If you did, I apologize to you. I would like to
ask you a few questions about this. You know, that is a fast
growing area of housing in America. It is my understanding that
the manufactured home inspection and monitoring program which
administers Federal construction standards is subordinated
under the Office of Single Family Housing within HUD. If that
is true, given the fact that manufactured housing accounts for
nearly one in three new single family homes sold in the United
States each year, and that is one of the best means, affordable
means for home ownership for Americans with an average price
tag--I did not know it was this low--average price, I am sure,
of $37,000, do you believe the program has been given the
necessary leadership and oversight in HUD since it is a fast
growing part of meeting the housing needs?
Secretary Cuomo. Senator, I agree with your concern and
your expectations for manufactured housing. I think there is
great potential for manufactured housing, and really playing an
even increasing role despite the great progress that they have
made over these past few years in the area of affordable
housing in particular. It is one of the most exciting
developments that I think we can point to on the horizon.
Have we done enough for manufactured housing within the
Department? The Senator just has to keep in mind the overall
context, as we were mentioning earlier. The Department is
coming down about close to 50-percent reduction in personnel,
and that is basically the backdrop against which we are doing
all of these things. So, do we have a lot more staff to put in
the manufactured housing division? No, just because most of the
numbers in most areas are coming down. I am not familiar
exactly with the Deputy Assistant Secretary level. On one hand
we try to keep down the number of assistant secretaries and
deputy assistant secretaries----
Senator Shelby. Overhead. I understand.
Secretary Cuomo. But I will look at it, and let me assure
the Senator that we will have the right leadership and the
right priority for manufactured housing. Because, as I said, as
a matter of policy----
Senator Shelby. Well, it has changed a lot. I see where
they are moving areas of manufactured housing, maybe two or
three or four sections, and putting it together. It is changing
the looks of a lot of the housing. It has I think improved a
lot. If it is growing that fast and it is affordable, it looks
to me like it ought to be answerable to at least the FHA
Commissioner or someone under him. I wish you would let me
review it--you review it and let me know how you view it for
the future.
Secretary Cuomo. That would be my pleasure, Senator.
Senator Shelby. But how can we do, working with you, a
better oversight of it and give a helping hand making sure the
standards are met for the American people, because it has
increased availability of housing in some areas? If HUD is
promoting that in some way, then that is probably positive. I
do not know. I am not in the business. I have just seen some
improvements.
PROPOSED RULE ON RESPA
I want to shift to RESPA. About one-half of today's
residential mortgages originate with mortgage brokers, I have
been told. Some of them write me and say there is ambiguity
with regard to lender paid broker fees. You know, there is some
controversy about this. As a matter of public policy, if this
is true, if there is ambiguity there on what you can pay, what
you can charge, or what you cannot charge--I do not know this
myself. I just have had people write me and call me about it--
should HUD be involved, or are you looking at the possibility
to make a rule regarding what brokers can charge, what
parameters they are involved in, where there is some idea of
what is right, what is wrong, what is in a gray area, what is
the right thing to do? I know it is a controversial area.
Secretary Cuomo. Senator, it is controversial. There is
also litigation that is ongoing about it now, it is in the
court system. What fees are right, what disclosure has to
happen.
Senator Shelby. But it is a big industry, is it not?
Secretary Cuomo. Very big industry, very important for,
obviously, housing in America to continue at the rate it is
continuing. As you know, we are trying to even increase the
home ownership rate, so it is important to us that we keep it
going, and going well. We have a rule in the Department now
that is going to be going out literally in the next couple of
weeks which will put out a number of options on how the
situation could be handled. We will then get some comment on
that and come up with a final rule. But you are right, it is
controversial, it is in the courts, it does need to be
clarified so the industry can get on with it. We are going to
play our part by putting out a proposal, get comments, and then
we will go to a final rule.
Senator Shelby. Do you think that will be in the next few
weeks?
Secretary Cuomo. Yes; it will.
Senator Shelby. Well, that would be good. One thing we want
to make sure is that no one gets gouged or taken advantage of
in the market, but if there are no rules, if there are no
guidelines out there, we probably need to make some to protect
both the consumer and the broker, let them know what they are
doing, what they can do and what they cannot do. It would make
sense to me, because that is, a lot of people, that is where
they get their loans, is it not?
Secretary Cuomo. Yes; it is. As the Senator knows, we are
going to take a good stab at establishing clarity here on the
specifics, but the RESPA law itself, which was passed back in
1974 I believe, really has some areas that could have been
better written, could be clarified. It has been problematic to
implement, to say the least. But on the specifics, we will have
a proposed rule go out, we will get comment, and then we will
go to final.
Senator Shelby. That is all I am asking. Thank you, Mr.
Chairman.
Senator Bond. Thank you, Senator Shelby. You touched on one
of the questions I was going to ask, and the Secretary has
indicated that the RESPA proposed rule will be coming out in
the next couple of weeks. I would be interested in
clarification of HUD's position. Is it possible that HUD could
provide some interim guidelines which would be effective in the
near-term future? This is a continuing problem, obviously.
There is a great deal of uncertainty in the area.
Secretary Cuomo. I think, Mr. Chairman, that once we
publish the rule, anyone who reads the rule will see basically
where the Department is headed. It lays out a number of
options, but there is ongoing litigation now. It is very heated
on both sides. Again, the underlying law is vague. It was
designed to protect the consumer. I do not know that it always
got there, but we will publish the rule for comment. They can
look to that rule and try to obtain guidance that way.
PRESERVATION PROGRAM
Senator Bond. Let me turn to the Multifamily Housing
Preservation Program. In the last 2 years we have appropriated
approximately $1 billion to fund the Preservation Program,
mostly for capital grants for sales to nonprofits. There is
evidence which the GAO is investigating and the HUD inspector
general has raised questions about the possibility of
significant overpayments to owners for excessive appraisals and
rehabilitation under the program. I remain concerned, while
there is talk about finding a new approach, that certain of
these projects, especially projects with elderly and disabled
residents in low-vacancy areas, where a project prepayment
could result in displacement and the loss of a valuable housing
resource.
I would like your comments on this Multifamily Housing
Preservation Program, and I would also like to ask Ms. Gaffney
if she will enlighten us with any further information she has
on the program.
Mr. Secretary, you first, please.
Secretary Cuomo. Thank you, Mr. Chairman. You know the
Department's position on preservation is, given the current
budget environment, we do not support further funding for the
Preservation Program. Is it a worthwhile goal to preserve the
affordable housing stock? It certainly is, but at the cost of
the Preservation Program, we do not think we have that luxury
right now. The Preservation Program is much more expensive than
providing a voucher. Over 5 years, a voucher is about $20,000,
a preserved unit through the Preservation Program is about
$56,000. Over 20 years, a preserved unit is about $97,000, a
voucher is about $77,000. So, given the entire context of this
conversation today and looking for a cost-effective
alternative, we believe it is hard on the numbers to support
the Preservation Program.
Having said that, we do have a Preservation Program which
was passed by the Congress. We are implementing it. There are
questions on the implementation of that. GAO is doing a study.
I do not believe they have come out with a draft yet. But the
issue revolves around repairs which are done by the new owner,
the not for profit, which may have been in excess of original
estimates of repairs. What is happening, to the best of my
knowledge, is that new owners come in and we allow repairs to
increase the liveability of the building, reduce future
maintenance of the building. We allow a capital grant to make
those repairs. The new owners are coming in with an aggressive,
ambitious desire for repairs to the building, and we are
funding them.
The question is should we be more diligent in trying to
reduce those costs of repairs. GAO is doing an audit, we are
going to be reviewing it internally ourselves, and I am going
to be getting recommendations over the next several weeks on
how we can correct it. My sense of it, again this is just a
cursory review thus far, we have funded sometimes legitimate
estimates, but estimates which are in excess of what we really
needed to do as a bare bones minimum on rehab, and we have to
be on a more conservative side on rehab as opposed to a more
aggressive side.
Senator Bond. Thank you, Secretary. Ms. Gaffney, would you
come forward and share with us your comments? We will ask for
further expansion, obviously, on this from the Secretary and
from the inspector general. Welcome, Ms. Gaffney.
Ms. Gaffney. This is one area where I think it is fair to
say that HUD and the OIG are generally in agreement. All of our
work in the past has indicated that this program, that this is
one of the areas where HUD does not really have the staff
capability to do the program appropriately, and the costs as a
result have been too high. The impact on these buildings in the
past has been bad. What has happened is we have turned mixed
population kinds of buildings into everyone receiving section
8, a concentration of the poorest of the poor, and the
buildings go down hill.
The current program, we think there are cost problems, but
the problem that we have run into--and I am not going to tell
you that it is systemic, I do not know. We have, in the cases
we have looked at we have found the problem. That is the new
program relies on community-based organizations or resident
counsels who purchase the properties. In a few cases that we
have looked at we believe these are what we call sham
nonprofits. That means that these are the sellers' constructs,
and it becomes a means for the seller to maintain control over
the property in the long term. Now, again, I cannot tell you
that that is systemic, but that is what we have found in a few
cases we have looked at.
I will tell you that the Department, at this point, does
not agree with us in that characterization, and the issue
continues.
Senator Bond. Thank you, Ms. Gaffney. That obviously will
require some careful oversight. Senator Shelby, do you have any
additional comments?
SALE OF PUBLIC HOUSING UNITS TO TENANTS
Senator Shelby. I have no other questions, Mr. Chairman,
except I do have one observation. You may have gotten into it,
and maybe the Secretary has, or maybe Senator D'Amato did on
the Banking Committee. The public housing problem, which is big
in many ways, whether we rehabilitate them or what do we do
with section 8, what do we do here and there--Mr. Secretary, as
you know, you have got your hands full.
What are you doing, if anything, in the Department toward
selling some of these units to the people in them? I know we
talked about that, I know Secretary Kemp was into that several
years back. I just know from my own experience that a lot of
people, once they have ownership of anything, be it a car, they
take care of it. If they had a house, I do not believe they
would tear it up. I have thought, I have not run any numbers on
it or anything, it costs the Government billions of dollars
from the taxpayers each year to maintain the housing that we
have. A lot of it is old, a lot of it needs maintaining.
But would we as a Nation be better off if we started
privatizing, even if we sold some of these units as so-called
condos or whatever, to the people in it at book value, you
know, over the long term? I just wondered if you have ever done
any pilot programs or if you have thought about it in that
regard.
Secretary Cuomo. Senator, if I might, let me respond to two
questions, if I might, just quickly following what the
inspector general said, just for a point of clarity. I would
agree with the inspector general, this is not the type of
program HUD should be running. It is the exact opposite of
every discussion we have had where we want to get simpler
programs, where we can block grant to the local community and
then monitor. This is a very complicated program that requires
very sophisticated judgments by the HUD staff, and I would
agree that we do not have the capacity to do this. We will be
reviewing the program internally and we will have suggestions
to change it, because if we do not have the capacity I want to
make sure that there is no fraud, waste, or abuse on this, and
we will be taking care of that.
Senator Shelby, we discussed this when we had the briefing
prior to my confirmation. I could not agree more. There is all
the difference in the world between ownership and rental.
Before I had the pleasure of serving at HUD, I actually built
and operated housing, in the good old days, Senator. I ran
housing that was both rental and housing in which people had an
equity stake, the tenants had an equity stake. And it is all
the difference in the world. You cannot do what ownership does,
the vesting, the stakeholder status, the pride.
Senator Shelby. How do we get there?
Secretary Cuomo. In public housing, I do not know that the
best course is to sell public housing to the residents. That is
what Secretary Jack Kemp advocated. They did it on a very
limited basis. I believe where they did it the costs were
actually extravagant, that it cost a lot of money to get public
housing in a condition that you could transfer it to a person
and they could maintain it with their obviously limited income,
otherwise they would not be in public housing in the first
place.
COST OF REHABILITATING UNITS
Senator Shelby. Would it cost more in the long run, because
we continue to upgrade it? I know it would cost some money to
get it ready, like an apartment, a home, a condo to sell, a
house. You would fix it up, so to speak, and get it ready for
the market. But then once you are through with it you do not
have to come back year after year. I do not know how to get
there, but it just seems that public housing as we know it, for
the most part, I am sure there are success stories and you
could recount a lot of them, but in America people that I know,
and I know a lot of people and so do you, Mr. Secretary, they
would like to own something in America. That is the American
dream. The question is should we stay in the public housing
business as we have known it all these years, as we have grown
in it since the thirties, forever or should we figure out a new
plan under your leadership as HUD Secretary to try something
else?
I certainly do not know the answer. I do believe that what
we have is for the most part not good for a lot of people in
public housing, and it is not good for the taxpayers. So how do
we get there? Heck, I do not know. But, you know, I am
interested in some of your thoughts.
ALTERNATIVES TO SELLING PUBLIC HOUSING UNITS
Secretary Cuomo. Well, Senator, I think the point about
some of the public housing in this country has not worked well
is obviously true. I also believe we do have a much different
course in public housing than we have over the past few years.
You could look at the HOPE VI Program which is totally
different, look at public housing, you look at a law called the
mandatory conversion law which could have really significant
impact on public housing in this country that says if it is a
big project and it costs too much to fix and there is a high
level of vacancy, then we go to vouchers and that building goes
away, literally. That could have sweeping impact on public
housing. Literally it could take the worst, the biggest, the
most expensive, the most vacant projects and eliminate them
from the public housing inventory.
We then do sell some public housing when we think it works,
to the residents. We do several thousand units that way. I
would not say that it is a numerically significant number at
this point, but we do that with public housing also. And then
we have a host of other weapons in this arsenal that really I
think are more direct: the HOME Program where we provide
someone a subsidy and they can get home ownership; the section
8 home ownership initiative, which I am excited about, which
says we could take a person who is in public housing, give them
a section 8 voucher and let them buy a home with that. I think
when you start to look at those different initiatives, you see
a much different path for public housing in this country.
Senator Shelby. Mr. Secretary, I do not recall the so-
called HUD name of the program, it was many years ago, where
you had a subsidized single housing program where people of
lower incomes could buy a home under FHA insurance and they--
was it a 235 program?
Secretary Cuomo. Yes; it is the section 235.
Senator Shelby. OK. In my hometown of Tuscaloosa, AL, I
could carry you today into areas, this was probably 25, 30
years ago, a lot of those homes, were some of the poorest
people in my town at that time. They bought a lot of these
houses. They are the best maintained homes, their lawns are
cut, there is no trash in the street, they are proud of their
home. I know you do not have a program like that today, but it
fostered home ownership. I know I am getting off of the other a
little, but we are talking about housing and people. It is one
of the safest little neighborhoods around. It says a lot about
owning something. They are buying it, they feel like an owner.
Can we ever get there? If we could do it, I think we could
do miracles and you would, as a Secretary, under your
leadership--I do not know how to get there, as I say, but I
think we need to explore this, and you are in a position to
probably think up a lot of this, you and your staff.
Secretary Cuomo. We are trying, Senator. Your vision is the
goal for the Department. All of these efforts are to get to
home ownership. Either it is moving a person from homelessness
up through a continuum to home ownership, or public housing to
home ownership, or welfare to home ownership, but the ultimate
goal is home ownership because nothing works like home
ownership. From the individual's point of view it is literally
vesting in the American dream. It is the most stable community.
It works for the community by and large.
Senator Shelby. It works for the family, does it not?
Secretary Cuomo. It works for the family. So everything we
are trying to do is geared toward making that a reality. The
President has said the highest rate of home ownership in
history is his priority. So everything is pointed in that
direction.
Senator Shelby. Thank you.
USE OF EMERGENCY CDBG FUNDING
Senator Bond. Thank you very much, Senator Shelby. Let me
ask you a technical question. You may want to get back to us
and respond in writing because this is going to be a major
question in the emergency supplemental. As you probably are
well aware, at this juncture the Senate has $500 million for
emergency CDBG assistance for disaster areas, and gives HUD
broad waiver authority. The amount of these emergency funds are
unprecedented since there is not even an appraisal for the
disaster costs. The flood disaster areas have no plans for the
use of the CDBG funds, there is no agreed approach on how to
rebuild from the disaster.
I would be interested in having either your comments here
or written comments, what are the requirements that cover the
use of emergency CDBG funds under HUD's existing guidelines? We
know in some cases emergency CDBG has been used for buyouts,
and I understand they are generally restricted to use in
conjunction with the FEMA Program, but are there restrictions
for the use of CDBG funds for buyouts? Can CDBG funds be used
in conjunction with, for example, the buyout of private
businesses, rental properties, or is it limited to personal
residences?
Again, what can you do to enlighten us on this subject?
Secretary Cuomo. Senator, I will go back and check, if it
works for the committee, on some of the technicalities. But
unless my recollection fails me, I do not believe this is that
unusual a circumstance. Northridge earthquake in California,
Homestead, Hurricane Andrew in Florida, there was an allocation
of CDBG which is almost by definition done before you know the
actual disaster estimates, because the disaster estimates take
a while to assess. You have to get an engineer to go in and say
what the infrastructure damage is, what is the damage to
Government buildings, what is the damage to homes, et cetera.
The CDBG in those cases was allocated pursuant to a disaster
estimate done by FEMA, and the allocation among eligible
entities was also based on that disaster estimate by FEMA. We
had broad waiver authority in those cases. I do not know that
this waiver authority is any more or less than that waiver
authority.
Senator Bond. Since fiscal year 1993, in the last 4 years I
think only a total of about $1.2 billion has been appropriated
in these emergency CDBG's. It has gone to 25 States. The $500
million request for emergency CDBG for this fiscal year is an
unprecedented level, and if you would provide for us the
guidelines, the working guidelines--I am familiar with the use
of CDBG funds in conjunction with FEMA disasters. They have
been very helpful in my State, and really they were the extra
assistance that FEMA needed to move some very small communities
out of the floodplain where they were willing sellers. It
really made a difference.
But here we have what may be the CDBG Program being the
lead horse, the pulling mule, and before FEMA has any concept
of it we may have appropriated more in CDBG funds than FEMA has
in disaster funds. We would like to have the guidelines that
you use in handling that kind of emergency.
Secretary Cuomo. Just so the chairman knows, all past
experiences have been that CDBG does not come in until FEMA has
exhausted its resources and we are the fill behind FEMA, if you
will. FEMA comes in, they take the first shot, they come up
with a plan, they use FEMA funds. Where there is a shortfall,
then we have used CDBG in the past. But that is always the MO
that we have used, and I do not believe it would be any
different in this case.
Senator Bond. Well, that was my understanding, and we need
to know how it would work. I also have a problem in my home
area that involves you, and I do not know if your staff has
called to your attention the Kansas City Star on Sunday, May 11
that started off with an editorial on the dog that did not
bark. It says that HUD has recently reviewed how the city needs
to improve its management of funds in several areas, and that
last year in Kansas City, the city hall apparently approved an
outlay of some $17,500 for a picnic, and the HUD regional
director of community planning and development said that
spending money on picnics can be valid if it meets public
service requirements. The article asked the question what is
the public service for a $17,500 picnic, and what are the
constraints on this? This obviously has stirred some comment in
the community, not just in the editorial page.
Secretary Cuomo. Chairman, thankfully I am not familiar
with that picnic. I was not at that picnic. I do not know
anyone who was at that picnic. [Laughter.]
Senator Bond. They tell me it was not too lavish, but they
spent 17 grand. It had to be a heck of a picnic.
Secretary Cuomo. I will check on the specifics, Mr.
Chairman. I am not familiar with it.
Senator Bond. We will make a copy of this.
Senator Shelby. I was not at that picnic either.
REVIEW OF EMPOWERMENT ZONES
Senator Bond. I did not make it. It could have been a bash.
But we would appreciate your looking into this, because it is
of interest.
Actually one of the other things mentioned in here, when we
are talking about empowerment zones, the editorial also
mentions the EDI Program and the subsidies provided thereunder.
The question I guess that still lingers out there is the fact
that in the past the inspector general has said that the
selection of empowerment zones was not based on any formal
selection criteria. Have you, as you look at empowerment zones
and if you propose to move forward in that area, do you have
any plans to remedy those problems or to take a fresh look at
the selection of empowerment zones?
Secretary Cuomo. If you are suggesting are we considering
going back and removing the designation from zones that
received the designation, no. If that is the question, Mr.
Chairman. I am aware of the inspector general's opinion. It is
a different opinion than the opinion of the General Counsel,
who reviewed the same law and came to a different opinion. The
Empowerment Zone Program, by and large, has been a very
successful program. We did a report several weeks back that
said 67 of the 72 empowerment zones/enterprise communities are
already showing progress.
I think if you talk to these zones, Mr. Chairman, you will
see an energy and an excitement that we have not seen in years.
And these are zones which by and large are getting a small
amount of Federal money for the bang, when one considers the
bang we are getting for the buck. The enterprise communities $3
million. In some cases these enterprise communities for $3
million have leveraged 10 to 20 times as much funding. It was
really a program that caused the community to come together.
They got excited. It was about creating jobs, community
revitalization, and it has worked. We were at a conference a
couple of weeks back in Detroit with these empowerment zones.
Kansas City was there. Mayor Cleaver was talking about how well
it is working and the excitement, and that he knows that he has
a Federal partner. So I am very pleased with the program, and
we are not considering removing the designation from any zones
based on the inspector general's opinion.
Senator Bond. Well, there are some mixed results on that. I
do not think we need to pursue those here. We note that Camden
was designated a primary empowerment zone and has since gone
into receivership and there are other questions in other cities
about how much money is actually being leveraged in. I do not
think at this point that we need to extend this hearing any
further, but we will explore with you at the staff level any
further information that we may need on this. We will leave the
record open. Believe it or not, I still have some additional
questions that we will submit for the record.
Senator Bond. We invite the other members of the committee,
if their staff is here, to submit further questions, and we
will keep the record open for a week or so. We do want to have,
before we move to markup on the bill, we do want to see how you
are responding to the GAO and the NAPA and the inspector
general requirements, that we move forward on job one, getting
the financial and management systems in place so that you and
we will know what you have got, where it is, and how it is
being managed.
Any final comments, Mr. Secretary?
Additional committee questions
Secretary Cuomo. Just let me assure the chairman that we
share his concern about the management of the Department,
especially in the financial management systems. We have
embarked on a course that brings us to an entirely different
financial management system than we have ever had before. We
are going to contract with it. We know what we do not know. We
are going to bring in an outside contractor to go through all
1994 financial systems in the Department, get rid of the ones
that do not work, integrate all of them. We are making
management changes, personnel changes in the Department, and if
the committee indulges us a window of opportunity to get these
changes in place, I think you will be pleased with what you
see.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Bond
GAO DESIGNATION OF HUD AS A ``HIGH RISK AREA''
Question. GAO initially designated HUD in 1994 as a ``high risk
area'', the only cabinet-level agency ever so identified; GAO continues
to designate HUD as a ``high-risk area'' (as recently as February 1997)
vulnerable to waste, fraud, abuse and mismanagement.
GAO's major areas of concern are: (1) internal control weaknesses,
such as a lack of necessary data and management processes; (2) poorly
integrated, ineffective, and generally unreliable information and
financial management systems; (3) HUD organizational problems, such as
overlapping and ill-defined responsibilities and authorities, including
a fundamental lack of management accountability and responsibility; and
(4) an insufficient mix of staff with proper skills for the effective
monitoring and oversight of HUD's programs.
This is a significant concern to this subcommittee especially since
GAO also has described HUD as one of the nation's largest financial
institutions, with significant commitments, obligations and exposures;
that HUD is responsible for managing more than $400 billion worth of
insured mortgages, $485 billion in outstanding mortgage-backed
securities, and about $180 billion in prior years' budget authority for
which it has future financial commitment.
These are not new concerns; they have echoed through almost every
HUD appropriation hearing in every year. Secretary Cisneros spent 4
years talking about HUD reinvention and reform; however, HUD seems to
be on a treadmill, always moving but never moving ahead. What can be
done to rebuild HUD's fiscal management and program integrity?
Answer. Restoring the public trust in the Department is one of
Secretary Cuomo's top priorities. Work in the following areas will go
far toward rebuilding HUD's fiscal management and program integrity,
and restore the public trust:
1. Financial Systems Integration.--GAO has reported that one of
HUD's major management deficiencies involves inadequate management
systems. It is the Secretary's plan to fully correct deficiencies in
the financial management systems by the end of fiscal year 1998. The
Deputy Secretary has formed a Departmentwide working group with the
express purpose of developing a financial systems integration plan. Its
initial work has been completed. As a result, the Department will soon
enter into an Interagency Agreement with the Department of Treasury
(Center for Applied Financial Management) to develop an implementation
plan. Step one will be to assess systems requirements and provide a
report to the Department. This is to be accomplished within the next 90
days. In addition, to assure effective utilization of information
resources, the Department, in 1994, established the Technology
Investment Board (TIB) to oversee investments in information
technology. This Board has been recognized by the GAO as a ``best
practice'' in managing technology in the Federal government. Secretary
Cuomo has recognized the extraordinary potential in the TIB and has
agreed to serve as TIB Chair.
2. Financial Integrity.--Recent IG and GAO reports have identified
a serious disconnect at the program management level between
responsibility and accountability. To remedy this, HUD is changing to a
new business culture--a positive financial management process that is
fully integrated with day-to-day operations and is owned by program
managers. To transform HUD into an agency with a new business culture
where management self-monitors and looks at results, a three-part
strategy has been developed:
a. Make program managers responsible for the financial management
of their programs and hold them accountable for achieving business
results and reward positive performance.
b. Provide managers with clear, reasonable expectations and the
resources necessary to meet those expectations. In particular, it is
proposed that the Chief Financial Officer assumes an expanded role as
partner, consultant and advocate for the program managers.
c. Develop and demonstrate this new business culture by
incorporating front-end risk assessments in the reorganization and
consolidation of HUD programs.
The Department has undertaken an assessment of key financial
management functions, including control environment, control evaluation
and monitoring, the budget process, funds control, performance
measurement, reporting and financial systems. This assessment shows
both the strengths and weaknesses within these key financial management
functions. An implementation plan has been developed to assure that
those functions identified with weaknesses will be addressed and
appropriate actions taken.
A number of other initiatives are either planned or underway and
will be provided when further developed.
Question. What can we do and what can you do to address HUD's
fiscal, management and program deficiencies? Mr. Secretary, I would
really like you to provide us with some benchmarks and timeframes to
judge the fiscal health and reform of the Department. Mr. Secretary, if
my questions seem harsh, it is because I am frustrated over the
continued failure of HUD to come to grips with its management, fiscal
and program deficiencies. I also respect how difficult it must be for
you as the new Secretary at HUD to come to grips with so many different
and difficult problems--programs and bureaucracies have a tendency to
become locked in place and impossible to move or change. The real issue
is to identify the management and fiscal deficiencies at the Department
and what tools you need to address the fiscal and management
deficiencies? What can and should Congress do?
Answer. The work undertaken by the Government Accounting Office
(GAO) and the National Academy of Public Administration (NAPA) both
directed by the Congress has identified a set of problems/issues which
the Department must resolve. Implementation of their recommendations
will go far toward addressing financial management issues at HUD. In
addition, the NAPA report suggests that the ``challenge for Congress is
to work with the Administration and the Secretary of HUD to develop a
long-term agenda for change * * * '' and ``help clarify HUD's mission
and consolidate its programs.'' It goes on to say that ``in the short
term, Congress needs to work with the Secretary in creating additional
waiver and demonstration authority for HUD.''
NAPA STUDY
Question. The National Academy of Public Administration's study on
Renewing HUD: A Long-term Agenda for Effective Performance (July 1994)
advised that between 1980 and 1992, HUD's statutory mandates increased
from 54 to over 200 programs, with the HUD IG recently estimating that
the current number of HUD programs exceeds 240 programs and
initiatives. The NAPA report also questioned HUD's ability to achieve
its mission because of an overload of programs that ``saps HUD's
resources, muddles priorities, fragments the Department's work force,
creates unmeetable expectations, and confuses communities.''
I have seen little since 1994 to change this assessment. What has
HUD done specifically to address the concerns and recommendations of
the NAPA report?
Answer. The Department has provided a recent update to the ongoing
implementation of the NAPA recommendations. The initial NAPA Report
made 64 recommendations in 15 categories. At this time 44 of those
recommendations have been implemented, 20 of them are in the process of
implementation and 2 are not yet implemented. The Department has made a
good attempt at responding to the NAPA recommendations.
Question. What is HUD's current relationship with NAPA?
Answer. The Department continues to make progress in addressing the
recommendations made in the NAPA Report. This has called for regular
meetings and discussions with NAPA staff. It is the Department's
understanding that the Congress has proposed additional funding for
NAPA in the proposed HUD Budget Supplemental. It is further understood
that the funding is to be used to follow-up on the initial NAPA
recommendations.
HUD DOWNSIZING
Question. HUD continues to downsize its employees with a goal of
7,500 employees in 2000, while continuing to add new programs,
initiatives and activities. When will HUD focus on eliminating programs
and activities while focusing on its primary programs, such as Section
8, public housing, CDBG, the HOME program, the McKinney Homeless
Assistance programs and the FHA mortgage insurance programs?
Answer. The Department has made proposals for eliminating programs
that are not core to HUD's business. There are a number of reviews and
evaluations underway which may substantially expedite the
Transformation processes which were designed to consolidate, eliminate
and streamline existing HUD Programs.
Question. HUD also is mandated in last year's appropriation bill to
provide the appropriation committees with a downsizing plan. When will
the HUD downsizing plan be submitted to Congress?
Answer. Upon completion of the above-noted reviews and evaluations,
a downsizing plan will be submitted to Congress. A strategic buyout
plan has been submitted to and approved by the Office of Management and
Budget. This will be followed by a detailed downsizing plan, which
should be completed in draft form within 30 days.
HUD INSPECTOR GENERAL
Question. Audit of HUD's Financial Statements pursuant to the Chief
Financial Officers Act of 1990. The HUD IG on April 10, 1997 issued its
audit of the fiscal year 1996 consolidate financial statements of HUD
pursuant to the Chief Financial Officers Act of 1990. While the HUD IG
noted that HUD has made some progress in addressing a number of
material weaknesses, the HUD IG concluded that a Federal Managers'
Financial Integrity Act (FMFIA) statement of noncompliance would be
appropriate for HUD.
HUD's material weaknesses include: (1) the need for HUD to complete
improvements to financial systems; (2) the need to ensure subsidies are
based on correct tenant income; (3) the need to continue efforts to
improve monitoring of multifamily projects; (4) the need to address FHA
staff resource issues; (5) the need to place more emphasis on early
warning and loss prevention for FHA-insured mortgages; and (6) the need
to improve FHA's accounting and financial management systems.
Mr. Secretary, you are new and these are tough and slow issues. We
need to work together to find ways to address these concerns and
rebuild HUD's fiscal integrity.
Again, we need to find a consensus approach to identifying
benchmarks for reform and a time frame for assessing HUD's success in
addressing these concerns.
Answer. The Department is fully prepared to work together to find
ways to address these concerns and rebuild HUD's fiscal integrity.
MULTIFAMILY HOUSING PRESERVATION PROGRAM
Question. Congress has appropriated approximately $1 billion to
fund the Multifamily Housing Preservation program over the last 2
years, mostly for capital grants for sales to nonprofits. GAO currently
is completing a study on the Preservation program which I believe will
indicate that both the appraisals and the rehabilitation costs
associated with the projects are often much too high. I know that HUD
does not support continued funding for this program. In addition, Ms.
Gaffney, the HUD IG, also has expressed deep reservations about this
program and has several audits critical of certain sales.
While perhaps it is time to find a new approach, I remain concerned
about certain of the projects, especially those with elderly and
disabled residents, in low vacancy areas where a project prepayment
could result in displacements and the loss of a valuable housing
resource.
Mr. Secretary, I would like your comments on this program as well
as those of Ms. Gaffney.
Answer. The Department shares your concern that limited funding
resources require us to be vigilant about the cost of preserving
affordable housing. At the same time, we are very concerned about
minimizing displacement of the very vulnerable elderly, disabled, and
other citizens served in our programs, and the loss of scarce
affordable housing stock.
HUD's overall administration of the Preservation program since 1987
has been effective, and has resulted in the preservation of 814
properties consisting of approximately 100,000 affordable multifamily
rental housing units. At this point, the Department has utilized
approximately $2.2 billion to preserve these units at a per unit cost
of $21,600. There remains over $1 billion of unmet needs in the funding
queue. Short of the unlikely option of appropriating sufficient funds
to provide incentives for every Preservation eligible property, there
is no way to guarantee affordable housing stock will not be lost upon
prepayment.
High Program Costs
The program funding costs are the direct result of conflicting
goals within the statute. On the one hand, LIHPRHA provides equity
take-out incentives to owners based on a valuation of the project as if
it were to be sold as a market rate project. On the other hand, a much
higher useful life standard is required of the nonprofit purchasers.
They are expected to maintain the affordability of these units for 50
years with no additional Federal rental subsidies. The Department
encourages nonprofit purchasers of sales projects to perform
improvements above those which would be performed by an owner with a
short term interest in selling the project and maximizing profit. As a
result, rehabilitation costs can be high.
A number of the fundamental problems with the Preservation program
are direct result of the overly prescriptive legislation. More than any
other factor, this has added tremendous administrative burden,
complexity, and potential for error, thereby minimizing the cost
effectiveness of the program.
Preventing Displacement/Tenant Protections
As noted above, one of the Department's top priorities is to
minimize the amount of displacement resulting from prepayments allowed
under the Housing Opportunity Extension Act of 1996, particularly for
elderly, disabled, and other vulnerable residents in low vacancy areas.
Prior to the 1997 Appropriations Act, tenant protections were
provided in the form of restrictions on rent increases for a period of
3 years, and a requirement that the owner provide a portion of the
relocation assistance necessary. With implementation of the 1997
Appropriations Act, tenants receive an ``enhanced'' voucher. This form
of rental assistance gives the tenants the choice of remaining in their
current unit, or moving. Neither of these forms of tenant protections
prevent the loss of affordable housing stock, but they do protect
individual tenants and families.
Enhancing Program Effectiveness
Should the Congress decide to fund the Preservation program in
fiscal year 1998, the Department would recommend prioritizing (or even
requiring) funds from other sources to leverage the Federal funding. A
significant benefit of such a policy would be to supplement, not only
HUD's funding, but our capacity to effectively monitor and administer
the program in a cost effective fashion. Informed and financially
committed State or local agencies can be a particularly effective
resource in not only targeting the most deserving projects, but in
negotiating rehabilitation and other transaction costs, and monitoring
the management and affordability provisions through the life of the
property.
PUBLIC HOUSING--HOPE VI
Question. The Hope VI program (Distressed Public Housing) attempts
to respond responsible to many of the deteriorating, public housing
high-rises that have become symbolic of urban decay. Through HOPE VI,
HUD provides grants to demolish the worst public housing, replacing it
with mixed income housing, detached housing and section 8 assistance.
If implemented correctly, public housing under HOPE VI can help to
revitalize urban areas and provide an anchor for new economic growth.
What is the current status of the HOPE VI program?
Answer. HOPE VI appropriations from fiscal years 1993 to 1996 have
been used to fund a total of 118 grants in 52 cities: 59 implementation
grants, 24 demolition-only grants, and 35 planning grants.
Fifty-seven of the 59 implementation sites have proposed demolition
as part of their revitalization. As of June 1, 1997, 8,733 units have
been demolished. Seventy-four percent of the HOPE VI grantees planning
to do demolition have started and/or completed their demolition.
HUD will receive full Revitalization Plans in August 1997 for the
20 implementation grants awarded from fiscal years 1996 appropriations.
Of the 39 implementation awards made in 1993 to 1995, 17 grantees have
begun construction. Approximately 1,300 units have been built and 750
units are available for occupancy. Twenty-two of the 39 sites are
planning to use low-income housing tax credits; 20 sites are planning
for a mix of market rate and subsidized housing. Twenty-three sites
want to make some of the new units available for homeownership by
public housing residents. Nineteen sites are hiring private program
management for their HOPE VI programs.
All 39 sites are planning extensive community service and
supportive services programs to help residents prepare for self-
sufficiency. Eleven sites will have STEP-UP vocational training
programs; eleven sites have also been funded for a Youth Apprenticeship
program. At least ten sites have expressed interest in designing a
Campus of Learners program for some or all of the new units. HUD has
awarded several technical assistance contracts to outside experts so
they can assist grantees in the development and administration of their
self-sufficiency and community building programs.
HOPE VI funds spent as of May 31, 1997: Fiscal year 1993--22.7
percent; fiscal year 1994--17.9 percent; fiscal year 1995--11.9
percent; and fiscal year 1996--Pending execution of Grant Agreements;
funds not yet available to grantees for expenditure.
HOPE VI is truly the new face of public housing. By designing
housing that fits into the community, appeals to a broad range of
prospective tenants, offers incentives for upward mobility and finding
jobs, and provides supportive services to make self-improvement a
reality, HOPE VI is defining the public housing of the future.
Question. How many projects have been demolished and replaced with
some new form of public and mixed income housing?
Answer. The 59 implementation grants awarded through fiscal year
1996 will revitalize 68 public housing developments in whole or in
part. As of June 1, 1997, 8,733 HOPE VI units have been demolished. A
far larger number, of course, have been approved and/or funded for
demolition, but not yet taken down. For instance, while only 8,733
units have actually been demolished to date using HOPE VI funds, HOPE
VI grants awarded in 1993 to 1996 are expected to support the
demolition of approximately 35,000 units.
As of the December 31, 1996, reports from grantees, fiscal years
1993 to 1996 HOPE VI funds are expected to revitalize, through new
construction or rehabilitation, approximately 20,000 units; roughly
15,000 of which will be newly constructed replacement units. This
number will become more precise as the recently funded 1996 grantees
finalize their revitalization plans. The majority of replacement units
are on-site or in the immediate neighborhood. HOPE VI grantees will
build approximately 5,000 additional affordable and homeownership units
using leveraged non-HOPE VI funds. Approximately 8,100 units are being
reconstructed using outstanding MROP funds.
Question. What have we learned from this program?
Answer. Some of the initial lessons are:
--The Congressional directives articulated in the HOPE VI
Appropriation Bills recognize three distinct sets of
activities, each with identifiable costs: (1) Community and
support services for resident self-sufficiency and economic
development. (2) Remediation of the existing blighted public
housing site, usually including relocation of residents,
abatement of hazardous materials, demolition and removal, and
minimal site restoration; and (3) Development of replacement
housing, which is primarily new construction, but includes some
rehabilitation of existing structures.
--Inner-city revitalization is expensive, and often must address
infrastructure and neighborhood issues beyond the HOPE VI site,
including public safety and blight. HOPE VI grants should be
used to leverage other public and private funding sources, and
should not be expected to pay the entire cost of neighborhood
revitalization.
--HOPE VI should involve the whole community in revitalization and
creating new housing opportunities, rather than be seen as just
a public housing issue.
--Revitalization of existing, occupied sites takes longer than
anticipated, and cannot be compared with new construction on
vacant land.
--Because of historical apprehension and mistrust between residents
and some public housing agencies, revitalization is often
resisted at first because it is seen as permanent displacement
from home and community. Sometimes outside technical assistance
is needed to achieve positive working relationships.
--Doing HOPE VI revitalization at a ``troubled'' housing authority
takes longer and will probably necessitate the use of an
outside program administrator. It is difficult to ``insulate''
HOPE VI revitalization from other systemic problems or
weaknesses of a PHA.
--Mixed finance of replacement and affordable housing is creating
additional housing resources in the community, and is providing
additional housing choices for lower-income households as well
as viable mixed-income communities. This is a new experience
for most PHA's and few are equipped to negotiate or administer
such a program. PHA's need expert technical assistance to do
mixed-finance development.
--To be successful, HOPE VI must be closely linked with State and
local welfare reform, and the requirement to equip residents
for self-sufficiency.
--HOPE VI effectively addresses the blighted social and physical
conditions of severely distressed public housing developments
with potential for viable revitalization.
--HOPE VI is working, and should be continued. The new models of
lower-density, mixed-income and affordable housing are truly
the public housing of the future.
emergency cdbg in the fiscal year 1997 supplemental appropriation
Question. The fiscal year 1997 supplemental appropriations bill
would appropriate $500 million for emergency CDBG assistance for
disaster areas, while providing HUD with broad waiver authority. The
amount of these emergency funds are unprecedented, especially since
there are no current real appraisals of the disaster costs, the flood
disaster areas have no plan for the use of the CDBG funds, and there is
no agreed approach to how to rebuild from the disaster. What are the
requirements that cover the use of emergency CDBG funds under HUD's
existing guidelines?
Answer. In general, use of emergency CDBG funds are governed by
existing CDBG program requirements in the Housing and Community
Development Act of 1974, as amended, and in regulations at 24 CFR Part
570 and other relevant parts. The Department will grant appropriate
waivers of program requirements, as it has for use of funds for past
disaster recovery efforts, and will issue policy guidance that will
likely be similar to that issued previously for recovery from the
Midwest floods of 1993 and the floods of 1996. Once those materials are
developed following enactment of the 1997 supplemental appropriations
bill, we would be happy to provide you with a copy.
Question. In some cases, emergency CDBG funds have been used for
buyouts. My impression is that the use of CDBG funds for buyouts are
generally restricted to use in conjunction with the FEMA buyout
program. What are the restrictions for the use of CDBG funds for
buyouts? How could the CDBG funds be used in conjunction with private
businesses--personal residences--rental properties?
Answer. You are correct that, in some cases, emergency CDBG funds
have been used for buyouts. Though such use is not restricted to
buyouts undertaken in conjunction with FEMA's Hazard Mitigation Grant
program, generally, emergency CDBG funds used for buyouts are used to
complement FEMA mitigation efforts. In conjunction with buyouts,
emergency CDBG funds have been used to pay optional relocation
assistance so that property owners can relocate to ``comparable
replacement dwellings.'' It has been HUD policy that the use of
emergency CDBG funds for optional relocation payments to property
owners of personal residences and businesses (including rental
properties) follows the use of insurance proceeds, personal tax savings
that result from a property owner's tax deduction of a capital loss on
displacement property, FEMA Hazard Mitigation Grant funds for
acquisition, and SBA disaster loan assistance. Note that while a
grantee must provide optional relocation assistance uniformly among
categories of assistance recipients, the level of assistance and
categories of recipients assisted are grantee decisions.
MCKINNEY HOMELESS ASSISTANCE PROGRAMS
Question. I have been advised that a number of the McKinney
homeless assistance programs (such as Section 8 SRO housing) could
balloon in cost over the next few years. Are there additional costs
that the subcommittee should be aware of in assessing how to preserve
existing homeless assistance programs?
Answer. HUD is well aware of the fact that as a result of the
significant funding increases beginning in fiscal year 1995, McKinney
renewal costs do increase in fiscal year 1998 and beyond, and we have
taken action accordingly. As part of this year's competition, HUD is
asking communities to prioritize their renewal needs along with new
projects. Communities are given the option of renewing Supportive
Housing Program projects for up to 100 percent of the last year's costs
of the original grant, for a period of up to 3 years. By statute,
Shelter Plus Care renewals must be for 5 years.
HUD is currently considering the best way to renew Section 8 SRO
Moderate Rehabilitation projects. Since the original grants were for 10
years, the first projects will begin coming up for renewal in fiscal
year 1998, when approximately 800 units will be eligible for renewal.
FHA MORTGAGE INSURANCE PROGRAMS--FHA SINGLE FAMILY MORTGAGE INSURANCE
PROGRAM--RAISING THE MMI LOAN LIMIT
Question. The FHA single Family Mortgage insurance program permits
mortgage insurance not to exceed the lesser of 95 percent of the median
single family home price in an area to 75 percent of the Freddie Mac
limit (or approximately $151,725). HUD is now requesting that the FHA
single family mortgage insurance loan limit be raised to the Fannie
Mae/Freddie Mac loan limit (about $212,000). Why is this necessary?
This raises a number of serious questions, including (1) risk to
the FHA insurance fund under which the federal government already has
some $400 billion of contingent liability (e.g. high risk due to low
downpayments and high loan-to-value ratios; many individuals are
unlikely to have savings or credit to pay for significant repairs or
make mortgage payments in the face of an economic downturn); and (2)
intrusion of the FHA into the high-cost market in competition with
private mortgage insurance companies.
Answer. FHA loans historically do not show a higher level of risk
with higher insured amounts. For mortgages at current limits, the value
of homes insured by FHA is at or below median area house prices. In
these areas, the proposed increase would make possible the insurance of
homes in a wider range of prices around area medians (both below and
above median prices), where the market for homes sales is stronger, and
the risk of loss is lower. Especially in high cost areas, the
additional FHA volume should reduce average risk levels. In other
areas, it would likely have a mixed effect on risk, enabling FHA to
serve some additional borrowers who are creditworthy, but pose
relatively higher risk, without adversely affecting overall average FHA
risk. We do not expect that on balance the proposal will result in
increased risk to the FHA insurance Fund.
The reserves in the Mutual Mortgage Insurance Fund (MMI) of FHA,
where most of the new business generated by the loan limit increase
would be, achieved in 1995 the 2 percent capital reserve requirement
set by Congress for the year 2000. In 1996, the reserve level has
continued to increase.
Experience has shown that FHA and Private Mortgage Insurance (PMI)
serve distinct segments of the market. FHA fees and costs are higher
than PMI fees, so that most borrowers who qualify for private mortgage
insurance go with PMI. FHA predominantly serves homebuyers that PMI
leaves behind. This should hold true to an even greater degree at the
price ranges affected by the proposed increase, due to the FHA
requirement that borrowers put up a 10 percent marginal down payment
for the portion of loans that exceed $125,000. Any competition between
FHA and PMI insurance should remain small under the proposal. We
estimate a small volume increase of 8 percent from the loan limit
increase, because the proportion of borrowers served by the private
market in these loan amounts is higher.
FHA's presence in credit markets benefits underserved and unserved
populations directly by expanding access to home financing, and
indirectly by setting standards that influence the products and
services offered by private insurers and lenders. FHA brings public
purposes and stability to mortgage credit markets, through both good
times and downturns. Without infringing on the business of private
insurers, the proposed increase in mortgage limits would extend the
benefits of FHA insurance to many families with sufficient income to
meet mortgage payments on the home they desire, but who otherwise would
have difficulty obtaining affordable financing.
FHA MORTGAGE INSURANCE PROGRAMS--FHA SINGLE FAMILY MORTGAGE INSURANCE
PROGRAN--FHA CORPORATION
Question. Also, there are concerns that FHA could be made more
efficient by setting up a separate FHA corporation within HUD? This
also is controversial for a number of members who would look at a new
FHA corporation as another GSE (government-sponsored entity) which
competes with the private sector. Does HUD support a new corporate FHA
and what would be the advantages over the current FHA structure within
HUD.
Answer. Creating a corporate FHA within HUD is very different from
a GSE. While a GSE is stockholder-owned, and has a fiduciary duty to
pursue policies which benefit those stockholders, a corporate FHA
within HUD would remain government-owned and be integrated into the
larger housing policy of the President and the Secretary of HUD. HUD
proposed creating a corporate FHA within HUD several years ago. At the
moment, we are working to make progress toward a more performance-based
organization through administrative and existing authorities, but
further statutory changes may be required as well.
To be most effective, a reinvented FHA should combine
entrepreneurial market-driven mode of operation with a public-purpose
mission and mind-set. The Secretary would continue to develop Federal
housing policy, of which FHA would be one arm. He would preside over
major policy issues, as today, and approve each year's business plan.
Within the policies that are set, an FHA chief operating officer would
handle the daily operations and the business plan and be accountable
for performance. Additionally, administrative policies would be more
flexible to respond to business needs.
An FHA corporation statute would consolidate numerous statutory
insurance authorities into a small number of business lines, and allow
FHC to change its products quickly to respond to market changes,
provided they met public purpose and safety and soundness objectives.
SECTION 8 MARKET-TO-MARKET
Question. The Section 8 project-based programs have been
significantly criticized because the Federal government routinely
oversubsidized these FHA-insured projects with inflated section 8 rents
through 15- and 20-year contracts. These section 8 costs need to be
addressed, especially since many of these contracts are now expiring
with section 8 rents above market. The VA/HUD fiscal year 1997
appropriations bill established a demonstration for restructuring the
section 8 rents and mortgages to market, and the Senate Banking
Committee has introduced legislation each of the last 2 years to
provide a long-term section 8 and mortgage restructuring program. In
addition, HUD is following Senate recommendations in having drafted a
proposed tax fix to this issue. What is the status of the
Administration legislation and how would it work?
Answer. HR 1433 ``Housing 2020: Multifamily Management Reform Act''
was introduced in the House by Representative Lazio and co-sponsored by
Representative Kennedy on April 24, 1997. The Bill was referred to the
House Banking and Financial Services Committee; Ways and Means
Committee; and, Judicial Committee.
The Administration's Bill has four critical goals: 1. Preserve and
extend a commitment to affordable housing for 850,000 people; 2. Ensure
that these projects are put on a financially sound footing well into
the 21st century; 3. Protect low-income tenants; and 4. Reduce HUD's
long-term costs for section 8 contracts.
Under HUD's proposal, over-subsidized rents can be reduced to
market levels at or before contract expiration. The objective of the
mark-to-market proposal is to induce owners to accept lower section 8
rents prior to contract expiration. The Department believes that
property owners will agree voluntarily to terminate existing high-cost
contracts before expiration in return for the benefits contained in
this proposal. Owners recognize that Congress will not continue to fund
the renewal of expiring contracts at above-market rents indefinitely
into the future.
Responsible landlords would have their FHA-insured mortgages
reduced to a level that can be supported by market rents. Writing down
the mortgage and reducing the rental assistance payments would reduce
both the Federal government's contingent liability and the excessive
subsidy costs to United States taxpayers.
The reduction of the mortgage debt (or a sale of the property) will
generally result in taxable income for the owners. In order to
encourage voluntary owner participation, subtitle B contains tax
legislation that will allow deferred payment of the tax liability in
certain situations. Owners who are having their debt reduced by more
than 30 percent and less than 75 percent of the mortgage will be able
to amortize payment of the tax associated with the debt write-down for
up to 10 years. Owners that sell their project to certain non-profits
will be able to amortize the resulting tax liability for seven years.
However, in either case, if certain events occur (such as sale of the
property or death of the taxpayer), the unpaid tax becomes due and
payable.
In exchange for a mortgage write-down and favorable tax treatment,
property owners would agree to charge affordable rents on at least 40
percent of the rental units for another 15 years.
In addition to mortgage write-down, or debt restructuring,
rehabilitation of the properties can be undertaken where necessary.
Rehabilitation may be financed by using accumulated project reserves,
new equity provided by the owner, and further debt write-downs.
Rehabilitation funds from the insurance fund may be available to
restructured projects to accomplish repairs and rehabilitation.
HUD proposes to renew expiring housing contracts with tenant-based
and project-based assistance. In about half the projects, HUD will
renew the contracts with project-based subsidy. This would occur in
housing markets where market indicators demonstrated that it would be
difficult to use tenant-based subsidy (for example, in areas with less
than a 6 percent vacancy rate) and for projects which are predominantly
(90 percent and higher occupancy) for elderly and/or disabled
households.
In the case of tenant-based assistance, the assistance will be
calculated to provide the tenant with an option to remain in the
project at a reasonable market rent or to search for an apartment on
the private market.
Finally, the legislation calls for the use of third parties
(``designees'') to assist HUD in administering the multifamily
restructuring initiative. This reflects the existing constraints upon
HUD resources and is designed to make best use of public and private
managerial and housing expertise. State and local government agencies
will have a priority choice to be designees.
IMPLEMENTATION OF THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-
DETERMINATION ACT
Question. The Native American Housing Assistance and Self-
Determination Act of 1996 established a new Native American Block Grant
which consolidated most of HUD's Indian Housing programs (HOME, Public
Housing programs, Homeless programs). The Administration is requesting
$485 million for the Native American Block Grant Program for fiscal
year 1998. What is the status of this block grant program? Is this
program ready for implementation and for funding to start in fiscal
year 1998?
Answer. The Native American Housing Assistance and Self-
Determination Act (the Act) will fundamentally alter the delivery of
housing assistance to Indian tribes and their tribally designated
housing entities (TDHE). Indian Housing Block Grant funding will be
allocated to all eligible tribes or TDHE's according to a needs-based
formula.
The Department has been actively engaged in all aspects of
preparing this program for its scheduled implementation on October 1,
1997. As prescribed by Section 106 of the Act, a series of negotiated
rule-making sessions with representatives of twelve tribes was recently
conducted. Through these sessions, an allocation formula and a
consolidated proposed rule were developed and approved by the
committee, which is comprised of staff from the National Office of
Native American Programs (ONAP) in Denver and tribal leaders from
across the Nation.
The proposed rule is expected to be published in the Federal
Register for public comment soon. Once the comment period ends, the
negotiated rule-making committee will meet again to prepare the final
rule. A public notice has been issued by the Department requesting that
the Indian Housing Plans, required under Section 102 of the Act, be
submitted not later than November 3, 1997.
EMPOWERMENT ZONES
Question. HUD would like to fund another round of empowerment
zones, even though there are significant questions regarding the
reliability of the original selection process and whether the
empowerment zones have worked.
Answer. The HUD Inspector General (IG) reviewed our selection
process following the first EZ/EC competition, and made only two
recommendations for change, both of which were administrative in
nature. We have complied with both. We have also worked with the IG to
develop a Competitions Manual to govern how all future competitions
managed by the Office of Community Planning and Development are to be
conducted.
As to whether EZs have worked, we believe that the results of the
first 2\1/2\ years of the program have been quite promising. Since the
designations were made in December 1994, EZs and ECs have begun to
translate the goals articulated in their strategic plans into specific
activities, with investment strategies that are focused primarily on
economic opportunity and sustainable community development. While there
were a few problems, the vast majority (67 of 72) of EZs and ECs have
shown a great deal of success in their program implementation to date.
The EZ program is successful because of its combination of
extraordinary vision and concrete, measurable results. The Strategic
Plans developed by the communities represented a wealth of innovative
thinking about how best to address the difficult and complex problems
of America's distressed communities. We are now beginning to see the
rewards of such careful planning, community collaboration, and hard
work. In fact, the General Accounting Office Report (issued in December
1996) concluded that ``HUD has taken commendable steps toward
establishing results-oriented measures for the EZ program. Among other
things, the EZs have developed benchmark that described planned
activities, as well as the baselines and time frames against which
progress toward accomplishing individual benchmark can be measured.''
The EZ Initiative represents the most ambitious performance-driven
grant management effort to date. EZ/ECs use performance benchmarking to
set specific goals for Federal, State, local and private investment.
The benchmark provide a blueprint for an entrepreneurial, no-nonsense
way to distribute funds, fulfill commitments, and measure performance.
Our recent publication, WHAT WORKS! in the Empowerment Zones and
Enterprise Communities provides examples of accomplishments in EZ and
ECs around the country. More than 100 programs and projects are
highlighted, providing reason to celebrate the successful
revitalization of our Nation's communities. Moreover, these serve as
models for programs throughout the country, helping to bring businesses
and residents back to America's most distressed areas and giving hope
to the people of every community.
Communities have used Federal funds to leverage additional private
investment from foundations, businesses, and other sources. Federal
funds have also been used as seed money, supporting the communities as
they build partnerships with a wide variety of organizations in both
the public and private sectors. In addition, tax incentives have been
highly successful in drawing private investment into distressed
communities.
--Since designation of the EZs in 1994, the total private and public
investment activity commitments has exceeded $2.6 billion.
--More than $2 billion in private investment has been made,
indicating that capital investors perceive future opportunities
for investment returns in the EZs to be equal to or greater
than in other locations. For every dollar of EZ funds, $18 of
private investment are leveraged.
--The overwhelming focus of the new investment--$1.7 billion--is
targeted toward economic opportunities, including business-
related job retention, expansion, relocation, and creation;
investment pools for capital access and innovative financing
needs; jobs- and occupation-skills training; and
entrepreneurial and entrepreneurial and business-support
services and assistance.
VOUCHER PROGRAM
Question. The voucher program currently allows assisted households
to pay more than 30 percent of their adjusted income for rent if the
rental house costs more than the payment standard. As I understand it,
there is evidence that the median voucher family pays 38 percent of
their adjusted income for rent and that 45 percent of new voucher
families or movers pay more than 40 percent of their adjusted income
for rent?
Answer. This is correct. A copy of a rent burden table showing
these data is attached.
Question. Since 30 percent of adjusted income has become the basic
federal standard for rent affordability in the country, what do these
rent burdens in the voucher program mean for the cost of housing for
low-income families? Also, since families are limited in the section 8
certificate program to paying 30 percent of their adjusted income for
rent, how successful are families at finding affordable rental housing
in the certificate program?
Answer. These figures do not represent a major change in the
program over time. Rent burdens among movers in the Freestanding
Housing Voucher Demonstration of the late 1980's were comparable. We
have consistently found that some renters will choose to pay more than
the FMR when that option is available, even at the cost of a higher
rent burden.
Rent burdens may be surprisingly high in the voucher program for
the following legitimate reasons:
--Families seeking modest and decent housing in good neighborhoods
may be willing to lease units with rents substantially above
the FMR.
--By statute and by regulation certain income sources are not counted
in annual income. Among these are foster care payments,
earnings of dependents, student loans and grants, and wages for
persons enrolled in certain training programs. In addition,
some assisted households have virtually all food and medical
needs met by the Food Stamps and Medicaid programs,
respectively. In short, for some families, it would be possible
to have rent burdens even in excess of 100 percent of annual
income without hardship, simply because annual income is a poor
measure of total resources.
--At any given time, certain communities may be undergoing rapid rent
inflation. The Fair Market Rent (FMR) published by HUD will
respond to this inflation only with a significant lag.
--Housing authorities may choose under the voucher program to
maintain payment standards that are below the FMR, in order to
serve a larger number of families. This may be a reasonable
choice, as only about a fourth of eligible households are
assisted. There is a significant relationship between rent
burdens in the voucher program and the setting of the Payment
standards: the higher the Payment Standard (relative to FMR)
the lower the incidence of high rent burdens.
HUD has sponsored two studies bearing on the utilization rate:
--In the Freestanding Housing Voucher Demonstration (final report
issued in 1990), the success rate was 61 percent in the
certificate program and 64.6 percent in the voucher program.
This difference was statistically significant.
--In the Section 8 Rental Voucher and Rental Certificate Utilization
Study (final report issued 1994), the success rate for the two
programs combined was 80 percent (87 percent outside New York
City). Results were not broken out by program, but about three-
fourths of the families probably received certificates.
Preliminary data are also available that show the relationship
between units under lease (for which subsidies are actually being paid)
and units under contract (the number of subsidized units that HUD has
agreed to pay for). The two numbers will always be different for
various reasons; the most important are the time that it takes a PHA to
process a new family and the time that the new family requires to
identify an acceptable unit.
The lease-up rate in the voucher program (unit-months of subsidy
used divided by unit-months available) is 84.4 percent; the lease-up
rate in the certificate program is 82.8 percent. Both figures are
probably affected by the statutory 3-month delay in the reissuance of
turnover units. HUD has proposed that Congress permit this provision of
the most recent HUD/VA Appropriation to expire.
voucher program rent burdens
The table below excludes from analysis all cases other than new
admissions and moves, and also removes all cases where tenant
contribution is $25 or less.
The median voucher family analyzed pays 38 percent of adjusted
income for rent. 45 percent of mover/new admission tenants paid more
than 40 percent of adjusted income toward rent. Caveats follow the
table.
------------------------------------------------------------------------
Percent of
Tenant contribution as percent of adjusted voucher Percent of
income tenants in cumulative
this range distribution
------------------------------------------------------------------------
0-14......................................... 4.8 4.8
15-19........................................ 4.6 9.4
20-24........................................ 7.5 16.9
25-29........................................ 9.7 26.6
30-34........................................ 14.1 40.7
35-39........................................ 13.9 54.6
40-44........................................ 11.8 66.4
45-49........................................ 7.5 73.9
50-74........................................ 18.3 92.2
75-99........................................ 4.7 96.9
100 percent or more.......................... 3.1 100.0
------------------------------------------------------------------------
Source: MTCS February 1997 tape; 8 percent sample; records with
effective dates prior to January 1, 1996 excluded.
The table contains some judgmental editing. MTCS has some data in
which HA's have either left the amount blank and a zero has been
substituted for the blank, or have submitted the number of cents where
HUD asks for dollars. (This leads to ratios that are 100 times their
true values).
In producing this table, we have tried to account for the following
facts:
(a) The MTCS shows 2.9 percent of voucher tenants paying less than
10 percent of total income for rent. This is contrary to program rules,
but probably reflects more on data entry than on administration; and
(b) The MTCS shows 3.7 percent of voucher tenants paying more than
105 percent of total income for rent. This is not bloody likely.
Our adjustment is to remove the bottom 2.9 percent and the top 3.7
percent from the distribution.
We have also tried eliminating cases where total income was less
than $1,000, and cases where tenant contribution was double the FMR.
The results, which are not shown, made only a slight difference.
EXPIRING SECTION 8 CONTRACTS
Question. As HUD knows, the cost of section 8 contracts will
skyrocket over the next few years. In particular, the VA/HUD Fiscal
Year 1997 Appropriation Act appropriated $3.6 billion to cover the cost
of renewing expiring section 8 contracts for fiscal year 1997. The cost
of renewing all Section 8 contracts for fiscal year 1998 (a total of
1.7 million expiring contracts, many of which are for the elderly and
disabled), however, will require some $10.2 billion in budget authority
for fiscal year 1998. The cost of expiring section 8 contracts will
then rise to $11.9 billion in fiscal year 1999; $13.7 billion in fiscal
year 2000; $15.1 billion in fiscal year 2001; and $16.4 billion is
fiscal year 2002.
I remain very concerned that we continue to fund these existing
section 8 contracts. Senator Mikulski and I have sent letters to the
Chairmen and Ranking Members of both the Budget and Appropriation
Committees requesting special attention to this vital issue.
Nevertheless, HUD abruptly on April 17th found some $5.8 billion in
unobligated and excess section 8 contract reserves.
Answer. We have always been aware that the Section 8 programs
generate project reserves; multiyear increments have always been funded
on a level basis, so that each increment would generate reserves in the
early years so that the housing authority (HA) could draw upon them in
the later years. In mid-1995, we began analyzing what portion of the
reserves could be considered excess in order to identify expiring
increments which could be extended using the reserves. During the
negotiations with Congress on the 1995 Rescission Act (Public Law 104-
19), HUD was able to offer-up the use of reserves as a means of funding
(extending) the expiring contracts, along with shortening the terms of
the contracts, in order to comply with the rescission of almost $1.2
billion. The 1995 rescission, in fact, specifically authorized the use
of the reserves. It was critical at that time since the appropriated
funds were insufficient to cover all renewal costs. As a further point
of clarification, it is noted that all project reserves held by the
HA's are obligated funds.
Question. The failure of HUD to get a handle on this section 8
funding is indicative of HUD's fiscal and management deficiencies as
identified by GAO and the HUD IG.
Answer. The Department has been working diligently since 1993 to
develop automated financial management/data systems that would enable
the Department to determine, among other issues, the appropriate amount
of project reserves for a HA to maintain. HUDCAPS was implemented
during fiscal year 1995, and every account now has been reconciled with
the old system. The reconciliation took over a year to complete and it
was only through this reconciliation that the Department was able to
provide the project reserve numbers. The ability of HUD to identify the
project reserves in total is, in fact, indicative of the substantial
improvement in HUD's fiscal and management systems.
Question. Mr. Secretary, you met with me as recently as March 12th
and I was assured in that meeting that there might be as much as $1
billion of section 8 reserves on hand, but certainly no more than $1
billion. In addition, in a Banking Committee hearing on September 28,
1995, Bruce Katz, then Chief of Staff to HUD Secretary Cisneros,
testified that HUD estimated that, in fiscal year 1996, there was only
about $460 million in excess section 8 contract reserves in public
housing authorities around the country.
Answer. That amount, $460 million, was the amount of reserves the
Department indicated would be used for 2-year extensions in fiscal year
1996. It does not represent the total amount of reserves that could
have been considered excess at that time, but only the amount that was
anticipated to be used for extension of expiring increments in that
year; extensions were limited to those increments which could be funded
from reserves for a full 2 years after allowing a 6-month threshold
amount to remain in the reserves. It was an amount HUD considered
available, absent (at the time) a system to accurately determine
project reserve levels.
Question. Nevertheless, on April 17th of this year, HUD finds not
only $3.5 billion in excess, unobligated section 8 reserves to pay for
FEMA needs but indicates it will revise its section 8 contract reserve
requirements so that there is an excess of $5.8 billion in unobligated
section 8 contract reserves. It is a big jump from $460 million to $5.8
billion. This is a big problem and raises significant management
issues.
Answer. Again, for the record, it is noted that all project
reserves held by the HA's are obligated funds. The $5.8 billion figure
identified in April is based on substantially different assumptions and
a much larger universe than the $460 million figure previously noted.
It included the entire universe of HA Section 8 programs, regardless of
whether it had expirations in the next fiscal year, and assumed only a
2-month threshold amount remaining in the reserves. Moreover, it was
based on a reconciliation of reserve balances nationwide, to correct
any inaccuracies drawn from prior accounting systems.
Question. In addition, since that time, I have asked my staff to
begin evaluating the status of the section 8 reserves. I am concerned
about the accuracy of the $5.8 billion and the continued need for
retaining adequate section 8 reserves. I only have anecdotal evidence,
but I have been told that many small PHA's have little if any section 8
reserves on hand and that, for a small PHA, a month's section 8
reserves might be considered normal to cover shortfalls. On the other
hand, I understand that the Housing Authority of Kansas City is likely
to have some $800,000 to $900,000 on hand, approximately 5 months worth
of section 8 reserves.
Answer. Project reserve amounts vary among housing agencies,
according to the size of the HA, and the age of their program, their
leasing history and the relationship of costs to historical funding
levels. There is no mandated reserve level--reserves accrue based on
the normal operation of the program. HA's have been given the autonomy
to manage their programs as efficiently as possible consistent with
program regulations and handbooks, and in a manner that would not
create negative reserves. Certificate programs that experience
shortfalls are provided additional funding through amendments to ensure
continued assistance for the number of units contracted by HUD.
Amendment funds, however, were not provided for Voucher programs which
were initially funded for shorter terms with a statutory 15 percent
inflation factor. The recently completed analysis of excess reserves
assumes that every HA should have a minimum 2-month threshold amount in
their reserves.
As part of HUD's efforts to ascertain accurate reserve levels and
maintain financial management data in our automated system (HUDCAPS),
Kansas City was informed in September 1996, that its Certificate
project reserves totaled $22 million, as of the end of the housing
authority's fiscal year 1995. (See attached letter.) Subsequently,
Kansas City's 1996 settlement (as of December 31, 1996) showed that
additional project reserves accrued (actual and projected through
1997). Based on the Department's current policies to maintain reserves
to cover contract terms and extensions, and to maintain a 2-month
reserve threshold, Kansas City will have $32,846,064 of excess project
reserves at the end of their fiscal year 1997.
letter from karen schleper
U.S. Department of Housing and Urban Development,
Kansas City, KS, September 18, 1996.
Mr. Eugene Jones,
Executive Director, Housing Authority of Kansas City, MO,
Kansas City, MO.
Dear Mr. Jones: Enclosed you will find the HUD-approved year-end
settlement for the Certificate Program, MO002CE, for the period ending
December 31, 1995. Please note the ending balance of your project
reserves for the program has changed to $22,886,338.
The conversion of accounting information from the PAS/LOCCS systems
to HUDCAPS in May, 1995 identified discrepancies in the amount of
budget authority available, budget authority liquidated, and project
reserve balances. The Annual Budget Authority has been reformulated
based upon the effective and expiration dates for each individual
increment using an effective date of the first day of the month.
Partial years have been prorated accordingly.
The reformulated budget authority has been compared to the amount
of cumulative disbursements through the reporting period. The
difference between the reformulated budget authority and cumulative
disbursements is the amount of project reserves available for use and
should be carried forward as your beginning balance for your current
PHA fiscal year.
Please make the necessary adjustments to your accounting records.
You will be required to adjust account 2840, Cumulative HUD Annual
Contributions, account 2827, Project Account, and account 2810,
Unreserved Surplus, as applicable.
We apologize for any delays and inconvenience created by the
reformulation process for your Authority. This is a one time adjustment
to the above program to bring the accounting records in line with the
terms of the Annual Contribution Contract (ACC).
Should you have any questions please contact Robert Boepple,
Financial Analyst, (913) 551-5587.
Sincerely,
Karen Schleper,
Director, Management Division--Office of Public Housing.
Question. Even more troubling is that several PHA's report that
there are few rules or restrictions concerning the use of section 8
reserves--that most uses are okay if consistent with the purposes of
the Section 8 or public housing program.
Answer. Project reserve balances are maintained in the Department's
central accounting and program system, HUDCAPS, and can only be used to
supplement each year's Budget Authority in the operation of the
program. The Annual Contributions Contract between the Department and
each PHA stipulates that HUD may establish and maintain a reserve
account, in an amount determined by HUD, and that the account may be
used to pay any portion of the program payment approved by HUD for a
fiscal year. Current policy on use of the reserves was established in
HUD Notice 96-68, which stipulates that PHA's may not use the reserves
to lease more than the number of units originally reserved by HUD and
that HUD will use reserves to extend the terms of expiring contracts
and to cover increased costs of continuing to assist the number of
units reserved by HUD. Your characterization above of the Section 8
reserves, however, does not apply to these project reserves; rather it
applies to the HA's operating reserves, which are different funds
entirely. An HA is paid an administrative fee to cover its costs of
operating the Section 8 programs (salaries, office space, supplies, and
all other administrative costs). Any portion of that fee that is not
needed for operations in the year it is earned accrues to the operating
reserve, which is maintained by the HA. The operating reserve is to be
used to support program administration in later years, if cost
increases exceed fee increases. If an HA determines that any portion of
the operating reserve is not needed for future program administration,
the HA may use that amount for other housing purposes consistent with
State and local law.
Question. Mr. Secretary, I know that you are as concerned as I am
about the availability and use of unobligated section 8 reserves. You
have indicated to me that HUD has contracted with Price Waterhouse to
audit the Section 8 reserve accounts. What is the status of that report
and when do you expect a final accounting of Section 8 funds.
Answer. On April 17, 1997, I directed my Acting Chief Financial
Officer to obtain the services of an independent public accounting firm
to verify the amount of excess Section 8 tenant-based program reserves
estimated by the Office of Public and Indian Housing (PIH) to be
available in fiscal year 1998. Only one firm, Price Waterhouse and Co.,
agreed to meet on short notice to discuss requirements for such an
engagement.
An audit of the PIH Section 8 program office estimates was
previously requested. However, during preliminary discussions with
independent accountant firms and Departmental staff, several
complications to obtaining an audit were discovered. One complication
related to the fact that calculating excess reserves involves
projections of future events. While projections are a normal part of
budgeting, the uncertainty with regard to the assumptions (inflation
and provision for future contributions to reserves, for example)
appeared to preclude absolute guarantees as to the accuracy of an
amount by any auditor. A related complication is that excess program
reserve balances is a dynamic amount which changes daily as payments
are made, new Budget Authority is added, contracts are renewed or
extended and accounts are closed-out by the housing authorities.
Another impediment to obtaining an audit opinion is the length of
time since the books and records of its grant and subsidy programs had
been audited by an independent auditor. The Office of the Inspector
General has been the Department's primary auditor for the last 2 years.
It was determined that the primary auditor is the only one that could
render an opinion on an element of the Department's financial
statements in a reasonable time period since they would be the only
entity capable of expanding their existing work without the necessity
of starting from the beginning, as a new firm would have to do.
While an audit might not be practical, other forms of assurance can
be obtained by an independent public accounting firm in a reasonable
period of time. One such alternative is an engagement to apply agreed-
upon procedures to the excess reserve amount calculated by the program
office. In an agreed-upon procedures engagement the accountant issues a
report of findings based or specific procedures performed.
To address the limitations of an agreed-upon procedures engagement,
the Office of the PIH Comptroller, in conjunction with the Office of
the Chief Financial Officer and the PIH Section 8 program office,
designed a verification methodology to test the reasonableness of the
amounts reported as excess reserves by the Section 8 program office.
The verification method compares total undisbursed Budget Authority
currently recorded in HUDCAPS to a projection of requirements to fully
fund all existing contracts to their expiration date. The result is a
projection of total excess Budget Authority (some of which has been
closed to reserve accounts and some which has not).
The services of American Management System (AMS) were utilized to
perform the verification methodology. AMS is the contractor that
developed the Federal Financial System (FFS) that is currently the
foundation of both HUD's Central Accounting and Program System
(HUDCAPS) for PIH Section 8 programs as well as for Salary and Expense
payments. AMS is currently under contract with the Department to
provide on-going support for the continued implementation of HUDCAPS/
FFS.
Price Waterhouse's work is complete and a report should be
available by the second week in July. Procedures performed and to be
reported on thus far include: (1) testing for clerical accuracy of
audit trails and spreadsheets; (2) sampling source documents maintained
in the field offices for agreement with spreadsheet amounts; and (3)
tracing financial and program amounts to PIH's (also the Department's)
integrated financial management system.
Question. I also am very interested in knowing how HUD will assess
the amount of section 8 reserves that PHA's should keep on hand for
shortfalls or other needs. For example, I understand that there are
significant concerns over the possible impact of welfare reform on
HUD's obligation to pay public housing operation costs and section 8
rents; that the cost of welfare reform to HUD could be calculated in
the billions of dollars. How does the Department plan to calculate this
potential cost into section 8 contract reserves and future section 8
operating subsidies costs?
Answer. The cost of welfare reform is a prospective one and we are
building it into per unit costs to be used in developing future budget
estimates. Since we are now processing contract renewals for only 1-
year terms and since the bulk of our inventory will expire in fiscal
year 1998, we anticipate that most of the costs of welfare reform will
be carried by future funding rather than by current reserves.
Restrictions on Leasing Additional Units; Budget Guidance
DIRECTIVE NUMBER: 96-68
Subject: Restrictions on Leasing Additional Units; Budget Guidance
1. Purpose: This Notice provides guidance to public housing
agencies and Indian housing authorities (HA's), and HUD staff regarding
the number of units that can be approved in an HA's budget. Guidance is
also provided regarding the utilization of funds from an HA's Annual
Contributions Contract (ACC) Program Reserve Account to support the
budgeted units, provided that additional units are not approved.
2. Applicability: These policies apply to HA's administering the
rental certificate and rental voucher programs. These policies do not
apply to the moderate rehabilitation or single room occupancy programs.
Please note that Notice PIH 96-7 issued on February 13, 1996
covering mandatory delays in reissuing turnover rental certificates and
rental vouchers, optional suspension of the federal preferences, and
fiscal year 1996 administrative fees is still applicable to these three
areas.
3. Leasing Policy: HA's may approve leases for the number of units
of assistance approved by HUD in the budget for the current HA fiscal
year. However, HA's should not submit, and State or Area Offices should
not approve, subsequent fiscal year budgets which reflect the use of
funds from the ACC Program Reserve Account to provide assistance for
additional units.
Previously, HA's were permitted to use ACC Program Reserves to
lease-up additional units, as long as the contract authority and ACC
Program Reserves covered the subsidy and administrative fee costs of
those units and the additional lease-up was approved by HUD. That
policy has been revised as follows:
A. An HA may not use ACC Program Reserve funds to lease-up
additional units;
B. An HA may lease-up more than the number of units originally
reserved by HUD if it can support the additional units within the
contract authority amount under ACC. No funds may be used from the HA's
ACC Program Reserve Account to cover the subsidy and administrative fee
costs in future years.
C. If an HA currently has an approved budget to assist more units
than the number of units initially reserved by HUD, and the contract
authority will not support the additional units, HUD will approve
subsequent budgets to continue assisting all families currently
assisted. However, the HA must reduce the number of assisted units
through attrition until the HA is within the number of units that HUD
initially reserved for the HA, or the number of units that can be
supported by the contract authority, whichever is higher.
D. ACC Program Reserve Account funds will be used to extend the
term of expiring funding increments, and to cover increased costs of
continuing to assist the number of units reserved by HUD.
4. Budget Review and Approval: State or Area Offices shall use the
budget review and approval process to monitor and manage the number of
unit leases which a HA may approve.
A State or Area Office may approve a budget for more units than are
currently under lease, or were initially reserved by HUD, as long as
the proposed number of units can be supported within the contract
authority amount for the HA fiscal year, as well as subsequent HA
fiscal years. If the budget reflects the use of ACC Program Reserves,
the State or Area Office must carefully review the proposed units
budgeted to ensure the ACC Program Reserves are being used to continue
assistance to families currently assisted, not to lease-up additional
units. This review must also consider any portion of the ACC Program
Reserve Account which has been restricted. Restricted ACC Program
Reserves, set aside to support contract extensions, should not be
included in this analysis.
If the HA's rental certificate or rental voucher program is
overleased at a level which cannot be supported within the contract
authority available for the HA fiscal year and/or is not sustainable in
future HA fiscal years, the State or Area Office may approve continued
assistance, including the use of ACC Program Reserves, for all families
currently under lease. However, the budget approval letter to the HA
must direct the HA to stop reissuing turnover rental certificates or
rental vouchers until the number of units under lease has declined to
the number of units which can be assisted within the contract authority
available for the HA fiscal year. Of course, HA's may not reissue
turnover rental vouchers and rental certificates for 90 days.
5. Issuance of Rental Certificates or Rental Vouchers: In the past,
many HA's have found it necessary to issue two, three or more rental
certificates or rental vouchers to eligible families in order to
achieve one successful lease-up. This is most common in rental markets
with low vacancy rates and/or limited availability of affordable and
adequate housing units. This practice does not need to change under
these revised policies.
Where market conditions adversely affect the ability of rental
certificate and rental voucher holders to find suitable units, it is
anticipated that HA's will continue to have to issue multiple rental
certificates or rental vouchers to achieve one successful lease-up.
Occasionally, rental certificate or rental voucher holders may be more
successful than normal in their search for units, and the HA may find
itself briefly in an overleased situation. If so, the HA must not
reissue turnover rental certificates or rental vouchers until the
number of units under lease can be fully supported by the contract
authority. Also, the HA will be required to hold additional turnover
rental vouchers or rental certificate up to the number of units
subsequently overleased for 90 days.
6. Contact: If questions arise, please contact Mary Conway,
Director of the Finance Division in the Office of Rental Assistance on
(202) 708-2934, extension 4078.
GOVERNMENT PERFORMANCE RESULTS ACT (GPRA)
Question. What is the status of HUD's implementation of the
Government Performance and Results Act? When will HUD be ready to
submit a draft of its ``Results'' plan to the VA/HUD Appropriations
Subcommittee for consultation?
Answer. We began implementation of GPRA in January 1994 with the
establishment of the Secretary's Performance Report (SPR). The SPR
tracks performance measures set forth in the Annual Management Plans
and Management Control Plans done by each Assistant Secretary.
Beginning in fiscal year 1995, HUD negotiates with OMB regarding
performance measures which are outcome oriented for the major program
funds. The resultant measures are included with the Budget submission.
Consultation regarding the objectives and general direction of the
Strategic Plan was held with House staff on June 6, 1997. A full final
draft will be forwarded on July 14, 1997. At that time, it will also be
placed on the Web Page for General comment.
RESPA--MORTGAGE BROKERS
Question. There has been a significant amount of litigation with
regard to the requirements of the Real Estate Settlement Procedures Act
and mortgage brokers. I understand that HUD was going to issue some
interim guidance on mortgage brokers practices to relieve the confusion
in the industry while final regulations can be reviewed and issued.
What is the status of the interim guidance and when will it be issued?
Answer. The Department has determined to issue a proposed rule to
comprehensively address the treatment of mortgage broker fees under
RESPA instead of issuing interim guidance. The proposed rule will
provide a framework to end consumer confusion about the role of
mortgage brokers and the fees which they receive. At the same time, the
rule would afford mortgage brokers, who meet requirements under the
rule, a reasonable degree of certainty about the legality of their
fees. The rule is being completed by HUD. After final review within the
Administration, it will be submitted to the House and Senate Banking
Committees for 15 days of pre-publication Congressional review. It will
be published in the Federal Register approximately 3 weeks after
submission.
CONCLUSION OF HEARINGS
Senator Bond. Well, no further questions for this session.
We will recess the hearing. Thank you, Mr. Secretary.
[Whereupon, at 11:30 a.m., Tuesday, May 13, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT AND
INDEPENDENT AGENCIES APPROPRIATIONS FOR 1998
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[Clerk's note.--The following testimonies were received by
the Subcommittee on VA, HUD, and Independent Agencies for
inclusion in the record. The submitted materials relate to the
fiscal year 1998 budget request.
The subcommittee requested that public witnesses provide
written testimony because, given the Senate schedule and the
number of subcommittee hearings with Department witnesses,
there was not enough time to schedule hearings for
nondepartmental witnesses.
DEPARTMENT OF VETERANS AFFAIRS
Prepared Statement of Veronica A'zera, National Legislative Director,
AMVETS
Mr. Chairman, I am Veronica A'zera, National Legislative Director
of AMVETS, The American Veterans of World War II, Korea and Vietnam. We
are grateful to you and the committee for this opportunity to testify
before you today. Neither AMVETS, nor myself, have received any federal
grants or contracts during fiscal year 1997 or in the previous two
fiscal years.
We view the Independent Budget as a factual analysis of the
realistic funding required by the Department of Veterans Affairs to
adequately carry out the many roles and missions designed to meet the
needs of America's veterans. We urge this committee, the Congress and
the administration to support the VA's efforts at reorganization and
refocusing of it's health care delivery system by sparing the agency,
and the veteran, from unreasonable reductions in order to balance the
budget.
AMVETS' testimony today primarily addresses the National Cemetery
System (NCS). America's National Cemetery System (NCS) has a long and
proud history of service to America's veterans and their families. Many
of the individual cemeteries within the system are steeped in
historical memorabilia which represents the very foundation of these
United States. The National Cemetery System, its land, its monuments,
and the historical interments within are a national treasure that must
be protected, maintained, and nurtured.
Unfortunately, despite NCS's continued high standard of service and
despite a true need to protect and nurture this national treasure, and
despite the administration's proposal for a $7 million increase in
budget authority over fiscal year 1997 levels, we feel the system has
been and continues to be under funded. The current and future
requirements of NCS are simply not being adequately funded to meet the
current or anticipated demands.
THE SYSTEM
The National Cemetery System (NCS) assumed its current posture as
an independent benefit provider within the Department of Veterans
Affairs pursuant to Public Law 93-43. Its mission is to provide
deceased veterans and deceased active duty members of the armed forces,
their spouses and certain dependents a last resting place of dignity
based on their service to this country. For over 100 years, NCS has
performed this mission and to date maintains some 2,148,000 gravesites
for veterans and their dependents.
Veterans Service Organizations are concerned with the future of NCS
due to the depletion of gravesites available in many of its cemeteries.
While some facilities are able to accept the remains of those who chose
cremation, the facts are as follows:
--Currently only 57 of the 114 (or 50 percent) national cemeteries
remain open with burial plots.
--By the year 2000, it is projected that only 53 cemeteries will be
accepting full casket first interments.
--During fiscal year 1996, NCS had approximately 360,000 gravesites
available (that is 27,500 less than fiscal year 1995), with the
ability to add 1.6 million additional grave sites on
undeveloped land.
As the veteran population ages, the workload of the NCS will
continue to increase in all program areas. Based on the 1990 census,
annual veteran deaths are expected to peak at 620,000 in 2008. Given
the current and projected death rates in the veteran population, NCS'
capability will fall far short of requirements to provide burial spaces
for those veterans who seek burial in a national cemetery. A veterans
right to burial in a national cemetery was affirmed by Public Law 93-
43, The National Cemeteries Act of 1973. We ask you, the lawmakers, to
ensure that the dictates of that law are met, and that burial space is
available for those veterans who request it.
It should be noted that historically only about 10 percent of
eligible veterans seek interment in a NCS facility. Despite this
seemingly low demand rate, if funding is not forthcoming for new
acquisitions and development of existing land, the legal entitlement
will be an empty promise, as veterans are denied access based on non-
availability.
The non-availability of NCS burial sites is compounded when
geographical limitations are considered. An example of geographical
limitations is illustrated by the veteran and his family who live in
San Francisco, California. The nearest available burial space for that
veteran is available at San Jocuquin Valley, approximately 100 miles
east of San Francisco. We, the authors of the IB continue to feel it
practicable that every veteran have the availability of burial space in
a national cemetery or state-supported veterans cemetery within 75
miles of his or her home.
On a more positive note is the projected opening of the new
national cemeteries in Dallas, Chicago and Albany. Here again, the need
for $1.8 million activation monies is paramount in fiscal year 1998.
The IB also lauds the expansion of the Ft. Sam Houston and Arizona
National Cemeteries. The projected funding of $9.4 million for Fort Sam
Houston and $9.1 million for Arizona will provide burial space for
veterans in Texas and Arizona for several decades to come.
NCS SHORTFALLS
Prior IB's have been complimentary of NCS's management in spite of
the budget shortfall and understaffing they continue to incur. We may
only hope they are able to meet future challenges as they face a
shortfall of 276 FTE's (Full Time Employee Equivalents) in fiscal year
1998. NCS has, for too many years, been forced to delay new equipment
purchases and maintenance and repair projects, making it difficult to
provide basic services at an acceptable level. NCS anticipated that by
the end of fiscal year 1994 their equipment replacement backlog would
be $4.8 million. Now, three years later, NCS is looking at an estimated
backlog in obsolete equipment and equipment in need of repair of $6.5
million by the end of fiscal year 1997. This equipment maintenance
backlog shortfall of fiscal year 1997 is a 35 percent increase in three
short years. The problem continues to compound, and worsen. Less
dollars, more deadline equipment, less efficient work, less service to
veterans.
SECONDARY MISSIONS
The state grant program for veterans cemeteries continues to
provide a cost-effective alternative in providing burial space for
veterans. The IBVSO's are pleased that in fiscal year 1996 NCS provided
grants to 11 states totaling $7.5 million. One way to ensure that
veterans are provided a dignified burial is to ensure adequate funding
of the grants program. We recommend that VA provide at least $5 million
additional in such grants in fiscal year 1998.
NCS is projecting that they will process 351,000 applications for
headstones or markers during fiscal year 1998. This, coupled with an
estimated request for 250,000 Presidential Memorial Certificates,
substantiates the need for improved ADP equipment.
ADP improvements, equipment backlogs on repair, maintenance, new
equipment, staff position shortfalls, new and expanded facilities for
burials, and the preservation of a national treasure, all require
proper funding. The funding comes from the Congress and the
Administration. When the veteran was asked to serve, he and she did so
willingly, immediately, with pride, and without question. When the
veteran or his/her family comes to the NCS to ask for his final
entitlement, a dignified burial space, NCS should have the resources to
provide that space willingly, immediately, with pride and without
question. Not ``sorry, no vacancy.'' The Congress and the president
documented, in Public Law 93-43, the American peoples' wish that a
veteran be provided a dignified last resting place. The only way to
ensure that happening is for Congress to authorize and appropriate the
needed resources.
Therefore our recommendations are:
--VA should add at least 60 more FTE's over the 1997 level to cover
incremental workload increases and maintain current services.
Although 60 FTE's are required just to maintain the current
line of services, it is important for you to note that there is
still a shortfall of nearly 270 FTE's.
--VA should provide at least an additional $4 million in funding to
reduce equipment backlog.
--The IBVSO's again ask VA to begin a feasibility study to promote a
second national cemetery to ease the demand for space at
Arlington National Cemetery. While the IBVSO's understand that
it is not possible to duplicate the national appeal of
Arlington, the VA should pursue a second site of national
significance properly promoted and placed. Ft. Myer and
Henderson Hall offer potential land mass for expansion of
Arlington, as an alternative to this recommendation.
--VA should aggressively pursue an open cemetery in each state.
--VA should actively expand existing national cemeteries wherever
possible.
--VA should recommit to a policy of an open national cemetery within
75 miles of 75 percent of America' veterans.
--VA should seek relief from historic preservation requirements at
NCS facilities wherever appropriate.
These recommendations cost out at approximately $85,550,000 which
represents a $1,367,000 increase over the fiscal year 1998 VA budget
request of $84,183,000.
Mr. Chairman this concludes my statement.
______
Prepared Statement of Larry D. Rhea, Deputy Director of Legislative
Affairs, Non Commissioned Officers Association of the United States of
America (NCOA)
DISCLOSURE OF FEDERAL GRANTS OR CONTRACTS
The Non Commissioned Officers Association of the USA (NCOA) does
not currently receive, nor has the Association ever received, any
federal money for grants or contracts. All of the Association's
activities and services are accomplished completely free of any federal
funding.
The Non Commissioned Officers Association of the USA (NCOA)
appreciates the opportunity to testify on the appropriation levels for
the Department of Veterans Affairs for fiscal year 1998. The
Association thanks the Distinguished Chairman for holding this hearing
and trusts that our testimony will contribute in a meaningful way to
the deliberations undertaken by the Subcommittee.
The Administration has described the fiscal year 1998 budget for
veterans as ``historic and innovative.'' It certainly is that Mr.
Chairman; however, the innovative trend set forth in this budget is
deeply troubling to NCOA on several fronts. In NCOA's view, the trend
established by this budget for fiscal year 1998, and continuing in the
out-years, is innovative in one tragic respect--relying on states and
the private sector to fulfill in the future what should be a federal
responsibility. Arguably, there are probably many things done by the
federal government that are more appropriately state and private sector
responsibilities. NCOA respectfully submits that taking care of the
medical needs of the Nation's warriors is not one of those
responsibilities.
When taken in its entirety, the Administration's budget starts
veterans down a path that is fraught with even more uncertainty than
under current circumstances. NCOA implores the Distinguished Chairman
and Members of the Subcommittee to not take steps in fiscal year 1998
which could produce disastrous results and from which recovery would be
very difficult, if not impossible.
NCOA is deeply concerned with two areas of the President's budget
proposal for veterans for fiscal year 1998--veteran health care and
post-service education benefits.
HEALTH CARE DISCUSSION
The Administration has recommended that veterans health care
appropriations be reduced by $54.6 million from the level enacted by
Congress for the current year. Further, the Administration's proposes
to flat-line DVA health care dollars at that reduced level, $16.9
billion, through the year 2002. The President's budget also calls for
an actual reduction of $28 million below the level appropriated for
fiscal year 1997 in VA research programs which would further erode VA's
ability to deliver clinical services to veterans.
The health care budget for veterans is further complicated by the
Administration's reliance in the future on two separate legislative
initiatives that have yet to even be considered by the 105th Congress.
The first would permit VA to collect and retain MEDICARE reimbursements
from the Health Care Financing Administration. The second would allow
VA to retain monies recovered from veterans with private insurance as
well as reimbursements from other third-party payers. Presently,
payments received from private insurance and other third-party payers
goes to the Treasury for deficit reduction. VA is permitted to retain
the administrative costs associated with medical care cost recovery.
In fiscal year 1998, the Administration estimates that $591 million
will be collected from MEDICARE and third-party insurance to offset
their actual reduction in appropriations for veteran health care. In
the out-years, to meet increased patient demand, the budget proposal
estimates even greater reliance on recoveries to compensate for their
flat-line appropriation. By the year 2002, the Administration has set a
goal of having 10 percent of veteran health care costs to be met
through such recoveries. At the same time, VA intends to increase
patient workload by 30 percent while achieving 20 percent greater
efficiency in the delivery of services.
NCOA has and continues to aggressively support MEDICARE
reimbursement and allow VA to retain MEDICARE and third-party monies
within the system. NCOA has always viewed these receipts as a
supplement to, not a replacement for adequate annual appropriations. In
NCOA's view, the rosy scenario ``hoped for'' in the budget proposal is
simply not achievable. VA's track record on medical care cost recovery,
while improved in recent years, still leaves a lot to be desired. VA
originally projected recoveries in fiscal year 1997 at $736 million;
they now acknowledge that they will be nearly $200 million short of
their earlier estimate.
The proposed outside revenues are not only dependent on Congress
enacting enabling legislation, the reliability of the estimates are
questionable and emerging health care market forces will make the task
of recovery even more difficult. The VA's own strategic plan for
medical care cost recovery notes that there is not methodology that can
accurately predict the collection potential. As VA restructures to a
primary care, outpatient system, the difficulty in recovering costs
will be multiplied many times over. Today, medical care cost recovery
must generate approximately 20 outpatient bills to produce the
equivalent recovery of a single inpatient bill.
On April 24, 1997, the Senate Veterans Affairs Committee provided
their views and estimates on the fiscal year 1998 budget for veterans
benefits and services. Essentially, the Committee agreed with NCOA's
preceding comments by stating:
``This budget proposal, even assuming the enactment of MCCR and
Medicare subvention legislation, does not allow even for slow growth in
real terms. The Committee, therefore, remains very concerned that VA's
health care spending projections, particularly in the out year's, are
unrealistic. The fact that this year's out-year projections differ
substantially from those presented by the Administration last year, as
the Secretary then stated they would, does not increase the Committee's
confidence that VA out-year projections can be viewed as real planning
tools.
The Committee notes one other concern. VA is currently initiating a
medical care resource reallocation plan which will result in actual
cuts in some regions of the Nation. The Committee is of the view that
resources should be allocated equitably so that similar veterans will
have similar access to VA care without regard to the region where they
live. VA's health care funding must grow sufficiently to allow such
allocations without undue disruption in any region.''
The Senate Committee on Veterans Affairs further stated: ``The
better course, in our judgement, would be for VA's fiscal year 1998
projected medical care spending needs--at minimum, $17.573 billion, as
set forth in the President's budget--to be financed fully with
appropriated funds. In our view, the goal of balancing the budget could
still be met while allowing VA medical care appropriation to increase
to at least that amount.''
RECOMMENDED HEALTH CARE APPROPRIATION
Both the Administration and the Senate Veterans Committee seem to
agree on the amount needed for veteran health care in fiscal year 1998.
The manner to achieve that amount is where the question lies. The
Administration wants to rely on $591 million in outside sources and
revenues, that requires enactment of legislation, to fund health care
at $17.5 billion. The Senate Veterans Committee has recommended an
appropriated amount of $17.55 billion with no reliance on outside
sources in fiscal year 1998. And, for your information Mr. Chairman,
the House Veterans Affairs Committee has recommended VA medical
appropriations at $17.6 billion.
With the passage of last year's health care eligibility reform
legislation, Congress projected a funding need for veteran health care
in fiscal year 1998 at $17.9 billion. In the strongest possible terms,
NCOA urges this Subcommittee to: (1) reject the Administration's fiscal
year VA medical care proposal; and, (2) meet or improve upon the $17.55
billion recommendation of the Senate Veterans Affairs Committee. NCOA
believes every effort should be made to achieve the $17.9 billion
target set last year.
Further, the Senate Veterans Committee has recommended restoration
of the critical medical and prosthetic research appropriation. The
Administration has proposed spending in this area at $234 million in
fiscal year 1998, $28 million less than enacted for fiscal year 1997.
The Veterans Committee in the Senate has recommended a level of $280
million for fiscal year 1998. NCOA urges the Subcommittee to adopt or
improve upon the recommendation of the Senate Veterans Committee for VA
medical and prosthetic research programs.
EDUCATION DISCUSSION
No other area of the President's budget has incensed this
Association more than the non-proposal for veterans education. The
Administration's budget recommends no improvements to veterans
education benefits although the Administration seeks record levels on
non-veteran education spending during fiscal year 1998. Neither did the
Administration propose any improvements for the education programs
available to certain survivors of service-connected disabled veterans.
In NCOA's view, veteran education benefits should be the touchstone
by which all other education programs are measured. In this
Association's view, if anyone has earned an increase in benefits, the
very first place to start is the veteran benefit which now covers only
40 percent of the cost at a public four-year college or university.
Irrespective of what Congress may do on other programs, a substantial
increase in the basic Montgomery GI Bill benefit is called for as being
long overdue.
NCOA understands that the Chairman and Ranking Member of the House
Veterans Affairs Committee will be seeking a 10 percent increase in the
MGIB basic benefit, which now is $347 per month for a veteran with two
years of honorable service. A similar initiative has not yet been
offered in the Senate. While NCOA will aggressively support the efforts
of the Chairman and Ranking Member, the Association is not timid in
pointing out that, if the increase were enacted, the benefit will
remain woefully deficient. If an AMERICORPS volunteer can be guaranteed
$5,000 per year for education, the individuals who provide for the
Nation's security have earned and deserve a better deal than what they
are getting.
CONCLUSION
In closing Mr. Chairman, let NCOA be clearly understood. The
Association appreciates fully the difficult task before you. It is
important though that NCOA repeat what we have said many times during
the last several years before numerous Committees and Subcommittees in
both the House and Senate.
The veterans of this Association are more than willing to do their
fair share to assist in the effort to balance the federal budget and
deal with the national debt. An examination of Federal budgets for the
past ten or fifteen years will reveal that veterans have indeed been
doing their share. User fees have been added and increased, COLA's have
been frozen and/or rounded down, and, pensions for some veterans have
been nearly eliminated are but a few examples of what such an
examination would reveal.
The President's budget for fiscal year 1998 contains a number of
cost-saving provisions which have been previously approved and which
were contained in the Balanced Budget Act of 1995. Rather, than extend
these OBRA cost-saving provisions through 1998, the Administration
proposes to make these provisions permanent.
NCOA does not oppose extending these cost savers in fiscal year
1998 although the Association is not joyous about that prospect. NCOA
is adamantly opposed, however, to making those savings provisions
permanent. The pattern of sacrifices and restraint in veterans budgets,
over the last ten years alone, substantiates that veterans programs are
not among the culprits in federal deficits. The Administration's fiscal
year 1998 veterans budget and the recommendations of the Senate
Veterans Affairs Committees continue that same pattern of restraint in
fiscal year 1998 and beyond.
Until the pattern of unrestrained growth in other budget categories
is effectively dealt with by the Congress, NCOA will never agree to
locking-in permanently onerous fees and penalties on veterans
benefits--to agree to do so would be sheer foolishness on the part of
this Association. Currently, veterans have little leverage in the
budget reconciliation process. NCOA is unwilling to permanently give
away the few bargaining chips that veterans have remaining in the
scoring process.
Veterans have been and will continue to pull their fair share of
the load. Frankly, in the opinion of NCOA, it is about time that a
concerted ``fair share'' be imposed on all other non-defense,
discretionary budget categories.
Thank you.
______
Prepared Statement of Rick Surratt, Assistant National Legislative
Director, Disabled American Veterans
Mr. Chairman and Members of the Subcommittee: On behalf of the more
than one million members of the Disabled American Veterans (DAV) and
its Women's Auxiliary, I am pleased to present DAV's views on the
President's fiscal year 1998 budget request for the Department of
Veterans Affairs (VA).
As you know, the combined views of DAV, AMVETS, PVA, and VFW are
provided in the Independent Budget (IB) we publish each year. The co-
authors of the IB appreciate the recognition our views have received
from this Subcommittee in the past. We hope our analyses of VA's
funding needs will be helpful to you. We believe our recommendations
accurately reflect the resources necessary to enable VA to provide an
acceptable level of benefits and services for our Nation's 26 million
veterans and their dependents and survivors.
The DAV has responsibility for the sections of the IB pertaining to
Benefit Programs, General Operating Expenses (GOE), and the United
States Court of Veterans Appeals. Our testimony will primarily focus on
these appropriations.
THE PRESIDENT'S BUDGET
Of the $41.1 billion budget authority the Administration requests
for VA, $40.05 billion would be from appropriations. A total
appropriation of $846.4 million is requested for General Operating
Expenses (GOE). Of this, $660.8 million is for the Veterans Benefits
Administration (VBA), and $185.6 million is for General Administration.
Under the Administration's budget, VBA would lose 543 FTE (full-
time employee(s) or equivalent(s)) from the fiscal year 1997 level,
reducing the total from 11,943 to 11,400. In General Administration,
there would be an FTE reduction of 71, to 2,292 from 2,363. The
reduction in VBA's FTE is to be offset by increased operational
efficiency and the impact of various restructuring initiatives designed
to improve service to veterans and reduce the overall costs of
operation in the future. VBA projects that it will continue its trend
of improving its claims processing timeliness and reducing its case
backlog in fiscal year 1998. The Board of Veterans' Appeals (BVA) would
be authorized 494 FTE for fiscal year 1998, a reduction of 6 FTE from
the 500 authorized in fiscal year 1997.
For medical care, the Administration requests $17.6 billion in
budgetary resources, a $536 million increase over the fiscal year 1997
appropriation. This amount would include an appropriation of $16.959
billion, $468 million retained from third-party collections, $68
million reimbursement from VBA for rating examinations, and $78 million
from sharing and other reimbursements. This assumes legislation
allowing VA to retain third-party collections of $591 million minus
$123 million for the administrative costs of collection. Employment in
the Veterans Health Administration (VHA) will decrease by 2,135 to
190,835 FTE. With these resources, VHA expects to provide care to 3.1
million unique patients, an increase of 134,914 over fiscal year 1997.
Through increased efficiency and with Medicare subvention, VHA's 5-year
plan, beginning with fiscal year 1998, includes the goal of reducing
the per-patient health care cost by 30 percent, serving 20 percent more
veterans, and increasing the portion of the operating budget obtained
from nonappropriated sources to 10 percent.
A total of $79.5 million is requested for major construction. Funds
are included for structural corrections to the Memphis, Tennessee,
Medical Center to meet current seismic standards; beginning development
of a new cemetery at Cleveland, Ohio; expansion of the cemetery at Fort
Sam Houston, Texas; and additional gravesite development at the
National Memorial Cemetery of Arizona. For various minor construction
projects, $166.3 million is requested. The Administration's budget also
proposes legislation to change the definitions of minor and major
construction to raise the minor construction range from $300,000 to a
$500,000 maximum.
The request for the National Cemetery System is $84.2 million, an
increase of $7.3 million. Fifty-two additional FTE are requested. The
Administration is proposing legislation to change the VA role in the
cemetery program. Under the proposed plan, VA would discontinue
construction of new VA cemeteries after the addition of the Cleveland
cemetery. It would make the grant program for construction of state
cemeteries more attractive by increasing the Federal share of the
construction costs from 50 percent to 100 percent and by making initial
equipment costs eligible for up to 100 percent of funding by Federal
grant. Thereafter, states would be responsible for the operation
expenses.
While VA projects that services will not suffer with the
recommended staffing reductions in VBA and VHA, the depth of these cuts
cause us concern that VA may be overly optimistic, especially
considering the already existing strains on the system. The IB
recommended that staffing levels be maintained at least at current
levels for VBA.
The DAV supports the concept of allowing VA to retain and use
collections from third parties to strengthen its health care system to
permit it to provide more cost-effective treatment to more veterans.
However, the Administration's proposal does not direct these
collections toward improvement of the efficiency and capacity of VA's
health care delivery system, but merely serves to relieve the
Government of part of its obligation to provide the resources necessary
to care for our Nation's ill and disabled veterans. Funds collected
from the private sector and Medicare should not be used to supplant
appropriations. Moreover, even with the inclusion of third-party
collections in VA's ``budgetary resources,'' health care funding is
increased only 5.4 percent over 5 years. We are concerned that, even
with optimum increases in efficiency, this amount will be insufficient
to maintain an acceptable level of service. With the effects of
inflation, a 5.4 percent increase over a 5-year period will quite
probably not even represent a modest real increase but rather a
substantial reduction in health care funding for veterans. In addition,
under the Omnibus Budget Reconciliation Act (OBRA), some of the third-
party collections have already been assigned to deficit reduction. It
would be even more of an inequity if these OBRA funds were to be
replaced from elsewhere in VA's budget at the expense of further
reducing benefits and services to veterans.
INDEPENDENT BUDGET RECOMMENDATIONS
In the Benefit Programs section, the IB presents some of the
authors' priority legislative goals for benefit improvements. Also
included is our argument against proposals to means test, eliminate,
offset, tax, reduce, and restrict eligibility for disability
compensation.
In the GOE section, the IB authors have addressed VBA's Business
Plan, which, in accordance with the Government Performance and Results
Act of 1993 (GPRA), outlines VBA's strategy and associated resource
needs for accomplishing its mission of providing benefits and services
to veterans and their families in a responsive, timely, and
compassionate manner in recognition of their service to the Nation.
Just as veterans enjoy a special status and are highly deserving of
VA benefits, they are deserving of an effective benefits delivery
system to ensure that benefits are dispensed in a manner to be
meaningful and fully accomplish their purposes. The GOE portion of the
budget covers the administrative costs of delivering VA benefits and
services. VBA is responsible for administering VA's nonmedical
programs. These are compensation and pension, education, loan guaranty,
vocational rehabilitation and counseling, and insurance.
VBA's Business Plan is comprised of its overall direction and
policy and its primary goals and strategy for administering all of its
benefit programs but also integrates more specific multi-year plans for
each of its five component benefit programs, referred to as its five
business lines. In addition to serving as VBA's operational
``blueprint'' for its business processes and reforms, and as its ``road
map'' to achievement of its long-term goals, this comprehensive plan is
also intended, under GPRA, to serve as an aid to Congressional
oversight and budgetary decisions. To each of the five Business Line
Plans--which form the context and specific bases for the
Administration's budget request--we added our own recommendations and
discussed our concerns where we question or disagree with VBA's
approach. The IB includes analyses of the activities, performance, and
needs of each of the services that administer VBA's business lines as
well as two of the functions funded under General Administration, BVA
and the Office of the General Counsel (OGC). Although the Court of
Veterans Appeals is not part of VA, the IB contains a section on its
operations because of its inextricable role and impact in veterans'
claims and VA's processes. Overall, we believe that the VA plan and the
budget request are tailored to achieve an optimum level of services and
an optimum use of limited resources. We generally support this plan
and, in the IB, urged that Congress provide VA with the resources
necessary to effectuate its strategy for the timely and efficient
delivery of benefits and services. The area of greatest concern
continues to be the compensation and pension claims process.
In recent years, VBA has been challenged by increasing claims
backlogs and resulting long delays for veterans and other claimants
awaiting decisions on claims. With an aging veteran population, the
need for prompt service has become greater at a time when, until
recently, claims processing times were becoming progressively longer.
Backlogs and consequent protracted delays result in increasing numbers
of disabled veterans in need of VA assistance dying before that
assistance is provided. Other veterans with immediate needs suffer
through long delays without their needs being met.
In response to concerns about the quality of its service to its
customers, VA established a Business Process Reengineering (BPR) Office
in November 1995 and the BPR team issued a report of its findings and
recommendations in August 1996. These recommendations were incorporated
in Compensation and Pension Service's (C&P's) Business Line Plan. This
plan includes measures to correct the following five core problems
identified in the BPR study: inadequate communications and outreach;
lack of individual accountability; emphasis on production and
timeliness instead of quality; inadequate information technology
support for process; and complexity of rules and regulations.
The plan acknowledges that poor quality and the resulting necessity
to rework claims is the primary problem accounting for the overload on
the system. The plan builds on the strengths of the current successful
hearing officer program--personal interaction and more thorough review.
The current ``assembly line'' process is replaced with a new integrated
claims process that allows direct interaction between the veteran and a
more highly skilled and trained adjudication team, with one person on
the team responsible for ensuring satisfactory completion of all
actions related to the claim. A separate post-decision review process
will allow a dissatisfied claimant prompt access to remedial action and
a ``second look'' by a hearing officer, (redesignated post-decision
review officer). The post-decision review officer will have authority
to (1) change the decision on the basis of the current record, if
warranted, (2) undertake additional action toward favorable resolution,
or (3) prepare the case for BVA review if revision of the decision or
further action is not indicated. Quality--and thus efficiency--and
customer service will be the primary goals, supported by training and a
certification process and better quality review and accountability
mechanisms. We believe that the Business Line Plan for C&P presents a
solid, well-reasoned, and well-supported strategy for resolving the
problems that have for the past several years plagued VBA and have been
at the center of attention of the Congress, VA, and the veterans'
community.
From our knowledge of VBA's operations and our review of VBA's
Business Plan as included in VA's budget submission, the four veterans
organizations co-authoring the IB present the following added
recommendations for the activities funded under the GOE appropriation:
Compensation and Pension
Congress should endorse and support C&P's BPR plan as set forth in
its GPRA Business Line Plan. Congress should provide VA with the
resources necessary to accomplish all components of this plan, namely
funding for training and associated personnel costs, information
technology improvements, and other related costs. However, Congress
should reject recommendations that VA revise its rules to negate the
Court's enforcement of claimants' rights as contained in current rules.
Congress should, through its oversight functions, closely scrutinize VA
rulemaking to ensure that it is not undertaken to erode or undermine
rights VA claimants currently enjoy and to ensure that VA does not
continue to make rules without involving its customers.
Should it become necessary to protect VA claimants' procedural
rights, as have been provided in long-standing VA regulatory
provisions, Congress should codify into statute provisions which VA
shows an intent to rescind, and Congress, if necessary, should amend
the Secretary's general rulemaking authority to require means for
public participation in rulemaking that impacts upon VA customers.
Congress should enact the legislative changes recommended by C&P to
carry out simplification of VA programs, namely, de novo review
authority for Post-Decision Review Officers and pension simplification.
C&P's Business Line Plan should be revised to include more
concrete, defined strategies for obtaining improvements in quality of
decisionmaking, namely through performance standards that focus
primarily on quality criteria. To obtain quality in decisionmaking, VA
must install an effective quality assurance infrastructure, VA must
have quality measurement criteria that correspond to the requirements
of law for a complete and legal adjudication, and VA must have a means
for effective enforcement of quality and performance standards among
its decisionmakers through an accountability process that includes
strong incentives for quality work and strong disincentives for
noncompliance with quality standards.
VA should promptly institute an aggressive new training program to
instruct adjudicators on the mandatory nature of case law and in its
use and applicability. This training should be complemented by a
process incorporating a chain of accountability for proper and legal
claims decisions, with monitoring for compliance and quality control,
along with studies of appellate decisions to identify problem areas.
Management should take necessary steps to bring about a renewed
institutional and individual adjudicator commitment to VA's fundamental
guiding principles for the administration of benefits, such as broad
and liberal application of the law, resolution of reasonable doubt, and
award of all benefits to which entitlement may be established.
To confront rating boards with the reality of their errors, to
instruct them in proper interpretation and application of law, to
provide data to measure performance and enforce accountability, and to
aid in identifying areas where training is most needed, BVA decisions
should specify regional office errors accounting for the different
outcome on appeal or necessitating remand.
If VA fails to voluntarily revise the manner in which BVA decisions
are written, Congress should amend 38 U.S.C. Sec. 7104(d) to expressly
require that the Board specify the basis for affirming the decision of
the agency of original jurisdiction or specify the errors accounting
for the Board's reversal or remand.
Education
Congress should provide Education Service the resources necessary
to improve accessibility, services, accuracy, and efficiency as
envisioned in its GPRA Business Line Plan.
Loan Guaranty
Congress should provide the resources necessary for Loan Guaranty
to fulfill the service goals in its Business Line Plan, including the
information technology improvements shown to be essential to the plan;
however, Congress should not reduce Loan Guaranty's FTE authorization
below current levels inasmuch as staffing reductions are incompatible
with the planned improvements for customer service under GPRA and are
indeed essential to maintaining current levels of service quality and
timeliness.
Vocational Rehabilitation and Counseling
To prevent further strains on Vocational Rehabilitation and
Counseling Service (VR&C) and reversal of recent gains, current FTE
levels should be maintained until the effects of reorganization can be
evaluated as to staffing needs. Subsequently, staffing considerations
should include a plan to return to full use of in-house counseling and
routine rehabilitation services because they are more cost effective
than contract services.
VBA should include VR&C's immediate and future needs in its
development of automated support systems.
Disabled Veterans Outreach Program specialists employed at the
local Job Service Office should be part of the case management system
for vocational rehabilitation.
The vocational rehabilitation Design Team should promptly finalize
its report and forward it to the Under Secretary for Benefits and to
the Secretary, if appropriate, for implementation.
Insurance
Insurance Service should be provided the resources necessary to
fulfill its customer service goals.
Because of changes in VA's accounting methodology beginning with
the fiscal year 1997 budget, Veterans Services is no longer funded as a
separate entity under the budget structure. Its functions are viewed as
support and are considered overhead expenses, which are apportioned
among VBA's business lines. Nonetheless, even with the changes in
accounting methodology and the consolidation of functions, Veterans
Services remains a discrete operational entity within VBA. Given the
necessity for personnel devoted solely to dissemination of general
benefits information and assistance across the varied benefits programs
at various field and satellite locations, it seems apparent that VA
will find it necessary to retain a service dedicated to those purposes.
We believe that Veterans Services is a vital part of VBA's benefits
delivery system, and we discuss it separately in the IB because of its
importance. Our recommendation for Veterans Services is:
--VA and Congress should continue to recognize that a strong and
viable Veterans Services component within VBA is essential to
the satisfactory delivery of veterans' benefits, and Congress
should provide Veterans Services with the resources necessary
for it to perform all of the many important tasks with which it
has been charged.
Similarly, funding for information technology is no longer
separated from the VBA's product lines under the current budget
structure. Again, because of the importance of this program, the IB
includes separate discussion and a recommendation for this component of
VBA's operations:
--Congress should provide funds to maintain VBA's existing data
systems while new systems are phased in; Congress also should
provide all funding necessary to meet VBA's future
responsibilities and to implement its new business processes.
From its analysis of the processes, performance, and needs of BVA
and OGC, the IB provides several recommendations. Two recommendations
aimed at improving the Board's operations and decisions:
--Congress should earmark sufficient funding for BVA training
programs.
--VA should change 38 C.F.R. Sec. 19.5 to properly instruct that BVA
is bound by VA manuals, circulars, and other directives issued
by VA.
Given OGC's workload, the IB includes the following recommendations
for additional personnel to meet OGC's needs:
--OGC should be authorized 12 additional FTE to handle the increase
in workload before the Court of Veterans Appeals.
--OGC should be authorized 10 additional FTE for its alternative
dispute resolution program.
--OGC should be authorized 15 additional FTE for procurement and
leasing functions to minimize VA's liability and reduce
litigation and claims costs.
Last year, there was some consideration of reducing the number of
judges on the Court. Such action would be inadvisable for several
reasons, including the increasing rate of appeals in the last year. The
four veterans organizations presenting the IB oppose any reduction in
the number of judges on the Court.
One of the problems the Court has faced since its inception is a
large pro se docket. Approximately 74 percent of appellants before the
Court are unrepresented when they file their appeals. That figure is
reduced to 50 percent through the efforts of the Pro Bono program. The
IB authors support continuation of this program. The IB recommends:
--Legislation to codify into law the Veterans Consortium Pro Bono
program.
--Appropriation of adequate funds to operate the program.
The Court seeks improvement in its retirement and survivor program
to make it comparable to other Article I courts. Also, regarding its
retirement plan, the Court seeks early retirement provisions for
associate judges to avoid retirement of all judges near the same time,
when their terms expire. The DAV supports these changes.
CONCLUSION
This concludes the DAV's testimony on the fiscal year 1998 budget.
We appreciate the opportunity to present our views on this most
important matter, and we thank this Subcommittee for its continuing
support of this Nation's disabled veterans.
______
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Prepared Statement of Charles L. Calkins, National Executive Secretary,
Fleet Reserve Association
Mr. Chairman and Members of this distinguished Subcommittee: I am
Charles L. Calkins, National Executive Secretary, Fleet Reserve
Association (FRA). The Association is Congressionally-Chartered and has
been serving the Sea Services since 1924. Current membership is more
than 162,000 active duty, reserve and retired Navy, Marine Corps and
Coast Guard personnel, veterans all. FRA is the only organization
exclusively representing the more than 500,000 enlisted members of
those three branches of the Armed Forces and it is my privilege to
bring their message to you regarding fiscal year 1998 Department of
Veterans Affairs (DVA) appropriations.
The Administration is requesting nearly $41 billion for DVA in its
fiscal year 1998 Budget. This includes $21.7 billion for Veterans
Benefits, $17.9 billion for Veterans Health, $246 million for
construction and a total of $94 million for the National and State
Cemetery Systems. Although, there are other items in the request, only
those mentioned herein are of paramount concern to the Association.
VETERANS BENEFITS
Compensation and pensions.--FRA supports the Administration's
request of $19.7 billion for this program. It does, however, seek
additional funds in the event the oversight committees agree to
amending OBRA 1990. FRA believes it unfair to further deny the
reinstatement of Dependency and Indemnity Compensation (DIC) to widows
whose subsequent spouses either passed away or the marriage ended in
divorce. The Association has made its position on this issue known to
the oversight committees.
COLA's.--The Association fully endorses funding full cost-of-living
adjustments to Veterans Compensation and DIC. FRA does not support a
decrease in COLA's based on the presupposition that the CPI is
inflated, particularly when it has not been supported with sufficient
scientific data. The Association believes that the Consumer Price Index
(CPI) provides the best guide for determining annual COLA adjustments.
Montgomery GI Bill (MGIB).--FRA strongly supports the House
Committee on Veterans Affairs (HCVA) request for an additional $175
million to improve veterans education programs. The MGIB program is
sorely in need of improvement. Current benefits are running far below
the annual cost of undergraduate education. And noteworthy is the fact
that if the President's request for a 10 percent increase in Pell
Grants is approved, the program will provide about $123 less each year
than what the MGIB pays for a nine month school year. HCVA found that
the current AmeriCorps education benefit of $4,725 per year for two
years exceeds the earned MGIB basic benefit on a per school year basis
by $1,602. The program needs to be enhanced if Congress, charged with
raising an army and navy, wishes to attract quality young men and women
to serve in the defense of this Nation and its citizens.
VEAP conversion.--Legislation was enacted last year to authorize
military personnel enrolled in the Veterans Educational Assistance
Program (VEAP) to convert to the MGIB. Unfortunately, the legal
interpretation of what constituted an ``active'' VEAP account left
thousands of service members out of the conversion since they no longer
had funds invested in their VEAP accounts. Many of the Association's
active duty members have expressed frustration because they were
counseled by their respective services to close out their accounts. FRA
urges this distinguished committee to appropriate additional funds to
enable those frozen out of last year's program to convert to the MGIB
in fiscal year 1998.
Concurrent receipt.--FRA and many of its sister organizations
continue to urge Congress to halt the discriminating practice of
requiring military retirees to waive retirement pay in order to receive
VA disability compensation. FRA believes the current law should be
amended and has so advised the proper oversight committees of its
commitment to resolve the matter in favor of military retirees. In the
event concurrent receipt is authorized for military retirees, FRA
strongly recommends that this distinguished subcommittee appropriate
the necessary funds to support the authorization.
VETERANS HEALTH ADMINISTRATION
The Administration's fiscal year 1998 DVA budget requests nearly
$17.9 billion for Veterans' Health Care. This is almost $500 million
above the fiscal year 1997 authorization, but close to $1 billion below
the estimate recommended by the HCVA. FRA supports the HCVA request for
an additional $117 million. Hopefully military retirees--surely one of
the most deserving groups eligible for veterans benefits--will soon be
placed in a higher priority for access to DVA health care facilities.
FRA urges this distinguished Subcommittee to also consider additional
appropriations for the expansion of access to VA medical facilities for
military retired veterans.
In a recent statement to the oversight committees, FRA recommended
that VA medical facilities, particularly at or near military
installations being closed or ``downsized,'' be opened to military
retired veterans on a priority immediately below that of service-
connected disabled veterans. Access to the facilities would be at the
option of the military retired veteran, if space is available.
The Association believes that every veteran should have access to
VA facilities; however, FRA is acutely aware that the system is unable
to physically or fiscally accommodate all veterans. FRA advocates an
open door policy for military retired veterans who were promised free
medical care for life in return for serving 20 or more years in the
uniformed services. Today, that promise grows more shallow with each
passing year.
It's a disgrace that some military retired veterans who are 65
years of age or older are being shut out of Military Treatment
Facilities (MTF's). An estimated 35 percent are combat veterans of one
or more wars. Less than that number have combat-related disabilities,
but each honored their commitment to the Nation and is seeking only
that which was promised. Unlike other federal employees, these
beneficiaries must rely upon the civilian sector for services under
Medicare. Those residing near military installations who counted on
access to local MTF's, now closed under BRAC, failed to enroll in
Medicare Part B and the only recourse for some may be accessing VA
medical facilities. Hopefully, this distinguished Subcommittee will
concur and allocate additional funds to accommodate these military
retired veterans.
HEALTH CARE OFFSETS
The Administration's budget proposes that DVA be granted authority
to retain collections from health insurance companies that pay for care
provided in VA Health Care Facilities. These collections would be used
as offsets for reductions in veterans medical care totaling about $468
million. FRA agrees with the distinguished HCVA Chairman, who warns
that ``future collections may not keep pace with the needs of aging
veterans. Projections for future spending contained in the
Administration's budget could lead to a drastic reduction in services
to veterans who now depend on VA for their care.'' FRA supports the
authority for the collection and retention of ``third party'' payments
by DVA, but not as leverage to offset funds for veterans health care
programs. Although, FRA questions whether collections will equal
projected offsets, the Association urges this Subcommittee to fully
fund the DVA's Health Administration request.
MEDICARE SUBVENTION
DVA is seeking authority to participate in a Medicare Subvention
Demonstration Program. The plan would authorize DVA to provide health
care to over-65 veterans enrolled in Medicare, and then collect
discounted reimbursements from the Health Care Finance Administration
(HCFA). FRA supports this demonstration program and urges the
Subcommittee to do likewise.
CONSTRUCTION PROJECTS
FRA supports all construction projects listed in the fiscal year
1998 DVA budget request. Noteworthy is the Administration proposal to
reduce funding to the State Home Program by $6 million. World War II
and Korean Veterans are reaching their senior years and may require
extensive long term care. Many suffer from mental illnesses, some as a
result of participating in combat environments, relived again in their
later years. For their families to place them in commercial nursing
homes drains what little financial resources they may possess.
According to Joshua M. Wiener of the Urban Institute, a long-term care
insurance policy costs a 65-year old veteran $2,607 annually. At age
79, the initial policy purchase would be $8,492. With the median age of
World War II veterans at 75, not many are able to afford this coverage.
Expanding the number of VA nursing homes and beds will provide
necessary accommodations and care plus an atmosphere of camaraderie
with other veterans. The State Home Program is doing a superb job in
relieving the Federal government of much of this responsibility, and at
only 65 percent of the cost of construction. This is a win-win-win-win
situation for the Federal Government, DVA, the State, and the Veteran.
FRA strongly endorses the $80 million HCVA recommends to assure that
States continue to participate and maintain the partnership in caring
for our aging veterans. An example of this is the Texas State Senate's
recent authorization of construction for as many as four veterans-only
nursing homes. Funds from the State Home Program Grants will build 300-
bed facilities offering nursing care for up to 1200 veterans at one
time.
CEMETERIES
FRA urges this distinguished Subcommittee to support the request
for $84 million for the National Cemetery System (NCS) and $10 million
for State Cemeteries Grants. NCS was established by Congress in 1973,
an act endorsed and influenced by FRA. Today, the Association continues
to support the System and seeks its expansion in order to accommodate
many more of our aging veterans and family members who are expected to
choose NCS burial plots for interment.
According to the HCVA, the NCS faces an increasing workload through
fiscal year 2008 as the veteran population between fiscal years 1995
and 2010 decreases by 6 million (23 percent). By fiscal year 2008, the
number of interments in NCS cemeteries is projected to reach 104,000
from a high of 71,786 in fiscal year 1996. Over the same period, the
total number of graves maintained is expected to increase from 2.1
million to 2.5 million.
FRA believes the $7 million increase over last year's authorization
is justified. The System must expand the number of cemeteries to
accommodate the projected increase in interments over the next decade.
This, in turn, requires additional FTEE as requested by the oversight
committees. The Association continues to be an advocate for the NCS
State Grant program. Financial grants to State veterans cemeteries
relieve the Federal Government of full responsibility for funding
additional cemeteries at the national level.
GRATEFUL ACKNOWLEDGMENT
Mr. Chairman, FRA appreciates this opportunity to present priority
veterans programs of interest to its membership. FRA also supports and
endorses all requests for appropriations that provide the Nation's
deserving veterans with adequate and reasonable programs. The Nation
would not exist today if it weren't for the service and sacrifices of
our veterans. FRA again salutes this distinguished Subcommittee for its
concern and commitment to our Nation's Veterans.
______
Prepared Statement of Kenneth E. Quickel, Jr., M.D., President, Joslin
Diabetes Center, Boston, MA and Blake E. Waterhouse, M.D., CEO, Straub
Clinic and Hospital, Honolulu, HI
Mr. Chairman and Members of the Subcommittee, we appreciate this
opportunity to present Joslin Diabetes Center's proposal to improve the
access to and quality of health care for veterans and to reduce costs
and increase savings in the near term for Veterans Affairs health care
outlays by establishing a new paradigm of health care. We have met with
policy officials and senior career professionals in the office of the
secretary and with regional and state officials in the Veterans
Administration and they are enthusiastic about our proposal.
Diabetes among veterans and their families mirrors the disease in
the total overall population where the incidence of diabetes approaches
20 percent in the over 50 age group and diabetes and its complications
comprise 25 percent of Medicare costs. In this societal context, the
1998 Department of Veterans Affairs covers 26,198,000 veterans:
--786,000 will be diabetics who generate in excess of $8 billion in
health care costs annually
--nearly an equal number will have diabetes and not know it
--nearly 15,000 will die every year from diabetes and its
complications
--between 1,400 and 3,600 will become blind each year
--5,000 will have amputations
--1,240 will develop kidney failure
Though Joslin is the world's largest and most comprehensive
independent diabetes research and patient care institution, we would
like to put ourselves out of business by finding a cure for diabetes
through research, but we are not quite there yet. Joslin would like to
share our technology and methods with other institutions and networks
in order to limit the effects of diabetes. The personnel structure,
telemedicine technology and medical network within the Department of
Veterans Affairs offer a tremendous opportunity for the transfer of
Joslin's technology and techniques to demonstrate the following:
--Early detection of diabetes and those who will develop diabetes.
--Prevention of the onset of diabetes for those prone to diabetes
development.
--Improved care for those who have diabetes.
The real effects of this proposal offer improved quality of life
for diabetes patients and significant cost savings for the Department
of Veterans Affairs as soon as the period 2000-2002, the period in
which overall government expenditures must be reduced to meet balanced
budget objectives.
Joslin proposes to work with Department of Veterans Affairs
officials to develop a pilot program of diabetes detection, prevention
and care. The objectives would be to institutionalize advanced
techniques to detect diabetes and those most likely to develop diabetes
within the Department of Veterans Affairs personnel and to implement
improved prevention and care protocols for veterans with diabetes.
Early detection, intervention for prevention and improved care
techniques can reduce projected health care costs in excess of $400
million throughout the Department of Defense/Veterans Administration
population universe by the 2000-2002 period.
Specifically, we propose to institute pilot programs of detection,
prevention, and care in two sites (New England and Hawaii) for a two-
year demonstration, training and technology transfer exercise of
Joslin's expertise utilizing existing Department of Veterans Affairs
medical infrastructure, personnel and employee/patient base. The cost
would be $2.5 million annually.
If patients with diabetes have eye examinations annually, current
treatments can prevent 98 percent of the blindness of diabetes. Yet
today, diabetes and diabetic retinopathy remains the leading cause of
blindness in working age Americans. The primary causes for this dilemma
are twofold, namely access of patients into mandated standards of care
and patient and provider education.
Equally important, the Joslin health care treatment programs can
significantly reduce complications of diabetes including cardiovascular
disease, kidney disease, and peripheral neuropathy with subsequent
significant economic savings.
We have developed the Joslin Vision Network and a Diabetes Eye
Health Care Model to address these problems of access and education of
diabetic eye disease.
The Joslin Vision Network is a telemedicine based platform that
services remote eye examination stations using video imaging
technologies that take advantage of low light level sensitive video
cameras and industry standard telecommunication protocols. Thus, at a
remote site, patients can have their retinal images rapidly and
comfortably acquired using the low light level sensitive video
technologies, have these images transmitted to a central site where the
images and related medical information is stored and reviewed. The
review of the images at the central reading center resource produces an
assessment of the level of diabetic retinopathy and a recommended
treatment plan which can be transmitted back to the patient contact
site before the patient has left from their visit. This function is
performed using the real time teleconferencing functions of the Joslin
Vision Network. Operation of the Joslin Vision Network has been made
simple so that retinal images and related medical information can be
acquired by ancillary staff without any prior expertise in computers.
Minimal training is required for recognizing regions of the retina that
will need to be imaged for diagnostic purposes.
The Joslin Vision Network system can affect patient access,
compliance, education and motivation using the Department of Veterans
Affairs test bed sites. The objectives are to establish Joslin Vision
Network remote imaging stations at these sites and to implement and
evaluate services aimed at addressing concerns regarding patient access
across geographic and cultural barriers, cost effectiveness of the
service, establishing and assessing health professional and patient
education programs specifically with respect to behavioral, compliance
and motivational issues.
Using the Joslin Vision Network, all veterans can be screened for
diabetes at the test sites. Diabetes detection will be performed using
a methodology that does not involve drawing blood or taking urine
samples, which was developed by Joslin and is currently being
commercially produced by Spectra, an Atlanta based medical
instrumentation company. The system provides a rapid assessment of
diabetes without the need for a blood sample to be obtained and results
from initial studies have shown that as a screening device for diabetes
this system provides as good or better sensitivity than a fasting
plasma glucose measurement.
Diabetes care will be available using the Joslin Vision Network and
the Diabetes Outpatient Intensive Treatment program developed at Joslin
Diabetes Center. We have had experience at Joslin in applying a new
approach toward patients with diabetes. From the beginning, this
approach focused on two major areas: improving clinical outcomes and
doing so in a practical, resource-efficient manner. Our clinical
outcome goals were improved metabolic control (and thus fewer long-term
complications) and reduced patient stress from having to take care of
their diabetes. The program was focused on individual flexibility and
was developed in a way to be more efficient in utilization of both the
patient resources and the health care resources. Rather than have the
continued intensive involvement of health care providers throughout a
patient's lifetime, we put the patient through a short (but intensive)
course of training which not only leads to an immediate improvement in
their metabolic control, but gives them the foundation to take care of
themselves in the future. We are also able to reduce the patient's
diabetes-related stress. Training the patients to care for their own
diabetes, seeking other input when they need it, is more appealing to
the patient, more efficient in use of resources in the long-term, and
produces good results.
The Joslin Vision Network provides the technology structure and
program for the Joslin Diabetes Eye Health Care Model and the Joslin
Diabetes Outpatient Intensive Treatment program so that people with
diabetes can closely monitor their disease and appropriately trained
medical personnel can provide timely treatment to better control of
glycemia, hypertension and cholesterol to alleviate and eliminate life
threatening complications.
The two proposed pilot programs would be expected to demonstrate
significantly improved detection, prevention and care techniques for
diabetes patients incorporated within the Department of Veterans
Affairs medicare/health arena, resulting in reduced costs, improved
patient access and quality of life and increased personnel
productivity.
Thank you for this opportunity to testify. We would be pleased to
answer any questions you might have.
______
Prepared Statement of the American Heart Association
The non-profit American Heart Association, powered by 4.2 million
volunteers in virtually every community throughout the nation, is
alarmed that the federal government, through its Department of Veterans
Affairs Medical and Prosthetic Research program, is not devoting
sufficient resources for medical research on America's No. 1 killer--
heart disease--and on America's No. 3 killer and leading cause of
permanent disability--stroke.
More than 57 million Americans of all ages suffer from heart
attack, stroke and other cardiovascular diseases. The absolute number
of Americans with heart disease and stroke is expected to increase
dramatically with the aging of the ``baby boomer'' generation. While
heart disease and stroke occur at all ages, they are most common in
Americans over age 65--an age group that is now about 13 percent of the
U.S. population and will be 20 percent by year 2010. By the year 2010,
the percentage of veterans over 65 years of age will be about three
times that of the general population or 42.5 percent of the veteran
population. The VA's planning models recognize that its aging patient
population demands more care. More than 4.49 million or 16.4 percent of
the veterans population reported suffering from ``heart trouble'' in
the 1992 National Survey of Veterans.
Heart attack, stroke and other cardiovascular diseases often begin
in childhood and progress through mid-life. Thus, research efforts must
be targeted at populations of all ages.
Thanks to advances that already have occurred in defining and
countering risk factors for heart disease and stroke and in the
treatment of these and other cardiovascular disease, more Americans are
surviving heart attack and ``brain attack'' (stroke), and in many cases
are developing these diseases at later ages than did their parents or
grandparents. Due to these accomplishments made possible by previous
investment of funds for research by the federal government and the
American Heart Association, heart disease and stroke have evolved into
chronic--or long-term--health problems much like diabetes and
arthritis. No longer does a heart attack or stroke necessarily mean
immediate death. But, they usually can mean long-term disability,
requiring costly medical attention, and loss of productivity and
quality of life. Over the last 20 years there has been a dramatic
increase in the indicators of prevalence of heart disease and stroke.
This situation will worsen in the 21st century.
Cardiovascular diseases already are a staggering burden to our
nation's health care system consuming about 1 out of 6 health care
dollars, with a price tag in medical expenses and lost productivity of
$259 billion per year. No other disease costs this nation so much
money, and the amount is expected to increase dramatically with the
growth of the senior citizen population and as a consequence of the
relatively recent trends in all ages of our population--but
particularly in the young--of smoking, obesity and physical inactivity,
which are among the several risk factors for heart disease and stroke.
The American Heart Association challenges our government to invest
additional funds in cardiovascular disease research. Our government's
response to this challenge will help define the health and well-being
of citizens in the next century. We have a choice between
--a nation of physically and mentally healthy veterans and other
citizens, capable of enjoying an active, productive life,
living as independently as they wish late into their lives; or
--a population of frail elderly veterans and other citizens, disabled
by stroke and congestive heart failure the latter too often the
end-result of heart disease.
The AHA places its major emphasis on research. Since 1949 the AHA
has invested almost $1.5 billion in research to increase knowledge
about heart attack, stroke and other cardiovascular diseases. More than
31 percent of the AMA's fiscal year 1995-1996 expenditures support
biomedical research.
Our ability to combat heart attack, stroke and other cardiovascular
diseases correlates directly with the level and quality of overall
support for basic and clinical research and prevention efforts.
Although the AHA will continue to commit increased resources toward
research, larger efforts by the federal government are essential to win
the battle against cardiovascular diseases. A significant increase in
funding for federal biomedical research is critical for continued
progress.
The Department of Veterans Affairs Medical and Prosthetic Research
program plays an important role in cardiovascular research and deserves
the strong support of Congress. In fiscal year 1996, VA support for
research on heart disease was $21.1 million (a 4.4 percent reduction
from fiscal year 1995), accounting for 8.2 percent of the VA's
appropriated budget. VA-supported stroke research represented $2.4
million or 1 percent of the VA's appropriated budget. In addition to
its own program, the VA administers an additional $26.7 million in
heart research and $5.6 million in stroke research from outside
sources.
The mission of the VA Medical and Prosthetic Research program is to
``discover knowledge and create innovations to advance the health and
care of veterans and the nation.'' While the primary purpose of the VA
health care system is the provision of quality health care to eligible
veterans, VA-supported research contributes to the quality of care by
bringing talented and dedicated physicians into the VA system.
Discoveries from VA-supported research benefit veterans, science and
the world's health. VA researchers include many nationally recognized,
distinguished scientists and several Nobel Laureates. Several VA
investigators have been acknowledged for their work in cardiovascular
research. In addition, VA-sponsored investigators provide core faculty
support at major medical schools affiliated with VA institutions.
The Medical Research component of the VA Medical and Prosthetic
Research program supports both basic and clinical research, primarily
investigator-initiated peer reviewed studies. This component provides
funds for support of VA-based faculty members (M.D.'s or Ph.D.'s) at
various stages in their careers, multicenter cooperative studies--a
large portion of which are cardiovascular studies--and research
equipment. The presence of a VA research program aids the VA. This
small, but internationally recognized, highly competitive research
program in 1996 directly supported 2,130 investigators with
appropriated funds at about 123 VA centers nationwide.
VA cardiovascular research is largely clinical in nature. The VA is
a major contributor to this nation's clinical research, playing a
unique role in the research community because of its ability to
immediately translate research findings into clinical practice.
VA-supported research has produced landmark results and
revolutionized treatment in the cardiovascular area in the last decade.
Research results from selected studies show that:
--low doses of the blood thinner warfarin can lower the risk of
stroke by about 80 percent in patients suffering from an
irregular heartbeat;
--carotid endarterectomy, a surgical treatment to remove fat deposits
in a major artery in the neck supplying blood to the brain, can
prevent stroke in patients with a blocked carotid artery;
--blood pressure lowering medication is beneficial for older patients
with high blood pressure, the most prevalent cardiovascular
disease and the leading risk factor for heart attack, stroke,
congestive heart failure and kidney failure;
--physicians can adapt blood pressure lowering medication to fit
individual patient profiles;
--heart medication works just as effectively as coronary artery
bypass surgery for most patients with blocked arteries;
--aspirin cuts deaths and heart attacks by 50 percent in patients
suffering from unstable angina (chest pain);
--patients, after undergoing angioplasty to widen narrowed arteries
to the heart, suffer less pain and can exercise more than those
taking only medication;
--heart medication can enhance the heart's pumping ability and keep
sufferers of congestive heart failure alive;
--mechanical heart replacement valves bleed more in patients but last
longer than those from animals; and
--noninvasive treatment of non-Q-wave heart attack survivors is just
as effective or in some cases better than invasive procedures
such as bypass surgery and angioplasty. Higher death rates for
victims were associated with invasive procedures. Of the
estimated 1.5 million Americans suffering from heart attack
each year, an estimated 750,000 experience the non-Q-wave--EKG
classification--version.
Examples of on-going VA Medical Research-funded cardiovascular
studies include:
--determination of whether the addition of beta-blockers to standard
treatment reduces deaths and enhances health and quality of
life of patients with heart failure. A substudy is creating a
large DNA bank of sufferers to examine the genetic basis of
heart failure. Still another study, the first big scale,
international, randomized clinical trial of digitalis, is
evaluating the effects of this 200-year old treatment in
preventing deaths from heart failure, the leading cause of
hospitalization of Americans age 65 and older. Heart failure
represented more than 22,000 VA hospital discharges in 1990 at
an estimated cost of $100 million.
--assessment of the most cost-effective way to diagnose and treat
suspected heart attack victims without the use of costly
invasive procedures.
--research to evaluate the best therapy for patients with low HDL or
``good'' cholesterol, desirable LDL or ``bad'' cholesterol and
high levels of triglycerides. Individuals with this type of
blood lipids profile are more susceptible to heart attack.
Incidence of stroke in these patients is also being examined;
--analysis of the effects of warfarin, a blood thinner, plus aspirin
versus aspirin alone in reducing death from heart attack;
--evaluation of concept that too much iron in the blood stream causes
atherosclerosis; and
--evaluation of efficacy of two promising drugs (amiodarone and
sotalol) in maintaining normal heart beat in 2 million
sufferers of atrial fibrillation, a totally irregular heart
beat, that is a known risk factor for stroke.
The number of VA research applications has grown slightly over the
last five years, but funding cuts and/or inflationary increases
severely restrict support for approved applications. For the programs
which were reviewed for fiscal year 1997 funding, 20 percent of
approved applications were funded. Ten years ago, 50 percent of the
approved applications were funded.
Total dollars appropriated for the Department of Veterans Affairs
Medical and Prosthetic Research program have increased $69.3 million
since 1985 at an average annual rate of 2.8 percent; however, there has
been a decrease in terms of constant ``1985 dollars'' of $60 million.
The President's fiscal year 1998 budget of $234.4 million for the
VA Medical and Prosthetic Research program is a 10.5 percent or $27
million cut from the fiscal year 1997 appropriation. The President's
budget represents a 14 percent cut when adjusted for biomedical
research inflation. The VA's ability to fund new initiatives and other
important medical research projects would be severely jeopardized by
the funding cut proposed by the President.
Enactment of the President's request would require deep
modifications and severe cuts in the VA Medical and Prosthetic Research
program. Under the President's budget, no new Career Development Awards
would be initiated for the third year in a row. The VA would be forced
to terminate ongoing programs scheduled for review and renewal and may
have to cancel programs approved in fiscal year 1997 to start in fiscal
year 1998. The total number of funded programs would fall from an
estimated 1,644 in 1997 to 1,469--an 11 percent or 175 program
reduction by the end of fiscal year 1998. From 1992 there will be a
reduction of more than 930 research programs, an approximate 39 percent
cut because budgets have not kept pace with current services. The VA
research program would lose 407 FTE.
The Medical Research programs highlighted below would be
jeopardized.
--Investigator-Initiated Studies.--During fiscal year 1997 this
program will constitute 70 percent of the Medical and
Prosthetic Research appropriated budget and will support an
estimated 1,550 investigators. Under the President's 1998
budget, this program would be cut 16 percent from the fiscal
year 1997 appropriated level. This proposed budget will result
in a loss of 175 programs. These investigators comprise the
core of all VA research and provide the preceptorship for
career development awardees.
--Cooperative Studies.--In fiscal year 1997 this program supports 37
clinical trials. The VA offers a unique opportunity for
cooperative studies due to close linkage among hospitals. These
studies provide a mechanism by which research on the
effectiveness of diagnostic or therapeutic techniques can
achieve statistically significant results by pooling data on
patients from a number of VA hospitals. Proposals developed by
teams of VA clinicians and biostatisticians are evaluated by
the Cooperative Studies Evaluation Committee. Many landmark
clinical trials in the cardiovascular field (e.g., studies in
high blood pressure treatment and coronary artery bypass
surgery) have been supported by the VA under this mechanism.
Under the President's fiscal year 1998 budget, this program
would receive a $500,000 million decrease from the fiscal year
1997 appropriation. Two planned heart-related cooperative
studies--comparison of medical treatment versus surgical
methods and evaluation of outpatient surgery as opposed to
hospital surgery of victims of heart disease--would not be
funded.
--Career Development Awards.--Applications for these awards are
reviewed both locally and by the VA Central Office. This
program has experienced a decrease in the number of awards by
200 percent over the past 5 years. The President's budget
recommends a ten percent decrease in this program from the
fiscal year 1997 appropriation. For the third year in a row,
there will be no new awards. The Research Realignment Advisory
Committee-suggested rejuvenation of this program will
indefinitely be postponed.
These proposed funding levels are short-sighted because of their
negative impact on the entire VA Medical and Prosthetic Research
program. Moreover, VA cardiovascular research represents an integral
part of the overall scientific effort in this field. The AHA is keenly
aware of the need for fiscal restraint, but more importantly, we are
concerned about the potential negative long-range effects on this
nation's health if biomedical research programs do not receive
resources for significant growth.
Today's investment in biomedical research will lead to future
returns, including continued decreases in death rates from heart
attack, stroke and other cardiovascular diseases, reduced federal
outlays for hospital and long-term care expenses, a well-trained cadre
of biomedical researchers and a more healthy and productive society.
The American Heart Association recommends a fiscal year 1998
appropriation of $280 million for the VA Medical and Prosthetic
Research program. Our recommendation, consistent with that of the
Friends of VA Medical Care and Health Research, is based on a current
services budget for fiscal year 1998 and a small amount for new
initiatives and to recruit new VA physician researchers. A fiscal year
1998 appropriation of $280 million for this program would continue
current research momentum in cardiovascular diseases within the VA and
help to maintain the VA's vital role in the overall scientific effort
in this field.
______
Prepared Statement of Jay Lane, Director, Program Planning and
Development, Laconia Housing and Redevelopment Authority
THE CONGREGATE HOUSING SERVICES PROGRAM
For the record, my name is Jay Lane. I am Director of Program
Planning and Development for the Laconia Housing and Redevelopment
Authority, Laconia, New Hampshire. For over 15 years, I have
participated in the development and operation of eleven CHSP's in the
State of New Hampshire. I also serve as a professional consultant,
providing technical assistance to public and private housing agencies
that are developing CHSP and other alternative housing programs. I am
the publisher of the ``Congregate Report,'' a national newsletter that
provides information and advice on funding and other issues related to
Congregate Housing and Supportive Services for frail elderly.
In my testimony, I will discuss CHSP's history and the people it
serves. I will provide an opinion on the potential problems that may
occur in the event that future funding for CHSP is eliminated. I will
introduce evidence that CHSP is cost-effective and provides an enhanced
quality-of-life by referencing independent evaluations that have been
conducted on CHSP programs, and, finally I will share the concerns
expressed by housing administrators when discussing the possible
elimination of CHSP.
History
Congress established the Congregate Housing Services Program [CHSP]
in 1978 with the goal of preventing the premature institutionalization
of elderly and handicapped residents of federally subsidized housing.
Through CHSP, supportive services and non-medical care would be
provided to residents of Public Housing that qualified for the Program.
Congress was intent on determining if the introduction of supportive
services would assist Public Housing Administrators deal with frail
elderly residents ``aging in place.'' The goal was to determine if a
supportive service program linked to the public housing subsidy program
could delay the premature institutionalization of frail elderly people
into nursing homes, and, if this program could have any impact on the
amount of money the federal government spends through its Medicaid and
Medicare Programs to provide nursing home care to low-income elderly
people.
People Currently being served by CHSP
Presently, over 3,200 public housing residents (frail elderly and
handicapped people) receive both housing assistance and supportive
services at 130 CHSP sites across the country. While CHSP may differ
from community to community, most programs offer basic services that
include meals, housekeeping, personal care, transportation, case
management and medical prevention programs. Public housing residents
qualify for the Program if they are deficient in at least three
activities of daily living [ADL]. Residents also pay for the services
they receive based on their income.
Evaluations Conducted on CHSP Revealed the Following
Despite efforts by Congress to determine if the original goals of
CHSP were being met, very few evaluations on the CHSP have been
conducted since its inception. HUD has commissioned two evaluations on
CHSP. The first evaluation was conducted on the original program in
1985. It provided the first conclusive evidence that CHSP kept people
from entering nursing homes and saved taxpayers thousands of dollars.
The second evaluation of CHSP remains on going.
While few evaluations have been conducted on CHSP, those that have
been done overwhelmingly agree that CHSP is both cost-effective and
provides a higher quality of life for its participants than nursing
homes. The following excerpts are from three different evaluations
conducted on different CHSP's:
Sylvia Sherwood, Ph.D.--Executive Summary of the Evaluation of CHSP
for the Department of HUD, April 1995:
--The CHSP is a cost-effective alternative to institutional care. All
research comparing congregate services to nursing home care
finds substantial savings for congregate services when
comparing costs for a typical person, over a specified period
of time. The most careful cost comparison study conservatively
estimates these savings to be $4,233-$5,880 per person per
year.
--CHSP's in-home services have been effective in preventing
unnecessary institutionalization.
--CHSP had substantial positive effects on the life satisfaction and
general sense of well being of its participants.
Richard Fortinski, Research Director, University of Southern
Maine--Evaluation of the Pariseau CHSP in Manchester, New Hampshire,
1987:
--Based on an analysis of the program's first 40 clients, the
researchers estimated that the State of New Hampshire would
have spent more than $201,000 on institutional care for the
CHSP participants during the first fifteen months of the
program. It was estimated that the State would have paid more
than twice as much per client month. Monthly costs were $745
per month for CHSP versus $2,097 for nursing home care.
--Our evaluation shows that existing formal services are enhanced by
participation in CHSP. CHSP actually provides important support
to families to permit them to continue family interaction.
Tamara Martin, Research Assistant, University of New Hampshire,
conducting an evaluation on The Tavern Program operated by the Laconia
Housing and Redevelopment Authority in 1997:
--Based on an analysis of the program's costs over the first twelve
months of operation it was determined that it costs $14,399 to
provide housing and supportive services to residents at the
Tavern Building versus $32,000 for nursing home placement in
one of the state nursing homes.
--The Tavern Program is offering a very high quality of life to a
population who would otherwise be in nursing homes.
Despite overwhelming evidence of the Program's success, CHSP is
targeted for elimination unless the Congress acts to provide additional
funding. The Program, currently funded through the United States
Department of Housing and Urban Development, is scheduled to be phased
out in 1998. New funding for the program has not been requested for
fiscal year 1998. HUD has informed public housing agencies operating
CHSP's, that existing five-year commitments will begin expiring in
August 1998 and that renewal of the program is not expected.
public housing administrators concerned over the elimination of chsp
Public Housing Administrators who work in agencies that sponsor
CHSP are concerned about what will happen to their residents if CHSP is
eliminated and supportive services end. Most agree that there are two
major problems, (1) where will people who participate in the Program
go? And, (2) what will happen to them if they stay? When CHSP ends, the
vast majority of the estimated 3,200 public housing residents that rely
on CHSP services to remain independent, will no longer be eligible to
reside in public housing because they cannot care for themselves. They
will need to move to nursing homes or other institutional settings.
[PHA Administrators wonder]--Suppose beds are not available at local
nursing homes, where will my residents go? Will I be forced to evict my
residents when they can no longer take care for themselves?
Across the country, thousands and thousand of people are placed in
nursing needlessly at great expense to taxpayers because we have not
developed Alternative Programs like CHSP. It has been well documented
that anywhere from one-third to two-third's of the people currently
residing in nursing homes in this country have the functional
capability of living in an independent setting if provided with
supportive services. In New Hampshire, the State Department of Adult
and Elderly Services commissioned a study in 1986 in which it was
determined that at a minimum, 10 percent of the people living in the
State's nursing homes could live in an alternative setting if provided
with necessary supportive services. The report further suggests that
through the development of Alternative Housing Programs, like CHSP,
thousands of taxpayer dollars could be saved.
As Congress searches for ways to better utilize its scarce Medicaid
and Medicare dollars, it makes no sense to eliminate the few
alternatives we've developed. Not only should we maintain programs like
CHSP, we should seek to expand them. CHSP has proven to be cost-
effective, while at the same time allowing people the opportunity to
live out their lives in dignity. It makes absolutely no sense to
eliminate funding of programs that are cost-effective and provide a
higher quality of life for society's most vulnerable citizens.
I cannot stress enough, if Congress does not refund CHSP, many of
the 3,200 people currently receiving services will no longer be
eligible to reside in public housing, because they cannot care for
themselves without the supportive services. Many will be required to
move immediately into nursing homes. If nursing home beds are not
available, housing administrators may be forced to undertake eviction
procedures for residents unable to care for themselves.
In closing, let me again point out that CHSP provides vital
supportive services for the most vulnerable people in this country. The
vast majority of people receiving services through CHSP would reside in
nursing homes if CHSP were not available. The difference in costs
between nursing homes and CHSP are two to one. In the State of New
Hampshire it costs $32,000 for nursing home care, while CHSP is
$14,399. I would suggest the costs are similar across the country.
Since every resident participating in CHSP is Medicaid eligible, the
longer we can maintain people in CHSP the more precious taxpayer
dollars we save.
I would like to thank you for allowing me the opportunity to
provide you with this testimony. It has been my pleasure to discuss
with you this very important program and I look forward to your
continued support. Please feel free to be in touch with me should you
require additional information on the Congregate Housing Services
Program or other alternative programs.
______
Prepared Statement of Sunia Zaterman, Executive Director, Council of
Large Public Housing Authorities (CLPHA), Washington, DC
The Council of Large Public Housing Authorities (CLPHA) thanks you
for inviting it to submit this written testimony. CLPHA represents the
65 large housing authorities shown on this testimony's face sheet. Our
members manage over a half million of the country's 1.3 million public
housing units, have assets ranging from 1,250 to 160,000 units, and
administer a major share of the section 8 tenant-based assistance
program.
THE PUBLIC HOUSING CRISIS
Our gravest crisis is in the public housing program. Starting with
the fiscal year 1995 rescissions, public housing has endured cuts among
the deepest in federal government. Development funds have been both
zeroed out and recaptured; modernization levels have dropped one-third
from the original fiscal year 1995 appropriation; operating subsidy
shortfalls have been severe--a combined loss of one billion dollars for
fiscal year 1997 and fiscal year 1998, should the HUD request be
accepted, and a total drop of $5.3 billion from fiscal year 1993 to
2002, assuming a hard freeze from now on. Revenue losses will worsen as
the result of welfare and SSI changes. CLPHA estimates a rent loss of
$500 million annually from the welfare changes alone. In Wisconsin, a
waiver state, a year into the end of welfare entitlement, the Milwaukee
Housing Authority estimates that rent losses will be $100,000 in the
year that ends December 31, 1997. Its reduced rents from the impact of
SSI changes upon legal immigrants and upon disabled children will be
even greater--almost $200,000.
Despite these huge structural deficits, PHA's are still required to
run the same program, suffer the same regulations, and serve the same
extremely poor households as heretofore. We have become a massive
unfunded mandate.
MAJOR CHANGES NEEDED
Mr. Chairman, we greatly appreciate your response to the failure of
the authorizing committees to change the rules of the game last year.
Your willingness to provide relief has helped, especially in setting
ceiling and minimum rents and in removing derelict properties. However,
many PHA's have been reluctant to undertake the far-reaching and
complex move to local preferences without permanent authorization,
which we hope will happen this year.
hud requests for fiscal year 1998 are woefully inadequate
HUD's request for operating subsidies is a half-billion dollars
under the $3.4 billion required by the Housing Act's Performance
Funding System (PFS). For the Committee's convenience, there is
attached hereto a comparison and analysis of the HUD request and
CLPHA's calculation which points up the discrepancy. The differences
lie mainly in HUD's claim of savings from an unimplemented and largely
non-existent income matching system, overestimation of savings gained
from units to be demolished, underestimation of replacements, and
understatement of inflation.
Congress has long dictated that the poorest of the poor should be
housed in PHA's. We have done that--our residents' average annual
income is a paltry $5,850. The rents they pay--capped at 30 percent of
adjusted income--cover only 40 percent of a PHA's operating costs. The
federal promise, through the PFS, is to provide an operating subsidy
that covers the gap between the low rents and the operating costs of a
well-run PHA. HUD's request of $2.9 billion does not come close to
keeping that promise. It is short a record $500 million. The impact of
that shortfall falls on a PHA's budget for maintaining the properties
and the grounds, collecting the rents, providing security, and re-
renting vacant units; the utilities must be paid. To accept HUD's
figure is to inflict those consequences on the residents.
PHA's are told that it is difficult to meet the PFS funding
requirements because operating subsidies are a ``high outlayer.'' This
label means little to our members: it is the nature of a rental subsidy
program for the money to be spent currently. The statutory income
targets and the rent cap are not suspended when being a ``high-
outlayer'' becomes a problem. Operating subsidies do not spend money
more quickly, for example, than the subsidies to private owners for
existing section 8 units. The notion of ``outlay rate'' and ``budget
authority'' are not meaningful, we suggest, when applied to contract-
type subsidy programs, such as operating subsidies and section 8. (If
``outlay rates'' are the obstacle, then the Committee might wish to
increase our slower-outlay capital funds.) The other inequity in
shorting the operating subsidy is that private landlords with section 8
contracts do not suffer subsidy cuts as their tenants' incomes fall;
they always get 100 percent of the contract rent.
The Committee should also disregard HUD's proposal to cut section 8
administrative fees further. We have already suffered the two-step cut
of a reduced percentage and a reduced base. Many authorities use their
administrative fees to help make up for the reduced operating
subsidies.
HUD'S REQUEST FOR MODERNIZATION IS A RECORD LOW
Major HUD studies and the National Commission on Severely
Distressed Public Housing call for annual funding of $4.5 billion to
revitalize and to rehabilitate the public housing stock to current
standards, and to cover normal depreciation. Aside from HOPE VI, HUD
purports to propose only $2.5 billion for ``public housing capital,''
basically: the modernization program. Its request is misleading because
$100 million is set aside for non-capital, non-rehabilitation items:
$50 million for ``Economic Development & Supportive Services,'' $45
million for ``Technical Assistance,'' and $5 million for the ``Tenant
Opportunity Program''--leaving $2.4 billion for building
rehabilitation. This is the lowest level since fiscal year 1989, is
almost $2 billion below that called for by the National Commission on
Severely Distressed Public Housing, and is little more than the $1.7
billion that HUD experts say is needed annually to meet the costs of
normal depreciation. Before the fiscal year 1995 rescissions, when
formula funding was in full swing, the public housing stock was
improving rapidly. Let that momentum be restored--especially now when
we seek to market to families with a broader range of incomes.
The Committee should also seek clear plans on how HUD plans to
spend $45 million in technical assistance. We have not seen any sign of
strategic use of such monies or measurement of outcomes.
MODERNIZATION FUNDS ARE USED PROMPTLY AND EFFECTIVELY
The General Accounting Office's recent testimony here on ``HUD's
Fiscal Year 1998 Budget Request: Some Requests for Funding May Be
Unnecessary'' observed that despite PHA's having reduced uncommitted
modernization funds by over 30 percent, approximately $925 million has
been in the hands of PHA's for more than two years without being
committed to use. Of this amount, one-quarter was with three
notoriously troubled PHA's: the District of Columbia, New Orleans, and
San Francisco. The DC Housing Authority is now under an able receiver
who is spending the backlog apace after years of incompetence; San
Francisco and New Orleans are in HUD's hands. HUD under its regulations
can recover and redistribute dormant mod funds from any PHA. All mod
funds must be obligated by the PHA within two years of HUD's approval
of the mod plan and expended within three years of such approval: 24
C.F.R. Sec. 968.125. Mod-troubled PHA's suffer a partial withholding of
funds followed by a phaseout: Section 14(k) of the Housing Act of 1937.
HUD can always seek the appointment of a receiver to carry out a
troubled PHA's mod program. CLPHA has long urged HUD to use these
powers but with little success. Effective PHA's and their residents
should not be punished by reduced mod funding, because of the failures
of the few and of HUD.
SUPPORTIVE SERVICES SHOULD NOT BE FUNDED FROM MODERNIZATION; DEFINITION
NEEDED
Supportive services should be funded from the Community Development
Block Grant Program as heretofore, and not newly from the underfunded
``capital account.'' See, VA, HUD and Independent Agencies
Appropriations Acts, 1996 and 1997. CDBG has not suffered any funding
cuts. Moreover, supportive services grants are not confined to PHA's
nor to PHA residents, but may be granted to ``nonprofit corporations,
and other appropriate entities * * * '' and may be used for other than
residents of public housing. See, for example, Public Law 104-204, 110
Stat. 2887 (1996). CLPHA also urges the Committee to make clear that
funding to a non-PHA for work with a PHA's residents should be done in
collaboration with the PHA to avoid duplication and misuse of the
funds.
Please clarify the purposes for which these funds can be used. The
language of the Appropriations Acts, no doubt induced by HUD, allows a
hodgepodge that worsens at the Notice of Funding Availability (NOFA)
stage. Neither PHA's nor HUD belong in the panoply of social and
entrepreneurial activities littered across the Department's fiscal year
1997 NOFA for these funds. See, 61 Federal Register 42356 (Aug. 14,
1996). A portion of the setaside is transformed into the ``Economic
Development and Supportive Services Program,'' which HUD's proposed
1997 authorizing bill makes into a new program. Other portions are set
aside for ``Bridges to Work,'' ``Neighborhood Network,'' ``Resident
Initiatives'' and ``Family Self-Sufficiency,'' programs of questionable
authorization parentage. Finally, partnerships should not be a
condition for funding.
CLPHA recommends statutory earmarks of these funds for the elderly
and disabled in the form of service coordinators, pursuant to section
507 of the National Affordable Housing Act, Public Law 101-625, and
section 673 of the Housing and Community Development Act of 1992,
Public Law 102-550, and Congregate Housing Services, and for families
in the form of service coordinators, including job training
coordinators, and basic education and work readiness training. HUD
should be instructed to drop its unauthorized requirement that
supportive services can be funded only if ``new or significantly
expanded.'' Many are struggling to maintain their successful ongoing
programs, rather than invent something for grantsmanship.
Service coordinators for the elderly and disabled can be very
helpful at many PHA's with mixed populations. Mixed populations of
elderly and non-elderly disabled are sustainable only through the use
of service coordinators. Fear and tension between the two groups can be
decreased and coexistence made possible. The confidence of the elderly
community and its supporters can be regained and the lives of both
populations enhanced. We urge that a significant portion of supportive
service funds be targeted for such coordinators.
We appreciate the Chairman's constant efforts to get HUD to make
the designation of buildings exclusively for senior citizens feasible.
We regret that HUD's budget doesn't request section 8 units, as in the
past, to enable nonelderly disabled persons to move from elderly
buildings or to be able to avoid moving into them in the first place.
Certificates/vouchers give the nonelderly disabled an opportunity to
live in the broader community; please continue this setaside.
phdep and supportive services funding should be increased
The Public Housing Drug Elimination Program (PHDEP) has enabled
PHA's to leverage helpful services for their residents ranging from
more security to networks of crime preventing Boys and Girls Clubs.
Please increase funding for these worthy programs to $350 million
for PHDEP and to $75 million for Supportive Services. We ask that an
allocation of 85 percent of the PHDEP funds go to PHA's with 500 or
more units on a per unit basis. The first nationwide survey of tenants
in public housing, by the Research Triangle Initiative in 1995, found
that residents in the large authorities--1,250+ units--suffered at that
or a greater percentage of the study's crime indicia when measured
against the residents of the four smaller classes of PHA's, each of
which was dramatically less. Although this share would reduce the
current per unit funding of many large PHA's--to the benefit of
smaller, less crime-beset agencies--large PHA's are willing to accept
this ``discount'' to gain: predictability, opportunity to plan,
continuity for the residents, and enhanced recruitment of capable
staff. The present system of annual grantsmanship undercuts good
program performance.
Please head off HUD's reported intent to limit the percentage of a
PHDEP grant that can be used for law enforcement and to prescribe a
percentage that must be used for work-related efforts. PHDEP funds are
effectively used now for the purposes Congress intended--to defeat drug
and alcohol abuse. Sometimes HUD should learn to leave well enough
alone. We request Report language on this point.
hope vi funds should be limited to original revitalization goal
The promise of HOPE VI--of social and physical revitalization--is
being fulfilled. Milwaukee's Hillside development (one of the first
HOPE VI sites to be reoccupied) is a wonderful example: a pariah
project is now eagerly applied for; the neighborhood has been
rejuvenated; now one-third reoccupied, residents reporting wages as
their principal source of income have increased 34 percent. The
combination of capital for reconstruction and funds for support
services to residents has been the secret of this success. Now, HUD
seeks in its fiscal year 1998 request, and in its proposed
authorization bill, to use HOPE VI (a) to fund applications for
demolition only, unconnected to revitalization--an activity which
should be carried out under the modernization (now ``capital'')
account; and (b) to use HOPE VI capital for section 8 tenant-based
assistance for relocation--an activity traditionally carried out under
the section 8 account. There is a ``bait and switch'' aspect to this:
Congress appropriates funds narrowly focused on the capital needs for
major reconstruction of the most distressed projects and HUD then
bootlegs other activities under the popular HOPE VI account. CLPHA
requests $500 million for HOPE VI--for revitalization capital and
supportive services only.
CONCLUSION
Please recognize that no system serving 3.4 million persons--all
poor, many frail elderly, many mentally and physically disabled, many
children--housed in over 13,000 individual developments with 1.4
million apartments, often in difficult locations, can survive the cuts
imposed on public housing. CLPHA members seek only to fulfill the
responsibility that we share with the federal government to shelter
decently the country's most vulnerable people--not to launch new
activities with future funding obligations. We want to prevent a $90
billion public asset from wasting. Thank you for whatever help you can
give us; please consider our predicament and that of those whom we
serve.
______
The Performance Funding System: CLPHA's Operating Subsidies Projections
for Fiscal Year 1998
In early February, HUD announced its budget request for fiscal year
1998. The budget calls for $2.9 billion for public housing operating
subsidies for non-Indian housing authorities. This request corresponds
to 93 percent of HUD's own estimates of operating subsidies needs for
fiscal year 1998. CLPHA estimates that these HUD projections are
significantly below the basic needs of public housing. According to
CLPHA's calculations, the PFS calls for $3.4 billion in operating
subsidies, making the HUD request only 85 percent of PFS. A worksheet
summarizing the estimates is attached.
The major differences between HUD's and CLPHA's estimates are in
two areas: the projection of tenant income and the number of units.
Other differences are influenced by these two estimates. Also, HUD is
expecting the inflation factor to be 3.4 percent in 1998, while CLPHA
projects slightly over 4 percent.
TENANT INCOME
HUD expects tenant income to increase by $88 million and income
matching to generate an additional $49 million in 1998. We believe that
these assumptions are not realistic and may not materialize. HUD may be
trying to correct a deficiency on one hand while adding another
deficiency of the same nature on the other hand. In the past, HUD used
to require housing authorities to automatically budget for a 3 percent
increase in rental income. However, these increases never materialized
and HUD was forced each year to budget for an adjustment. Last year
this requirement was suspended. HUD may be banking too early on the
potential positive effect of welfare and housing reforms.
number of units
HUD in its budget estimates is accounting for units demolished in
fiscal year 1996 and to be demolished in fiscal year 1997. Although HUD
is correctly accounting for the phasing out of these units, we do not
believe that the pace or the magnitude will be as projected by HUD.
Also, CLPHA does not believe that the demolition of units will or
should automatically translate into reduction in operating subsidies.
The correct accounting for the number of units is crucial in the
determination of operating subsidies for it affects the budgeting for
costs and revenues.
THE PERFORMANCE FUNDING SYSTEM: OPERATING SUBSIDIES NEEDS PROJECTIONS
FOR FEDERAL FISCAL YEAR 1998
[Dollars in millions]
------------------------------------------------------------------------
No IHAS in 1998 HUD CLPHA
------------------------------------------------------------------------
Components of PFS base:
Allowable expense level (AEL)..... $3,865.273 $4,014.333
IPA audits and other expenses..... 8.583 8.913
Add-ons for FICA/UNEC............. 18.980 19.712
Utilities......................... 1,179.662 1,216.682
Utility adjustments--rate......... 17.422 17.422
Less: income...................... (1,970.998) (2,032.852)
---------------------------------
Subtotal PFS base............... 3,118.922 3,244.210
Add:
Non-PFS projects.................. 114.955 120.124
Energy incentives per 1987 HCD Act 3.000 3.000
Miscellaneous adjustments......... ............... ...............
Non-dwelling units................ 1.796 1.809
Family self-sufficiency program... 3.908 3.935
Unit configurations............... 5.965 6.195
Transition funding for demolitions 19.038 19.171
Earned income exclusion........... 40.000 40.000
Less:
Utilities rolling base............ (43.700) (30.700)
Change tenant income.............. (88.000) ...............
Tenant income matching............ (49.000) ...............
---------------------------------
Subtotal requirements........... 3,126.884 3,407.744
=================================
Cumulative demolition savings in
requirements......................... (88.193) ...............
Amount available/request.............. 2,900.000 2,900.000
Shortfall............................. (226.884) (507.744)
Proration (percent)................... 93 85
------------------------------------------------------------------------
BACKGROUND AND ASSUMPTIONS
In 1975 pursuant to Section 9(a) of the 1937 Housing Act, HUD
implemented the Performance Funding System (PFS) to determine the
amount of operating subsidy to be paid to most housing authorities. The
PFS serves two purposes: it is used to determine each PHA's share of
the total operating subsidy funds appropriated by Congress each year;
and provides a reliable means of estimating the annual aggregate
operating subsidy of PHA's which serves as the basis for requesting
annual appropriations from Congress.
Under the PFS, subsidy levels are tied to the cost of operating a
prototype well managed project, taking into account the characteristics
and location of the project and the characteristics of the tenants. The
subsidy amount is computed as the difference between the PHA's
projected expenses and its projected operating income. The operating
subsidy is generally approved prior to the beginning of a PHA fiscal
year. After the end of each fiscal year, certain adjustments of
operating subsidy eligibility are required based on actual experience
during the year.
The total allowable expenses under PFS are comprised of an
Allowable Expense Level (AEL) for non-utility costs, a separate
Allowable Utilities Expense Level (AUEL), and several other costs.
The AEL inflation.--The AEL inflation factor will be equal about
4.12 percent. In recent years, HUD has used a rate between 2.7 percent
and 3.6 percent.
The first step in determining a PHA's operating subsidy allocation
is to compute the base year expense level. In subsequent years, the AEL
is increased by 0.5 percent (the delta which represents regional cost
variations), adjusted for changes in the number of units in excess of 5
percent or 1,000, whichever is less, and adjusted for the local
inflation factor.
(a) The Delta.--A Delta of 0.5 percent was used in this projection.
Normally, The delta varies from region to region and is reflected in
each housing authority's budget submission. However, at the national
level, a single delta is used. In recent years the value of the delta
has been consistently set at 0.5 percent.
(b) The Inflation factor.--The inflation factor used to annually
adjust the AEL for anticipated increases in non-utility expenses is a
composite of two separate indices. The first which has a weight of 60
percent is in the composite index is derived annually from data
collected in a survey of state and local government wage and rates
conducted each fall by the bureau of census. The basic rational behind
the use of this measure is that PHA's as public agencies should be
given adequate funds to provide wage increases to their employees,
which keep pace with those of other public employees in their
communities. In this projection, this value is taken to be equal to the
projected growth from 1987 to 1988 in wages and salaries as predicted
by the Office of Management and Budget (OMB).\1\ This value is equal to
5.4 percent.
---------------------------------------------------------------------------
\1\ See attached.
---------------------------------------------------------------------------
The second index, which has a weight of 40 percent in the composite
index, is also derived annually from survey data The Bureau of Economic
Analysis samples the costs of goods and services purchased by state and
local governments and determines how much the costs have to be deflated
to be valued in constant dollars. The implicit price deflator is then
further modified for HUD in order to strip out the labor component of
the index and to estimate, what the index will be in the upcoming PFS
forward coming year. Unlike the index used for local government wage
rates, which varies from community to community, the implicit price
deflator is a single value which is used for all PHA's nationally. The
basic rationale for using the implicit price deflator is that it allows
compensation for increases in PHA non-labor expenses, which could be
rising at a higher or lower rate than local government wages.
OMB reports a prediction of 2.2 percent for the IPD for 1998.
The rationale behind the 60/40 weights in forming the composite
index is that approximately 60 percent of PHA non-utility costs are, on
the average, labor costs and 40 percent are goods and services.
AEL Inflation Factor (0.6*5.4+0.4*2.2)=4.12 percent
IPA Audits and Other Expenses.--Independent audits are intended to
determine whether a PHA's financial statements fairly present its
financial position and the effectiveness of its financial operations.
Additionally, an audit ensures that internal accounting and other
control systems exist to provide reasonable assurance that programs are
in compliance with applicable laws and regulations which may have a
material effect on its financial statements. PHA's receiving $25,000 or
more in operating subsidy are subject to an annual audit.
The estimate for the IPA audits is done by adjusting the previous
year's audit cost for inflation.
Add-Ons for FICA/UNEC.--In 1977 change in Social Security laws in
1977 periodically increases the amount of Social Security deductions
and, therefore, increases the employee benefit contributions expense
for PHA's whose employee are covered by Social Security (FICA).
Increases may be a result of changes in the contribution rate and/or
benefit base.
The estimate for the FICA audits is done by adjusting the previous
year's audit cost for inflation
The AUEL inflation factor used is 3.0 percent.--Utility expenses
are estimated at the beginning of a PHA fiscal year based on a 3 year
average consumption level and the use of current rates. After the end
of the PHA's fiscal year, an adjustment is made in order to: reflect
actual utility rates during the year; adjust estimated consumption to
resect the impact of weather on heating costs; and provide for a PHA
and HUD 50-50 sharing, of additional costs or savings resulting from
changes in consumption level.
PUBLIC HOUSING OPERATING SUBSIDY FUNDING SHORTFALLS (1993-2002)
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating subsidy need \1\.......................... $2,576,000,000 2,817,579,000 $2,933,867,000 $3,146,910,000 $3,347,291,000 $3,407,744,000 $3,548,143,053 3,694,326,547 $3,846,532,800 $4,005,009,952
Appropriation for operating subsidies............... 2,282,000,000 2,620,000,000 2,900,000,000 2,800,000,000 2,900,000,000 2,900,000,000 2,900,000,000 2,900,000,000 2,900,000,000 2,900,000,000
Annual funding gap.................................. 294,000,000 197,579,000 53,867,000 346,910,000 447,291,000 507,744,000 648,143,053 794,326,547 946,532,800 1,105,009,952
Cumulative funding gap............................. 294,000,000 491,579,000 545,446,000 892,356,000 1,339,647,000 1,847,391,000 2,495,534,053 3,289,860,599 4,236,393,400 5,341,403,351
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Operating subsidy needs do not include funding for employee benefits and funding for deductions in the 1990 NAHA. Projections for fiscal years 1998 to 2002 include a 4.2 percent inflation adjustment.
TABLE 2.--ECONOMIC ASSUMPTIONS \1\
[Calendar years; dollar amounts in billions]
----------------------------------------------------------------------------------------------------------------
Projections
Actual --------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002
----------------------------------------------------------------------------------------------------------------
Gross Domestic Product (GDP):
Levels, dollar amounts in billions:
Current dollars........................ 7,246 7,569 7,952 8,360 8,783 9,233 9,701 10,196
Real, chained (1992) dollars........... 6,739 6,888 7,050 7,214 7,381 7,552 7,725 7,905
Chained price index (1992=100), annual
average............................... 107.6 110.2 113.0 116.2 119.3 122.5 125.8 129.3
Percent change, fourth quarter over fourth
quarter:
Current dollar......................... 3.7 5.0 5.1 5.1 5.1 5.1 5.1 5.1
Real, chained (1992) dollars........... 1.3 2.6 2.3 2.3 2.3 2.3 2.3 2.3
Chained price index (1992=100)......... 2.6 2.5 2.7 2.7 2.7 2.7 2.7 2.7
Percent change year over year:
Current dollars........................ 4.5 4.5 5.1 5.1 5.1 5.1 5.1 5.1
Real, chained (1992) dollars........... 2.0 2.2 2.4 2.3 2.3 2.3 2.3 2.3
Chained price index (1992=100)......... 2.5 2.4 2.6 2.8 2.7 2.7 2.7 2.7
Incomes, billions of current dollars:
Personal income............................ 6,102 6,403 6,722 7,040 7,368 7,708 8,068 8,467
Wages and salaries......................... 3,424 3,588 3,797 4,003 4,214 4,429 4,653 4,894
Corporate profits before tax............... 601 652 697 724 764 815 848 880
Consumer Price Index (all urban): \2\
Level (1982-84=100), annual average........ 152.4 156.9 161.3 165.8 170.5 175.3 180.2 185.2
Percent change, fourth quarter over fourth
quarter................................... 2.7 3.2 2.8 2 8 2.8 2.8 2.8 2.8
Percent change year over year.............. 2.8 3.0 2.8 2.8 2.8 2.8 2.8 2.8
Unemployment rate, civilian, percent:
Fourth quarter level....................... 5.6 5.6 5.7 5.7 5.7 5.7 5.7 5.7
Annual average............................. 5.6 5.6 5.7 5.7 5.7 5.7 5.7 5.7
Federal pay raises, January, percent:
Military................................... 2.6 2.9 3.0 3.1 3.1 3.1 3.1 3.1
Civilian \3\............................... 2.0 2.0 3.0 ...... ...... ...... ...... .......
Interest rates, percent:
91-day Treasury bills \4\.................. 5.5 4.9 4.5 4.3 4.2 4.0 4.0 4.0
10-year Treasury notes..................... 6.6 6.2 5.6 5.2 5.0 5.0 5.0 5.0
Addendum: March Budget assumption for GDP
implicit price deflator, pre-revision basis
(1987 dollars): \5\ Percent change, year over
year 1.7 2.2 2.2 2.2 2.3 2.2 2.2 2.2
----------------------------------------------------------------------------------------------------------------
\1\ Based on information available as of June 1996.
\2\ CPI for all urban consumers. Two versions of the CPI are published. The index shown here is that currently
used, as required by law, in calculating automatic adjustments to individual income tax brackets. projections
reflect scheduled changes in methodology.
\3\ Percentages for 1995 and 1996 exclude locality pay adjustments. Percentages to be proposed for years after
1997 have not yet been determined.
\4\ Average rate (bank discount basis) on new issues within period.
\5\ Because the comprehensive revision to the National Income and Product Accounts (which include GDP price
measures) was delayed due to furloughs of Government employees, some budget estimates and their Mid-Session
Review updates were based, at least in part, on GDP measures on the pre-revision basis.
______
Prepared Statement of John Koelemij, Past President, National
Association of Home Builders
Mr. Chairman, Senator Kerry and Members of the Subcommittee: My
name is John Koelemij and I am a home builder from Tallahassee, Florida
and past President of the 190,000 member firms of the National
Association of Home Builders (NAHB). On behalf of NAHB, I thank you Mr.
Chairman, as well as other key members of the Subcommittee and of the
full Banking Committee, for your leadership and perseverance in
continuing to strive in order to achieve both a responsible as well as
equitable solution to the task before you with respect to the expiring
project-based Section 8 rental assistance contracts. I also want to
publicly thank and acknowledge our appreciation for the Subcommittee's
professional staff, both Republican and Democratic, for their
dedication, accessibility and their in depth knowledge of housing
programs. They serve you well.
Further, I thank you for the opportunity to appear here today to
comment on the ``Multifamily Assisted Housing Reform and Affordability
Act of 1997,'' S. 513. As the Chairman and Members of this Subcommittee
know all too well, project-based section 8 rental assistance contracts,
have begun to expire. Their numbers are estimated to be 1.3 million
units. Of this universe, approximately 900,000 are in structures with
mortgages insured by the Federal Housing Administration (FHA). An
additional 50,000 units, in about 1,700 projects, are financed by a
direct loan from the Rural Housing Service at the Department of
Agriculture. Other units are in projects financed by bonds through
various state housing finance agencies.
While some of these rental assistance contracts are co-terminus
with the terms of the mortgage, most are not. Consequently, if the
Section 8 rental assistance contracts are not renewed, these projects
are at serious risk of default and foreclosure. The practical effect of
Congress taking no action exposes a wide variety of stakeholders to
very serious consequences. These stakeholders include: the FHA
insurance fund, the Departments of Agriculture, HUD, and Treasury;
state bonding agencies; private lenders; a vast number of communities
and neighborhoods; owners and most importantly, the residents the
program is intended to serve.
Most owners of this valuable housing stock are dedicated to
providing good housing that is decent, safe, sanitary and affordable.
Residents depend on this rental housing for shelter and security. In
many neighborhoods, this housing serves as an anchor for the community.
These are very sound reasons, indeed, Mr. Chairman for taking actions
that will preserve this housing in the affordable housing stock,
minimize the risk of loss and likelihood of increased liabilities for
responsible owners, minimize the displacement and uncertainty for
current residents, and protect the physical asset that this housing
provides.
NAHB believes that Section 8 portfolio re-engineering should
contain certain elements essential to providing a responsible and
equitable solution. First, the formula should be clear, workable and
flexible, as a ``on one size fits all'' system simply will not work. S.
513 contains this essential element. The bill provides for new, lower
rents for projects based on rents for comparable unassisted properties
in the area, or, if no such measure is available, 90 percent of the HUD
fair market rent (FMR). Existing mortgages would be restructured to
provide a reduced new, or modified, first mortgage with lower debt
service, which along with operating costs, can be covered by the lower
rents. Funds to pay the difference between the old mortgage and the new
mortgage would come from the FHA insurance fund. In order to avoid
certain adverse tax consequences arising from the reduction of the
first mortgage, funds provided by FHA to reduce the first mortgage
would be repaid by the owner through a second mortgage. The lower rents
would result in lower rental subsidies from HUD.
Second, if the debt is to be restructured, the restructuring entity
should be a public body. Section 8 project-based rental assistance
involves the use of public funds. Only public bodies have the
accountability necessary for balancing social policy with the fiscal
policy in a responsible manner, while being accountable to taxpayers.
S. 513 embraces this element by maintaining an active role by public
entities for any reform of the Section 8 portfolio; namely the state
and local housing finance agencies (HFA's). NAHB strongly supports this
approach.
We recognize that not all public housing finance agencies possess
the ability to restructure the debt on properties that exceed market
value, nor to determine the actual market value. HFA's should,
nonetheless, remain in control of the process, while contracting out
certain functions to FHA approved mortgage lenders and other entities
that are qualified to deliver a responsible and workable approach. Re-
engineering, or financial restructuring, on over-market properties
should focus not only on reducing the cost to the government, but it
should also focus on protecting the physical asset along with
responsible owners and managers and the hundreds of thousands of
elderly, disabled, and other low-income families. S. 513 achieves this
goal.
Third, the rental assistance should remain as project-based.
Empowering residents by providing alternative housing choices is a
commendable concept and can be a useful tool. However, in this
instance, we are in most cases misleading the public, if not ourselves,
for there often exists no alternative housing. Instead, the goal should
be one of adequate protection for the joint needs of current residents,
the fiscal viability of responsibly owned and well-managed housing
projects, the overall cost to taxpayers, and the continuation of needed
affordable housing that serves as an important resource for the
community. S. 513 embraces this element.
Continuation of project-based assistance provides the highest level
of protection for current residents. For the elderly and the disabled,
tenant-based assistance does not offer choice, but rather uncertainty.
This is particularly true in tight housing markets in major urban areas
as well as in rural areas. ``Vouchering out'' project-based rental
assistance does, however, pose an increased risk to the continued
financial viability of an affordable housing resource. ``Vouchering-
out'' also places residents at greater risk that the government's
commitment to providing rental assistance can be reduced in overall
numbers with greater ease.
Further, NAHB is deeply concerned with the Administration's
proposal, which provides project-based assistance for the elderly and
the disabled, but not for housing occupied by families with children.
NAHB believes that it is important to preserve affordable housing for
the elderly and the disabled, as well as housing occupied by low- and
moderate-income families.
The fourth element is maintenance of FHA insurance. NAHB believes
FHA insurance should remain in place on those projects that have their
mortgage debt restructured. Without FHA insurance, many otherwise good
and fiscally sound housing projects will be unable to obtain long-term
financing at reasonable interest rates. S. 513 embraces this element.
The combination of project-based assistance, which is mandatory,
combined with the presence of FHA multifamily mortgage insurance on
one-year renewals of the rental assistance, increases the likelihood
that future renewals will be forthcoming.
The Administration's proposal potentially would subject literally
hundreds of thousands of residents to displacement as long-term
pressures on balancing the budget prevail over the more limited
resistance to renewing tenant-based assistance contracts. As existing
residents either move or cease to need assistance, the overall supply
can be more easily reduced by failure to re-issue the certificates or
vouchers. Further, in certain markets, projects will quickly become
destabilized as low-income residents receiving rental assistance move,
or exit the program, and no new assistance is provided for additional
families. If market rate renters can not be located or attracted to the
project, then they will go into default and foreclosure.
Fifth, responsible owners of this housing should be provided
adequate protection from the likelihood of unnecessary tax consequences
as a result of debt restructuring. If the federal government takes
actions to restructure the debt, it has the responsibility to protect
those stakeholders who would otherwise be penalized, albeit
unintentionally, as the result of these actions. While not containing a
tax solution through the Internal Revenue Code, S. 513 turns that
portion of the original debt that is above the market value into a
second mortgage. While this approach is far from perfect, it is
preferable to the tax consequences that would occur for many owners
without it. The Administration's proposal would increase an owners tax
liability beyond that which currently exists without debt restructuring
or sale of the property. It creates a preference for sale to certain
purchasers, by providing favorable tax treatment to sales to non-
profits, but no tax relief for sales to for profits, thereby reducing
the overall value of the properties. Also, the provision calls for
owners to relinquish the step up in basis at death. This would result
in a major change in what has been an integral part of tax law for
decades.
Sixth, restructured rents should be based on market comparables,
not HUD's fair market rents (FMR's), which often do no reflect the
current market. Further, rents can, and often do, vary widely
throughout a metropolitan area leaving the FMR far too low in more
costly sections of an area, while excessively high in other
neighborhoods.
Seventh, restructuring should not abrogate an owner's right to
prepay the existing mortgage. S. 513 embraces this element. Owners have
the option simply to prepay the current mortgage without participating
in the program. The Administration's proposal, on the other hand, does
not allow property owners a clean right to prepay their mortgage
obligation and seek other uses for their properties. It also would
require owners receiving many types of housing assistance to lease a
set amount of units to holders of tenant-based assistance, abrogating
contract rights of the owners.
With respect to the Section 515 rural direct loan program
administered by the Rural Housing Service (RHS) at the Department of
Agriculture, NAHB supports the Chairman's decision to renew these
Section 8 assistance contracts at current rents. Additionally, we would
support any efforts by this Subcommittee to ensure that when these
Section 8 contracts do expire, that they are renewed as Section 8
contracts, as opposed to transferring them to the RHS Section 521
rental assistance program until any rural restructuring proposals are
fully developed.
When I appeared before this Subcommittee a year ago, I offered our
support for last year's version of S. 513. This year, I again offer our
support for S. 513. It embraces not only the basic principles for
responsible housing policy, but also a clear, concise, and workable
formula that protects all stakeholders in the program.
We remain concerned, however, over the following three issues:
First, we strongly agree with the authors of S. 513 that the
restructuring entities must be public organizations. And, most of the
provisions in this legislation direct the restructuring to public
entities. Section 103(b)(3)(B), however, provides HUD with a ``back
door'' to contract with non-public entities, including Wall Street
investment bankers to conduct the restructuring. NAHB believes that
this back door approach, while admittedly a narrow opening, will,
nonetheless, allow HUD to involve firms with motivations to take these
properties from their current owners and displace their low- and
moderate-income residents. NAHB urges that this provision be stricken.
Second, NAHB believes that the bill should contain workable
``exception rent'' provisions. NAHB is aware of many projects,
particular in New York City, as well as many rural areas, where
comparable properties do not exist, and where operating costs are high
in comparison to HUD's FMR's. A substantial portion of these properties
serve seniors who need special services and facilities. It is
appropriate to shift to budget-based rents as ``exception rents'' when
the formula cap will not support operating costs without debt service
for these properties. However, the technique for establishing a higher
exception rent cap (120 percent of the FMR in S. 513) and annual limits
for use of exception rents (20 percent of expiring units) is not a
proper approach for controlling operating costs and simply will result
in the removal of hundreds of good projects from the affordable housing
stock. A HUD commissioned study by Earnst & Young indicates that market
rents would not cover operating expenses in 1,100 of the 8,400 projects
in the privately owned FHA-insured HUD-assisted portfolio. Many of
these worthwhile projects, particularly elevator structures for seniors
in rural areas, would have to be demolished because existing
residential market rents will not support operating costs and these
buildings cannot be converted to other uses.
NAHB urges that these limitations be removed from S. 513. In their
place, NAHB supports language to be added to Section 104(g)(2),
allowing Participating Administrative Entities (PAE's) to exceed
restructuring rent limits and utilize budget-based rent levels for
``exception projects'' where the PAE determines that the housing needs
of the tenants and the community cannot be addressed adequately through
restructuring.
Third, as discussed above, many projects are located in communities
where comparable properties do not exist, particularly in rural areas.
Comparable properties do exist, however in other communities of similar
size and characteristics and can be utilized by expanding the
definition of ``comparable properties'' to allow state certified
appraisers, pursuant to the standards of the Uniform Standards of
Professional Appraisal Practice, to locate and use actual comparables.
Thank you for considering our comments on this legislation of vital
importance to the industry.
I would be happy to respond to any question that Members may have.
______
Prepared Statement of the National Council of State Housing Agencies on
Behalf of the Nation's State Housing Finance Agencies
Chairman Bond, Senator Mikulski, and members of the Subcommittee,
thank you for this opportunity to submit testimony.
The National Council of State Housing Agencies (NCSHA) is a
national, nonprofit organization created in 1970 to assist its members
in advancing the interests of lower income and underserved people
through the financing, development, and preservation of affordable
housing. NCSHA's members are Housing Finance Agencies (HFA's) with
statewide authority. NCSHA's member agencies operate in every state and
the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Mr. Chairman, the state HFA's are very grateful for your
extraordinary support of affordable housing in this time of severe
budget austerity. You have consistently supported HFA's and worked to
enact sensible housing finance policy. The HFA's will continue to do
their very best to use these hard-won resources as efficiently,
effectively, and creatively as possible.
Though the HFA's administer the full range of affordable housing
programs--from homeownership to rental to all types of special needs
housing--our statement focuses on three HFA priority federal spending
programs: the HOME Investment Partnerships Program, Section 8, and the
Federal Housing Administration's (FHA) multifamily insurance programs,
particularly the HFA Risk-Sharing program.
REJECT THE ADMINISTRATION'S HOME FUNDING CUT
The HFA's vigorously oppose and urge you to reject the Clinton
Administration's proposal to cut the HOME program by five percent to
$1.309 billion in fiscal year 1998. As you know, HOME has produced
dramatic results over the years, giving many low income, working
American families a chance they otherwise would not have to live in
decent, affordable housing, to move toward self-sufficiency, and to
establish a stake in their communities. Since the program's inception,
the need for HOME funding has exceeded its supply, and states and
localities have been unable to meet the steadily increasing demand for
HOME funds.
The Administration claims that despite its success, HOME too must
contribute to deficit reduction. We assert that like affordable housing
programs generally, HOME has already contributed more than its fair
share. Congress cut HOME to $1.4 billion in 1994, and has not increased
it since, while inflation has cut its purchasing power 15 percent.
After correcting for contract renewal costs, the Administration
proposes to cut affordable housing programs by one percent between
fiscal year 1997 and fiscal year 1998, as compared with its proposed
increase of four percent in discretionary programs overall. Between
fiscal year 1997 and fiscal year 2002, the Administration proposes to
cut HUD's budget by five percent, while increasing the discretionary
budget by eight percent.
We hope you will find a way to increase HOME funding to meet its
growing demand, or at the very least to maintain HOME funding at its
current level of $1.4 billion.
NCSHA's member agencies administer the HOME program in 39 states
and territories and are responsible for over 70 percent of all state
HOME funds. That is nearly' $2.4 billion to date.
HOME works because Congress designed the program to allow states
and localities, not the federal government, to decide how best to
respond to their unique housing needs. HOME marks a bold step toward
decentralizing decisions about affordable housing help to the states
and localities. We must not reverse this progress by cutting its
funding.
Unlike bureaucratic, categorical programs, HOME can be used, and is
being used, at the option of states and localities, for a wide range of
activities to produce housing for every conceivable low income
population. HOME is funding housing for the elderly, the homeless,
people with disabilities, battered women with children, and families
with extremely low incomes. HOME is making homeowners out of public
housing residents and creating independent living opportunities for
people across the spectrum of special needs.
HOME funds have financed construction and rehabilitation of more
than 95,000 affordable apartments, helped over 55,000 families buy
their first home, assisted more than 46,000 to make needed home
repairs, and provided rental assistance to nearly 26,000 families.
The vast majority of HOME funds assist extremely low and very low
income families, whose incomes are well below the income limits
Congress has imposed on the program. For example, over 70 percent of
families who have received HOME funds to repair their homes have
incomes below 50 percent of their area's median. The same is true for
nearly one-third of those families who have purchased a home with the
help of HOME down payment, closing cost, or interest rate assistance.
Over 70 percent of families who have received HOME rental assistance
have incomes below 30 percent their area's median income, and more than
90 percent of HOME-financed apartments are rented by families with
incomes below 50 percent of the area's median income.
HOME also creates jobs, expands local tax bases, and stabilizes
communities. One dollar in HOME funds leverages nearly two more dollars
of investment in affordable housing.
Here are just a few of the success stories HOME has written in your
state and some of your Subcommittee members' states:
--In Missouri, for the first time, the Department of Mental Health is
working in cooperation with a community housing development
organization (CHDO) to use HOME funds to create a twelve unit
apartment complex for people with serious mental illness. One
hundred percent of the units will be rented to residents with
25 percent or less of median income.
--In Montana, a CHDO is using HOME funds to support infrastructure
costs involved in developing 22 units of single family housing
on land donated to a permanent land trust by the City of
Livingston. All homebuyers will have incomes ranging from 66 to
80 percent of median income.
--The Alaska Housing Finance Corporation (AHFC) used HOME funding to
develop a 15 unit disabled-accessible, affordable community in
Juneau, historically one the state's most difficult housing
markets. This region's limited utilities, expensive land costs,
and rugged terrain generate unusually high development costs.
The sponsor combined the HOME funds with a capital grant from
the City and Borough of Juneau and Low Income Housing Tax
Credits.
hfa's priority role in portfolio reengineering
Mr. Chairman, NCSHA commends you for co-sponsoring Senator Mack's
legislation (S. 513) which would address permanently the need for
restructuring FHA insured mortgages and renewing the thousands of
expiring Section 8 project-based contracts which support them. NCSHA is
committed to working closely with you, your staff, and the authorizing
committee to develop the best legislation possible to preserve the
federal government's multimillion dollar investment in this quality
affordable housing, protect the properties, their residents, and
communities, and respect the rights of states, owners, and investors,
without breaking the federal budget.
We also appreciate greatly your efforts to create the fiscal year
1997 Section 8 portfolio reengineering demonstration program, enacted
last September in last year's VA-HUD appropriations bill. We are
especially grateful for the priority role you gave to HFA's to serve as
designees for HUD in the demonstration. Thirty state HFA's, with three-
quarters of the eligible properties, have been approved by HUD to serve
as designees. Unfortunately, despite NCSHA's efforts to help HUD
prepare its program guidelines and specific instructions for designees,
HUD only issued the guidelines in late January and the designee
instructions in mid-April. Regrettably, HUD has focused much of its
time and attention on readying its own field staff to carry out the
restructurings Congress intended for public agencies and nonprofits.
The sluggish pace of the demonstration should not be misinterpreted
as a lack of enthusiasm or interest on the part of the HFA's, however.
Despite their disappointment with HUD's repeated delays, HFA's are
eager to participate in the demonstration and begin the restructuring
process. Two states already have submitted management plans to HUD.
This week, HUD approved the plan presented by Ohio, which has the
largest portfolio of eligible properties in the nation.
In its fiscal year 1998 budget, HUD again proposed a multifamily
portfolio reengineering plan to renew expiring Section 8 contracts at
market rents and restructure the properties' FHA-insured mortgages so
they can be serviced at the reduced rents. In addition, HUD recently
submitted its legislative proposal for portfolio reengineering to
Congress. This proposal is an improvement on previous HUD approaches,
but continues to have serious flaws. Our greatest concerns are that
HUD's legislation would continue project-based assistance for only 50
percent of the current portfolio and fails to give HFA's and other
public agencies the right of first refusal to carry out the
restructuring, which both the demonstration and the Mack legislation
provide.
Consensus exists among Section 8 residents, owners, managers, and
lenders that portfolio reengineering of some kind is necessary to
reduce the cost of renewing expiring Section 8 contracts while
preserving the housing stock as affordable. We favor the approach taken
in the fiscal year 1997 demonstration and Senator Mack's bill which
renews all expiring project-based contracts and utilizes qualified
designees to handle restructuring when possible. If Congress is unable
to enact permanent authorizing legislation in the time remaining this
year to address the Section 8 contract renewal crisis, we urge you to
extend for another year the current demonstration program, which
embodies so many principles we support, especially the priority role
for HFA's as designees and the preservation of project-based
assistance. In the absence of permanent legislation, an extended
demonstration presents the best opportunity for illustrating the
benefits of portfolio reengineering.
As the discussion about permanent portfolio reengineering
legislation continues, we propose several measures to ensure the best
possible outcome for all properties. We support the use of the FHA
insurance fund to write down the insured mortgages to levels
sustainable at new, reduced rents, and the use of budget-based rents
for distressed properties which could not operate successfully at
market rents even if the FHA insured debt was written down to zero.
Some of the Section 8 contracts expiring in fiscal year 1998 and beyond
support uninsured properties and properties developed under the Section
8 Moderate Rehabilitation program. The HFA's are confident, given the
provision Congress made for these properties in fiscal year 1996 and
1997, that you intend to renew these contracts going forward. We urge
you to renew these contracts at rents adequate to support their
operating budgets, so these properties, like the FHA insured inventory,
can continue to provide viable, affordable housing for the long term
future.
Budget-based rents are particularly important for uninsured
properties with bond financed mortgages outstanding at the time of
their contract expirations. Without adequate rents, many of these
properties will default, valuable affordable housing will be lost, and
HFA's, bondholders, and states will be left to suffer the financial
losses.
The HFA's support moving to a system where rents are based on a
property's financial needs, not on HUD's fair market rents (FMR's),
which are often inappropriate for individual properties within a larger
market area, or market rents, which require an administratively
burdensome and costly analysis to determine. Allowing budget-based
rents in many Section 8 properties still will yield budget savings,
while preserving decent, affordable housing and avoiding deterioration
and abandonment harmful to residents, the FHA insurance fund, and the
state and local governments and neighborhoods where the properties are
located.
MAKE HFA MULTIFAMILY RISK-SHARING PERMANENT
The HFA's thank you for continuing the very successful HFA/FHA
multifamily risk-sharing program. In the three years since HUD
allocated insurance authority to the 28 states it approved to
participate in this program, including Alaska, California, Colorado,
Idaho, Maryland, Missouri, Montana, and New Jersey, the states have
financed more than 20,000 units of affordable housing.
Risk-sharing is a win-win approach for the states and the federal
government. In return for sharing in the federal government's risk,
HFA's are permitted to cut through the HUD bureaucracy and use their
own proven and prudent financial underwriting standards. HUD has
revised the credit subsidy rate for the risk-sharing program, so that
it is now self-supporting and needs no credit subsidy. You can
literally enable the financing of these units at no additional cost to
HUD.
Mr. Chairman, the Missouri Housing Development Commission (MHDC)
has financed three mixed-income properties providing more than 344
units, using risk-sharing, Low Income Housing Tax Credits, taxable and
tax-exempt bonds, loans to be sold in the secondary market, corporate
donations, and local government resources. At one development, O'Fallon
Place, MHDC is restructuring a 675 unit family rental apartment complex
located adjacent to the Vaughn and Carr Square public housing
developments in a distressed St. Louis neighborhood. Residents of
O'Fallon Place will benefit from the State of Missouri's Department of
Social Services' Family Maintenance Organization demonstration, which
will address welfare reform by helping families move into work and
increase their self-sufficiency. In addition, the St. Louis Board of
Education is working with the project's developer to transform the
community's elementary and middle schools into top-notch neighborhood
based schools with strong after-school and summer programming. In
completing the O'Fallon Place project, Missouri will exhaust its risk-
sharing unit allocation and require 300 additional risk-sharing units.
We appreciate your efforts to provide additional risk-sharing units
in this year's supplemental appropriations bill. As you know, many
states like Missouri will exhaust their allocations soon and HUD does
not have any additional units to allocate. We recommend that Congress
provide at least 7,500 units as soon as possible. We believe HFA's will
need at least 10,000 additional units in fiscal year 1998 to continue
operating their programs to meet demand. To avoid the need to
constantly request more units and the uncertainty about whether those
requests will be met, we strongly urge Congress to make the HFA risk-
sharing program permanent so states can plan, generate more interest
within the development community, and avoid diverting energy toward
constantly seeking piecemeal unit allocations. In addition, we urge you
to appropriate sufficient credit subsidy for HUD's other multifamily
direct insurance programs.
Thank you for this opportunity to testify.
______
Prepared Statement of Cyrus M. Jollivette, Vice President for
Government Relations, Miami University
Mr. Chairman and Members of the Subcommittee: I appreciate the
opportunity to present testimony on behalf of the University of Miami.
The University is seeking your support for four initiatives within your
purview: a HUD special project research and diagnostic institute
initiative for children; a diabetes research initiative in the
Department of Veterans Affairs; and two initiatives in the
Environmental Protection Agency which address some of the urgent
problems of South Florida's declining environment.
First, the University has embarked on the construction of one of
the major children's research facilities in the nation, a state-of-the-
art research building to house all basic and clinical research for the
Department of Pediatrics in the University of Miami/Jackson Memorial
Medical Center. The goals and mission of the facility are for the
benefit of the children of Florida and the nation. We seek to create a
children's clinical and basic research center of unmatched excellence,
to facilitate consolidated, coordinated, interdisciplinary research
efforts in pediatrics, and to study, treat, and ultimately cure
childhood diseases.
Through HUD, the University seeks a $5 million special project
grant which will be leveraged with $40 million in private contributions
to construct a state-of-the-art pediatric research facility in Miami's
urban core.
The $45 million facility will contain 145,000 square feet. The
facility will contain outpatient research facilities for broad ranging
clinical investigations including AIDS, cystic fibrosis, asthma, other
lung problems, genetics, behavioral sciences, gastroenterology,
endocrinology, critical care, neonatology, maternal lifestyles (and
their effects on children), clinical research in Touch and many others.
Major space will be allocated for parent/patient education, in
addition to extensive education programs of medical students, house-
staff, and fellows in all areas of pediatric medicine. State-of-the-art
laboratories are planned for cardiology, critical care, cancer,
endocrinology, gastroenterology, neuromuscular genetics, infectious
diseases/immunology, AIDS, pharmacology/toxicology, neonatal, pulmonary
(asthma and cystic fibrosis), core facilities, shared research, and a
vivarium.
Second, through the Department of Veterans Affairs, the University
seeks to establish a Diabetes Research Center to marshall the expertise
and resources in diabetes, immunology, transplantation, and of the
closely affiliated Miami VA Medical Center, Jackson Memorial Hospital,
and the University of Miami School of Medicine's Diabetes Research
Center.
This partnership in one of the nation's largest academic medical
centers will contribute greatly to the enhancement of diabetes care at
the Miami VA Medical Center and stimulate and facilitate
multidisciplinary research in diabetes at the Diabetes Research Center.
The VA/JMH/UM Medical Center is the only tertiary care academic
medical center in South Florida, with a patient catchment area
embracing more than 5 million people, as well as a large and growing
number of referrals from outside the region.
Next, the focus of the coastal ecology research program within the
Rosenstiel School's Division of Marine Biology and Fisheries (MBF) is
on advancing the scientific understanding of coastal ecosystems and
their interactions with humans. My colleagues have considerable
expertise in coral reef, seagrass, hardbottom, mangrove, and wetland
ecosystems in South Florida and the Greater Caribbean region.
Their coastal ecology research covers the range of hierarchy from
biochemical, physiological, and behavioral studies on individual
organisms, through studies on population dynamics, community ecology,
ecosystem processes and landscape- and seascape-level ecology. Examples
of their coastal ecology research include: studies on diseases and
morphological anomalies as indicators of pollution affecting coastal
fishes, and studies on fish biochemistry and behavior as indicators of
environmental stress. The University seeks support through the
Environmental Protection Agency to continue this important initiative.
Fourth, my colleagues at the Rosenstiel School of Marine and
Atmospheric Science recently have discovered a possible connection
between the occurrence of algal blooms in Florida Bay and the
underlying rocks.
Based upon a series of core borings taken throughout South Florida,
it appears that a confined bed composed of coarse quartz sand runs from
areas close to Lake Okeechobee south underneath the Everglades and
close to the surface in Florida Bay and Keys. Rosenstiel scientists
have suggested that phosphate rich waters could be transporting this
sand into Florida Bay, providing this essential nutrient to algal and
plant life in the area. Excess supply of phosphate result in algal
blooms which are detrimental to water clarity and life in the Bay.
It is important that this discovery be investigated as soon as
possible. Funds are being expended in attempts to find solutions for
excess phosphates, such as restrictions on agricultural sources.
Results from this study could have significant impact on decisions
which are being discussed by various agencies for remedying the
perceived decline in Florida Bay. The support of the Environmental
Protection Agency is crucial to this initiative.
Mr. Chairman, my colleagues and I know what a difficult
appropriations year you face. However, again, we respectfully request
that you give very serious consideration to these two projects so that
the research progress already made is not lost. In the long-term, these
national investments will provide continuing dividends in our mutual
search for cost-effective solutions for the nation's problems.
______
Prepared Statement of Jay Lane, President, Jay Lane Associates
THE CONGREGATE HOUSING SERVICES PROGRAM
For the record, my name is Jay Lane. I am President of Jay Lane
Associates, a consulting firm that works closely with public and
private housing agencies assisting in the development of Congregate
Housing Services Programs that allow frail elderly and people with
handicaps to remain independent and avoid premature
institutionalization. I have participated in the development and
operation of Congregate Housing Services Programs for over fifteen
years. I am the publisher of the ``Congregate Report,'' a monthly
newsletter with a nationwide circulation, that provides information and
advice on funding and other issues related to the Congregate Program.
My experience with the Congregate Program includes working with state
and federal leaders in the development of legislation calling for the
establishment of alternative housing programs that give people choices
and allow them to remain independent. I have worked closely with local
communities in the planning and design of programs that keep people out
of nursing homes. Finally, and most importantly, I have worked closely
with clients and their families who have been faced with having to
enter a nursing home.
As you know, the Congregate Housing Services Program is being
eliminated. The Program, funded in part through the United States
Department of Housing and Urban Development, is scheduled to be phased
out in 1998. New funding for the program has not been requested to
extend existing contractual arrangements with participating housing
agencies. Organizations that operate CHSP programs have been informed
by HUD that existing five year commitments will begin expiring in
August 1998 and that contract renewals will not occur unless authorized
by Congress. It is HUD's opinion that this will not occur. HUD is not,
nor has it ever advocated for the program. HUD's current position is
that CHSP is being eliminated, along with other worthwhile programs, as
a means of cutting the budget.
Currently, CHSP services are available in 130 public and private
housing sites nationwide. Over 3,200 frail elderly and people with
handicaps receive both housing assistance and supportive services
through the Congregate Housing Services Program. The availability of
these services in public housing allows residents ``aging in place'' to
remain in their home, thereby avoiding premature admission to nursing
homes. When the program ends, many of these 3,200 people that receive
supportive services through the CHSP will no longer be eligible to
reside in public housing. Once supportive services are eliminated,
people lacking the functional ability to care for themselves will be
forced into nursing homes or other forms of institutional care. This
will come at a great expense to the American taxpayers since Medicaid
will pick up the majority of the costs, which are estimated to be
substantially more than CHSP.
The Congregate Housing Services Program [CHSP] was established by
Congress in 1978 with the goal of preventing the premature
institutionalization of elderly and people with handicaps residing in
federally subsidized housing. In-home supportive services and non-
medical attention would be provided to residents that qualified for the
program. It was the intent of Congress to decrease unnecessary human
and financial costs associated with placing people in nursing homes
prematurely. At the time CHSP was created, Congress mandated an
evaluation study to determine if these goals were realistic and could
be attained by federally assisted housing agencies that agreed to
participate. Congress was intent on determining if the program could
successfully address three major concerns identified by administrators
of elderly public housing:
(1) Would the introduction of supportive services assist Public
Housing Administrators deal with long-term residents who were ``aging
in place?'';
(2) Would people with special needs become eligible for public
housing assistance as a result of supportive services specifically
designed to meet their needs?
(3) Would the introduction of supportive services to the public
housing subsidy program delay the premature institutionalization of
frail elderly people into nursing homes and would this have an impact
on the amount of money spent through the Medicaid Program to provide
nursing home care to low-income elderly?
In 1978, at the time it passed the original CHSP legislation,
Congress recognized it faced serious financial problems associated with
the Medicaid Program. Congress was intent on determining if alternative
housing and supportive service programs would prove to be a cost-
effective alternative to placing people in nursing homes and could a
program like CHSP reduce the Medicaid appropriations targeted to
nursing home care.
Since its inception, all evaluations conducted on the Congregate
Program have demonstrated conclusively that CHSP saves the taxpayers
money and it promotes the dignity of elderly people. The original
evaluation on the program conducted by the Hebrew Rehabilitation Center
of Boston in 1986, entitled ``Dignity, Independence and Cost
Effectiveness: The Success of the Congregate Housing Services
Program,'' presented the following conclusions: The CHSP is a cost-
effective alternative to institutional care. All research, comparing
congregate services to nursing home care finds substantial savings for
congregate services when comparing costs for a typical person, over a
specified period of time. The most careful cost comparison study
conservatively estimates these savings to be $4,233-$5,880 per person
per year.
An evaluation conducted by the University of Southern Maine in 1989
on a Congregate Program operated by the State of New Hampshire provided
the following conclusions: The CHSP has been successful because of its
ability to target resources to those most at risk of
institutionalization. The majority of residents participating in the
Program are frail elderly women living alone who have few financial
resources. CHSP serves those who often have no other appropriate
housing options. Additional sites would serve a similar, yet expanded
population, reaching more of those in urgent need of supportive
services, while at the same time saving Medicare and Medicaid dollars.
This evaluation documents that CHSP is especially less costly than
nursing home services, where it was estimated that the State of New
Hampshire would have paid more than twice as much per month. For the 21
clients who would have been in nursing homes if the CHSP did not exist,
the State of New Hampshire would have paid $1,049 per month for each
client under its share of Medicaid cost. This is almost twice the cost
of Congregate Housing Services Programs. An additional $1,049 a month
per client would also have been spent on these clients, but was instead
available for other Medicaid-Funded Services.
An evaluation conducted in 1996 by the Connecticut Department of
Social Services on the Congregate Housing Services Program operated
within that State concluded the following:
CHSP improves the quality of life of its participants, promotes
dignity and independence and is an extremely cost-effective alternative
to placing people in nursing homes. At a minimum, the CHSP model
addresses quality of life outcomes, facilitates elderly's independence
through co-location of housing and supportive services, frees housing-
management personnel to attend to other responsibilities and reduces
turnover. Family members of program participants were unanimous in
their assessment that the program had impacted positively on people
participating. Many suggested that family members that participated in
the program had an enhanced sense of independence, heightened social
interaction, and increased access to supportive services.
When it came to cost, findings indicated that Connecticut's CHSP's
average monthly costs of $522 were consistent with the national average
for CHSP's. A typical nursing home in Connecticut is estimated to cost
approximately $5,543 per month. Nursing homes costs are estimated to be
more than ten times greater than most community-based options.
The University of New Hampshire is currently conducting an
evaluation on a CHSP operated by the Laconia Housing and Redevelopment
Authority in Laconia New Hampshire. Preliminary reports suggest that
per day costs for the program are $22. The average rate for Medicaid
reimbursed nursing home care in the State is $105 per day. Since the
majority of clients participating in the CHSP operated by the Laconia
Housing and Redevelopment Authority moved into the program from nursing
homes, a substantial savings of taxpayers dollars is occurring. A final
report on the project is due out in July.
New Hampshire, like many other states, has come to the realization
that it is spending proportionately more for nursing home placement
than any other form of care for its elderly people. New Hampshire
institutionalizes roughly 68 people per 1,000 over the age of 65. This
ratio is among the highest in the country. Oregon, for example,
institutionalizes roughly 38 per 1,000. The reason for the high ratio
of institutionalized people is that New Hampshire, like many other
states, simply has not developed alternatives to nursing home care.
Therefore, we are placing people in nursing homes prematurely at great
expense to the taxpayer. According to New Hampshire's Commissioner of
Health and Human Services, Terry Morton, at least a third and perhaps
as many as two-thirds of the people residing in the State's nursing
homes have the functional capability of living in an independent
setting, like CHSP, if provided with services. If this were to occur,
the potential for savings could be substantial.
The Congregate Housing Services Program should not be eliminated,
it should be expanded. At a time when the fastest growing segment of
our population is people 85 years of age and older, I do not believe it
is prudent to dismantle a program that has proven to be effective in
saving money and promoting the dignity of the most vulnerable people in
our country.
CHSP is not a program that relies exclusively on federal dollars in
order to operate. The program, as designed, calls for the creation of
partnerships between state and federal agencies, as well, as public and
private entities with everyone participating in the cost. The federal
government is responsible for 40 percent of the costs while the
remaining money comes from participating partners, including clients.
This shared arrangement encourages efficiency.
I strongly urge the committee to consider the long-term
ramifications of eliminating the Congregate Housing Services Program. I
am available to answer additional questions should they be required.
Thank you for allowing me this opportunity.
______
Prepared Statement of Kathye Gorosh, Project Director, The CORE Center
I would like to thank the Chairman and the Members of this sub-
committee for their support for the Cook County/Rush Health Center,
which has been permanently named ``The CORE Center--For the Prevention,
Care and Research of Infectious Disease.'' Their commitment has made a
critical difference in the availability of appropriate health care
services for those affected by and living with HIV and other infectious
diseases in the greater Chicago area.
1. The CORE Center: A unique solution for Chicago's public health
crisis.--Today, despite major technological and scientific advances,
devastating infectious diseases such as HIV/AIDs, Tuberculosis and
Sexually Transmitted Diseases (STD's), these diseases remain prevalent
in Chicago and around the world. Efforts must be sustained with
continued vigilance to detect, treat, and cure Tuberculosis and STD's
or their resurgence will be devastating. The HIV/AIDs epidemic
continues to be one of the most serious public health problems facing
the nation today. It is currently the leading cause of death among
Americans between the ages of 25 and 44 years of age. Today, the
Centers for Disease Control and Prevention (CDC) estimate that there
are between 650,000 and 900,000 Americans living with HIV in the United
States. In 1995, the CDC reported that our country had unfortunately
reached another milestone in the AIDs epidemic--over a half million
Americans had been diagnosed with AIDs. In 1996, it was reported that
362,004 Americans had died of AIDs. These numbers continue to increase.
Although the number of AIDs cases is what primarily gets reported
by the press, the real focus should be on HIV, the virus that cause
AIDs. While the development of new and more effective drugs has allowed
people to remain healthier longer and to delay the progression from HIV
to AIDs, it remains critical that we stop the spread of HIV as well as
provide early and comprehensive care to those already infected. It is
also critical to recognize that regardless of a decline in the number
of AIDs related deaths in the U.S., there is not a decline in the need
for adequate care, treatment and research for HIV/AIDs.
Because of the resurgence of infectious diseases and HIV/AIDs, the
Chicago area is in the midst of a severe public health crisis. Over
35,000 people in the Chicago metropolitan area are currently infected
with HIV/AIDs. Approximately, two-thirds of those infected are not
receiving treatment.
An examination of the profiles of patients who receive HIV services
at Cook County Hospital reveals that Cook County Hospital cares for 75-
80 percent of infected women and roughly one-third of infected children
in the Chicago Eligible Metropolitan Area (EMA). 72 percent of program
clients at Cook County Hospital are African American. Of all the
patients seen at the Cook County HIV Primary Care Center last year, 916
(46.4 percent of all clients) of the patients seen were HIV positive
and 986 (49.9 percent of all clients) of the patients seen were AIDs
diagnosed.
One in every 9-10 beds at Cook County Hospital is occupied by a
person with HIV/AIDs. Approximately 30 percent of those inpatients
could be seen on an outpatient basis if specialized services were
available--saving $6 million per year.
In addition to HIV/AIDs, sexually transmitted diseases continue to
be a major cause of morbidity in the greater Chicago area. STD's, which
increase the likelihood of HIV transmission three to five fold, have
increased at alarming rates since the 1980's. In fact, in 1996, the CDC
reported that STD's--most of which are curable through the use of
conventional treatments and drugs--accounted for 87 percent of the top
10 percent of transmissible diseases in the nation.
The landscape of the AIDs epidemic is changing daily--much faster
than care providers are able to handle. Today, people of color make up
nearly 50 percent of all reported AIDs cases. Those indirectly affected
by AIDs also present a rapidly increasing need. For example, by the
year 2000, it is expected that 144,000 children will be left motherless
by the AIDs epidemic. Obviously, these new dimensions require new and
innovative community-based prevention and care strategies.
While the federal government has and will continue to provide
leadership in the battle against AIDs and other infectious diseases,
these afflictions will ultimately only be conquered at the local level
through the implementation of comprehensive systems of care which
involve every sector of the community.
Regardless of these dramatic statistics, the serious increase in
the demand for outpatient services and the obvious public health
crisis, no comprehensive community-based system of specialized
outpatient care and support services has been available to help reduce
unnecessary, disruptive, and costly hospitalization while maintaining
the quality of life for people with HIV/AIDs--until now.
2. The CORE Center: For the prevention, care and research of
infectious disease.--It is clear that we must take immediate and
decisive action to address the HIV/AIDs crisis in the greater Chicago
and across the nation. A community-based commitment is required to
develop and coordinate the complex medical and social interventions
necessary to address these diseases effectively. Both public and
private local health care providers must develop the resources and
linkages needed to effectively address this health crisis. As a result,
Cook County Hospital and Rush-Presbyterian-St. Luke's have combined
their resources to develop ``The CORE Center: For the Prevention, Care
and Research of Infectious Disease.''
Construction of The CORE Center, the result of an unprecedented
public/private partnership, is scheduled to begin by this summer. The
Center's design is the culmination of a focused team effort that has
involved collaboration between HIV/AIDs patients, architects, doctors,
nurses, other health care professionals, community members,
representatives from the business community and government officials.
It will provide a system of specialized health care and an array of
support services for community-based health care providers to improve
the care of persons with HIV or related infectious diseases who do not
need to be hospitalized. As people continue to live longer with HIV/
AIDs the demand for services, especially outpatient services, continues
to increase. The CORE Center will provide that care and, at the same
time, provide access to clinical trials and emphasize the importance of
prevention and education in combating this epidemic.
With a full range of services available for the first time in a
centralized location, the Center will provide a missing link in the
public health system thus creating a full continuum of community-based
outpatient medical care for people with HIV disease who currently do
not receive adequate care.
The new 60,000, square foot, state-of-the-art, Center will boast
many times the space now available for HIV/AIDs services at Cook County
and Rush combined. The facility will combine and expand the
capabilities of both institutions. The new Center will effectively
house current programs and make it possible to address the growing
numbers and needs of infectious disease patients.
PREVENTION AND EDUCATION
The HIV program at Cook County Hospital has responded to the
current health crisis by providing extensive outreach, prevention and
education services. In 1995 alone, the Women and Children's Program at
Cook County Hospital went out into the community and educated 6,979
children ages 11-14 about HIV risk reduction.
Prevention and education are essential components of the Center's
comprehensive approach to the care of HIV/AIDs and other related
infectious diseases. The CORE Center will focus significant resources
on community-wide prevention strategies and education programs. The
Center's programs will include a major specialized training program for
physicians and other health care professionals, including: clinical
care, lectures, clinic observations and psychosocial interventions;
targeted programs for people at risk, especially women, children, and
minorities; HIV counseling and testing; and bilingual community forums
to extend the reach of the Center's prevention and education programs.
Prevention programs will be tailored for specific populations and the
Center will actively recruit members of these populations to their peer
education courses.
KEY FEATURES AND ON-SITE SERVICES
The design of The CORE center is meant to provide a sense of
security and dignity to patients and families. A primary focus in the
design of the facility is the comfort and ease of use by patients and
staff. Key design features include:
--Graduate levels of care on each ascending floor of the four-floor
facility--moving from education, prevention and screening
programs on the first floor to treatment areas for the most
seriously ill patients on the fourth floor.
--Multi-functional space throughout the building so that clinical and
administrative areas can be easily reconfigured to adjust to
the development of new modes of treatment.
--Medical care services which are integrated with essential support
services, such as: child care, mental health and case
management, and integrated with research in new treatments.
--Specialized space and programs for adolescents, people with
chemical dependency and for women, children and families with
HIV.
--A resource center library and classrooms to enhance the
EFFECTIVENESS OF PREVENTION AND EDUCATION PROGRAMS.
RESEARCH
Recent breakthroughs in drug therapies give reason to be hopeful
for the successful treatment of HIV/AIDs now and in the future. The
Center will carry out critical research to continue the search for a
cure, as well as develop new treatments that will help prolong the
comfortable and functional lives of HIV/AIDs patients.
resource and referral site
The CORE Center will serve as a resource and referral center for
the growing network of primary care providers currently delivering
community-based care for people with infectious diseases. It will
provide increased access to the sophisticated medical services of
institutions like Cook County Hospital and Rush-Presbyterian-St. Luke's
Medical Center. The Center will supplement services available through
the providers in the community-based system, enabling them to serve
clients more efficiently and effectively and avoiding costly
duplication of services. Community providers will now be able to refer
patients to the Center for a definitive diagnosis, specialized care or
participation in clinical trials. Patients can then return to their own
primary care provider or clinics for continuing care.
3. Cook County Hospital and Rush-Presbyterian-St. Luke's Medical
Center: A tradition of excellence.--As leaders in HIV/AIDs research and
model service delivery, Cook County Hospital and Rush-Presbyterian-St.
Luke's Health Center are highly capable of delivering programs of
highest quality care and are uniquely qualified to develop and operate
the Center in response to this urgent, community identified, health
crisis.
Each institution has in-depth experience with infectious diseases,
especially HIV/AIDs, and a history of successful affiliation with one
another. They are Illinois' largest public and private hospitals.
Traditionally, Cook County Hospital has cared for approximately 30
percent of the HIV population receiving care in the Chicago area and
has an international reputation for HIV model care programs, prevention
and research. The Infectious Disease Section at Rush has been
nationally recognized for its HIV treatment program since it was
created in 1986. Rush, a leader in clinical HIV related research also
coordinates an acclaimed service of national physician training
sessions on HIV/AIDs. In addition, the two hospitals are already
integrated for the provision of training and clinical care.
It is these existing strengths and collaborations that will enable
The CORE Center to provide the most comprehensive and expert care
available in the country.
4. A national prototype.--This unique partnership and model system
of care will be a prototype for national efforts to meet the challenges
posed by infectious diseases, especially, HIV/AIDs.
It is estimated that in its first full year of operation, operating
and programmatic costs will be approximately $14.5 million.
In light of the Subcommittee's support for community-based
solutions to unique public health problems, and the current public
health crisis in Chicago, we are requesting that you include $2 million
for the operational and programmatic support of The CORE Center in the
fiscal year 1998 VA-HUD-Independent Agencies Appropriations Bill.
Thank you Mr. Chairman for your consideration of our request.
______
Prepared Statement of the American Association of Retired Persons
American Association of Retired Persons (AARP) appreciates this
opportunity to comment on funding next year for housing programs which
affect the lives of many low-income older Americans. We also want to
take this opportunity to acknowledge the Subcommittee's historical
support of initiatives which benefit the elderly.
Our recommendations can be summarized as follows:
Secs. 202 and 811.--Provide sufficient funds for the Sections 202
and 811 Housing Programs in order to continue current production levels
of project-based assistance to older persons and persons with
disabilities;
Alternatives for younger persons with disabilities.--Make available
to public housing authorities the resources necessary to develop and
adapt alternatives to elderly housing for younger individuals with
disabilities. Designate at least 5,000 vouchers for persons with
disabilities and target them to housing authorities most affected by
the ``mixed population'' problem;
Housing counseling.--Provide sufficient funds for the Housing
Counseling Program, which is under statutory obligation to provide
counseling to reverse mortgage consumers;
Supportive services.--Set aside adequate resources for Public
Housing Supportive Services;
Congregate housing services.--Set aside funds to continue existing
projects under the Congregate Housing Services Program;
Section 8 assistance.--Provide sufficient resources to continue
Section 8 assistance contracts; and
Corporation for National and Community Service.--Provide sufficient
funds for the Corporation for National and Community Service.
FULFILLING THE PROMISE TO SERVE OLDER PERSONS AND PERSONS WITH
DISABILITIES
Despite policy differences that will undoubtedly be debated at
great length in Congress this year, nearly all parties agree that the
time has come to weed out ineffective programs, wasteful bureaucratic
structures, and counterproductive regulations. Entrepreneurial
government and rewarding success have become the new themes of housing
policy discussions. As the debate continues, AARP believes that it is
also important to remember and reward existing programs that work,
including elderly housing programs.
Relevant parties in the public and private sectors have all
acknowledged that programs like Section 202 Elderly Housing work well
for older persons with low incomes. The Association is mindful of the
need to produce housing as cost effectively as possible. We stand ready
to work with the authorizing committee in this regard. However, pending
any changes that would improve the productivity of the existing Section
202 program, we urge that funding be provided to allow for current
production levels next year.
The Administration's Section 202 budget request represents a cut of
more than 53 percent below the existing appropriation and would
severely curtail the production of specialized rental housing for the
elderly. The number of new housing units to be constructed would drop
from 8,526 to 3,865. Section 202 helps meet an acute housing need for
frail, low income older persons. Research indicates that eight people
are waiting for every one vacancy that occurs. Meanwhile, many elderly
are forced to live in unsafe housing and unsafe neighborhoods because
of limited resources. The average Section 202 tenant is a frail woman
in her mid-seventies living on an annual income under $10,000. Cuts
made here, Mr. Chairman, really end up hurting those most in need.
In addition, AARP urges that a minimum of 5,000 vouchers be
designated to fund the tenant-based assistance program for younger
persons with disabilities authorized in the Housing and Community
Development Act of 1992. We recommend that these vouchers be targeted
to public housing authorities (PHA's) which have been most affected by
problems that have occurred as the result of housing the younger
disabled with the elderly. PHA's need these resources along with
additional development and modernization funds in order to meet the
challenge of providing real housing alternatives and choices to younger
persons with disabilities.
One of the thorniest issues to face FHA and policy decision-makers
is the restructuring of the current inventory of FHA-insured housing,
much of which has rental assistance under Section 8 or other programs.
Seeking to reduce HUD's long-term rental assistance costs, the
Administration has proposed a plan to ``mark to market'' the properties
and convert the project-based assistance to tenant-based assistance as
contracts expire. Proponents contend that both quality and price should
improve as housing providers are subjected to competitive pressures of
the marketplace. Also it is argued that the process would significantly
reduce the Department's future requirements for budget authority and
help move the Administration toward meeting its deficit reduction
goals.
Unfortunately, the Administration's plan leaves many questions
unanswered relating to the transition and long-term program effects on
project residents. The answers will be critical in evaluating whether
or not the risks inherent in this approach--rent increases or
displacement--are worth taking. Pending legislative resolution of these
important program questions, AARP recommends that sufficient resources
be provided to continue extending assistance contracts as provided
under existing law.
Because almost half of the residents of Section 8 projects are
elderly, the risks associated with the Administration's proposal must
be weighed carefully. HUD has proposed to protect current residents
against negative effects by providing an ``enhanced voucher'' that
would pay the difference between 30 percent of the household's income
and the new market rent for the unit, even if that rent were higher
than HUD's normal limit for the locality. However, a recent General
Accounting Office report notes that these enhanced vouchers would
increase the costs of the ``mark to market'' proposal, making the
program savings from the change less clear-cut. Further, the proposal
does not answer the question of how to successfully relocate displaced
tenants in tight local markets. AARP understands that the
Administration is currently considering a ``choice coupon'' proposal
that would give such residents the option of remaining in their current
housing unit. But it should be emphasized that the majority of elderly
projects are working very well now. The burden of proof, therefore, is
very high in demonstrating that the outcome of the dramatic changes
proposed is likely to be substantially better than more modest
improvements to the current system.
PROMOTING THE INDEPENDENCE OF FRAIL OLDER PERSONS
AARP recommends that no less than the proposed $50 million for
public housing supportive services continue to be set aside out of the
Community Development Block Grant (CDBG). These resources are used to
support a variety of eligible activities including nonmedical,
congregate services to the frail elderly as well as Service
Coordinators.
Service Coordinators have proven their value as part of the
management team in elderly housing projects. The need for such
coordinators is especially acute in public housing projects for the
elderly, which often include large numbers of residents with mental and
physical disabilities. AARP believes that the cost for such personnel
should be made part of routine operating expenses of elderly housing
projects. We recommend that HUD be encouraged to fund them as part of
operating budgets.
The first contracts funded under the Congregate Housing Services
Program (CHSP) are due to expire next year, curtailing services that
are desperately needed by frail and disabled tenants of public and
assisted housing. Many of the estimated 4,000 tenants currently
assisted by CHSP will be forced to relocate to expensive and confining
nursing homes. AARP recommends that these expiring contracts be
extended for another year by setting aside sufficient resources in the
CDBG program. We further recommend that HUD be directed to come up with
an alternative strategy for providing future funding for these vital
services.
AARP also urges that sufficient funds be made available next year
for the Housing Counseling Program. This program requires independent
counseling for those elderly homeowners who seek FHA-insured reverse
mortgages. These mortgages allow older homeowners who are ``house rich
but cash poor'' to tap into the equity in their homes to pay for
meeting basic needs. Given recent reports of scam artists taking
advantage of older homeowners who seek such mortgages, the need for
adequate resources to continue the Counseling Program is critical.
corporation for national and community service
AARP further recommends that sufficient resources be made available
for programs administered by the Corporation for National and Community
Service. Older Americans are not only participants in programs like
AmeriCorps, but recipients of its community-based services as well. And
many older persons participate in programs as mentors and tutors to
youngsters in schools across the nation. These valuable activities
foster civic responsibility and strengthen the ties that bind us as a
people.
Thank you again for this opportunity to comment on some of the
Administration's budget proposals for fiscal year 1998.
______
Prepared Statement of James H. Mullen, Jr., Vice President for Student
Affairs, Trinity College
EXECUTIVE SUMMARY
Founded in 1823, Trinity College is an independent, nonsectarian
liberal arts college with an enrollment of about 1,800 undergraduates
and 200 graduate students. Its academic excellence was recognized as
early as 1845, when it became the eighth institution in the nation to
be granted a chapter of Phi Beta Kappa. Trinity's demanding vision of
higher education is shaped by three fundamental commitments: to
excellent instruction that is personal and conversational, to the
rigorous pursuit of the liberal arts, and to reaping the educational
advantages of its setting in Connecticut's capital city.
As one of the nation's preeminent liberal arts colleges, Trinity
sustains and nurtures a diverse community of learning united by a
common engagement with the classic liberal arts tradition. Within this
context, in recent years, one of the College's chief aims has been to
connect its goals and mission to its urban environment in ways that
reflect a fundamental commitment to the City and to its rigorous
liberal arts curriculum.
Trinity's new commitment, the Neighborhood Initiative, was
announced in January of 1996. The Neighborhood Initiative is a
comprehensive $175 million effort to revitalize the historic
communities surrounding Trinity's campus in South Hartford. The
initiative is designed to create a safe, viable area which also is a
central hub of economic development, new jobs and educational, health,
and family support activities. The initiative reflects an emerging
national trend in which institutions and communities are joining forces
to solve urban problems and create mutual growth and development. For
Trinity and for Hartford, the Neighborhood Initiative marks the highest
level of collaborative engagement and activity since a group of
Hartford residents worked together to establish the College almost 175
years ago. The partnership includes a unique mix that successfully
joins a largely impoverished Latino community with city/state
government agencies, private businesses, hospitals, and a prestigious
liberal arts educational institution.
The Neighborhood Initiative will reinvigorate an economically
distressed neighborhood in the southern part of Hartford with a
comprehensive, cooperative and bottom-up philosophy. It will do so
analyzing the problems of the neighborhood within the broader context
of the problems of the institutions within that neighborhood. Each
entity confronts the need to survive, and each has a stake in growth
and development. Second, it strives to bring about revitalization
through a corporate-institutional-community partnership that affirms
the will, determination, and innate capacity of local residents. This
is a program designed to offer the tools, education, and resources
critical to the advancement of the people living in the area. It is
renewal from within, not from without. It is renewal that is proactive,
not passive. It is renewal that fosters self-sufficiency and creative
problem-solving, not dependency and canned solutions. Finally, the
project strives to reinvigorate a very manageable target area of the
city. So while it is ambitious, it is also very manageable given the
scope of the problems facing Hartford and other urban centers
throughout the nation. In so doing, the project has great potential for
serving as a model for other cities, institutions and urban areas
confronting similar dilemmas.
THE NEED FOR COMMUNITY INVESTMENT AND RENEWAL
For the past decade, there has been a critical need for jobs,
housing, recreation facilities, education and training in the Frog
Hollow and Barry Square neighborhoods. In particular, there has been a
need for leadership, resources and a spirit of cooperative problem-
solving. It is that vision of development from within that will help
local residents fulfill their dreams and rebuild their community. The
Neighborhood Initiative fulfills that need.
Hartford is the fourth poorest city in the nation. A range of
startling indicators highlight the need for comprehensive approaches to
community development in Hartford:
--One child in three lives in poverty, compared to one in four
nationally;
--A 1990 survey of three neighborhoods found 72 percent of homes
female-headed, and 62 percent of households below the poverty
line;
--45 percent of high school freshmen did not graduate with their
class 4 years later, and only 50 percent of persons over 28 had
high school diplomas; and
--A 1990 survey of two mainly Latino neighborhoods found 48 percent
of households could not speak or read English.
Crime is significant in the neighborhoods of Hartford being
targeted by this project. In 1990 there were 297 narcotics arrests of
adolescents under the age of 17 in Hartford. There were 169 youth
referrals to juvenile court for narcotics offenses in 1990. In the same
year, there were 157 juvenile referrals for other types of crime. Staff
of a local gang prevention project indicate girls are increasingly
involved in illicit activity such as gun/drug trafficking, theft, and
credit card falsification. Violence has become a way of life for many
Hartford youth. In Connecticut, homicide is the second leading cause of
death among 15-19 year-olds and the leading cause among minority males
15-24.
Increasingly, young people are affected by poverty and crime.
Despite a decline of adolescents nationwide, Hartford is a
disproportionately young city--one-third of residents are youth--and
most youth are persons of color. Most city youth under 18 are African-
American, Caribbean or Hispanic. The infant mortality rate is 21-35
percent, paralleling that of many third world nations. Teen pregnancy
is chronic. Like Latinos nationwide, only 78 percent completed high
school in 1990 compared to 91 percent for Anglos and 84 percent of
African-Americans. A 1990 report on education in Hartford stated 45
percent of high school freshmen did not graduate with their class 4
years later, and only 50 percent of persons over 28 had high school
diplomas. Dropping out of school is associated with linguistic and
cultural isolation.
To further aggravate the situation, many families have abandoned
their homes. In Frog Hollow about 13 percent of housing is vacant.
Mobility is also high. One study reported that in the past five years
Frog Hollow families moved between 3-6 times. Many local businesses
have been forced to close down due to crime, poor sales, and lack of
credit. Large employers have also disinvested, leaving families without
jobs only to rely on public assistance and drug sales--for income. The
mood created as a result of this collective message of flight and lack
of confidence has resulted in a sense of anger, frustration, and
despair.
an alliance for economic development and community renewal
The Neighborhood Initiative covers a 15-block area in the heart of
historic Frog Hollow and Barry Square neighborhoods nestled between the
College and Southside Institutions Neighborhood Alliance (SINA) partner
institutions. SINA partners participating in the renewal efforts are:
the Connecticut Children Medical Center, Hartford Hospital, the
Institute of Living, and Connecticut Public TV and Radio. The
revitalization effort encompasses renewed housing, increased home-
ownership and employment opportunities, and retail and commercial
development, as well as expanded parking and improved streetscapes,
lighting and security. The aim is to create the underlying support and
infrastructure needed for local residents to advance economically and
educationally. The project strives to provide the tools, resources and
skills needed by the community to move and develop from within. It
seeks to recognize the innate potential of residents; capitalize upon
their fortitude; and help people find their own solutions. Slated for
completion by 2002, the Neighborhood Initiative will become a bedrock
for a community that has long suffered crime, blight, disinvestment,
gang involvement, nonresident homeowners, family fragmentation, and
lack of stability and lack of credit. It will become home to hundreds
of low- and middle-income families who will send their children to
school in Learning Corridor schools; take pride in affordable single
family dwellings; work in local businesses, and shop in newly developed
retail stores.
The Learning Corridor is a cornerstone of the neighborhood
revitalization initiative. The Learning Corridor is a comprehensive,
community endeavor designed to offer general and specialized education,
skills-building, and support to over 2,000 Hartford families, largely
Puerto Rican, and hundreds of students of all cultural backgrounds
living in the metropolitan region. To be constructed over the next four
years directly east of the College on a former bus garage site acquired
from the State, the Learning Corridor will consist of a unified
physical complex within walking distance to shops, churches, child
care, health facilities, libraries, parks, a college, and other basic
resources. It will house the following educational and training
projects: a regional Montessori-style public elementary school; a
public neighborhood middle-school; a regional math, science and
technology high school resource center; and, a regional arts high
school program; and a professional teacher training and development
center.
Also within the Learning Corridor will be broader programs to
support family education and training, including: an early childhood
and family support center, a youth development center, recreation
facilities and a series of arts and cultural heritage programs and
events. The overall endeavor will have linkages with numerous children,
youth, and arts/cultural programs in the City and the region. The
Learning Corridor will also generate and test new methods of
redefinition and renewal that can be adapted to other colleges and
universities in urban areas nationwide.
It is envisioned that the Neighborhood Initiative and the Learning
Corridor will evolve into an independent community entity. It will be
governed by a diverse group of education, business, governmental and
community leaders from the neighborhood, the City and the region.
Administrative and academic representatives from the College will also
participate in the governing body. The latter individuals will, in
part, come from a regional steering committee. This new community
entity will also have its own identity and physical space within the
Learning Corridor's central administrative offices. The Neighborhood
Initiative will be an economic, cultural and social anchor within
Hartford's south end. It will deepen ties between residents and the
College, as well as between residents and other SINA institutions.
Further, it will create opportunities for learning engagements,
volunteering, student internships, cultural exchanges, and a host of
activities that will benefit students, faculty and health professionals
at local institutions. Finally, it will offer learning challenges to
hundreds of families residing in and outside of Hartford. It will also
provide vitally needed training, health/social programs, recreation
facilities, housing, employment and other services to local residents
that will guarantee its vigor and life well into the next century.
The Neighborhood Initiative will generate significant employment
opportunities within the community of South Hartford. Initial economic
impact studies estimate that 400 primary jobs will be created from the
construction and associated improvement efforts. Additional employment
opportunities will be generated over the life of the entire project.
CORPORATE, STATE AND COMMUNITY SUPPORT
The Learning Corridor and the Neighborhood Initiative have broad
support at the local, city, state and regional levels. Key entities
that have been involved in planning and development include:
institutional members of SINA, the Loctite Corporation, the Aetna
Foundation, the Hartford Public Schools, State and City governments,
the Boys and Girls Clubs of America, the Trinity Center for
Neighborhoods, Hartford Areas Rally Together, Spanish American Merchant
Association, Broad Park Development Corporation, Capital Region
Education Council and Trinity Community Child Care Center. Numerous
community leaders, residents, youth, and several local service
organizations have also been participating in the planning. Fannie
Mae's Connecticut Partnership office has provided technical assistance
and funding for the development of an Employer Assisted Housing Program
to provide incentives for employees to buy homes in the target area and
Hartford.
The Learning Corridor and the Neighborhood Initiative also have the
backing and intimate involvement of Trinity's President and senior
administrative, academic and development staff and of SINA partner
institutions. Together, the five SINA institutions have combined
budgets of $500 million and a total of 7,000 employees in Hartford.
The project will provide a broad range of services for neighborhood
residents that are important to the State and the nation. Hartford is
the state capital, and has a large stake in restoring its physical and
economic health. Hartford is also a regional center of growing
importance along the northeastern corridor, with increasing ties to
cities across the country through business and industry. As such, it
plays an important role in the national economy. It is critical that
the city be economically healthy. The present project will play an
important role in achieving that end. It will offer within the southern
sector of the city the following: home ownership opportunities,
economic development, employment and training, education, early
childhood screening, day care, family supports, and youth development.
Each of these programs are designed to offer a comprehensive package
that addresses the needs of the entire family from birth through old
age. The aim is to revitalize an entire community in a way that fosters
self-sufficiency and growth from within. The project is an important
model for other urban centers experiencing similar problems. Both the
State and federal government can point to the project as a powerful
example of community-institutional partnership for urban renewal.
federal support for an innovative approach to urban blight
Since the announcement of the Neighborhood Initiative by Trinity
College President Dobelle in January 1996 the core staffing,
consulting, and predevelopment costs for the Initiative and the
Learning Corridor have been supported by financial contributions from
the SINA institutions. Because Trinity serves as the lead institution
it has added two new positions and created the Department of
Institutional and Community Relations to support the Initiative. As the
College and SINA move from planning to implementation with the
components of the Initiative, the cost of improving the infrastructure
and development capacity continues to increase.
The College seeks $4.3 million in Federal assistance to support the
Neighborhood Initiative's planning, acquisition and environmental
abatement, demolition, and coordination needs for next three years.
There are two types of planning activities that are needed for the
next phase of the project. First, a long term master plan for each of
four quadrants around Trinity College needs to be developed with
intensive community involvement and support on a block-by-block level.
The cost of each quadrant plan is $50,000 and will include a
coordinated process that will bring together the present Neighborhood
Revitalization Zones Committee's plans and those of the merchants
associations in each quadrant. Secondly, most of our current planning
activities and resources have been aimed at the first-time buyers and
home-ownership development. A significant amount of the current vacant
or distressed housing stock is in multi-family buildings. A plan needs
to be developed to determine which buildings require demolition,
rehabilitation and/or changes in use. The plan must include an
inventory of conditions: present use and potential future uses in the
present market. The plan will include an analysis of current funding
opportunities and how they could be packaged with institutional support
to attract housing and retail developers to the target area. The plan
is projected to cost $400,000 for acquisition and economic development
plans in each quadrant.
Acquiring the 15 block target area is the Neighborhood Initiative's
biggest challenge. Most of the properties in the area that are vacant
need to be foreclosed by the city or written off by the mortgage
holder. The College, SINA and the City are assembling parcels for the
Learning Corridor. There are another 75 sites throughout the target
area that need to be acquired. A minimum of 45 properties are proposed
to be acquired with the assistance of the City of Hartford. The City,
in most cases, will foreclose on buildings but their cost and tax
write-off would be significant since there are about 600 abandoned
buildings citywide. The SINA institutions have proposed to pay the city
the cost of foreclosing and $10,000 per property (or $450,000 in total
for the 45 target) in the back taxes. The cost of a non-contested
foreclosure to the City is $3,000 and $5,000 if contested. If the
assumption is that half of the foreclosures will be contested, then the
cost will be in the range of $180-$200,000. The total cost of
acquisition with assistance from the City is estimated at $650,000.
The other 30 properties will be acquired through negotiated sales
involving the owner and their mortgage holder. These sales would be to
a tax-exempt entity and land-banked until it is time to turn it over
for development in the overall quadrant plans. In order to be able to
develop successful plans, site control is important for attracting
prospective non-profit and profit developers. We are proposing the
establishment of a matching fund of $1 million for the purpose of
purchasing the non-city assisted acquisitions. This fund will be
matched with another $1 million from the SINA institutions.
In cases where rehabilitation of present structures are not planned
or are unfeasible, the structures must be remediated for lead and
asbestos, then demolished. This cost is prohibitive on two grounds.
First, Trinity and SINA may not have an immediate reuse of the property
when it is targeted for acquisition and some of the vacant property
will be used for open-green space, recreation or community gardens.
Absorbing this redevelopment cost in properties that in most cases have
negative market value is a disincentive and an unreasonable risk.
Second, in the event that the institutions decide to absorb the
redevelopment cost associated with demolition, it is very unlikely that
the cost could be recaptured in the development budgets since most of
the initial projects will require an ``affordability-subsidy'' because
the incomes of prospective buyers and renters are low. The costs of
remediation and demolition are driven by location and future uses. An
estimate of $1.5 million is needed for remediation and demolition of
property.
As evidenced by the success of the coordination of the Learning
Corridor, the College's Office of Institutional and Community Relations
will serve as the lead implementation team that coordinates the
community, city, state, federal, and private stakeholder that will
participate in the Initiative. The Office requires $250,000 a year over
a three-year period for a total of $750,000. This is in addition to
SINA and Trinity's current total commitment to the Office of over $3.1
million.
SUMMARY
Responding to the escalating crime and unemployment in Hartford,
the $175 million Neighborhood Initiative is an ambitious, yet
realistic, solution to revitalizing the economically depressed
community of South Hartford. The Initiative has brought together all
aspects of the community, state and local governments to work together
to help the area regain its economic and social stability to create an
environment where businesses and community residents can flourish.
A $4.3 million community and economic development grant will help
Trinity College, its SINA partners and the community to meet this
crucial challenge of revitalizing the depressed areas of Hartford that
surround the college campus and neighboring institutions. The
Neighborhood Initiative will constitute one of the largest reinvestment
efforts in a concentrated area of Hartford. It requires leadership and
commitment and we ask that the Federal government be committed to being
part of the solution.
FEDERAL GRANTS AWARDED
------------------------------------------------------------------------
Dollar amount Dates
------------------------------------------------------------------------
Department of Education
Program:
SEOG 96-7 E-P007A60799/5- $290,718
20107.
CWS 96-7 E-P033A60799/5- 203,495
20109.
PELL 96-7 E-P063P61376/5- 374,371
20105.
Perkins 96-7 E-PO38A60799/0- 55,139
4500.
Department of Housing and Urban 580,000
Development: HUD COPC-CT-0024/
5-20260.
Department of Commerce: 196,452 10/01/96-09/30/98.
Department of Commerce-
Langeland 09-40-96027.
Department of Agriculture: USDA- 43,743 10/15/96-10/31/98.
Archer 96-35311-3811/5- 20237.
Research/Development
NSF-Brown ATM-9424423/5- 73,200 12/01/95-11/30/98.
20201.
NSF-Blackburn BIR-9512508/5- 221,000 08/15/95-07/31/98.
20202.
NSF-Bronzino BES-9509117/5- 75,000 03/15/96-08/31/97.
20203.
NSF-Lang DUE-9653736....... 190,093 09/01/97-08/31/99.
NIH-Bronzino 1 R15 NS/ 109,462 05/28/96-05/30/98.
OD35287-01/5-20222.
NIH-Prigodich 1 R15 GM52712- 105,912 06/01/95-05/31/98.
01/5-20223.
NEH-Lang RH-21201-94/5- 111,000 09/94-08/97.
20230.
NEH-Lang EW-20283-94/5- 87,221 05/25/95-05/25/97.
20232.
------------------------------------------------------------------------
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Prepared Statement of Local Initiatives Support Corp.
The Local Initiatives Support Corporation (LISC) is pleased to
submit this statement regarding fiscal year 1998 HUD Appropriations for
the U.S. Department of Housing and Urban Development (HUD), and in
particular three HUD programs that affect low-income communities--HOME,
CDBG and the National Community Development Initiative.
a new stability for low-income neighborhoods
These three programs, along with the Low Income Housing Tax Credit
(LIHC), have fueled a remarkable if unheralded wave of low-income
community revitalization. Indeed, stability is returning to some of
this country's toughest inner-city neighborhoods. The idea that these
neighborhoods might be salvageable is potentially of great national
significance, because it means that America has begun to find a way to
confront one of its most serious problems. While there are many, many
low-income neighborhoods in deep trouble, there are others with enough
revitalization activity to establish substantial, sustainable progress.
Most of these reviving neighborhoods are still poor and face numerous
hurdles, but the evidence of regeneration is unmistakable: population
has stabilized; physical conditions are much improved; crime is down;
civic engagement is greater; bank lending and property values have
increased; and public services are more responsive. A renewed sense of
hope, pride and responsibility is spreading in the inner-city.
THE ROLE OF COMMUNITY GROUPS
Nonprofit community groups formed by churches, civic associations,
and ordinary residents have led most of the serious neighborhood
revitalization efforts. Government and the private sector have become
critical partners and undertaken subsequent activities, but
neighborhood organizations have usually taken the first initiative.
Nationwide, these community development corporations (CDC's) have
produced hundreds of thousands of affordable homes, and some have
invested in commercial enterprises, or are involved in anti-crime,
child care, job training, health care and other activities. Equally
important, community groups have brought residents together with the
private sector and government to create a new sense of hope for
neighborhoods that the popular press and most other outsiders write off
as irretrievable.
CDC's succeed in so many diverse places because they embrace
mainstream American values. Because these values transcend ideology,
CDC's have been able to generate broad participation and are an
attractive instrument of public policy. We believe CDC's have been
ahead of many of the emerging changes in federal policy.
--Self help.--CDC's are vehicles that community residents create to
take responsibility for improving their neighborhoods and
enforcing pro-social behavior.
--Community building.--CDC's bring people together, reinforce the
social fabric, and bolster community institutions from churches
to little leagues. Their mission to rebuild communities
physically, economically and socially transcends housing or any
other single issue.
--Local control.--CDC's bring decision making down to the
neighborhood level, where it is closest to the people. CDC's
work well with city and state officials.
--Partnership.--CDC's are pragmatic and collaborative, not
confrontational. They recognize that no single organization can
revive a neighborhood alone. CDC's, government, and the private
sector--lenders, investors, property owners, developers,
businesses, foundations, and others--all contribute to and
benefit from community development activities.
--Investment.--The only long-term, sustainable way to revive low-
income communities is through investment, private as well as
public. A principal function of public investment is to
stimulate private investment, create healthy, functioning
markets, and to connect isolated, distressed communities to the
economic mainstream.
--Tangible results.--This is perhaps the most important and
distinguishing characteristic of CDC's. The visible results of
community development, such as housing and retail development,
are verifiable proof that community development works. Less
tangible outcomes--greater community cohesiveness, new
relationships with public and private institutions, stronger
community leadership, and a new sense of hope and progress--are
undeniably important, but it is CDCs' tangible results that set
them apart from many other efforts and impart credibility to
claims of less visible outcomes.
HOW LISC HELPS CDC'S
LISC was created 17 years ago as a nonprofit organization to enable
the private sector to assist CDC's in their efforts to transform
distressed neighborhoods into healthy communities. LISC operates with
the convictions that: community regeneration must come from within the
community itself; that government at all levels, the private sector,
and community residents all have critical roles to play and must work
together as active partners; and that CDC's are the most effective
agents for fighting poverty in the most distressed communities in the
United States.
Our first name is ``Local.'' We are a constellation of 37 local
programs nationwide, a list of which is attached, serving over 100
cities and urban counties. Funds raised locally are matched by national
LISC on a formula basis. Each LISC program is served by local staff and
governed by a local advisory committee. In addition, in November 1995,
we began a new Rural LISC program to invest $300 million through 68
rural CDC's nationwide.
We believe that engaging the private sector is essential to the
community development process. Private involvement is not a substitute
for governmental funding, and public funds are necessary to make
private investment feasible. But community development requires that
isolated neighborhoods join the economic mainstream. Not only is the
active involvement of the private sector necessary to community
development, but business leaders genuinely want to participate. It is
our job--and, we would assert, the government's job as well--to create
opportunities for them to do so.
Our primary focus has been to build the financial and technical
capacity of CDC's to sponsor housing and commercial development
projects. We provide project financing and technical support to CDC's:
grants, loans, recoverable grants, equity investments and loan
guarantees for project development, operating support, and up-front
predevelopment costs. Since 1979, LISC has provided $2.2 billion in
grants, loans and equity investment to over 1,400 CDC's nationwide. The
funds have, in turn, leveraged an additional $3.1 billion in financing
to build or rehabilitate over 68,000 homes and apartments and create
9.6 million square feet of commercial and industrial space. We provided
$481 million in grants, loans, and investments to CDC's in 1996 alone.
LISC has also expanded the scope of our support for the wide range
of activities undertaken by CDC's including social community
development, and a wider range of economic development activities.
HUD'S ROLE
We believe that, in general, HUD's role should be to support the
efforts of local communities to meet their housing and community
development needs. Two HUD programs that do just that are the HOME
Investment Partnerships Program (HOME) and the Community Development
Block Grant (CDBG). They, along with the Low Income Housing Tax Credit
(LIHC), have fueled the neighborhood revival process. The constraints
on HOME, CDBG and LIHC's are now a principal bottleneck constraining
neighborhood revival. In many cities, competition for these scarce
resources means that many important projects must wait two or three
years to get funding, and private investment is being choked off. We
may be losing this historic opportunity to reclaim not just
neighborhoods and the families who live there, but something even more
precious: our self-confidence as a nation to solve our most difficult
problems.
Attached to this testimony are seven descriptions of projects
developed with the help of HOME and/or CDBG funds. We believe these
stories will help illustrate the important work both programs help to
produce.
HOME.--HOME is now seen as HUD's most important tool for producing
affordable housing and an indispensable resource for nonprofit and for-
profit sponsors and state and local governments.
The National Housing Task Force, convened in 1987, conceived what
in 1990 became the HOME program as the centerpiece for the Cranston-
Gonzalez National Affordable Housing Act. Congress and the task force
intended HOME to be a flexible resource to strengthen state and local
housing production systems, in stark contrast to previous federally
driven approaches, and to engage CDC's and private developers,
investors, and lenders as active partners in the process.
Since 1993, when regulations implementing crucial amendments were
issued, HOME has become an invaluable resource. States and localities
have been spending funds expeditiously. HOME has already assisted over
230,000 housing units at an average HOME contribution of $19,800. In
addition, roughly 31,000 families are receiving HOME tenant-based
rental assistance. HOME is combined effectively with other sources of
financing and works extremely well with the Low Income Housing Tax
Credit program. Each dollar of HOME has attracted an additional $1.79
of other funds; LISC has participated in the financing of many of these
properties.
We are especially pleased by the way HOME is helping to forge new
local partnerships with CDC's. We strongly support the 15 percent set-
aside of HOME funds in each state and locality for nonprofit Community
Housing Development Organizations (CHDO's), whose definition
accommodates the vast majority of CDC's. In addition, the 1992
amendments permit states and localities to use up to 5 percent of their
HOME funds to support the operational expenses of CHDO's. These
provisions have sparked new and greater opportunities for CDC's. Where
CDC's and state and local governments already had good relationships,
HOME has strengthened and deepened those relationships. Elsewhere, HOME
has brought CDC's and state and local governments together for the
first time.
CDBG.--The Community Development Block Grant program has for many
years been a critical resource for CDC's and low-income communities
generally. While HOME has focused primarily on housing production, CDBG
is used for a broader range of activities critical to low-income areas,
including economic development, community facilities such as health
clinics, day care centers, and youth recreation centers,
infrastructure, and certain public services. Numerous CDC's use CDBG
for a wide range of activities and the vast majority of funds benefit
low-income people and areas. In fact, in a major 2\1/2\ year study of
the program, the Urban Institute concluded: `` * * * in every city,
neighborhoods would have been worse off had the program never existed,
and certainly, cities would not have embarked on the housing and
redevelopment programs that now comprise a core function of municipal
government.''
Over the last three years, Congress has shown its support for HOME
and CDBG by providing them level funding during a period of severe
pressure to reduce the domestic budget. Achieving level funding was
seen as a success since many other HUD programs were cut deeply. Yet,
continuing to deny increases to these programs is no longer
satisfactory.
We urge Congress to continue its strong past endorsement of both
programs by approving modest increases in their appropriations. We
support fiscal year 1998 appropriations for the HOME program of at
least $1.5 billion--a $100 million increase over the fiscal year 1997
appropriation of $1.4 billion. For the CDBG program, we support an
appropriation of at least $4.6 billion for the core CDBG program
allocated to states and localities. All funding for new or existing
set-asides within the program should be either funded as separate
programs or provided funding in addition to the $4.6 billion.
national community development initiative
Just like private business, CDC's start small and grow over time.
As CDC's grow, they can take on new and more complex challenges, but
again, similar to small businesses, they can experience growing pains.
Capacity building programs are needed to help CDC's successfully manage
growth to become financially stable, sophisticated organizations,
poised for even greater productivity. Capacity building may include
board and staff training, funds for equipment, asset management
training, and a wide assortment of other activities geared towards
strengthening the operations of CDC's.
One successful capacity building program is the National Community
Development Initiative (NCDI). LISC helped to conceive the NCDI under
which seven private foundations and the Prudential Insurance Company
provided $62.8 million in grants and loans to assist CDC's in
developing 4,400 affordable new homes. LISC and the Enterprise
Foundation administer the funds. In 1993, the Congress authorized and
appropriated $20 million for HUD to contribute for the second phase of
the program. This modest federal participation attracted $87.7 million
in grants and low-interest loans from 10 national foundations and
corporations as match for the federal funds. LISC and Enterprise have
passed every federal grant dollar through to CDC's primarily for
capacity building activities. Over the course of the program, over
15,000 units of affordable housing have been made possible by this
partnership. We expect these nationally raised funds to generate at
least another $1.4 billion in project financing and other support, a
remarkably effective use of federal funds. In 1996, another $10 million
NCDI participation was approved as part of the HUD Extender Bill. Along
with the $10 million requested by the Administration for fiscal year
1998, we expect this HUD participation to attract even higher levels of
private sector participation in the NCDI program.
The Administration is requesting an additional $10 million for the
National Community Development Initiative (NCDI) as a set-aside within
the CDBG program for fiscal year 1998. We support at least this funding
level for NCDI as a separate account.
CONCLUSION
America faces its most pressing problems--adjusting to economic
change, controlling crime, improving public education, and reducing
welfare dependency--most intensely within the inner city. We as a
nation cannot successfully meet these challenges unless we take them on
in the cities. Nor can the cities consolidate and build on their
nascent recovery unless they effectively meet these same challenges.
What is new is that effective local initiatives, bolstered by six years
of economic expansion, have created an organizational, economic,
social, and physical foundation on which to build.
So, Congress deserves praise for rewarding the good performance of
the HOME and CDBG programs by maintaining level funding for the past
three years. However, we support an increase in both programs as well
as funding for NCDI, to help continue to support the efforts of
effective community groups.
This concludes LISC's statement.
35 LISC PROGRAM AREAS
Baton Rouge, Bay Area, Boston, Chicago, Cleveland, Connecticut
Multi-Cities, Detroit, Hartford, Houston, Indiana Statewide, Northwest
Indiana, Indianapolis, Kalamazoo, Kansas City, Little Rock, Las Vegas,
Los Angeles, Greater Miami, Michigan Multi-Cities, Milwaukee, Mid-South
Delta, Monongahela Valley, New Orleans, New York City, Newark, Palm
Beach County, Philadelphia, Phoenix, Puget Sound, Rhode Island,
Richmond, San Diego, St. Paul, Toledo, and Washington, DC.
______
kansas city cdbg project
Project Name.--Metropolitan Homes
Project Address.--31st and Brooklyn, Kansas City, MO.
CDC Sponsor(s).--CDC of Kansas
Number of Units.--60
CDBG Funds.--$1,200,000
Total Project Costs.--$5,479,637
Metropolitan Homes is a newly-constructed affordable rental housing
project built with the intent to meet the diverse needs of residents
living within the Linwood/Prospect area. Located within Kansas City's
core urban communities, this area was once known for having the highest
crime rate, three times the poverty rate, twice the unemployment rate
and half the median housing value of the city. In order to address
chronic distress of abandoned buildings, drug dealing and middle-class
flight, the Community Development Corporation of Kansas City (CDC-KC),
developed Metropolitan Homes.
CDC-KC is a non-profit community-based organization founded in
1970. Since its inception, CDC-KC has primarily concentrated on
commercial redevelopment. However over the past eight years, CDC-KC has
vigorously pursued a multi-faceted community development strategy,
including housing and commercial development and social service
activities. During this time, CDC-KC produced over 150 homes affordable
to low- to moderate-income families. With a staff of 13, the CDC-KC has
helped create more than 1,200 new jobs, including 560 jobs to construct
and operate of three commercial retail centers.
CDC-KC provides a broad range of services for its tenants and
community residents. For example, home healthcare service is available
for residents with special needs, while a transportation company
provides reverse commute services to Metropolitan Homes residents at a
reduced cost.
Metropolitan Homes is a 60-unit project comprised of five buildings
with 12 apartments each, half of which have garages. Each two-bedroom
unit contains nearly 900 square feet of living space. The apartments,
which rent for $400 a month on average, provide homes for ten families
with incomes at or below 50 percent of area median income ($23,150 for
a family of four), and 50 families that earn no more than 60 percent of
the area median income ($27,780 for a four-person household).
A host of public and private organizations contributed to make this
project possible. CDC-KC received a ten-year tax abatement on the
property by the city. The National Equity Fund invested $2.7 million
through the Low Income Housing Tax Credit program while Boatmen's Bank
and the Housing Development Corporation and Information Center made
construction loans for $1.1 million and $1 million, respectively. An
allocation of $1.2 million in Community Development Block Grant funds
was made by the City of Kansas City. In addition, the Kansas City
Redevelopment Authority cleared the land and did preliminary site work
at no cost.
Due to the proximity of the property to the Metropolitan Missionary
Baptist Church, CDC-KC formed a strong bond with this active
institution. The church played a leadership role in finding tenants,
which happened in less than 90 days. Today, many church members are
Metropolitan Home residents.
Metropolitan Homes is part of broad long-range economic
redevelopment plan developed by the CDC-KC. The apartments are not only
conveniently located within walking distance of churches and schools,
but are adjacent to other CDC-KC developments such as the Linwood
shopping center area and a retirement community.
The fact that Metropolitan Homes provides a safe environment and
source of quality housing for its residents has not gone unnoticed.
Last year, CDC-KC was honored with the Maxwell Award of Excellence from
the Fannie Mae Foundation for its innovative approach to the
development of Metropolitan Homes. In their support for nominating
Metropolitan Homes for an award, its residents said that living there
``gives them a sense of security and comfort''. Moreover, one widowed
resident, wrote: ``It's clean, quiet and private, a place where my
daughter and I can call home''.
north little rock home project
Project Name.--Argenta Home Rehabilitation
Project Address.--108 Melrose Circle North Little Rock, AR.
CDC Sponsor(s).--Argenta Community Development Corporation
HOME Funds.--$27,200
Total Project Costs.--$63,000
For many years, the historic Argenta neighborhood of North Little
Rock, Arkansas maintained the highest crime rate in the city. Yet, many
dilapidated single family bungalows and vacant lots offered
opportunities for development. In 1994, the Argenta Community
Development Corporation (Argenta CDC) was created by residents who had
formed a Booster Club to identify properties which needed substantial
improvement. Argenta CDC enjoys a strong base of neighborhood support,
with over 270 people on the CDC membership list.
In just two short years, the CDC's efforts have brought more than
$1.6 million into Argenta to renovate single-family homes. A total of
23 single-family have been rehabilitated. Sales of renovated homes have
been swift, and the transformation of the area has been remarkable. A
neighborhood once plagued with crime and instability is home to new
homeowners in well-maintained houses. More families have been moving
back into Argenta, crime rates have plummeted and a new sense of
neighborhood pride is spreading.
One of the homes Argenta CDC assisted was 108 Melrose Circle.
Originally constructed in 1924, the house remained abandoned for
several years prior to the Argenta CDC's purchase. The house was in
disrepair from years of neglect and a series of haphazard and unsafe
additions. It also represented an arson risk. The CDC's improvements to
the house resulted in the creation of a 3-bedroom, 2-bath home to
accommodate Michelle Martin and her family.
Michelle Martin was born in North Little Rock. One of five
children, she was raised by a single mother in a poor area of the city.
Michelle became a single unwed mother herself at age fifteen and left
school after the ninth grade.
As an adult, Michelle lived in public housing for seven years, and
was supported by welfare and food stamps. In 1985, through her own
efforts, her life began to take a turn for the better. She became an
employee of the North Little Rock Public Schools, and is now a
supervisor of a school cafeteria where she earns $11,000 annually.
Currently, she is also working towards her GED. Within the last two
years, Michelle successfully completed self-sufficiency classes offered
by the North Little Rock Housing Authority, and was among the first of
many low-income home buyers to seek assistance from Argenta CDC. She
completed home buyer counseling classes.
To help make Michelle's dream of homeownership a reality, $27,200
in HOME funds helped finance construction and her mortgage. The Argenta
CDC Board approved the application for HOME funds in recognition of
Michelle Martin's remarkable ``Welfare to Work'' life story. Other
financial partners include First Commercial Bank and Metropolitan Bank
which provided a line of credit for contractors. The Community
Development Agency of the City of North Little Rock and ARKLA, the
local gas company, provided a grant for gas street lamps for all of the
Argenta rehabilitated homes.
With help from the HOME program, Michelle was able to purchase her
home and is now one of nineteen home owners residing in Argenta CDC-
assisted homes. She lives with her three children and one grandchild.
When asked about her new home, Michelle states, ``It is everything I
always desired, more comfortable than any place I have ever lived. I
thank Argenta CDC for helping me make my dream of owning my own home
come true.
newark home project
Project Name.--St. James CDC, Phase II Rentals
Project Address.--134-148 Broad Street, Newark, New Jersey
CDC Sponsor(s).--St. James CDC
Number of Units.--30
HOME Funds.--$500,000
Total Project Costs.--$3,402,913
The St. James community is known as a neighborhood with garbage and
debris strewn vacant land, blatant drug dealing and businesses. Located
in the lower Broadway prostitution, and abandoned neighborhood section
of Newark's North Ward, St. James is lacking retail services and public
parks and playgrounds are scarce. Supermarkets or pharmacies are absent
while highly priced mini-markets serve as substitutes through-out the
area. Renters outnumber homeowners by a ratio of 4 to 1. About half of
St. James' residents are housed in properties built before World War
II, while very little new housing stock exists.
With a 90 percent minority population, the St. James neighborhood
is rated the third poorest section in the City of Newark. Over 41
percent of all families in St. James live below the poverty level in
contrast with 23 percent of families city-wide. Renters regularly pay
more than half of their household income for shelter.
St. James Community Development Corporation, incorporated in 1992,
was originally established as St. James Square Housing Corporation in
1989. It was responsible for planning the St. James Square housing
project in conjunction with the Episcopal Diocese of Newark. St. James
CDC's mission is to provide a vehicle for neighborhood-based efforts to
affect systemic change in the community's physical and social well-
being.
While serving as sponsor for affordable housing and other community
development projects, St. James CDC also builds partnerships with other
organizations to meet identified community needs. Recently, St. James
Community Development Corporation and La Casa de Don Pedro, a
neighboring CDC, agreed to jointly undertake a comprehensive community
revitalization process. The goal of this collaboration is to transform
the Broadway section of North Newark into a dynamic and viable
community. The collaborative effort will oversee the construction of
150-200 additional units of affordable housing, strengthen and develop
the local economy, and stimulate the social fabric of the community
through the provision of social services. Phase II, a historic
restoration project, was St. James' second housing venture. The nine
historic limestone and brownstone townhouses, dating back to 1893, were
recently placed on the National Register of Historic Places by the
Department of the Interior. They are unique Italian-influenced,
Renaissance Revival rowhouses, three stories high with an elevated
basement. They were renovated to retain their original look by
utilizing the authentic woodwork and moldings.
The project will house 30 families in 1 four-bedroom, 24 two-
bedroom, and five three-bedroom apartments. Six units were reserved for
recently homeless families. All of the apartments are rented by
families at or below 50 percent of area median income.
Funding for Phase II included $500,000 in HOME funds, grants from
the State Department of Community Affairs Balanced Housing Program and
contributions from the Episcopal Diocese of Newark. The National Equity
Fund raised $449,000 in equity through Low Income Housing Tax Credits.
Other partners included Thrift Institutions Community Investment
Corporation of New Jersey, and the Federal Home Loan Bank of New York's
Affordable Housing Program.
As stated by Mayor Sharpe James, ``Newark, the third oldest major
City in America after New York and Boston, is a leader in urban
renewal. We see a rebirth for Newark's neighborhoods in preserving
these magnificent historic properties.'' The restoration of the
limestone rowhouses signifies the completion of a neighborhood
revitalization plan by St. James CDC to rebuild the community's
affordable housing base.
houston cdbg project
Project Name.--Heritage Homes--Phase I
Project Address.--5th Ward Community, Scattered Sites, Houston,
Texas
CDC Sponsor(s).--Fifth Ward Community Redevelopment Corporation
CDBG Funds.--$450,000
Total Project Costs.--$2,250,000
The 5th Ward has the lowest income in the city with sixty-two
percent of the residents living below the poverty line. Houston's 5th
Ward Community Redevelopment Corporation (CRC) was organized in 1989 by
5th Ward residents, business owners, ministers, educators and civic
leaders to be a catalyst for rebuilding a healthy community through
housing and business development, neighborhood safety and
beautification. The CRC has either built or rehabilitated over 100
affordable for-sale homes for low-income families in the community.
Some of the CRC's accomplishments include the rehabilitation of two
historic homes, the creation of a chamber of commerce for neighborhood
businesses, and neighborhood safety-related improvements. In the near
future, CRC plans to develop a day care center, a mixed commercial and
residential project, and affordable rental housing units.
Heritage Homes I is the first phase of a multi-phase project to
develop 150 affordable single family homes for the 5th Ward
neighborhood. The project includes homes that range in size from 2 to 4
bedrooms with up to 1,700 square feet of living space, constructed on
scattered sites in the northeast corner of Houston's Central Business
District. The project will be developed over the next three years.
Heritage Homes is giving 30 families the chance to purchase newly built
single family homes. Phase II is scheduled to produce forty more homes
in 1997. Administered by the City of Houston, a Community Development
Block Grant (CDBG) grant of $450,000 was used to write down loans, pre-
pay development costs, and finance closing costs for homebuyers.
Private partners such as Bank United assisted with permanent financing.
The project represented the first affordable for-sale housing units
built in Houston's inner-city in years. Homeownership opportunities are
finally a reality for 5th Ward families desiring quality affordable
housing.
Since its development, Heritage Homes I has not only increased home
ownership but also made a significant contribution to improving the 5th
Ward housing stock. Moreover, community residents observed how Heritage
Homes I became a catalyst for additional development and investment in
the community. Now several private developers are interested in
developing and investing in the area due to its close proximity to
downtown Houston. One such example is Texas Commercial Bank, which in
its new location, will be the first financial institution in the 5th
Ward community in over 30 years. The 5th Ward community has also
recently welcomed a Walgreens drug store and a retail commercial
business.
houston home project
Project Name.--Plaza de Magnolia Apts.
Project Address.--7310 Sherman, Houston, Texas
CDC Sponsor(s).--Association for the Advancement of Mexican
Americans CDC (AAMA CDC)
Number of Units.--84
HOME Funds.--$420,000
Total Project Costs.--$4,542,000
The East End neighborhood of Houston is predominately Hispanic, and
is comprised of approximately 85,000 residents, many of whom are Latin-
American immigrants. This community has experienced many years of
disinvestment and neglect during which the housing stock deteriorated
and dozens of apartments were lost to demolition. It is estimated that
there is a need for at least 10,000 units of affordable family housing
in the East End neighborhood. For the first time in more than 30 years
new affordable homes were developed in a project called Plaza de
Magnolia Apartments.
Sponsored by the CDC affiliate of the Association for the
Advancement of Mexican Americans, Plaza de Magnolia was developed by
one of the largest Hispanic non-profit social service agencies in
Texas. AAMA has provided educational and social services to the East
End community for 25 years. The CDC is a non-profit, tax-exempt
organization, established to encourage the development of affordable
housing opportunities and other projects to meet the East End's
community development needs.
Plaza de Magnolia Apartments has 84 new rental units ranging from
one- to three-bedrooms for individuals and families. Rents, ranging
from $375 to $525 per month, are affordable to the tenants whose
incomes range up to $19,800 for individuals and up to $32,000 for a
family of four. Partners in the project include Homes for Houston
Organization, a city-sponsored non-profit corporation that serves as a
clearinghouse of affordable housing information for Houston's
residents. Project financing includes $2,435,000 in equity raised using
Low-Income Housing Tax Credits provided by LISC's National Equity Fund,
and a first mortgage of $1,688,000 from the Bank of United Texas.
Administered through the City of Houston, federal HOME funds provided
$420,000 in gap financing of the $4,542,000 total development costs.
Plaza de Magnolia Apartments is providing safe, decent, and
affordable housing opportunities and is stimulating private investment
in the neighborhood--breathing new life into a once dying community.
san diego home project
Project Name.--Mercado Apartments
Project Address.-- 2001 Newton Avenue, San Diego, California
CDC Sponsor(s).--Metropolitan Area Advisory Committee on Anti-
Poverty of San Diego County, Inc. (MAAC Project)
Number of Units.--144
HOME Funds.--$758,600
Total Project Costs.--$12,377,000
For six years, Sonia Rodriquez and her three children shared a two-
bedroom apartment with her sister, Sandra Le, her brother-in-law and
their three children in the Barrio Logan Community. Sonia and her
children slept in one bedroom while Sandra, her husband and children
slept in the other. Sonia, 34, recalls, ``When my children Fabian, 12,
Laiza, 10 and Vicki, 5, were small, it (their living conditions) was
O.K. and we dealt with it, but as they were growing up their needs for
their privacy grew, especially for Fabian, my son.'' So when Sonia's
application was accepted for a new three-bedroom, two bath apartment at
the Mercado Apartments, she was very excited. ``When my family and I
moved into our apartment, it was like we won the lottery!'' she
exclaimed.
Developed on an industrial lot once owned by a utility company,
Mercado Apartments is a 144 unit family rental development located
adjacent to Chicano Park, across the San Diego Bay from Coronado. The
development created 144 family apartments including 18 one-bedroom, 60
two-bedroom, and 66 three-bedroom family dwellings
All of the apartments are affordable to families who earn 60
percent or less than the area median, or $27,000 for a family of four.
Residents of Mercado Apartments use on-site social services such as a
Head Start daycare facility and job placement program. While Chicano
Park has been a symbol of Latino activism and cultural pride since
1970, Mercado Apartments represents a symbol of renewed community
spirit and revitalization as the first major residential development in
Barrio Logan in more than 50 years.
The nonprofit sponsor and co-developer of Mercado Apartments is the
Metropolitan Area Advisory Committee, also known as the MAAC Project.
The MAAC Project has been serving low-income people of San Diego County
since 1965. It is dedicated to building mixed-income, multi-ethnic,
service-enhanced and self-sufficient communities in San Diego County.
The MAAC Project combines its community base with professional services
to the Latino community, such as alcohol and drug recovery counseling.
For the past 17 years, an ongoing public/private partnership effort has
existed between the MAAC Project and neighborhood residents, the City
of San Diego, and the financial community to improve the living and
working conditions of the Barrio Logan population. The MAAC Project has
also developed ten homes for first-time home buyers, and is currently
developing both Boston Gardens, a housing facility for persons living
with HIV-AIDS, and a retail center.
A financing collaborative for Mercado Apartments was made possible
with nearly $760,000 in HOME funds through the San Diego Housing Trust
Fund, and about $3 million dollars in low-interest loans from the City
of San Diego Redevelopment Agency. Almost $5 million in equity was
raised by the California Equity Fund and a grant of $800,000 was
provided by the Affordable Housing Program.
The Mercado Apartments is seen as a focal point for future
redevelopment activities in the Barrio Logan community. The development
not only attracted current residents like Ms. Rodriquez, but has made
it possible for former residents to return to the neighborhood. This
renewed interest reverses the trend of neglect, abandonment,
disinvestment and out-migration. In addition, other new developments
are springing-up. One example is an ambitious plan for a future 100,000
square foot project called the Mercado Commercial Center. The center
will be adjacent to the apartment complex and plans to include a major
supermarket, retail shops, and a neighborhood theater.
``Slowly but surely, nonprofits and government agencies are joining
hands to complete these projects and reclaim hope in this beleaguered
community'', says Rich Juarez, director of the MAAC Project.
Several local and national awards have recognized the MAAC
Project's efforts to create affordable housing. Mercado Apartments won
Honorable Mention from the Affordable Housing Tax Credit Coalition's
1995 Excellence Award competition and was an alternate in the Fannie
Mae Foundation's Maxwell Award competition. The project was also the
Nonprofit Federation for Housing and Community Development Project of
the Year for 1994 and won the San Diego Housing Commission Community
Partners Award.
The greatest reward, however, is the sense of renewed hope and
neighborhood pride for Ms. Rodriquez and the 560 Mercado Apartment
residents. At the apartments, Sonia is very busy with tenant
activities. She works and volunteers at the nearby Perkins Elementary
School attended by her two oldest children. She bakes cupcakes for the
Friday night movies, and helps with yard sales, holiday parties and
potlucks. She also attends parenting classes sponsored by the San Diego
Urban League. Getting involved has become a family affair for Sonia and
her sister. Sonia was recently elected Vice-President of the Mercado
Apartments Tenant Association while Sandra Le was chosen as Treasurer.
The town-like, family-oriented atmosphere is enhanced by the
security Sonia's family feels as Mercado Apartment residents. ``When my
friends come from outside to the apartments'', she says, ``they are
always comfortable, and you feel very proud to live here.''
cleveland home and cdbg project
Project Name.--Willow Rose Homes
Project Address.--Scattered Sites in Glenville and Forest Hills
Cleveland, Ohio
CDC Sponsor(s).--Northeastern Neighborhood Development Corporation
and Lutheran Housing Corporation
Number of Units.--56
HOME Funds.--$200,000
CDBG Funds.--$300,000
Total Project Costs.--$5,400,000
The Willow Rose project was co-developed by two community
development corporations (CDC's): the Northeastern Neighborhood
Development Corporation (NNDC) and the Lutheran Housing Corporation
(LHC).
NNDC serves the residents of Ward 9, which includes the Forest
Hills, Glenville and South Collinwood neighborhoods in Cleveland.
Founded in 1994, NNDC's mission is to improve the community through
organizing, code enforcement, home repair, housing rehabilitation,
construction and commercial development. Since 1994, NNDC has completed
56 units of housing and has constructed 46 new homes. With the support
of Congressman Louis Stokes, NNDC recently completed an ambitious
planning effort for Lakeview Ave., the major commercial artery for the
neighborhood, which will create significant residential and commercial
development.
LHC was founded in 1973 as an initiative of the Lutheran
Metropolitan Ministries to assist low and moderate income families
obtain and maintain quality affordable housing. Currently they provide
housing counseling, energy conservation, elderly home repair, furnace
repair and a tool loan program. In addition, LHC is implementing a
long-term comprehensive housing program in East Cleveland. Their
current projects include renovating and selling existing homes,
repairing occupied homes and providing pre-purchase and foreclosure
prevention counseling. LHC's other major programs include involvement
in a county-wide program to renovate and sell vacant HUD houses, and to
act as co-developer with emerging CDC's involved in both homeownership
and housing credit projects throughout Cleveland.
Willow Rose is one of the most well-known and successful
collaborations between NNDC and LHC. Named for Cleveland's City
Councilmen Craig E. Willis and Roosevelt Coats, from Wards 9 and 10
respectively, Willow Rose is 56 new and rehabilitated single-family
homes scattered among various sites within the Glenville/Forest Hills
neighborhoods. Forty-six of the homes provide affordable rental housing
to families with an option to purchase after 15 years. The remaining 10
new homes were sold to families at market rate ($90,000-$100,000) with
a deferred second mortgage provided by the City of Cleveland.
Financing for the 46 leased homes includes a combination of
$200,000 in HOME funds from the State of Ohio, $3,105,000 in Low Income
Housing Tax Credit equity, and $300,000 in CDBG support from the City
of Cleveland. These homes are being leased to families making
approximately $25,000 annually.
The strategic reinvestment of $5,400,000 back into the community
not only offers quality and affordable housing to residents, but it has
further strengthened the housing market for the whole community. The
sale of the new homes for $90,000--$100,000 demonstrates that the
market is rebounding and that people want to come back to Cleveland's
neighborhoods.
All homes have a full basement and attached garage. Standard
amenities include laundry rooms, central air conditioning, dishwashers
and large landscaped lots. Many of the homes have vaulted ceilings. New
homeowners also enjoy the option to select upgrades like fireplaces or
bay windows to personalize their homes to reflect their own tastes and
needs. NNDC continues to provide training to families on how to
maintain their homes, upgrade their landscaping and annually they have
Christmas and Halloween parties for the families.
Very little marketing was necessary since news of the project
spread quickly by word of mouth, reaching one former Glenville resident
named Crystal Washington. Before returning to Glenville, Crystal lived
in a tiny two-bedroom apartment in Euclid, a suburban community of
Cleveland with her two daughters. Her former home had no yard. As a
single mother expecting a third child, Crystal paid more for renting
the apartment than the monthly lease payment for a Willow Rose home.
Today at Willow Rose, Crystal lives in a 1,350 square foot, three-
bedroom house with her three daughters. There is a large yard with
plenty of room for the children to play. An avid gardener who likes to
work with flowers, Crystal is known to have one of the best-looking
backyards in the neighborhood! Before moving in, Crystal and all other
new Willow Rose residents participated in orientation and maintenance
workshops to learn the basics of upkeep of a house, developing them
into ``perfect homeownership material''.
Currently, all of the homes are fully occupied. The lease-purchase
program of Willow Rose Homes has had a major impact on the Glenville/
Forest Hills community. The attractive family homes gave families like
Crystal's an affordable opportunity for homeownership, a more stable
environment for their children, and instilled in them a sense of
neighborhood pride. By giving it a new face-lift to create stability
for its residents, Willow Rose Homes has encouraged additional
investment in the Glenville/Forest Hills neighborhood.
______
Prepared Statement of Henry M. Cagey, Chairman, Lummi Indian Nation
The Lummi Nation supports the Native American Housing Assistance
And Self-Determination Act Of 1996 (NAHASDA). The Lummi Nation was one
of the Tribal governments which entered into discussions with the HUD
Office of Native American Programs to support their administrative de-
regulation and the legislation to create the Block Grant Program. The
Lummi Nation views the development of the Housing Block Grant Program
as an integral part of our overall goal of Self-Governance within the
American family of governments.
This act enables Tribal governments to develop and implement a
comprehensive plan consistent with actual Tribal housing needs and
resources to meet local housing needs, which was not previously
available. The need for a new approach is obvious. After over 30 years
of working with the HUD Indian housing program the members of the Lummi
Nation continue to suffer from the lack of safe, affordable and
standard housing. Approximately 40 percent (2,200 people) of all Lummi
Nation members are either homeless or housed in substandard housing or
housing which cost more than 30 percent of their monthly income.
THE ADMINISTRATION'S BUDGET PROPOSAL FOR FISCAL YEAR 1998
The Administration's budget proposal for HUD reflects the
President's commitment to balance the federal budget by 2002. As a
result, the Administration proposes allocations for the next five
years. The proposed budget recognizes NAHASDA and combines several
categorical grants for Indian housing into one block grant. It proposes
$485 million for fiscal year 1998, and for each of the following four
years. The proposed budget also allocates $3 million for the Indian
Housing Loan Guarantee program (Section 184) which will leverage
approximately $36 million per year through 2002.
Lummi Indian Nation 1998 appropriation requests: $148 million
Funding for Tribal Planning and Implementation; $850 million for Basic
Affordable Housing Activities; $32 million Funding to Support our
Access to Private Financial Resources; and $6 million Section 184 Loan
Guarantee Program.
$148 million funding for tribal planning and implementation
Tribes and Tribal Housing Programs need adequate dollars for
additional implementation costs now necessary to carry out the block
grant. The NAIHC estimates that tribes and Tribal Housing Programs need
$148 million to plan, manage and administer the grants as well as to
undertake the environmental reviews that are now their responsibility.
Funds are also needed for planning and technical assistance to further
prepare Tribal Housing Programs and tribes for NAHASDA. Some tribes
lack the capability to adequately manage and oversee their housing
programs. Insufficient funding only compounds this problem.
$850 million for basic affordable housing activities
Mr. Chairman, the Administration's budget proposal for Indian
housing falls far short of our need. The National Indian Housing
Council (NAIHC), estimates that approximately $850 million will be
needed to address the current housing need in each of the next five
years. This is significantly more than the amount proposed by the
Administration, which is ultimately a compounded cut, due to inflation,
for each year after fiscal year 1998. Each year inflation will eat at
our precious dollars and each year their value will dwindle.
With the passage of NAHASDA, NAIHC estimates that approximately 30
more tribes can participate. These are, in large part, federally
recognized tribes that have not previously participated in the housing
program and new federally recognized tribes that are now eligible. The
program is already seriously under-funded given current housing needs,
provides no increase for inflation, nor does it account for new
participants who are now eligible.
$32 million funding to support our access to private financial
resources
The Administration has provided no funding for the Loan Guarantee
Program known as Section 601. The Lummi Nation is extremely
disappointed that the Administration has failed to fund Section 601. We
hope that this does not signal their abandonment of this mechanism to
enable Tribal governments to access private financial resources. With
zero funding until 2002, millions of private dollars will escape our
reaches while we scramble to stretch declining federal housing dollars.
Indian Country must wait, in spite of the acute human need, while the
federal government solves its fiscal problems.
NAHASDA will allow us to meet current needs by guaranteeing, to
private lenders, future financial resources. The Act provides for a
Loan Guarantee program (Section 601), similar to the Community
Development Loan Guarantee (Section 108) used in the rest of America.
Section 601 will allow us to guarantee future dollars, using private
lenders, to finance housing projects that we can begin building now.
The leveraged amount could be as much as $400 million. Section 601 is
essential for Indian reservations and Native communities in an era of
declining federal housing dollars. It is an indispensable tool that
will help us move private financing into our communities where few
private lenders dare to venture. Mr. Chairman and Members of this
Committee, without this option Indian people will remain solely
dependent on decreasing federal dollars for which there are countless
competing forces.
The Lummi Nation supports the NAIHC estimate that the Loan
Guarantee Program needs about $32 million in credit subsidy. This small
investment could potentially leverage twelve times more in private
housing funding, or $400 million. It seems a minor amount in comparison
to the huge contribution it will bring to our impoverished Native
American communities.
$6 million section 184 Loan Guarantee Program
Mr. Chairman, the Lummi Nation supports the NAIHC request of $6
million for the Indian Housing Loan Guarantee Program (Section 184).
Congress created this program in 1992 and appropriated its first $3
million in fiscal year 1993. This funding however, has not changed
since 1993. The Section 184 program is well-received and well-known in
Indian country. Each year appropriations for Section 184 are used, and
demand is growing. HUD expects to commit its fiscal year 1997 Section
184 appropriation months before the September 30 deadline.
LUMMI INDIAN NATION HOUSING NEEDS
Current housing needs.--Overall housing need--893 families (nearly
2,200 people).
Rate of increasing need.--The need for housing is increasing at the
rate of 55 units per year based on the annual birth rate of 112 per and
the rate of household formation.
Cost of current backlog.--At an average cost of $80,750/per housing
unit the total costs to meet the existing backlogged housing needs of
the Lummi Indian Nation would be $66 million.
Infrastructure needs.--Infrastructure development including access
roads, water lines and sewer lines and pump stations needed to support
the housing need would cost an additional $22 million.
Impact of welfare reform.--The impact of welfare reform on members
of the Lummi Indian Nation is anticipated to be severe. We anticipate
that those persons currently on our Housing waiting list will be the
most severely impacted. These families are now facing substandard
housing and a rental market which prices them on the outside looking in
on the prosperity of the mainstream American economy. The current
prosperity of America is still a dream for most residents of our
Reservation. There is no booming local economy waiting to absorb low
skilled and in many cases workers without even basic communications
skills of reading and writing. With nearly 1,000 families dependent on
income transfer programs housing will be a major issue in their
transition from dependency to prosperity.
The Administration proposes programs that housing authorities will
be able to use for creating jobs, linking welfare recipients to jobs,
and leveraging funds to increase job opportunities. Who pays the rent
when welfare payments stop? How will tribes and Tribal Housing Programs
make up the difference? Members of this Committee, you must understand
that welfare reform will hit us very hard. The Administration's budget
has not factored the impact of welfare reform into its request for the
Indian housing block grant.
Violence in cluster housing sites.--Over the past five years the
Lummi Nation has documented an increase in youth violence on the
Reservation and particularly in housing cluster sites, which are
modeled after large public housing developments in urban areas. The
divorce of Public and Indian Housing provided by NAHASDA will enable
Tribes to design housing cluster sites which support family
relationships as legitimate sources of behavioral control.
Davis Bacon Act requirements.--We recognize the efforts of the
Committee to relieve us of the burden of complying with the
requirements of the Davis Bacon Act. Unfortunately, these requirements
remain in NAHASDA despite our repeated attempts to remove them. Davis
Bacon does not have the positive benefits to workers that its
proponents are seeking on our Reservation. The administrative burden
imposed by Davis Bacon increases our costs and does not translate into
better wages. We request that these requirements be waived for
Reservation areas and be maintained in areas where there are
demonstrated benefits.
Thirty percent of income rule.--While we appreciate that the
statute provides for rental caps for families who are trying to earn
funds to move out of subsidized rental units it does not allow
sufficient flexibility to work with families with little or no income.
These families comprise the majority of families who occupy our rental
units. Thirty percent of zero is zero. We are requesting approval of a
sliding scale approach to rent rates. This will enable us to set
reasonable rents based on the local market, which recognize the ability
of even the poorest among us to live with dignity by contributing to
the extent that they can to their own support.
LUMMI INDIAN NATION SUCCESSES
Lummi Nation addresses its own housing needs.--Over the last 4
years Lummi Nation Housing Authority has been re-organized to
incorporate it into the management structure of Lummi Nation
Government. Now known as Lummi Nation Housing Program, this program has
revised its housing development, management and transition policies and
procedures. A new housing ordinance has been developed which authorizes
the Tribal Council to address a wide range of housing needs through its
housing, social, health, educational and credit programs.
Lummi Nation accomplishments.--Over the last 4 years Lummi Nation
Housing Authority has constructed 160 new units of housing and
renovated another 60 units of existing housing. The Lummi Nation is
also one of the very few Tribal governments which has been awarded a
HOPE I Grant. This grant is being used to fund the conversions of 50
existing rental units into homeownership units to be purchased by the
current renters. HOPE I funds are also providing an expansion in the
child care facilities available to housing residents.
Also, during the past four years the Lummi Nation has been one of
the most active in the process of developing financial connections with
the local private housing financing.
Section 248 Leasehold Mortgages.--The Lummi Indian Nation was one
of the first to develop the ordinances and procedures needed to enable
Tribal members to finance their homes on reservation trust lands
through the Section 248 Program.
VA Home Loan Program.--The Lummi Nation was the second Tribal
government to receive approval for its Memorandum of Understanding with
the Veterans Administration to enable its Veterans and their families
to participate in the VA Home Loan Program.
HUD Section 184 Loan Guarantee Program.--The Lummi Nation is also
one of the leaders in the use of the Section 184 HUD Loan Guarantee
Program.
Lummi Nation Mortgage Company and Credit Union.--The Lummi Nation
is currently developing on reservation private credit resources, which
include a mortgage financing company and a credit union.
CONCLUSION
Fiscal year 1998 is NAHASDA's first year! A poorly funded program
undermines the historic reform and great promises of NAHASDA. Success
breeds success. If we are successful in informing you of our true
financial needs and if we are all successful in securing the level of
funding we know is needed; then NAHASDA will be a success for Indian
people. If the funding is not adequate and we cannot even fund our
basic operations, then we cannot implement these plans. Our people
cannot live in our plans; promises provide no shelter from the bitter
cold and the grand designs we have supported through NAHASDA will
provide little more than more of the same. Our people need a stable
base from which to launch their escape from poverty to a future of
prosperity. They need housing. Housing on a scale that dwarfs the
current effort. Otherwise, Tribes and Tribal Housing Programs will
begin to question the foundation, meaning, and purpose of NAHASDA. Our
intentions as leaders will be doubted.
Mr. Chairman, I know that you are a supporter of NAHASDA. Our
members are grateful for the changes it will bring. I am sure, however,
that we always knew that without adequate appropriations, our struggle
to house Indian people would fail. A new program that is under-funded--
with funding levels that fail to account literally decades of neglect
or the impact of welfare reform--will be a program that has great
potential, yet ultimately fails to enable Native Americans an
opportunity to achieve goals that other Americans take for granted.
I strongly urge the Committee to reconsider the Administration's
budget proposal and consider the requests of the National Indian
Housing Council and the Lummi Indian Nation.
Thank you.
______
Prepared Statement of Merle Boyd, Acting Principal Chief, Sac and Fox
Nation
Chairman Bond and distinguished Members of the Committee, on behalf
of the Sac and Fox Nation, I thank you for this opportunity to present
the position of the Sac and Fox Nation regarding the fiscal year 1998
appropriations for the Department of Housing and Urban Development,
Public and Indian Housing programs. And, to submit for the record, our
support for this Committee's efforts and those of the Administration
towards the implementation of the Native American Housing Assistance
and Self-Determination Act of 1996.
appropriation needs
The Sac and Fox Nation asks that consideration be given to the
following fiscal year 1998 appropriation requests for the Department of
Housing and Urban Development:
--Increase Indian Housing block grant to $850 million;
--Provide $32 million to implement Section 601--Loan Guarantee
Program;
--Provide $6 million for the Section 184 Indian Housing Loan
Guarantee Program; and,
--Earmark $148 million to new and existing Tribal Designated Housing
Entities (TDHE's) planning and to complete studies to implement
the Comprehensive Housing Plans (CHP's), and conduct
environmental reviews.
BACKGROUND AND HOUSING NEEDS
After thirty years of service to the low-income Indian population
within the Sac and Fox Nation's jurisdiction, we continue to move
forward to meet the housing needs of Indian people. In 1993, the Sac
and Fox Nation was the first Tribe in Oklahoma to remove itself from
State control by establishing a housing authority under the sole
jurisdiction of the Tribe. We have managed our own housing programs
quite well under this structure and welcome HUD representatives to
review and monitoring our operations. The principles of the Native
American Housing Assistance and Self-Determination Act of 1996, are
consistent with our Tribes efforts to self-govern our Indian population
and to work diligently towards meeting the serious shortfall of
providing safe and standard housing. We are actively administering 325
mutual help homes and 44 low rent units with an additional 30 low rent
units underway. These housing developments make a small dent in our
overwhelming housing needs. There are 500 applicants on the waiting
list for mutual help homes and over 100 applicants seeking low rent
housing units. This listing of applicants awaiting housing assistance
serves as a constant reminder of the level of appropriations for
housing in comparison to the identified local housing needs.
NARRATIVE JUSTIFICATION ON REQUESTS
Increase Indian Housing block grant to $850 million
Based on current housing needs for Indian country, the
Administration's proposal for $485 million falls significantly short of
the Nation's Native American housing needs. While realizing that
Congress must remain conscientious about reducing the budget deficit,
the acute housing needs for impoverished Indians cannot be ignored.
$850 million annually, is needed to address the housing needs of Indian
country under a five year budget plan, which also considers
inflationary factors.
Provide $32 million to implement Section 601--Loan Guarantee Program
The Native American Housing Assistance and Self-Determination Act
authorized Section 601--Loan Guarantee Program. However, the
Administration has provided zero funding for implementation through
2002. While the rest of America is ably administering a similar program
under Section 108 Community Development Loan Guarantee, Indian country
will be unable to venture into private financing in an effort to
leverage other dollars to stretch the ever-shrinking federal dollar
made available for housing assistance.
Provide $6 million for a Indian Housing Loan Guarantee Program
This highly popular program was created by Congress in 1992 in
which Section 184 funding was appropriated in the amount of $3 million
for Indian country. Demand for this type of service continues; whereas,
appropriations have been flat-lined for the past five years. An
additional $3 million is requested to meet current demand.
Earmark $148 million for new and existing Tribal Designated Housing
Entities (TDHE's) planning, complete studies, and conduct
environmental reviews
The implementation of the new Act requires the development of
Comprehensive Housing Plans (CHP's). In order for our TDHE to update
its current needs, complete accurate assessments of future housing
construction needs, enhance administration capability and accept
primacy over environmental studies, assessments and clearances,
additional funding is needed to transition to this new way of carrying
out our respective housing responsibilities. A comprehensive housing
plan requires comprehensive planning which cannot not be adequately
carried out without funding to support the tasks at hand.
NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-DETERMINATION ACT
The enactment of the Native American Housing Assistance and Self-
Determination Act of 1996 was a historic event which brought forth
renewed optimism to Tribes throughout Indian country for a housing
program which has struggled to meet the dire needs of impoverished
Indian households. We bring to this Committee's attention, areas of the
Act which require clarification, and in some instances additional
appropriation needs to fulfill Congress' intent and purpose.
Implementation Time Lines
The time allotted for TDHE's to implement the act is insufficient.
Additional time and appropriations (as cited above) are needed to
implement a comprehensive housing plan. Implementation of the Act
should be consistent with fiscal year time lines, beginning on October
1, 1997.
Davis Bacon Act
As with HUD Indian Community Development Block Grant construction
grants of years past, Davis Bacon requirements should not be mandatory
for Indian country. While the Sac and Fox Nation does not want to
lessen the value of qualified construction workers, the prevailing
wages of the area should be the focal point for determining actual
wages for skilled workers. A waiver of Davis Bacon should be an option
to each TDHE to self-determine appropriate construction wages for a
Tribal reservation and/or service area.
Multi-Tribe Designated Housing Entity
While separate plan certifications are required for each Tribe
under a Multi-Tribal Designated Housing Entity, the Act is not clear as
to whether separate accounting mechanisms will also be required. The
Sac and Fox Nation believes that such a process can become convoluted
if complete segregation is required in all areas of administering
housing assistance for more than one Tribe. In-fact, it defeats the
purpose of a multi-service entity and subsequently requires more
funding to support such an umbrella operation.
Carryover and Lump Sum Funding
The Administration's five year proposal allows for the Congress and
Administration to better plan future budgetary needs. Tribe's equally
share in the process of streamlining their operations and to invoke
savings wherever possible. Multi-Year budgetary planning is a positive
tool for future housing planning needs. However, the Act is not clear
as to the true status of proposed carryover funds for TDHE's. The Sac
and Fox Nation believes that savings should be a priority for a TDHE.
Thus, carryover funding can be representative of astute fiscal
management. The TDHE should be able to retain any carryover funding and
have full authority to determine where incurred savings can best be
applied in future year funding cycles, based upon clearly defined
priorities established by a TDHE. Additionally, lump sum funding is the
appropriate manner in which funding should be allocated instead of our
current ``as needed'' basis. As a Tribe which has been participating in
``Self-Governance'' with the U. S. Department of Interior and the
Indian Health Service, such a funding mechanism has been instrumental
in serving our population needs. Our cognizance of our fiduciary
responsibilities have resulted in sound management practices and the
investment of the federal dollars allocated at the beginning of a
fiscal year, have afforded us the opportunity to stretch limited
dollars and to provide additional services to our membership. We
support local discretion and flexibility for carryover funding as well
as lump sum funding of TDHE allocations.
Section (8) Housing
The Sac and Fox Nation, along with all Tribes in Oklahoma as well
as the Native Villages of Alaska, have endured long-term discrimination
of our housing needs over the past thirty years. Because of our unique
land status in Oklahoma and Alaska, the past funding allocation formula
has been prejudicial towards our identified needs. A Tribe's land base
status is irrelevant in determining the level of housing need. Funding
determinations should be based upon the needy population to be served
within the area served by a TDHE. The funding allocation formula that
is currently being developed under the negotiated rulemaking process
must correct this long-standing deficiency in assessing Oklahoma Tribes
and Native Alaskan's housing funding needs. The estimated impact to
Oklahoma under Section (8) is $10 million. We can no longer expect to
be accepting of such a biased allocation methodology.
In closing, we thank the Committee for your dedication and
commitment in the passage of this important Act and for this
opportunity to present our written remarks for the record. I am
available to the Members of this Committee at your convenience to
provide any further response to our statement.
Thank you.
______
Letter From Congressmen Kennedy and Lazio
March 12, 1997.
House of Representatives,
Committee on Banking and Financial Services,
Washington, DC, March 12, 1997.
Dear Colleague: We are writing to invite you and your staff to a
briefing sponsored by a host of local government and national non-
profits that will highlight the importance of the Community Development
Block Grant (CDBG) and Home Investment Partnership (HOME) programs. The
event will take place on Thursday, March 20, from 8:30 until 9:30 in
Room 2222 Rayburn HOB.
Hear first hand from local elected officials, community leaders,
and representatives of non-profit organizations about how these two
programs improve communities across this nation. It is critical that
support for these two programs be sustained as states, localities and
community-based organizations rely upon CDBG and HOME to undertake
broad, long-term revitalization efforts.
In many communities, CDBG is the ``glue'' that holds revitalization
efforts together. It is a proven component of state and local
government housing and community development efforts. The unique nature
of the program provides flexibility so that urban, suburban, and rural
communities may tailor CDBG assisted projects to their development
needs. CDBG addresses deterioration, increases affordable housing, and
leverages private investment dollars.
The HOME Investment Partnership program serves as federal
partnership with state and local governments with private for-profit
and non-profit organizations. HOME provides these partners with the
ability to address local affordable housing needs, such as rental
housing development and tenant based assistance programs. The HOME
program has catalyzed local support for affordable housing.
This event is scheduled immediately prior to the celebration of
Community Development Week, an annual week-long campaign designed to
focus local and national attention on the outstanding accomplishments
of the CDBG program, funded through the U.S. Department of Housing and
Urban Development.
Joe Kennedy,
Ranking Member.
Rick Lazio,
Chairman, Subcommittee on Housing and Community Opportunity.
______
WHY THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM AND THE HOME
INVESTMENT PARTNERSHIP PROGRAM WORK
The CDBG and the HOME programs are working extremely well in
communities across the country. State and local governments and their
citizens are using these programs to build strong and equitable
communities for the future. Both CDBG and HOME are the epitome of
programs that enable Congress to fulfill its commitment to
neighborhoods and communities. This commitment was best expressed in
the Housing Act of 1949 that reads as follows: ``The Congress hereby
declares that the general welfare and security of the Nation, and the
health and living standards of its people, require housing production
and related community development sufficient to remedy the serious
housing shortage, the elimination of substandard and other inadequate
housing through the clearance of slums and blighted areas, and the
realization as soon as feasible, of the goal of a decent home and a
suitable living environment for every American family * * *''
CDBG and HOME work because they:
--Provide maximum flexibility to communities to design and implement
programs to meet their unique affordable housing, community and
economic development needs.
--Provide a stable funding source that enable jurisdictions to
implement long-term and far-reaching revitalization strategies.
--Require and foster community participation in identifying community
needs and targeting resources.
--Promote public/private partnerships. Both programs have leveraged
substantial private investment for affordable housing, and
community and economic development projects.
--Foster intergovernmental and multijurisdictional cooperation.
community development block grant program
Background
The Community Development Block Grant (CDBG) Program, enacted in
1974, provides annual grants on a formula basis to entitled communities
and states to carry out a wide range of community development
activities. Congress appropriated $4.6 billion for CDBG in 1997, of
which 70 percent is distributed directly to nearly 1,000 metropolitan
cities and urban counties, and 30 percent to states for distribution to
smaller communities based on state adopted priorities and selection
systems.
Cities with populations over 50,000 and counties with populations
over 200,000 receive annual entitlement grants. The amount of
entitlement funds a state or local government receives is based on a
dual formula that considers problems of growth and decline. Smaller
cities and counties with populations of 50,000 or less are eligible to
apply to their states for state administered non-entitlement CDBG
funds.
All CDBG funded activities must meet at least one of three
statutory objectives: (1) primarily benefit low-and moderate-income
persons; (2) eliminate or prevent slums or blight; (3) meet other
urgent local community development needs.
Since 1983, Congress has required that low- and moderate-income
persons be the primary beneficiaries of the CDBG program. Consequently,
over a one to three year period, each community must spend at least 70
percent of its CDBG funds on activities that principally benefit low-
and moderate-income persons who are defined as persons at or below 80
percent of median income. In fiscal year 1993, the Department of
Housing and Urban Development (HUD) calculated that 93.7 percent of the
funds were expended on activities benefiting persons at 80 percent or
below the median income.
Activities that can be carried out with these block grant funds
include, but are not limited to: acquisition of real property;
relocation and demolition; housing and nonresidential rehabilitation;
construction of public facilities and improvements, such as water and
sewer facilities, streets and neighborhood centers, and the conversion
of schools for eligible purposes; homeownership assistance; public
services (subject to a 15 percent cap) including job training, child
care and housing counseling; and assistance to for-profit businesses to
carry out job creation and other economic development activities.
In order to receive annual grants, jurisdictions must submit a
Consolidated Plan--a planning and management tool that documents a
jurisdiction's housing and community development needs and its strategy
for addressing identified needs. Grantees also are required to develop
and follow a detailed citizen participation plan which provides for and
encourages citizen participation, with particular emphasis on persons
of low- and moderate-income.
Nonprofit, low income community-based development corporations
frequently use CDBG as a primary tool to help rebuild their
neighborhoods and leverage private funds for locally based community
development initiatives.
A companion to CDBG is the Section 108 loan guarantee program which
is used by jurisdictions for large, primarily economic development
projects. Communities may finance site acquisition and rehabilitation
of publicly owned real property. These costs may be financed over an
extended period of time with the jurisdiction pledging its current and
future CDBG funds and other forms of security to guarantee the loan.
Impact of CDBG
The following statistics on the CDBG program are in HUD's most
recent annual report to Congress. Due to data collection methods, this
information primarily reflects 1993 data.
--Between fiscal year 1993 and fiscal year 1996 an estimated 14-17
million households benefited from the CDBG program.
--Approximately 114,799 jobs were created through economic
development activities.
--Of the funds expended by entitlement communities in fiscal year
1993 the following percentages were used:
Percent
Preventing or eliminating slum and blight......................... 6.0
Public works...................................................... 22.7
Economic development.............................................. 6.0
Public services................................................... 12.8
Acquisition and clearance of property............................. 7.3
Administration.................................................... 14.4
Housing rehabilitation assisting over 200,000 households.......... 35.8
--For every 10 percent of CDBG funds expended for direct assistance
to individuals and households (two-thirds of the CDBG funds),
1,093 million persons and households are affected, based on the
fiscal year 1992 Grant Performance Report. (Since the remaining
one-third of funds benefit entire neighborhoods, a per person
benefit cannot be accurately calculated.)
The Hidden Decline in CDBG Funding
Although the CDBG program has received ``level funding'' of $4.6
billion since fiscal year 1995, the actual amount of funding for states
and local governments has declined by four percent, while the number of
participating communities has increased by three percent.
In fiscal year 1995, $4.6 billion in CDBG funds were allocated to
946 entitlement communities and 51 states and territories with
approximately $90 million in designated set-asides. In fiscal year
1997, $4.6 billion in CDBG once again was allocated, but to 975
entitlement communities and 51 states and territories and with $289.6
million in designated set-asides.
----------------------------------------------------------------------------------------------------------------
Fiscal year
-----------------------------------------------------
1995 1996 1997
----------------------------------------------------------------------------------------------------------------
Number of entitlement communities......................... 946 955 975
Overall program funding................................... $4,600,000,000 $4,600,000,000 $4,600,000,000
Total amount of set-asides................................ $90,000,000 $230,000,000 $289,600,000
Actual allocation to entitlements......................... $3,140,000,000 $3,060,000,000 $3,020,000,000
----------------------------------------------------------------------------------------------------------------
Even without considering inflation, this on-going trend towards
more set-asides and increases in entitlement communities create a
steady, yet hidden decline in actual CDBG funding to jurisdictions. For
example:
----------------------------------------------------------------------------------------------------------------
Fiscal year Loss
--------------------------------------------------------------
1995 1996 1997 Dollar Percentage
----------------------------------------------------------------------------------------------------------------
Westchester County, NY: Actual alloca- tions.... $6,892,000 $6,637,000 $6,036,000 $525,000 8
East St. Louis, IL: Actual allocations........... 2,710,000 2,611,000 2,550,000 160,000 6
Cambridge, MA: Actual allocations................ 4,203,000 3,939,000 3,852,000 351,000 8
Los Angeles, CA: Actual allocations.............. 96,773,000 93,942,000 92,191,000 4,582,000 5
----------------------------------------------------------------------------------------------------------------
[GRAPHIC] [TIFF OMITTED] T050151.000
HOME INVESTMENT PARTNERSHIPS PROGRAM
Background
HOME, established by Congress in 1990, is an affordable housing
block grant to states and over 500 localities and consortia of smaller
jurisdictions. HOME funds are distributed according to a needs-based
formula with 40 percent allocated to states and 60 percent to
localities. HOME provides funds for housing rehabilitation, tenant-
based rental assistance, assistance to homebuyers, and new
construction. Funds may be used for site acquisition, site
improvements, demolition and relocation. As partners in the program,
states and localities are required to match a portion of federal funds
with non-federal money. States and localities determine how their HOME
funds will be spent through a comprehensive planning process which
requires public participation. HOME projects in nonmetro and rural
areas are generally funded through states. The fiscal year 1997 HOME
appropriation is $1.4 billion, level with fiscal year 1996 funding.
HOME is flexible, responsive to local needs, fosters true public/
private community collaboration, and provides the gap financing
necessary to attract private loans and investments to projects. HUD
reports that as of January, 1997, HOME funds have been used in the
following manner:
Percent
Rehabilitation.................................................... 58.2
Construction...................................................... 28.5
Acquisition....................................................... 10.3
Rental assistance................................................. 3.0
At least 15 percent of HOME funds must be set-aside for projects
sponsored by nonprofit Community Housing Development Organizations
(CHDO's). Most community development corporations (CDC's) qualify as
CHDO's. HOME funds can be used to implement a locally defined housing
strategy. The 15 percent of HOME funds that must be set-aside for
community-based housing organizations has helped develop a locally-
based nonprofit housing delivery system.
Impact of the HOME Program
Since HOME was created in 1990, it has helped to develop or
rehabilitate over 230,000 affordable homes for low-income families.
Ninety percent of HOME funds used for rental housing must be
targeted to families with incomes of 60 percent or below of area
median. The remaining 10 percent must be invested in housing occupied
by families whose incomes are at or below 80 percent of area median.
Actual targeting is deeper.
The majority of HOME funds are committed to developments that will
assist very low-income people and a substantial amount will assist
families with incomes no greater than 30 percent of area median. For
example, 65 percent of all occupied HOME-assisted rental housing is
rented to families with incomes of 30 percent of area median or less.
All funds used for homeownership programs must be targeted to
households with incomes at or below 80 percent of area median. Again,
these requirements have been exceeded. Thirty-two percent of homebuyers
assisted with HOME funds have incomes at or below 50 percent of median
income.
HOME funds help very low-income families realize the dream of
homeownership by providing the downpayment assistance and second
mortgages necessary to bridge the gap between the amount provided by a
mortgage lender and the purchase price of a modest home. HOME has
assisted 68,900 homebuyers.
HOME is cost effective and provides the gap financing necessary to
attract private loans and investments to projects. For each HOME dollar
invested in the new construction of affordable housing, four dollars of
private and other public funds are committed.
On average, HOME provides $19,800 per unit to produce rental
housing. Since the inception of the program, nearly $4.0 billion in
HOME funds have leveraged $7.1 billion for a leveraging ratio of $1.79
of private and other public funds to each dollar of HOME funds.
HOME Investment Partnership Appropriations From the Onset of the Program
[Actual appropriations]
Billions
Fiscal Year of dollars
1992.............................................................. 1.5
1993.............................................................. 1.0
1994.............................................................. 1.275
1995.............................................................. 1.4
1996.............................................................. 1.4
1997.............................................................. 1.4
FUNDING COMMITMENTS AND DISBURSEMENTS--BY FISCAL YEAR SOURCE OF FUNDS
[Amount in dollars]
----------------------------------------------------------------------------------------------------------------
Committed Disbursed
Fiscal year source Amount -----------------------------------------
allocated Amount Percent Amount Percent
----------------------------------------------------------------------------------------------------------------
1992...................................................... 1,460,000 1,448,663 99.2 1,367,291 93.7
1993...................................................... 990,000 978,562 98.8 820,876 82.9
1994...................................................... 1,215,250 1,190,898 98.0 779,283 64.1
1995...................................................... 1,339,000 1,030,044 76.9 430,054 32.1
1996...................................................... 1,361,200 365,291 26.8 61,041 4.5
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Authorized Projects committed Projects disbursed
Fiscal year source for -----------------------------------------
projects Amount Percent Amount Percent
----------------------------------------------------------------------------------------------------------------
1992...................................................... 1,328,033 1,313,089 98.9 1,240,647 93.4
1993...................................................... 889,682 849,146 95.4 731,489 82.2
1994...................................................... 1,087,296 967,876 89.0 692,837 63.7
1995...................................................... 1,195,252 701,382 58.7 380,651 31.8
1996...................................................... 1,154,400 135,808 11.8 50,275 4.4
----------------------------------------------------------------------------------------------------------------
Leveraging
Amount
HOME dollars commited to HOME units...........................$3,967,300
OTHER dollars commited to HOME units.......................... 7,101,914
--------------------------------------------------------------
____________________________________________________
TOTAL dollars commited to HOME units......................11,069,214
Ratio: Other dollars leveraged for each HOME dollar 1-79.
PROGRAM PRODUCTION
----------------------------------------------------------------------------------------------------------------
Millions of dollars Units \1\
-------------------------------------------------
Commitments Disbursements
to projects to projects Committed Completed
----------------------------------------------------------------------------------------------------------------
Activity in month............................................. 71.8 78.6 5,985 7,005
Activity in same month prior year............................. 101.1 68.6 5.973 3,332
Activity in fiscal year 1996.................................. 1,039.4 929.9 61,943 47,271
Activity in fiscal year 1997.................................. 328.0 356.6 24,633 23,337
-------------------------------------------------
Total activity to date.................................... 3,967.3 3,095.9 232,339 130,828
----------------------------------------------------------------------------------------------------------------
\1\ Does not include Tenant Based Rental Assistance.
Note: Home program data as of 1/31/97. All figures adjusted to include estimates of IDIS activity except lower
income benefit.
PROJECT FUNDING COMMITMENTS BY ACTIVITY TYPE AND TENURE
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Percent
Activity Rental Homebuyer Homeowner Total of funds
----------------------------------------------------------------------------------------------------------------
New Construction............................................ 792 339 ......... 1,131 28.5
Rehabilitation.............................................. 1,271 216 824 2,311 58.2
Acquistion.................................................. 100 310 ......... 10.3
TBRA \1\.................................................... 117 ......... ......... 117 3.0
---------------------------------------------------
Total................................................... 2,280 865 824 3,969 ........
===================================================
Percent of funds........................................ 57.5 21.8 20.8 ........ 100.0
----------------------------------------------------------------------------------------------------------------
\1\ Does not include Tenant Based Rental Assistance.
UNITS COMMITTED BY ACTIVITY TYPE AND TENURE
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Percent
Activity Rental Homebuyer Homeowner Total of units
----------------------------------------------------------------------------------------------------------------
New construction............................................ 35,682 17,794 ......... 53,476 23.0
Rehabilitation.............................................. 67,226 10,264 54,440 131,930 56.8
Acquistion.................................................. 6,092 40,842 ......... 46,934 20.2
---------------------------------------------------
Total................................................... 108,999 68,900 54,440 232,339 ........
===================================================
Percent of units........................................ 46.9 29.7 23.4 ........ 100.0
===================================================
TBRA \1\.................................................... 30,902 ......... ......... 30,902 ........
----------------------------------------------------------------------------------------------------------------
\1\ Does not include Tenant Based Rental Assistance.
HOME COST PER UNIT BY ACTIVITY TYPE AND TENURE
[Dollars based on commitments]
------------------------------------------------------------------------
Activity Rental Homebuyer Homeowner Total
------------------------------------------------------------------------
New construction............ 22,192 19,032 ......... 21,141
Rehabilitation.............. 18,910 20,998 15,136 17,515
Acquistion.................. 16,420 7,588 ......... 8,734
Average..................... 19,845 12,541 15,136 16,576
===========================================
TBRA \1\.................... 3,796 ......... ......... 3,796
------------------------------------------------------------------------
\1\ Does not include Tenant Based Rental Assistance.
RESERVATIONS/COMMITMENTS/DISBURSEMENTS FOR CHDO'S \1\
----------------------------------------------------------------------------------------------------------------
Percent Percent of dollars
of HOME reserved
funds Amount ---------------------
Fiscal year source reserved reserved
for for CHDO's Committed Disbursed
CHDO's
----------------------------------------------------------------------------------------------------------------
1992.............................................................. 21.6 $315,793 98.6 89.2
1993.............................................................. 21.5 213,109 91.8 73.5
1994.............................................................. 23.1 280,839 82.6 50.8
1995.............................................................. 17.6 235,874 70.7 35.1
1996.............................................................. 5.7 78,096 55.2 19.4
----------------------------------------------------------------------------------------------------------------
\1\ Community Housing Development organizations.
LOWER INCOME BENEFIT \1\ --BASED ON OCCUPANTS OF COMPLETED PROJECTS AND RECIPIENTS OF TBRA
----------------------------------------------------------------------------------------------------------------
Percent of--
---------------------------------------------------
TBRA and
Percent of median income TBRA Occupied occupied Occupied Homebuyer
families rental rental homeowner units
units units units
----------------------------------------------------------------------------------------------------------------
0-30........................................................ 81.9 46.0 64.5 31.2 7.8
31-50....................................................... 14.9 39.0 26.5 39.1 23.8
---------------------------------------------------
Subtotal 0-50........................................... 96.8 85.0 91.0 70.3 31.6
51-60....................................................... 2.1 11.9 6.9 12.6 23.4
---------------------------------------------------
Subtotal 0-60........................................... 98.9 96.9 97.9 82.9 55.0
61-80....................................................... 1.1 3.1 2.1 17.1 45.0
===================================================
Total................................................... 100.0 100.0 100.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
\1\ Does not include PJ's converted to IDIS.
USE OF CDBG FOR ECONOMIC DEVELOPMENT AND JOB CREATION
Background
The San Francisco Renaissance Micro Business Incubator (MBI) is an
example of a successful use of CDBG funds to foster and support
economic self-sufficiency for low and moderate income residents. It is
also an excellent example of how CDBG funds can leverage private funds
to promote local community economic development.
The MBI was initially designed as a pilot to demonstrate the
effectiveness of business incubation in stimulating growth of small
businesses owned by new entrepreneurs. Low and moderate income women
and minorities were targeted. The Renaissance MBI was the first in San
Francisco and one of the first incubators in the nation to target these
populations. The MBI is part of the larger Renaissance Entrepreneurship
Center which provides training, consulting, networks and financing
assistance to small business entrepreneurs.
The MBI provides low cost office space, office support services and
intensive business management assistance. Participants are expected to
stay an average of two years and then be able to ``hatch'' out of the
incubator. The goal of the Renaissance MBI is both to enhance self-
sufficiency of families through self-employment and asset development
and also to create jobs for community residents. As important, though
difficult to quantify, are the role models which Renaissance
entrepreneurs become for the neighbors and children of the community.
One MBI participant, Integral Results, has demonstrated phenomenal
success, in profits, job creation, and contribution to the community.
Lauren Gruner, Charles Okeke and Marlus Moscovici provide computer
systems consulting on Oracle databases. They have hired three
employees, two of whom were unemployed. Integral Results emphasizes its
business values: 10 percent or $17,000 was distributed to community
programs, including 10 scholarships for low income students in the SF
Renaissance entrepreneurship training.
Financing
The San Francisco Mayors Office of Community Development seeded the
Renaissance MBI with a planning grant in 1988 and provided small
amounts of funding until corporations such as PG&E and Bank of America
got involved. As it grows, the MBI also increases its ability to
generate program income and now generates 46 percent of its budget from
fees and income.
CDBG funds (per year)......................................... $50,000
Corporations/Foundations...................................... 50,000
Self-generated fees........................................... 85,000
Results
The project has exceeded expectations and now supports 15 tenants.
In seven years, the MBI has served 32 businesses: 50 percent minority
owned, 50 percent women owned and 150 jobs were created for San
Francisco residents, including the owners. For every $1 of CDBG funds
$3 in private funds are leveraged through this project. The San
Francisco Renaissance Micro Business Incubator was recently honored by
the National Business Incubator Association with the 1996 Special Focus
Incubator of the Year Award.
the transformation of a rural virginia community
CDBG.--$435,480 (Planning grant, acquisition, site development)
HOME.--$545,400 (Architectural design, new construction 14 units)
Non-Profit Contribution.--$15,000
Local Business.--$2,000 (Donated material for fencing)
Local Vocational Schools.--In Kind Student Labor (Construction of
fencing panels)
The project which built the Mill Run Apartments, 145 subsidized
rental housing units in the town of Belle Haven, Virginia, began in
1990 with a CDBG planning grant and was completed in December 1995.
Fourteen families (31 people) were housed through this project.
Duertown was one of the most notorious pockets of substandard
housing in Accomack County, Virginia. Duertown was constructed as
migrant housing in the 1940's. It consisted of 14 cinder block units
built on concrete slabs which were below grade level of the surrounding
land. Water flowed under the doors during rainstorms. All of the units
lacked complete indoor plumbing facilities. Each unit had cold water
only to a kitchen sink. Wastewater from the sinks was discharged
through a pit near each house containing two 55-gallon drums and
crushed shell material. Each house was served by a pit privy in various
state of repair. Duertown was cited on numerous occasions by the
Virginia Department of Health and was identified in their shellfish
surveys as a major pollutant to local shellfish grounds due to its poor
methods of sewage disposal.
Rental income from the property was not sufficient to afford
additional improvements to the property so the owner came to the
Accomack-Northampton Housing and Redevelopment Corporation seeking help
to rehabilitate the housing. The HUD Rental Rehabilitation Program
about which he inquired was no longer in existence and no new program
was available for rehabilitation of rental property. The non-profit
requested the Town of Belle Haven to apply for Virginia Community
Development Block Grant (CDBG) funds to help correct the problem.
In 1990 the Town applied for and received CDBG Planning Grant funds
to design a strategy for improving the living conditions in Duertown.
It became apparent almost immediately that rehabilitation was not a
feasible alternative. A preliminary engineering study and architectural
plan was developed for a workable alternative for construction of new
units for the residents of Duertown.
In 1991 the Town of Belle Haven applied for and received $415,480
in CDBG funds for site development, temporary relocation, acquisition
of a sewage easement and construction of a mass drainfield on a
neighboring property.
Throughout the project development the residents were active in
working with the architect and the Housing Corporation Board of
Directors in the design process. The architectural plans reflected a
real feel for ``people spaces''--storage areas, utility areas and
enclosed back yards were included in the design. The housing units were
designed as duplexes with a site plan which makes the complex feel more
like a neighborhood than apartments, an important component to the
residents who planned on keeping their neighborhood together at their
new site.
The community at large also became involved. A local building
supply company donated $2,000 in fencing materials. The vocational
classes from five schools made all of the fencing panels. Before
construction residents picked their units on a copy of the site plan
and were able to follow the progress of their own unit. Some residents
came daily. Residents were encouraged to submit names to the Belle
Haven Town Council for a name for the new development.
Some unique construction techniques were used in building the
units. Prefabricated framing and trusses were delivered and erected on
site. Instead of vinyl, poured flooring was used. (Poured flooring is
done by painting an epoxy-based substance on the floor, scattering
color chips over that and covering the whole thing with a clear epoxy
coat). The units were constructed to the power company's Super E+
energy efficiency rating. All units are heated/cooled with heat pumps.
The residents were moved, as a group, to the newly constructed Mill
Run Apartments in the Town of Belle Haven. These 14 subsidized rental
units house 14 families (31 people) who celebrated their first year
anniversary in their new homes this past Christmas. The residents pay
30 percent of their income for units which are more than just safe,
decent and sanitary. They were relocated as a neighborhood and they are
still a neighborhood. They take great pride in where they live and
their involvement in the development process makes it all the more
special to them.
For more information about this project or an opportunity to visit
the site contact: Kathy O'Keefe, Director of Housing Services,
Accomack-Northampton Housing and Redevelopment Corporation, P.O. Box
387, Accomack, Virginia 23301, (804) 787-2936, office, (804) 787-4221,
fax.
The Accomack-Northampton Housing and Redevelopment Corporation was
established by local governing bodies to address housing of their low-
and moderate-income residents. Since its establishment, the Corporation
has conducted housing rehabilitation projects using Virginia CDBG and
Indoor Plumbing Funds in Accomack and Northampton Counties and in eight
of the incorporated towns and developed 44 units of subsidized rental
housing. The Corporation operates a 262-unit Section 8 Existing Rental
Assistance program in these counties and from 1983 to 1984, the
Corporation was property manager for 215 FmHA units occupied by low-
income families.
CDBG/HOME FUNDED SPECIAL NEEDS HOUSING PROJECT
Who: Mt. Hood Community Mental Health Center (Mt. Hood CMHC), 400
NE 7th Avenue, Gresham, OR 97030.
What: Coburn Woods Apartments. Ten new construction rental units
for adults with a chronic mental illness.
Where: 17311 E. Burnside, Gresham, OR 97230. A rapidly growing
suburb located east of Portland. Its population is currently about
80,000, making it the fourth largest city in Oregon.
Financing: The total cost of this project was $775,762. Funds were
obtained from several sources, which are listed below. As is the case
with many projects targeted for low-income and ``special needs''
residents, a combination of federal and state assistance, with below-
market funding for acquisition and rehabilitation, and a source of
conventional funding were all needed.
Funding Sources
HUD 811....................................................... $675,330
Oregon State Trust Fund....................................... 31,100
Oregon Mental Health Grant.................................... 25,000
Mt. Hood CMHC Contribution.................................... 3,332
CDBG/HOME..................................................... 50,000
--------------------------------------------------------------
____________________________________________________
Total................................................... 775,762
A $43,000 acquisition loan was obtained from the Enterprise
Foundation and repaid at the beginning of the construction phase. The
loan was at six percent interest, with the principal and interest
deferred for two years or until the construction began whichever
occurred first.
The Coburn Woods Apartments consist of a single building to promote
independent living for very low-income adults with a chronic mental
illness. The project includes nine one-bedroom units for residents and
one two-bedroom unit for the apartment manager. The one-bedroom units
are approximately 740 square feet including a kitchen, bathroom, and a
living/dining area. To promote social interaction, the project has a
community room and a patio area for outdoor gatherings.
The complex offers residents the ability to live independently
while obtaining much-needed support services. These services include
case management, psychiatric help, drug and alcohol services,
vocational rehabilitation services and assistance with the activities
of daily living. In accordance with the HUD 811 program, all residents
are very low-income and pay no more than 30 percent of their adjusted
income for rent and utilities. Resident contributions are based on
income; the maximum is $141 per month.
Coburn Woods was developed in response to local awareness of the
need for facilities to house people with ``special needs'' including
those with mental illness. Before this project was developed, Mt. Hood
CMHC had a waiting list of more than 60 applicants for affordable
apartments with supportive services. It took applicants years to get
apartments because turnover in Mt. Hood CMHC's projects was very low--
fewer than one vacancy per year.
USE OF CDBG FOR INFRASTRUCTURE IMPROVEMENTS
Background
Air transportation facilities of the Reading Regional Airport are
surrounded by an industrial park. About 25 percent of the annual
revenue of the airport is generated by the industrial park. The airport
authority decided to undertake an aggressive capital improvement
program to fully utilize two underdeveloped sections of the park.
One of the tracts was a former military base that had declined
steadily since the end of World War II. Forty-seven structures in the
area were single-story block buildings and inadequate by today's
standards for industrial usage. Of this total, 63.8 percent were
deteriorated and incapable of supporting any revitalization effort. In
addition, the buildings were scattered over the entire area, thereby
making expansion or consolidation of facilities impractical. Because of
the original structural design and current condition of the buildings,
it was necessary to demolish and clear those structures which would
otherwise impede meaningful development.
Infrastructure in the area also was in disrepair. The original
roadways lacked a substantial sub-base and contained large potholes.
The narrow roads with excessive curves were not conducive to serving
the types of development the airport authority sought. The water
service was non-existent in certain areas and the sanitary sewer system
was primarily comprised of old terra-cotta pipes which were collapsing.
Recognizing that the existing infrastructure was inadequate to
accommodate any upgrading or expansion for development, Berks County
declared the area blighted and undertook the following: preliminary
engineering studies and site improvements; demolition and removal of
selected buildings and relocation of tenants; and installation of a new
road system; installation of water, sanitary sewer, storm sewer and
other related utilities.
Financing
Sec. 108 guaranteed loan funds (airport authority pays all
interest on the Sec. 108 notes)...........................$2,000,000
Berks County CDBG funds....................................... 250,000
Grant from the state of Pennsylvania.......................... 127,000
Results
Upon completion of the public improvements, a local developer began
development of an industrial park. With a target of 1.4-1.6 million
square feet of office, warehouse/distribution and manufacturing space,
construction costs alone range between $35-$40 million. To date, three
businesses have located in the park with over 500,000 square feet of
space. Over one hundred new jobs have been created of which
approximately 60 percent are held by low- and moderate-income persons.
Based upon the current tax millage of the three taxing bodies, the $40
million investment in new buildings will generate $117,400 in county
tax revenue, $610,000 in school district tax revenue, and $23,548 in
township tax revenue. With this revenue the jurisdictions can pay for
services to residents and attract additional businesses.
ECONOMIC DEVELOPMENT PROJECT--STATE OF IOWA
The Promise Jobs Program
An initiative that demonstrates Iowa's collaborative effects using
the CDBG program is its Promise Jobs program. In 1996, IDED setaside $3
million of its CDBG funds to help save the state's under-funded Promise
Jobs program, an integral part of Iowa's welfare reform initiative. The
program provides education and training, as well as child care and
transportation to help participants escape welfare. The rescue of
Promise Jobs has required IDED to carefully coordinate activities with
the Departments of Human Services and Employment Services, and with
communities and providers in service delivery areas across the state.
The Quality Jobs Program
The Quality Jobs program is designed to foster training services to
Promise Jobs participants who are on the waiting list for post-
secondary classroom training. Promise Jobs funding is insufficient to
enroll these individuals in the training that has been identified in
their Family Investment Agreements. Therefore, the Department of
Economic Development has allocated funds from its CDBG program to serve
the needs of these participants.
The Quality Jobs program will operate as a demonstration project in
several Service Delivery Areas. In addition to meeting participant
needs, the projects are intended to demonstrate the efficacy of the
post secondary component and re-emphasize the IDED's commitment to a
quality trained workforce as a foundation to economic development
efforts. Project operators will monitor and report the achievements of
program participants in support of increased levels of funding for
training. Projects will also be asked to provide examples of applied
learning techniques and industry-specific training, where possible.
project conditions
1. Operating entities.--JTPA/Promise Jobs contractors will be the
service delivery system for the QJ program.
2. Number to be served.--The QJ program is designed to serve up to
1,000 participants in selected Service Delivery Areas (SDA's) beginning
in the Program Year 1995.
3. Period of operation.--The total demonstration period is from
July 1, 1995, through June 30, 1997. QJ participants must be able to
complete training within the demonstration period.
4. Funding.--Funds in support of training up to 1,000 participants
will be available.
A. Participant process.--Quality Jobs participants must be select
from the Promise Jobs waiting list. The EI must describe participant
selection criteria that includes; the participant's need for training
and the likelihood of the participant becoming employed and self-
sufficient, i.e., leaving the Family Investment Program (FIP). In
addition, the EI may describe selection criteria that includes the
participant's investment in the training plan as demonstrated by going
to school and/or working while on the waiting list, by serving as an
Iowa Invest mentor or by some other initiative taken by the
participant.
B. Activities and services.--This part of the EI must identify and
describe the activities and support services that will be provided to
the participants. The EI must follow these guidelines:
--Pell and other grants will be used for tuition, fees, books, and
supplies. The QJ program will pay remaining costs up to rates
charged at Iowa Regents institutions.
--The QJ program is the child care payor of last resort. If the
participant can access another child care program, it must be
accessed. When such child care is not available, actual child
care costs will be paid.
--Transportation will be paid on an reimbursement basis.
state of texas partners with step \1\ to construct water and wastewater
systems
The state of Texas is establishing a prototype in the way states
can assist small, rural communities address their water and wastewater
needs. The Texas Department of Housing and Community Affairs, the Texas
Natural Resource Conservation Commission (TNRCC) and the Texas Water
Development Board have been instrumental in supporting the STEP effort
in Texas. Given that TNRCC is the environmental regulatory and
compliance agency, it assumed the lead in the Texas-STEP program.
---------------------------------------------------------------------------
\1\ States are beginning to seek many unorthodox methods for
assisting the most impoverished communities to obtain safe, clean water
and adequate wastewater disposal. One such method is the Small Towns
Environment Program (STEP) which is operated by the Rensselaerville
Institute (TRI) with support from the U.S. Environmental Protection
Agency and the Ford Foundation. Since 1989 STEP has been assisting
state governments to build support networks that enable small
communities to solve water and wastewater problems using less money and
more local initiative. Self-help as defined and implemented by STEP
refers to a variety of cost-saving techniques including conservation,
use of appropriate technology, local administration of projects, inter-
local cooperation, use of volunteer labor, direct purchase of materials
and others.
STEP first began in New York State in 1989. Its Self-Help Support
System has assisted approximately 160 community projects over the past
ten years, achieve cost savings of more than $18 million. There are
currently ten states that have become partners with STEP by undertaking
demonstration projects, putting forth the self-help message in small,
rural, communities. These states are: Arkansas, Idaho, Maryland, New
York, North Carolina, Oregon, South Dakota, Tennessee, Texas and
Washington.
STEP administers a $1.5 million revolving loan fund underwritten by
the Ford Foundation. The loan fund supports the goals of the program by
providing low-interest construction financing to disadvantaged
communities in STEP states. STEP works closely with state governments
and specifically with the departments that control and maintain
standards on safe drinking water and proper wastewater treatment.
Throughout the process of working with small communities in a self-
help program many issues of project development and design have become
standard. One very important standardization is the size, economic
level and overall ``commitment'' of the people with whom the services
are being provided. The project managers at STEP have designed a
``checklist'' that enables them to (1) determine if the locality is a
good STEP candidate and, (2) when its time for the STEP community to
assume operations of its new system.
---------------------------------------------------------------------------
The colonia of Arroyo Colorado Estates, an unincorporated community
along the Texas-Mexico boarder is the site of a STEP project. These
areas are typically the sites of large numbers of lower income people,
living in ``shanty town'' conditions, without adequate water and
wastewater treatment or the means to access services that may be
available to them. Priority in funding applications and systems within
the traditional avenue with the state always prefer incorporated
localities over colonias. Community officials were informed that it
could take anywhere from seven to ten years to design, finance and
implement a solution to their problem if they waited or relied on
traditional state/federal funding avenues. A cost of over $1 million
was much more than the community of 171 households could afford.
Members of the community decided that they could do much better
than seven to ten years and proceeded to form a nonprofit development
corporation, the Arroyo Colorado Estates Water Supply Corporation
(ACEWSC) as the vehicle for bringing sewer service to the area. Once
ACEWSC was formed, members searched for ways to bring the project cost
down. They searched for an engineering firm that was amenable to
working in a ``self-help environment,'' which often proves difficult.
Engineers and engineering firms are often unwilling to work with the
self-help approach. Engineers are used to working in very controlled
environments, with standardized practices and procedures, so it is not
surprising that the self-help concept would be foreign to them. It is
also very probable that the uncertainty of financing is also a major
deterrent. However, as funding levels dwindle and localities lose the
economic wherewithal to traditionally pay for water and sewer needs,
alternative financing and engineering methods are being employed.
With guidance from TRI, Texas-STEP, ACSWSC found methods to lower
the cost of the project. They found an engineering firm comfortable
using and working within the confines of the self-help model. ACEWSC
used volunteer labor and other in kind contributions such as equipment
to bring the $1 million project down to an affordable $150,000. They
were able to access TRI's Self-Help Loan Fund for short term financing,
found an entity to purchase the system and take over operations once
the project is complete and repay the loan with user fees. User fees
are expected to be approximately $25 per month. The Texas Division of
Natural Resources estimates costs could approximate $720 million to
meet the needs of the other colonias within the state. Using the STEP
approach could lower the estimated cost by as much as 60 percent.
______
NORTH LITTLE ROCK HOME PROJECT
Project Name: Argenta Home Rehabilitation
Project Address: 108 Melrose Circle, North Little Rock, Arkansas
CDC Sponsor(s): Argenta Community Development Corporation
HOME Funds: $27,200
Total Project Costs: $63,000
For many years, the historic Argenta neighborhood of North Little
Rock, Arkansas maintained the highest crime rate in the city. Yet, many
dilapidated single family bungalows and vacant lots offered
opportunities for development. In 1994, the Argenta Community
Development Corporation (Argenta CDC) was created by residents who had
formed a Booster Club to identify properties which needed substantial
improvement. Argenta CDC enjoys a strong base of neighborhood support,
with over 270 people on the CDC membership list.
In just two short years, the CDC's efforts have brought more than
$1.6 million into Argenta to renovate single-family homes. A total of
23 single-family have been rehabilitated. Sales of renovated homes have
been swift, and the transformation of the area has been remarkable. A
neighborhood once plagued with crime and instability is home to new
homeowners in well-maintained houses. More families have been moving
back into Argenta, crime rates have plummeted and a new sense of
neighborhood pride is spreading.
One of the homes Argenta CDC assisted was 108 Melrose Circle.
Originally constructed in 1924, the house remained abandoned for
several years prior to the Argenta CDC's purchase. The house was in
disrepair from years of neglect and a series of haphazard and unsafe
additions. It also represented an arson risk. The CDC's improvements to
the house resulted in the creation of a 3-bedroom, 2-bath home to
accommodate Michelle Martin and her family.
Michelle Martin was born in North Little Rock. One of five
children, she was raised by a single mother in a poor area of the city.
Michelle became a single unwed mother herself at age fifteen and left
school after the ninth grade.
As an adult, Michelle lived in public housing for seven years, and
was supported by welfare and food stamps. In 1985, through her own
efforts, her life began to take a turn for the better. She became an
employee of the North Little Rock Public Schools, and is now a
supervisor of a school cafeteria where she earns $11,000 annually.
Currently, she is also working towards her GED. Within the last two
years, Michelle successfully completed self-sufficiency classes offered
by the North Little Rock Housing Authority, and was among the first of
many low-income home buyers to seek assistance from Argenta CDC. She
completed home buyer counseling classes.
To help make Michelle's dream of homeownership a reality, $27,200
in HOME funds helped finance construction and her mortgage. The Argenta
CDC Board approved the application for HOME funds in recognition of
Michelle Martin's remarkable ``Welfare to Work'' life story. Other
financial partners include First Commercial Bank and Metropolitan Bank
which provided a line of credit for contractors. The Community
Development Agency of the City of North Little Rock and ARKLA, the
local gas company, provided a grant for gas street lamps for all of the
Argenta rehabilitated homes.
With help from the HOME program, Michelle was able to purchase her
home and is now one of nineteen home owners residing in Argenta CDC-
assisted homes. She lives with her three children and one grandchild.
When asked about her new home, Michelle states, ``It is everything I
always desired, more comfortable than any place I have ever lived. I
thank Argenta CDC for helping me make my dream of owning my own home
come true.
CARLTON TERRACE SRO APARTMENTS OFFER HOUSING, HOPE
Editor's Note: In June 1995, HUD, through the National Affordable
Housing Training Institute (NAHTI), recognized nine projects and four
honorable mentions in its ``Excellence in Affordable Housing''
competition. The following is a summary of the winning project from an
ALHFA member jurisdiction.Chicago's Sheridan Park Historic District is
a unique blend of the old and the new. Its citizenry is among the most
diverse in the country, combining African American (924 percent),
Caucasian (39 percent), Latino (23 percent) and Asian (14 percent)
populations. Some have been in the area for generations; many more are
new Americans. Some earn a good living, while others live on next-to-
nothing. While neighborhood block associations fight to preserve the
area's safety and historic integrity, gang violence and drug-related
crime is on the rise. Moreover, homelessness has become increasingly
common, and the neighborhood's overall living condition is uncertain.
Like the area's population, the neighborhood's buildings are also
diverse--some impeccably maintained and others vacant and
downtrodden.The City of Chicago has partnered with several nonprofits
to combat the area's deteriorating condition. One of these nonprofits
is Lakefront SRO Corporation, a local affordable-housing developer that
has acquired and rehabilitated four buildings in the Sheridan Park
neighborhood. Lakefront's mission is clear: to reduce homelessness
through the preservation of valuable (and vulnerable) SRO structures
(more than 70 percent of Chicago's SRO buildings have been lost since
1973). The Carlton Terrace Apartments is the most recent credit to
Lakefront's mission and to the neighborhood in which it operates.
In 1992, Lakefront was seeking a site for its fourth SRO project.
When the Carlton came on the market, it was in reasonably good
condition, but its former owners had run out of money to maintain the
property. Lakefront was immediately interested in the architecturally
unique building. With the help of the City of Chicago's Department of
Housing and the HOME program, Lakefront was able to acquire the Carlton
and began reconstruction shortly thereafter.
The project, which serves 70 single, formerly homeless individuals,
was financed with a wide variety of public and private sources, not the
least of which was a deferred first mortgage in the amount of
$1,536,000 funded by HOME through the Department of Housing. In
addition, the project received a total of $951,694 in low-income
housing and historic tax credits through the National Equity Fund, a
nonprofit subsidiary of the Local Initiatives Support Corporation
(LISC). A grant in the amount of $500,000 from the Illinois Housing
Development Authority ``filled the gap'' in the construction and
permanent financing packages for the project.
In addition to rehabilitating older SRO buildings to serve the very
poor, Lakefront SRO implemented what it calls a ``blended management''
system in all its affordable housing projects. This means that in
addition to traditional property management, which keeps the building
and surrounding property in good condition, each property's staff is
obliged to go the extra mile for its residents and neighbors. For its
residents, the Carlton offers a variety of supportive services,
including individual case management, substance abuse meetings and
counseling and employment assistance--at no charge to the tenant. With
this support network in place, Lakefront hopes that residents will
begin to weave their lives back together. When a tenant ``moves up and
out,'' it creates a new opportunity for another homeless person who so
desperately needs the help.
USING HOME TO BUILD HOMEOWNERSHIP AND PARTNERS
The HOME program is an important source of funding for
homeownership initiatives across the country. Recent HOME statistics
published by HUD reveal that more than 21 percent of all HOME monies
are spent to build, rehabilitate and acquire homebuyer units.
Furthermore, around 28 percent of the units currently produced under
the HOME program are home ownership units. Clearly, the HOME program
has facilitated the creation of many successful homebuyer programs,
but, more important perhaps, it has encouraged the development of new
partners and leaders for the development of housing in communities
throughout the nation.
The Clark County HOME Consortium--which gathers unincorporated
Clark County, Nevada and the cities of Las Vegas, North Las Vegas,
Boulder City and Mesquite under one funding and administrative
umbrella--used a First Time Homebuyers Program as a launching pad to
transform a social service organization into a strong CHDO, which now
produces a variety of affordable housing opportunities in the area.
In 1993, the Economic Opportunity Board (EOB), a large and
established community action agency, became a CHDO and approached the
HOME Consortium with a proposal to develop a First Time Homebuyer
Program. The need for such a program was evident. First, the area was
in the midst of a population boom, fed by the 3,000-4,000 people moving
into the county per month. Second, since 1980, the cost of rental
housing had risen over 70 percent throughout the county, driven by the
rapidly growing casino/gambling industry, which had created a plethora
of minimum-wage service sector jobs. Third, the people in service-
sector jobs could not afford to become homeowners and ended up paying
increasingly rising rents, which kept them from saving the money to
make a down-payment on a home. Finally, older and moderately priced
single-family homes were available in the county and seemed perfect for
a homebuyer's initiative.
Over the first two years, the HOME Consortium contributed $450,000
of HOME money and county money to the initiative. According to Michael
Trend, management analyst for Clark County, this substantial investment
was motivated by the recognition that ``large-scale efforts undertaken
by non-profit organizations are often plagued by under-capitalization,
and the consortium wanted to make sure that the EOB had enough
resources to do the job.'' Part of these resources came in the form of
HOME operating expenses, which enabled the EOB to hire the staff and
develop the expertise to build a strong homebuyer's program.
Under this program, a bank or mortgage company carries a family's
first mortgage and the EOB provides down-payment assistance. This down-
payment assistance is limited to $5,000 and structured as a no-
interest-bearing loan that becomes a full-fledged grant after five
years. The decision to make this assistance a grant is based on the
belief that for such a small initial investment, it is ``counter-
productive to monitor and recapture money that will be worth five or
ten cents on the dollar some 30 years hence.'' By providing this
shallow non-payment subsidy, EOB feels that it has been able serve more
people than if it had decided to fully finance a few homes for a few
families.
Eighty-seven families have become homeowners as a result of EOB's
program. More than 72 percent of the loans have been made to
traditionally underserved minority populations, while 30 percent of the
loans have been made to households making less than 60 percent of the
area's median income. EOB's homeownership program is a model across the
county and has generated more opportunities for homeownership than any
other HOME program in the state of Nevada. The City of Las Vegas has
recently chosen EOB to administer a $220,000 HOME-funded homeownership
program, a testament to the organization's strong administrative
capacity.
With the homeownership experience under its belt, EOB has willingly
undertaken a series of new and innovative housing initiatives. In 1995,
EOB added an ``acquisition, rehabilitation and re-sale'' component to
its program. The CHDO acquires ``board ups'' and other substandard
units from HUD, city, and county repo-lists for a low price and
rehabilitates them for sale to low- to moderate-income homebuyers. EOB
uses its own maintenance crews to do most of the rehabilitation work in
the units. This in-house rehabilitation allows the non-profit to save
money, but also prepares the ground to develop a job training program
for underprivileged youth. The county and EOB are still working on the
job-training program component of the new program, with the expectation
that it will become an important feature of their work under Section 3.
According to Mike Trend of Clark County, this initiative is
``especially noteworthy in that the EOB is going to make the effort to
be self-supporting.''
EOB is now working to provide a continuum of care in its housing
programs. The CHDO owns and runs transitional units for homeless
families, possesses 50 units of transitional below market rental
housing, which were developed with HOME funds, and is designing a
lease-to-purchase program which will be coordinated with the
organization's homeownership and acquisition/re-sale initiatives.
The innovation and the strength of EOB's housing program is
reflective of the Clark County HOME Consortium's original commitment to
the CHDO's homeownership program. According to Mike Powlack of EOB,
this commitment went beyond funding. The Clark County HOME Consortium
gave the CHDO the flexibility to run its program in both unincorporated
and incorporated areas and provided the organization with freedom to
design the program as it saw fit. Furthermore, the county was and
continues to be the EOB's helpful partner, assisting in working through
problems and challenges that the CHDO faces. With the Clark County HOME
Consortium's help, the EOB's homeownership program has blossomed into a
multi-pronged affordable housing initiative and a powerful agent in
building hope and opportunity in communities across the county.
ASTER PLACE APARTMENTS AT BLOOMFIELD, PARTNERSHIPS FOR AFFORDABLE
HOUSING
Editor's Note: In June 1995, HUD, through the National Affordable
Housing Training Institute (NAHTI), recognized nine projects and four
honorable mentions in its ``Excellence in Affordable Housing''
competition. The following is a summary of the winning project from an
ALHFA member.
When the Housing Development Corporation, a local nonprofit
developer in Lancaster County, Pa., proposed to build affordable
housing in one of the county's most affluent suburban townships, it set
itself on a path that few had traveled before. Located 50 miles west of
Philadelphia, Lancaster County, traditionally an agricultural region,
has experienced important industrial growth over the past 30 years.
This growth has been most vigorous in the county's suburban communities
where housing developers have built expensive homes to cater to the
newly expanding population. This push to develop luxury housing has
left the needs of low- and moderate-income families unaddressed. While
many of the county's new jobs are located in suburban communities, most
of the affordable housing remains within the city of Lancaster,
creating a dramatic imbalance between employment and housing
opportunities.
In response to this growing imbalance, the Housing Development
Corporation designed the Aster Place Apartments at Bloomfield project,
a mixed-income planned community which would bring together 66 new
affordable apartment units and 98 fee-simple, for-sale townhouses in a
suburban setting. The critical element in the project's plan was the
emphasis it placed on the creation of partnerships between
municipalities, townships, and the Housing and Redevelopment
Authorities as well as between the low-income families living in the
affordable apartment units, and the families residing in the planned
community's town homes. The result of these partnerships has been the
first affordable housing project locally produced in Lancaster County's
suburbs in the past 10 years.
The Aster Place Apartments at Bloomfield are located in Manheim
Township, the county's most affluent suburban township. Virtually no
affordable housing existed in the area before the Aster Place
Apartments, which proved to be an important factor for the Housing
Development Corporation when it chose the project's site. The developer
had to overcome negative perceptions of affordable housing, and
restrictive zoning and land-use ordinances. Through extensive
discussions with township officials, local leaders, and neighborhood
organizations early in the project's planning, the Housing Development
Corporation mitigated community opposition. These discussions forged a
close working relationship between the developer and Manheim Township,
facilitating the modification of the zoning requirements that made the
project possible.
The apartment portion of the project, which was opened in fall
1994, includes 50 two-bedroom apartments averaging 938 square feet each
and 16 three-bedroom apartments averaging 980 square feet. Typically,
the apartments' residents include single-parent households, single-
person households, and elderly households. People who moved into the
apartments were often living in Lancaster city and commuting to the
suburbs or paying more than 30 percent of their incomes for housing in
one of the county's suburban communities. This housing targets
households making less than 60 percent of the area's median family
income. The apartment project's waiting list attests to the further
need for this type of housing in the area.
In addition to providing affordable housing to low-income families,
the project offers a Supportive Service Program, including budgetary
counseling, latch-key programs, substance-abuse prevention, educational
seminars, health programs or any other identified need. The goal is to
empower residents to become partners in the life of their community and
to provide them with the skills necessary to become homeowners.
Ideally, residents with adequate means will choose to move from the
Aster Place Apartments into the Aster Place Town Homes.
The project depended on financing from a variety of sources,
including HOME funds. The Housing Development Corporation used HOME
funds, which allowed them to construct new housing at a soft, low-
interest mortgage of $662,500. The state Department of Community
Affairs made a similar loan in the amount of $200,000 through its
Housing and Community Development Program. The state Housing Finance
Agency provided soft secondary financing of $1,000,000 and a first
mortgage of $1,200,707. High Investors, Ltd., a local securities
broker, provided $2,050,000 in equity from various investors.
The Housing Development Corporation's Aster Place Apartments at
Bloomfield project highlights the partnerships that can be created to
generate a viable community that provides housing opportunities for
families at all income levels. Furthermore, the project serves as a
reference for communities looking to create affordable housing where
none existed before.
THE 15TH AVENUE CO-OP OF THE CITY OF ESCONDIDO, CALIFORNIA
The 15th Avenue Co-op is the first limited equity housing
cooperative to be developed in California's San Diego County. Limited
equity cooperatives offer an alternative to renting for low-income
families by allowing them to own the building in which they live.
Like many cities today, Escondido is faced with an increase in
deteriorating housing stock, overcrowded housing and urban blight. In
Escondido, the problem of overcrowding is compounded by a lack of
suitable units in the city's existing multi-family housing, especially
the lack of three- and four-bedroom units for large families. The vast
majority of multi-family housing in Escondido consists primarily of
studios and one- and two-bedroom units. Only 17 percent of its rental
units have three or more bedrooms. Due to the shortage of appropriately
sized units, there are relatively few existing multi-family buildings
that are suitable for acquisition and rehabilitation for lower-income
families.
The 15th Avenue Co-op had its beginnings after an apartment
building that was nearly vacant and in need of extensive rehabilitation
was also identified as having the potential to be redesigned to provide
three- and four-bedroom units. The building was severely deteriorated
with roof and plumbing leaks, holes in many of the walls and ceilings,
torn carpets, and broken interior fixtures. The exterior was also
deteriorated with missing asphalt in the parking lot and no
landscaping. Due to the condition of the building, as well as the
inability of previous renters to continue paying rent, all but one of
the occupants had moved out. The building, however, provided an ideal
opportunity for rehabilitation because of the availability of existing
utilities and its proximity to major thoroughfares, public
transportation, and amenities such as a neighborhood market,
restaurants, elementary schools and child care.
The 15th Avenue Co-op is located in the center city residential
area. In addition to convenient services, the neighborhood hosts a mix
of residential development consisting of apartment complexes and
single-family residences. The area encompasses approximately nine city
blocks and has been identified by the city as an ideal area in which to
promote a wide range of housing opportunities. The estimated average
annual income in the area (for a family of four) ranges from about
$7,000 to $28,000. Fifty-two percent of area residents are Hispanic,
and the remaining 48 percent are Anglo-Americans, African-Americans,
Asian/Pacific Islanders, and others.
The long-term financial success of the project is assured with the
commitment of all funds. Project financing is unique because three
reserve accounts will be set up instead of the standard two. In
addition to the usual operating and replacement reserves, a third
reserve account will enable paydown of the principal in order to reduce
mortgage payments should they go up in the eleventh year. The best loan
that was available offered low, fixed-rate interest for the first ten
years only. Thus, the monthly carrying charges could rise in the
eleventh year. However, this will be avoided due to the third reserve
account.
15th Avenue Co-op Funding
The project was funded by a variety of public and private
resources, but 47 percent was received from HOME funds. The next
highest contributor was SAMCO, a statewide consortium of lenders, which
provided approximately 32 percent of the needed resources through a 30-
year loan. The City of Escondido's Rehabilitation Program provided an
additional 13 percent of funding and the remaining came from other
contributors. Additional sources included ``sweat equity,'' which was
provided by the future residents' participation in the demolition of
the building, construction clean-up and installation of the fixtures
such as toilets, screens and doors. The breakdown is as follows:
HOME funds.................................................... $580,000
(3 percent simple interest deferred first 10 years)........... 405,000
(3 percent 30 years, residual receipts)....................... 175,000
SAMCO (standard 30-year loan)................................. 400,000
City of Escondido Rehabilitation Program (Funds are obtained
for the program through set-aside funds from tax
increments obtained within the redevelopment area)........ 160,000
Affordable Housing Grant (received from the Federal Home Loan
Bank)..................................................... 60,000
Developer/resident equity..................................... 24,450
--------------------------------------------------------------
____________________________________________________
Total...................................................$1,224,450
In addition to the HOME funds, the city's rehabilitation funds and
the developer's equity, other sources of interim funding include
$48,000 from the Local Initiative Support Cooperation and a Bank of
America Community Development Bank Loan of $404,500.
The financial success of the project can also be attributed to the
fact that the resale price of shares will be fixed, which will
encourage long-term ownership. In turn, success may be even greater
since residents will have a vested interest in and control of the
operation costs.
Principals involved with the project believe that the HOME program
played a very important role in its feasibility. HOME program funds
contributed 47 percent of the total development costs, which made it
more attainable for the developer to be able to pull together other
funding commitments. Also, when it comes to financing such a housing
project, private financing institutions take a close look at leverage
coming from a public source.
Because of the attractive loan terms offered by the city in respect
to HOME funds, the developer was able to offer quality affordable
housing and lower rents for very low-income households in the
community. Furthermore, the City of Escondido has been able to expand
its supply of affordable housing with the availability of HOME funds
coming directly from the State Department of Housing and Community
Development, as well as the U.S. Department of Housing and Urban
Development.
california renaissance village: the rebirth of an american neighborhood
Just a few short years ago, the Glenwood Avenue Apartments, located
in Rialto, Calif., was a neighborhood in distress. The 144-unit complex
was deteriorating, the area was plagued by crime, and the few habitable
dwelling units were difficult to rent. Other units were in foreclosure
or boarded up.
Then, the City of Rialto, San Bernardino County, the Southern
California Housing Development Corporation (a local, not-for-profit
community housing development corporation), area financial
institutions, and local residents formed a partnership to design and
implement a comprehensive neighborhood revitalization strategy for the
Glenwood Avenue Apartments. The partners assessed the underlying
problems of the complex, most notably that it was an eyesore and a
financial abyss.
The revitalization of the complex--which was later renamed
Renaissance Village--made it an ideal candidate for the HOME Investment
Partnerships Program because it entailed the acquisition, demolition,
rehabilitation, and continued management of the 144 units, and resulted
in the rebirth of an American neighborhood. Area lenders offered
financial incentives to potential buyers, managers, and tenants. The
City of Rialto leveraged funding, ownership, and management options at
the state and local level, while San Bernardino County tapped funding
mechanisms at the federal level. Finally, the Southern California
Housing Development Corporation (SCHDC) participated in acquiring,
rehabilitating, and operating the complex.
Over a two and one-half year period, the project's HOME program
objectives were met through the multilevel, comprehensive partnership.
The $7.5 million project was funded by a highly creative plan that
included: (a) a $1.5 million gap financing and a 30-year $500,000 bond
issue--credit-enhanced by Fannie Mae--from the Rialto Redevelopment
Agency; (b) a $500,000 HOME Investment Partnerships Program loan
approved by the San Benardino County Board of Supervisors; and (c) a
$500,000 grant from the Federal Home Loan Bank of San Francisco
Affordable Housing Program. In addition, SANWA Bank, Calif., provided a
$500,000 construction loan for rehabilitation, and the American Savings
Bank, Great Western Bank, Fidelity Federal Savings, and Freddie Mac
provided assistance through mortgage balance write-downs during SCHDC's
acquisition period.
In addition to saving the dilapidated apartment complex, SCHDC has
provided extra amenities for the restoration of the neighborhood. The
area that once looked like a war zone now boasts a gated neighborhood
community of attractive residential housing, a ``tot lot,'' two
swimming pools, picnic areas, basketball courts, indoor recreation
facilities, landscaping, and, most important, residents. To prevent
some of the problems faced by the former complex, in-house security
personnel patrol the grounds from 10 p.m. to 6 a.m., and local law
enforcement agencies are working with the community to ensure a safe
environment for the residents.
Renaissance Village is 100 percent affordable--20 percent of the
units rent to households earning 50 percent of area median income,
while 80 percent rent to individuals earning 60 percent of median
income.
San Bernardino County submitted Renaissance Village for the NACCED
HOME Awards awarded at the NACCED 21st Annual Conference.
______
Prepared Statement of the U.S. Conference of Mayors, the National
Association of Counties, the Association of Local Housing Finance
Agencies, and the National Community Development Association
Mr. Chairman and Members of the Subcommittee: The U. S. Conference
of Mayors, the National Association of Counties together with its
affiliate, the National Association for County Community and Economic
Development, the Association of Local Housing Finance Agencies, and the
National Community Development Association appreciate the opportunity
to present our views on fiscal year 1998 appropriations for the
Department of Housing and Urban Development, and in particular the two
priority programs of local governments--Community Development Block
Grants and HOME. Through this statement our organizations, composed of
city and county government elected officials and practitioners, wish to
articulate the critical importance of maintaining a continued federal
commitment, in partnership with our members--the nation's local
governments--in promoting neighborhood revitalization and expanding the
supply of affordable housing in our nation's central cities, counties,
small towns and rural areas.
At the outset, we wish to commend you, Mr. Chairman and members of
the Subcommittee, Republicans and Democrats alike, for your continuing
support for priority local government programs. This is evidenced by
inclusion in the fiscal year 1997 appropriations act the same funding
levels for CDBG and HOME as approved for fiscal year 1995 and 1996--
$4.6 billion and $1.4 billion, respectively.
However, we also want to reiterate our deep concern over, and
opposition to, the proliferation of set-asides within the CDBG program.
For fiscal year 1997, $289.6 million is allotted for set-asides. Of
that, $180 million is for programs unrelated to the basic CDBG program:
Youthbuild ($30 million), public housing supportive services ($60
million), and lead-based paint abatement ($60 million), and public
housing law enforcement ($20 million). The Administration's fiscal year
1998 budget also requests set-asides totaling $290 million. To the
extent these programs deserve to be funded, they should be funded
separately.
Making them set-asides has the effect of taking formula funds,
which benefit many communities, and converting them into discretionary
funds, which benefit a far fewer number of communities. In addition,
the inclusion of unrelated set-asides such as these is what I refer to
as the hidden cut in CDBG. Although the CDBG program has received level
funding of $4.6 billion since fiscal year 1995, the actual amount of
funding for local governments and states has declined by 4 percent,
while the number of new formula grantees has increased by three
percent. This increase in entitlement grantees, coupled with the
steadily mounting set-asides, seriously reduces entitlement
allocations. In fiscal year 1995, $4.6 billion in CDBG funds was
allocated to 946 entitlement communities and 51 states and territories
with approximately $90 million in total designated set-asides--those
for Indians, Insular areas and Section 107 special purpose grants (none
of which we object to). In fiscal year 1997, $4.6 billion in CDBG was
allocated to 975 entitlement communities and 51 states and territories
and with $289.6 million in total designated set-asides. Even without
considering inflation, this on-going trend creates a steady, yet hidden
decline in actual CDBG funding to jurisdictions. For example, from
fiscal year 1995 to 1997, East St. Louis, IL, lost 8 percent, Los
Angeles, CA, lost 5 percent, Cambridge, MA, lost 8 percent, and
Westchester County, NY, lost 8 percent in CDBG funding.
As with CDBG there is the beginning of a trend toward set-asides in
HOME. For fiscal year 1997, $15 million has been set-aside for housing
counseling. The HOME program has also experienced an increase in the
number of participating jurisdictions each year, spreading the funds
even further. In addition, for fiscal year 1998 the Administration has
recommended a cut in funding for HOME to $1.3 billion. We are, of
course, strongly opposed to this cut.
Mr. Chairman: Due the hidden decline in CDBG and HOME funding over
the past three years at ``level funding,'' we urge the following
funding levels for fiscal year 1998: $4.6 billion in formula funding to
entitlement communities and states without any set-asides within this
amount, and $1.5 billion for HOME.
Attached to this statement are the materials used for a
Congressional briefing on the CDBG and HOME programs which our
organizations and others held on March 20, 1997. We commend it to the
Subcommittee's attention for the extensive information which it
contains.
IMPACT OF CDBG
Celebrating its 23rd year, having been signed into law by President
Gerald Ford in 1974, CDBG is the federal government's most successful
domestic program. The CDBG program's success stems from its utility,
i.e., providing cities and counties with an annual, predictable level
of funding which can be used with maximum flexibility to address their
unique neighborhood revitalization needs. Based on HUD's most recent
annual report to Congress, between fiscal year 1993 and fiscal year
1996 an estimated 14-17 million households benefitted from the CDBG
program. During that same period an estimated 114,799 jobs were created
through CDBG-funded economic development activities. In fiscal year
1993, entitlement communities spent funds in the following manner:
housing rehabilitation, assisting over 200,000 households (35.8
percent), public works and infrastructure (22.7 percent), planning,
monitoring and program administration (14 percent), public services
(12.8 percent), acquisition and clearance of property (7.3 percent),
preventing or eliminating slums and blight (6 percent), and economic
development (6 percent).
Again according to the HUD report, for every 10 percent of CDBG
funds expended for direct assistance to individuals and households
(two-thirds of CDBG funds) over 1 million persons and households are
served, based on the fiscal year 1992 Grantee Performance Reports.
Since the remaining one-third of funds benefit entire neighborhoods a
per person benefit cannot be accurately calculated.
A two-year study of the CDBG program by the Urban Institute
concludes that in its twenty-two years' existence the program has
brought `` * * * important contribution[s] to city community
development, including demonstrated successes in achieving local
neighborhood stabilization and revitalization objectives.'' The Urban
Institute believes that in virtually every city, neighborhoods would
have been adversely affected had CDBG not been implemented. The
Institute claims that ``the CDBG program works most effectively when
communities practiced concentrated investments, linked housing,
economic development and social service spending, and invited citizen
participation in neighborhood planning efforts.'' This strategy of
comprehensive treatment of neighborhoods is greatly facilitated by the
Administration's Consolidated Plan requirements. The study also found
that CDBG programs clearly benefit those for whom the program was
intended, low- and moderate-income persons and neighborhoods, and does
so to a substantially greater extent than the minimum (70 percent)
required by law. The Urban Institute correctly characterizes the
program as the federal government's primary means to support local
efforts in the stabilization and restoration of deteriorated
neighborhoods.
IMPACT OF HOME
Like CDBG, the HOME program is producing very positive results in
expanding the supply of affordable housing. Enacted as the centerpiece
of the 1990 National Affordable Housing Act and signed into law by
President Bush, the program was initially mired by many legislative
provisions which thwarted its effective implementation. After a series
of legislative changes in 1992, designed to facilitate effective
implementation, and regulatory actions by former Secretary Cisneros and
his staff, the program really took off in January 1993.
Since then the progress in using the funds, and the uses to which
they are being put, is most impressive. In fact the House
Subcommittee's report accompanying H.R. 3666, the fiscal year 1997 HUD
appropriations bill stated: ``This program provides resources to
nonprofits to build affordable homes equitably and efficiently.
Furthermore, the program is well monitored, making it possible to
determine whether low- and moderate-income families are receiving the
benefit of the assistance.'' We heartily agree.
According to HUD data, since HOME was created in 1990, it has
helped to develop or rehabilitate over 230,000 affordable homes for
low- and very-low income families. Ninety percent of the HOME funds
used for rental housing must be targeted to families with incomes at or
below 60 percent of the area median. The balance may assist those with
incomes up to 80 percent of the median income. Actual targeting is
deeper. The majority of HOME funds have been committed to housing that
will be occupied by very low-income people and a substantial amount
will assist families with incomes no greater than 30 percent of median.
As of the end of January, 1997, 65 percent of all occupied HOME-
assisted rental housing is rented to families with incomes at or below
30 percent of area median income.
HOME funds help low- and very-low income families realize the dream
of homeownership by providing for construction and rehabilitation of
housing as well as providing the downpayment and/or closing cost
assistance in the form of second mortgages necessary to bridge the gap.
Since 1990 HOME has assisted 68,900 homebuyers. All HOME funds used for
homeownership must be targeted to households with incomes at or below
80 percent of area median. Again this targeting requirement is being
exceeded. Thirty-two percent of homebuyers assisted with HOME funds
have incomes at or below 50 percent of median income.
HOME is cost effective and provides the gap financing necessary to
attract private loans and investments to projects. For each HOME
dollar, $1.79 of private and other funds have been leveraged since the
program's inception. This clearly illustrates the effective and
judicious use of HOME funds by participating jurisdictions.
We also urge the Subcommittee to fully fund the Administration's
request for renewal of expiring project-based and tenant-based Section
8 subsidy contracts, but not at the expense of CDBG and HOME funding.
Failure to do so will put an estimated 4.4 million households at risk.
At the same time we are urging the authorizing committees to formulate
legislation which would permanently address this issue.
Mr. Chairman, local government officials believe that a strong
federal role in housing and community development programs must
continue. Since the Housing Act of 1937, Congress has enunciated, and
repeated in subsequent housing acts, that, as a matter of national
policy, the federal government has an obligation to assist states and
local governments in providing decent, safe and sanitary housing for
lower income households. Perhaps Congress said it best in a
``Declaration of National Housing Policy'' included in Section 2 of the
Housing Act of 1949:
``The Congress hereby declares that the general welfare and
security of the Nation, and the health and living standards of its
people, require housing production and related community development
sufficient to remedy the serious housing shortage, the elimination of
substandard and other inadequate housing through the clearance of slums
and blighted areas, and the realization as soon as feasible, of the
goal of a decent home and suitable living environment for every
American family * * *.''
We submit to you that, while progress has been made toward this
goal, it has not been fully achieved. The federal government must make
a commitment to this national housing policy, backed up by the
resources with which to continue the battle against neighborhood
deterioration and a decaying housing stock.
Mr. Chairman, we look forward to working with you and the
Subcommittee in adequately funding HUD's housing and community
development programs.
______
Prepared Statement of Jacqueline Johnson, Chairperson, National
American Indian Housing Council
I am submitting written testimony to your subcommittee to tell you
of the critical need for funding from Congress for the new Indian
Housing Block Grant Program. My name is Jacqueline L. Johnson and I am
the Chairperson of the National American Indian Housing Council
(NAIHC). I am also the Executive Director of the Tlingit-Haida Regional
Housing Authority located in Juneau, Alaska. In addition, I am the
Secretary of the Juneau Tlingit Haida Tribal Council, and a member of
the Raven/Sockeye Clan. Kus'een yo xat duwasakwak, Lukaxadi a'y'a xat,
Yeith hit dax nax satee Kagwaantaan yadi.
First, I want to thank the chairman and members of the subcommittee
for their continued support of the Indian housing program. We are
honored to provide the subcommittee with testimony about housing for
Native Americans, who continue to be among the most impoverished people
in the United States. NAIHC looks forward to working with the
subcommittee to assure that together, we meet the housing needs of
Native Americans.
As the subcommittee is aware, this is a historic time for Indian
housing. The Native American Housing Assistance and Self-Determination
Act (NAHASDA), passed last October, brings great changes to the way
federal housing assistance will be delivered to tribes. We are excited
about the change and the opportunities it brings, and ask the
subcommittee to consider funding NAHASDA at a level that will ensure
its success.
THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-DETERMINATION ACT
(NAHASDA)
Tribes and Indian housing authorities have long advocated for
changes in the Indian housing program. The passage of NAHASDA
represents the culmination of these efforts. NAHASDA allows for greater
tribal control and flexibility. Under the existing program, Indian
housing authorities have been forced to work within the confines of a
program designed for urban areas. Through the years, we worked hard to
make the program meet our rural needs and diverse cultures. While we
have had some successes, the road has been difficult. With the passage
of the NAHASDA, we can expand upon our successes and finally make
significant movement towards our goal of providing safe, decent and
sanitary housing for all eligible families. NAHASDA allows tribes the
flexibility to build culturally sensitive homes that are tailored to
their environments. It allows each tribal community to create their own
housing programs--to manage their resources in ways that will best
serve the unique needs of their people.
NAHASDA brings to tribes a new way to approach housing--one that
will identify each communities' housing needs and goals through
comprehensive housing planning. The comprehensive housing plans
required under the Act will guide each communities' housing program and
allow housing to be incorporated into all the other economic activities
of the tribe. No longer will housing be a separate activity.
NAHASDA provides new opportunities for meeting our housing needs by
combining public resources with private financing. The Act encourages
partnerships with banks and financial institutions, allowing us to
guarantee future financial resources to private lenders.
This is an exciting and challenging time for those of us who are
dedicated to improving the housing conditions in Native American
communities. We are eager to seize this opportunity and move forward.
In fact, I am proud to report that the Negotiated Rulemaking
Committee, created to develop the regulations for the new Indian
housing program under NAHASDA, recently completed its work. The
Committee met the deadline it established, and wrote draft regulations
for the Indian Housing Block Grant program which will be available for
public comment in the next few weeks. We thank Congress for providing
us with the opportunity to develop this new program. It has been an
educational and challenging process.
Through negotiated rulemaking, the Committee was able to draft
program regulations that: respect tribal sovereignty; provide HUD and
tribes with the tools to monitor and oversee the program; direct,
through the funding formula, resources to tribes that are most in need;
protect current residents and families through the continued operation
and maintenance of existing housing units; and encourage private-public
partnerships that allow tribes to leverage and guarantee financial
resources.
I believe that the Committee has addressed many of the concerns of
Congress, ensuring that accountability and responsibility is integrated
into the regulations, while providing for local control and flexibility
that meets the needs of low-income Native Americans. I am proud to
report that tribal representatives and HUD participants were able to
work together, to work out differences, and to produce regulations that
will enable us to achieve our goals of decent, safe, sanitary housing.
the administration's fiscal year 1998 budget request
To meet the great promise and challenge of NAHASDA, it is essential
that tribes and TDHE's receive a level of funding that allows them to
meet the Act's objectives. While we recognize the national goal to
balance the budget, the Administration's budget proposal falls far
short of our need. It fails to provide funding at levels designed to
ensure the success of the program. A new program that is under-funded--
that fails to account for the recent changes in welfare reform--will be
a program that has great potential, yet ultimately fails to give Native
Americans a fair chance to achieve goals that other Americans take for
granted.
NAIHC estimates the need for the Indian housing program to be
approximately $850 million. This figure includes not only the costs of
operating and maintaining the viability of the existing stock, but also
the costs associated with implementing the Act and preparing for
welfare reform. Additionally, it incorporates funding for the loan
guarantee programs, Section 601 and Section 184, which are vital for
addressing our housing needs.
While the Administration's proposal does not acknowledge that more
tribes and TDHE's are now eligible to participate in the block grant
program, HUD estimates that approximately 60 more tribes will be
eligible under the Act. These are, in large part, federally recognized
tribes that have not previously participated in the housing program and
new federally recognized tribes. The increase in those who are now
eligible for assistance must be budgeted for. In addition, the proposed
appropriation fails to account for the effect of inflation, and funding
remains at a constant level over the next five years. Each year,
inflation will eat at our precious dollars and each year their value
will decline. The result will be a cumulative decrease in funding
annually.
Also, tribes and TDHE's need adequate dollars to carry out the
additional responsibilities required by the Act. NAIHC estimates that
tribes and TDHE's need $148 million to plan, manage, and administer
their grants, as well as to undertake the necessary environmental
reviews that are now the tribes' responsibility. Insufficient funding
will hamper tribal and TDHE's efforts to manage these tasks which were
previously funded by HUD.
There is also a factor that no one can accurately estimate and one
in which housing is rarely mentioned when discussed--the impact of
welfare reform. The Administration proposes programs that housing
authorities will be able to use for creating jobs, linking welfare
recipients to jobs, and leveraging funds to increase job opportunities.
What happens when there are no jobs or when economies are so depressed
that jobs cannot be created or sustained? Who pays the rent when
welfare payments stop? How will tribes and TDHE's make up the
difference? It is important that this subcommittee understands that
welfare reform will hit us very hard. Unfortunately, the
Administration's budget does not factor the impact of welfare reform
into its request for funding the Indian housing block grant.
Under NAHASDA, tribes and TDHE's can form new partnerships with
private lenders and financial institutions, using many of the financial
tools available in the larger community. But under the Administration's
proposal, the Loan Guarantee Program, Section 601, receives no funding.
NAIHC estimates that Section 601 needs approximately $32 million in
credit subsidy. This small investment could potentially leverage twelve
times more in private housing funding, or approximately $400 million.
The amount of credit subsidy requested is minor in comparison to the
huge contribution it will bring to our economically distressed
communities. I sincerely believe that without adequate funding for this
program, we will never properly house Indian people. Section 601 is
important because it helps us begin to achieve our goal of economic
self-sufficiency. Without 601, we will remain solely dependent on
decreasing federal dollars for which there are countless competing
demands.
In addition, NAIHC is seeking to increase the funding for the
Indian Housing Loan Guarantee Program (Section 184) from $3 to $6
million. This program has been extremely successful since its creation
in 1992. Congress appropriated $3 million for funding in 1993. Each
year appropriations for Section 184 are used, and the demand is
growing. HUD expects to commit the fiscal year 1997 appropriation for
the Section 184 program months before the September 30 deadline. This
program has allowed us to build houses on Indian land for the first
time with private financing. With such great unmet housing needs, and
the prospect of diminishing federal dollars, it makes sense to further
encourage the participation of the private market.
Housing finance programs are essential for Indian reservations and
Native communities in an era of declining federal housing dollars. They
are indispensable tools that will help us move private financing into
our communities, where few private lenders dare to venture.
We request that appropriations for NAHASDA funding lose their
federal distinction for the purpose of leveraging those funds with
state and local matching contributions and private investment, similar
to the way funds under the Home Investment Partnerships Act are used.
This will allow us to fully maximize our ability to bring private and
other resources to our communities.
Additionally, we request that TDHE's be allowed to service public
housing vouchers and receive the funding for their non-Indian families
through the public housing appropriation. Currently, there are 4,174
Section 8 vouchers managed by Indian housing authorities. Although
small compared to public housing, in many areas of the country, Indian
housing authorities serve a substantial number of Indian and non-Indian
families in this program. Providing funding for TDHE's to continue to
serve non-Indians will allow these families to remain in their homes.
NAIHC recognizes the need to meet national budget priorities, and
the pressure that the subcommittee is under to do so. However, NAIHC
believes that if tribes and TDHE's are going to meet the housing needs
of their communities, develop housing that is decent, safe and
affordable, and create partnerships with the private sector, providing
the level of funding requested is essential.
MAXIMIZING THE OPPORTUNITIES THAT NAHASDA BRINGS
As tribes and TDHE's make the transition from the existing program
to the new program, technical assistance and training becomes
especially important. As the only national organization representing
Indian housing, NAIHC understands the importance of building the
capacity and ability of tribes and TDHE's. Education is critical in
preparing tribes and TDHE's for understanding the program, and
preparing for its implementation. NAIHC strongly supports additional
funds for technical assistance and training, directed not only to
tribes and TDHE's, but also for HUD staff so that they are better able
to understand their new role. Additionally, we ask that the
subcommittee continue the direct appropriation of $1.5 million to NAIHC
for the provision of technical assistance, training, and research
activities to tribes and TDHE's. NAIHC has received funding in past
years, and its TA and training programs have assisted IHA's (TDHE's)
and tribes throughout Indian country.
NAIHC also asks this subcommittee to support the passage of a
national financial institution, targeted to provide assistance to
tribes in the development of tribal consortiums and the pooling of
funds. Such services are critical to build the financial capacity and
resources of tribes, and to address the lack of access to credit that
exists in many tribal areas.
The success of the new Indian Housing Block Grant program rests on
a partnership--a partnership between the federal government and tribes,
where each fulfill their responsibilities to provide decent, safe and
sanitary housing for all Native Americans. Your support of $850,000,000
will give us the opportunity to achieve these goals.
______
Prepared Statement of Aimee R. Berenson, Director of Government
Affairs, AIDS Action Council
Good afternoon. My name is Aimee Berenson, and I am Director of
Government Affairs for AIDS Action Council, the Washington voice of
over 1,400 community-based AIDS service organizations across this
nation and the people living with HIV/AIDS they serve. The work of AIDS
Action Council is supported by our dues-paying members and individual
donations. AIDS Action Council does not receive any federal funding.
I want to thank the members of this Subcommittee for the
opportunity to testify here today on behalf of people living with HIV/
AIDS and their families. We are at a time of great hope and enormous
promise in this epidemic. As you probably know from recent media
reports, last year, as a result in dramatic advances in the care and
treatment of people living with AIDS, the number of people dying from
AIDS decreased by 13 percent. But this epidemic is far from over. While
the number of people dying from AIDS declined significantly last year,
the number of people living with AIDS did not. And tragically, not
everyone living with AIDS is reaping the benefits of advances in care
and treatments. The death rate for women with HIV disease actually
increased by 3 percent last year, and death rates among people of color
declined only nominally. These statistics are a poignant reminder that
there are stark inequities in the ability to access the state-of-the-
art health care that people with HIV/AIDS need to stay alive. AIDS
continues to be the leading cause of death among American women and men
between the ages of 25 and 44, cruelly depriving them of years of
productivity. Worse still, every year 40,000 to 80,000 more Americans
become infected with the human immunodeficiency virus (HIV), the virus
that causes AIDS.
Stable housing has always been essential to preventing the early
onset of illness and maintaining the quality of life for HIV-infected
individuals and their families. In the past, the lack of stable housing
has meant many people with HIV disease died prematurely, because
without a stable place to live, they could not access the care services
and life-sustaining treatments that could have prolonged their lives.
Today, the hope of new advances in the care and treatment of HIV
disease means that stable housing may not only prevent premature death;
it may actually be the key to a long, healthy life. Some people have
responded so well to new therapies that they have been able to go back
to work after years on disability. Ultimately, stable housing--and the
access to care it enables people to achieve--may not only prevent
premature death; it may mean the difference between life and death
altogether.
For the first time in the history of this epidemic, people living
with HIV disease and their families have real cause for hope. Yet at
the same time, they struggle with the challenge of how to realize that
hope. Imagine the challenges that the costs of these new drugs
therapies pose; imagine the challenges of finding the affordable,
comprehensive state-of-the-art medical care and supportive services
needed to benefit from the new drug therapies in the first place. Now
imagine the challenges of trying to do either without affordable,
stable housing. How do you choose between paying your doctor's bills or
filling your prescriptions and paying your rent or mortgage? And what
about those people who don't even have the pretense of such a choice,
because they are already homeless?
The Housing Opportunities for People with AIDS (HOPWA) program is
the heart of the federal housing response for people living with HIV/
AIDS. By increasing fiscal year 1998 funding for HOPWA, Congress can
help us ensure that no American living with HIV disease is denied care,
treatment, even life itself, just because they do not have a stable
place to live.
Ninety percent of HOPWA funds are distributed by formula grants to
states and localities hardest-hit by the AIDS epidemic.\1\ States and
localities control the use of these funds, not HUD. Communities may use
HOPWA funds to meet whatever housing needs they may have, from
providing short-term supportive housing or rental assistance for low
income persons with HIV/AIDS to rehabilitating existing housing units,
building new community residences, or coordinating home care services.
The remaining ten percent is awarded on a competitive basis for
projects of national significance.
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\1\ To qualify for a formula grant, a metropolitan statistical area
(MSA) must have 1,500 cases of AIDS in a population in excess of
500,000 people as reported by the CDC; a state must have 1,500 cases
outside of any qualifying MSA. Thus formula grants are awarded
equitably, based on need as reflected by numbers of cases.
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At any given time, one-third to one-half of all Americans with AIDS
are either homeless or in imminent danger of losing their homes. And 60
percent of all people living with HIV/AIDS will face a housing crisis
at some point during their illness, because they face illegal
discrimination or because, as a result of lost wages and medical
expenses, they become unable to pay their rent or mortgage. Moreover, a
growing number of people with HIV/AIDS are already homeless when they
become ill and find themselves shuffled between acute care hospitals,
medically unsafe shelter facilities, and the streets, at an enormous
cost to their health and to the taxpayers. Past studies by the Centers
for Disease Control (CDC) found HIV infection rates of up to 21.4
percent in selected homeless populations; more recently, infection
rates among the homeless in some urban areas are estimated to be as
high as 50 percent.
Unfortunately, the number of people living with HIV/AIDS in a given
jurisdiction who need housing is increasing disproportionately to the
overall increase in AIDS cases in that jurisdiction. Moreover, because
of the historical underfunding of the HOPWA program, the amount of
housing provided has never been nearly sufficient to meet the true
needs. And ironically, a number of AIDS housing providers across the
country are reporting that as a result of the recent advances in care
and treatment, the people currently being housed are living longer, so
there is less turnover in existing housing programs, and the waiting
lists for those programs are growing even more.
The housing crisis facing people living with HIV/AIDS exacts an
enormous toll, personally and economically, on individuals, their
families, and communities across this country. HOPWA dollars help
lessen this toll. For example, studies have shown that at any given
time, approximately 30 percent of people with HIV-disease in acute-care
hospitals are there only because there is no other community-based
residential alternative. An acute-care bed for an AIDS patient costs on
average $1,085 a day. The cost of providing housing and services in a
HOPWA-funded residential facility is between one-tenth and one-
twentieth of that amount. HOPWA dollars reduce the use of emergency
health care services by an estimated $47,000 per person per year.
HOPWA fills a need that has not been met by other federal housing
programs. Many programs, like Section 8, have waiting lists that are,
even today, much longer than the average lifespan of a person with
AIDS. Other programs, like CDBG, fund a wide range of community and
economic development activities far more politically popular on the
local level than housing for people with AIDS. And many people with
HIV/AIDS still have difficulty accessing HUD programs that serve people
with disabilities generally, such as Section 811 or HOME, because of
HUD's historic position that such programs cannot be used for
``targeted'' housing that meets the needs of people with particular
disabilities, such as HIV/AIDS.
Without question, the HOPWA program is critically important to the
thousands of people living with HIV/AIDS, their families, and their
communities in states across the country, ranging from New Jersey and
North Carolina to Florida and Mississippi; from Ohio and Wisconsin to
Texas and California. In fiscal year 1997, 80 jurisdictions--53
metropolitan areas and 27 states--qualified for HOPWA formula grants,
and HUD estimates that 10 new jurisdictions will qualify for fiscal
year 1998. Yet the ability of the HOPWA program to respond to the
growing housing crisis cities and states face in battling the AIDS
epidemic has already been compromised by the fact that appropriations
have not kept pace with the documented increases in need for their
communities. In fact, appropriations for the HOPWA program have been
below what is needed even to maintain existing HOPWA programs in some
jurisdictions.
The President's fiscal year 1998 Budget Request for HOPWA seeks an
8.1 percent increase, to a total of $204 million. This increase, while
below the $250 million we estimate is needed for fiscal year 1998,
would at least ensure that cities and states across the country, and
housing projects in your community and communities across this nation,
can work to address the ever-increasing needs of their citizens with
HIV/AIDS. HUD estimates that the increase in funding requested in the
President's fiscal year 1998 Budget would provide housing and related
services for an additional 2,836 individuals and families.\2\
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\2\ Attached is a chart prepared by HUD showing each state's
combined total in MSA/state HOPWA formula funds for fiscal year 1996
and fiscal year 1997, and each state's estimated total for fiscal year
1998 (assuming the President's requested increase in fiscal year 1998
appropriations for HOPWA).
---------------------------------------------------------------------------
This nation's investments in AIDS research and care have reaped
enormous benefits. But if this Congress does not make a similar
investment in HOPWA funding for fiscal year 1998, people with HIV/AIDS
will not have the most basic thing they need to realize those
benefits--namely, a roof over their heads. It is not only appropriate
but imperative for the federal government to enable those cities and
states hardest-hit by this epidemic to provide the housing needed, so
that their citizens on the local level can share in the progress we are
making in fighting this epidemic as a nation.
Without stable housing, we will continue to see people with HIV/
AIDS dying prematurely, and perhaps unnecessarily, in hospital
emergency rooms, in shelters, on the streets of our cities. It has been
true in the past and is even truer today: homelessness kills people
with AIDS.
We realize that there are enormous budgetary challenges facing us
on the federal level, particularly with regard to the overall HUD
budget. Our request of $250 million for HOPWA in fiscal year 1998
actually represents the amount that HUD estimated was needed for HOPWA
in fiscal year 1996 to prevent drastic cuts in funding to many states
and localities. Now more then ever, cities and states need this
increased HOPWA funding, to ensure that this community-based,
community-controlled program can respond to the growing AIDS housing
crisis in their jurisdictions. On behalf of the many people living with
HIV/AIDS in those jurisdictions, I ask you to remember that HOPWA
dollars really do represent life or death.
HOPWA has been the focus of my testimony here today because HOPWA
is the only federally-sponsored housing program specifically designed
to meet the acute housing crisis facing people with HIV/AIDS in those
cities and states hardest-hit by the epidemic. But HOPWA alone cannot
possibly meet the housing needs of all Americans with HIV/AIDS,
especially those living in communities that do not qualify for HOPWA
formula grants.
Thus many people with HIV/AIDS have relied on programs such as the
McKinney Homeless Assistance Grants, Section 8 rental assistance
(project and tenant-based), and Section 811.\3\ We urge you to remember
that programs such as these, which serve the homeless and people with
disabilities, are programs that serve people living with HIV/AIDS. When
we talk about the homeless, we are talking about people with AIDS; when
we talk about people with disabilities, we are talking about people
with AIDS. AIDS is a disease that disables and impoverishes people; at
the same time, it is a disease which disproportionately affects people
who are already poor and/or homeless.
---------------------------------------------------------------------------
\3\ Because of the waiting list problems with Sec. 8 and HUD's
interpretation of ``disability'' under Sec. 811 referenced earlier,
gaining access to these two programs has often had to be done through
set-asides within these programs for people with AIDS.
---------------------------------------------------------------------------
Funding for the McKinney Homeless Assistance grants program is of
particular importance for homeless people living with HIV/AIDS.
Therefore, we urge you to increase funding for this program in fiscal
year 1998 to at least the original fiscal year 1995 level of $1.12
billion. The growing number of homeless people and families, and the
increasing rate of HIV-infection among the homeless, pose enormous
challenges for communities across America. Without increased funding
for the McKinney programs, cities and states will not only have to find
the political will to address the complex needs of homeless people, but
may have to divert scarce local resources and raise state and local
taxes to do so.
We urge you to appropriate the funding needed to provide housing
that can prevent premature deaths, improve the quality and duration of
life, and enable thousands of Americans living with HIV disease and
their families to share in the hope of new treatments. Funding for
HOPWA and other housing programs serving homeless and vulnerable
Americans must be increased for fiscal year 1998, so that communities
across this nation have the resources they need to address the housing
problems of their citizens.
Thank you for allowing me to testify before you today.
______
Prepared Statement of Harold L. Paz, M.D., Dean, UMDNJ-Robert Wood
Johnson Medical School
OBJECTIVE STATEMENT
To meet the needs of children and their families' UMDNJ-Robert Wood
Johnson Medical School (UMDNJ-RWJMS) seeks to create the Child Health
Institute of New Jersey. We have received a planning grant from Johnson
& Johnson toward the creation of an institute and we expect substantial
support from the private sector.
The Child Health Institute of New Jersey will implement a set of
programs, integrating: (a) genetics and environmental exposure; (b)
social development and urban dynamics; and (c) the study of how
disorders of these processes result in diseases expressed at life's
different stages. This innovative and integrated scientific-clinical
approach will foster understanding of diseases of childhood, maturity,
and aging in terms of generic, environmental and developmental
influences.
BACKGROUND STATEMENT
The nation has embarked on a new initiative, ``Healthy People
2000'', announced by Secretary Louis W. Sullivan, MD in 1990. Child
health comprises a prime goal, with an explicit focus on ``lead
poisoning, learning disorders, mental retardation * * * and emotional
and behavioral problems'' (DHHS Publication No (PHS) 91-5021). The
state of New Jersey is in a unique position to assume a leadership
role.
As we approach the 21st century, New Jersey faces unique challenges
and opportunities in a healthcare environment in radical transition.
Our state is the most densely populated, leads the country in the
emerging suburbanization of America and is the heartland of the U.S.
medical-pharmaceutical industry. The state also possesses some of the
poorest urban environments in the nation. The impact of the decaying
urban environment has enormous implications on human growth and
development. The institute will examine not only the biological and
chemical effects on childhood, but the effects of behavioral and
societal influences as well. In many ways, these latter areas have been
the focus of most legislative action, but little attention has been
paid to the science which could provide the solutions to these
problems. This Institute will, for the first time, integrate
behavioral, social and biologic approaches in order to understand human
development.
The Institute will be based in New Brunswick. In the last 30 years,
New Brunswick has become the premier healthcare site in the state
through the cooperative efforts of UMDNJ-Robert Wood Johnson Medical
School and its affiliated hospitals, and the ongoing support of Johnson
& Johnson and the Robert Wood Johnson Foundation. While unmet needs and
unique biomedical opportunities characterize our state, New Jersey
contains no university children's hospital, and no international center
for the study of child health and development. The unique combination
of need and opportunity signal a chance for New Jersey to capture a
leadership position in child health. As a result, UMDNJ has made this
issue a top priority and Robert Wood Johnson Medical School has
received a planning grant from J&J to study the feasibility of
developing an Institute for Child Health. In addition, we anticipate
additional private support toward this goal.
The knowledge and technology to unravel the miracles of
development, the biologic mechanisms that convert the one-celled
fertilized ovum into a feeling, thinking, conscious individual are at
hand. The Child Health Institute of New Jersey at UMDNJ-Robert Wood
Johnson Medical School will implement a novel vision for the integrated
study of development and its disorders. Our strategy explicitly
recognizes that changing environmental conditions alter gene function
during development, maturation and aging, necessitating study of the
whole individual as well as the individual gene. The human child during
development appears to be more sensitive to the impact of the
environment, both chemical and social, than at any other period of
life. Employing this approach, Institute scientists will study human
growth and development and the emergence of cognition, emotion,
consciousness and individuality. Since growth mechanisms are now known
to govern function throughout life, abnormalities of development,
maturity and aging will be characterized employing unique insights
obtained during development.
Ongoing insight into mechanisms regulating growth and development
holds the promise of altering medical approaches to recovery of
function after illness and injury. For example, recent discoveries at
UMDNJ-RWJMS and elsewhere now indicate that brain nerve cell division
is governed by special growth factors in utero. These factors can be
used in the adult to accomplish a feat long thought impossible: nerve
cells can be regenerated. This striking discovery points the way to
regrowth and recovery of function after stroke, head and spinal trauma,
and Alzheimer's and Parkinson's diseases. Parallel discoveries in other
areas of developmental biology suggest that a variety of tissues,
including skin, bone and blood vessels, should now be regarded as
renewable resources. These and related findings now prompt a
thoroughgoing reevaluation of the entire process of aging. The new
Institute is designed to pursue these revolutionary findings and forge
this new approach to medicine.
The faculty at UMDNJ-Robert Wood Johnson Medical School provide the
academic, research, patient care and community service activities for
the two New Brunswick hospitals, Robert Wood Johnson University
Hospital and St. Peter's Medical Center. The new Institute will enable
the medical school to continue this leadership role and become a
statewide and national resource for the cutting edge issue of childhood
development. Further, the new Institute will link and enhance the
studies being conducted at other UMDNJ-Robert Wood Johnson Medical
School centers of research, all of which pursue development-related
studies. For example, the Cancer Institute of New Jersey (CINJ) studies
disordered cell growth; the Center for Advanced Biotechnology and
Medicine (CABM) characterizes gene structure and function; the
Environmental and Occupational Health Sciences Institute (EOHSI)
delineates environmental influences on normal and disordered function;
the Institute for the Study of Child Development in the Pediatrics
Department studies basic processes related cognitive, emotional, and
social development in children; and the core Transgenic and Gene
Targeting Facility defines how abnormal genes derange development. The
new Institute, formally charged with defining developmental mechanisms,
will enhance developmental programs at these and other centers in New
Jersey and throughout the nation.
ACTION NEEDED
The development of an institute that explicitly recognizes these
developmental issues will be necessary to meet national and state
needs. This Institute will pursue interrelated programs, designed to
integrate fundamental studies at the molecular genetic, cellular and
systems levels with whole organism investigations, in the context of
child development. The programs are mutually supportive, and each will
pursue problems of clinical and basic relevance.
In addition to the primary focus on scientific discovery, the
Institute will educate the next generation of developmental biologists
and physician-scientists in the emerging field of reproductive health,
growth and development. An integral component of the Institute
scientific enterprise will be the intensive exposure of students of
varying seniority to pioneering research; undergraduates, graduate
students, post-doctoral fellows, clinical residents, subspecialty
fellows, scientific personnel from regional pharmaceutical companies,
visiting senior scientists and physicians pursuing continuing education
will be afforded the opportunity to participate in cutting-edge
developmental science. We anticipate that New Jersey will rapidly
emerge as a center for learning the new basic and clinical
developmental biology, as well as a center for advanced developmental
research.
Environmental health science and policy has been driven by cancer
concerns in adults, however recent information from animal and human
studies indicate that the developing mammal and the reproductive
process can be effected at lower levels of environmental chemicals than
that required to produce many adult cancers and the effect may be more
general than a slight increase in cancer rate. An excellent example
would be the human in utero can experience apparent permanent brain
dysfunction when the mother is exposed to select suspected human
carcinogens such as polychlorinated biphenyls while the mother
demonstrates no effects including cancer. In addition the consequences
for the individual and society of children developing life long brain
dysfunction is greater than having a slight increase in the cancer
rates in adults.
Altered reproductive capacity also greatly effects the individual
and society. There are ample examples of how species have almost been
eliminated by having environmental chemicals alter their reproductive
capacity, and recent evidence indicates that human reproductive
capacity is also being altered by environmental chemicals. An example
would be couples who have been exposed to high levels of dioxin have a
decrease in the ratio of male to female offspring, even to the point
that if the couple has dioxin serum concentrations above a certain
level only girls will be born to the couple. It is these and other
examples of developmental and reproductive environmentally induced
adverse effects that have created this national mandate for child and
reproductive environmental health initiatives.
the request
The Child Health Institute seeks a $10 Million planning grant to
link the current programs at UMDNJ-Robert Wood Johnson Medical School
to the hospital-based research in childhood development. As noted
above, the medical school has already received support from J&J for the
Institute and expects continued private support.
An initial allocation of $1.5 Million is sought in fiscal year 1998
to provide direct support for pilot studies on behavioral, social,
genetic and cellular influences on development. This innovative and
integrated scientific-clinical approach will foster understanding of
diseases of childhood, maturity, and aging in terms of genetic,
environmental and developmental influences.
______
Prepared Statement from the City of Newark, NJ
Newark, New Jersey is a city of great contrasts and great promise.
Our City is home to one of the fastest growing and convenient
international airports in the nation, which is easily accessible to an
unparalleled network of sea, rail and highway connections. Newark is
also home to five institutions of higher learning, ranging from a fine
community college to two law schools and a medical school. The park
system of the city is another important component of Newark's value as
a commercial, educational, and cultural hub of northern New Jersey.
Weequahic Park is a 311-acre facility located in a densely
populated mostly low/moderate income area of Newark, NJ, the Nation's
third oldest city. The major areas of the park are (1) several playing
fields, (2) a 72-acre lake, (3) playgrounds, (4) tennis courts, (5)
picnic area, (6) paddleball/handball courts, (7) trails, (8) a wide
variety of open space, and (9) an 18-hole golf course, one of the few
urban golf courses in the nation. Weequahic Park was designed by
Frederick Law Olmstead in the 1850's and is the second largest park in
the Essex County Park System, the oldest park system in the United
States.
The park is within Newark's Enterprise Community boundaries and
borders on Frelinghuysen Avenue which takes its name from the long
distinguished New Jersey family of Congressman Rodney P. Frelinghuysen.
Further, the cities of Newark and Elizabeth boundary lines were
established within Weequahic Park, then Waverly Fair Grounds, in 1668,
two years after Newark became a city.
Over the past two decades or more, Essex County, the owner of the
park, substantially reduced its maintenance support, and as a result,
every aspect of this once-splendid park fell into substantial
disrepair. As this former ``anchor'' began to die, so did key elements
of the surrounding community.
In 1992, a group of park users came together to form Weequahic Park
Association, Inc. (WPA), which is modeled after and received a generous
amount of support from the highly successful Central Park Conservancy
in New York City. The community-based people working effectively with
the management team, has been the key to WPA's success to-date, i.e.
grass roots people do grass roots work, and professionals do the
professional work. In order to supplement the resources provided by
Essex County for use in Weequahic Park, and to play a hands-on
management role, WPA formally entered into a partnership agreement with
the county in 1995.
Also, WPA participated in the city of Newark's last Empowerment
Zone application submission, as one of eight (8) ``area coordinators.''
Following are some of the key accomplishments of WPA since 1992. It
should be noted that these accomplishments were made without an
administrative budget. Our estimate of the investment made in Weequahic
Park associated with WPA's accomplishments (including ``sweat-equity''
and ``in-kind contributions'') is in excess of $5 million and growing.
WPA's Accomplishments:
--Developed organizational structure
--Articulated key goals and objectives
--Recruited management team
--Incorporated and secured federal tax-exemption
--Negotiated partnership agreement with Essex County
--Planned and managed two Labor Day weekend festivals
--Functioned as Empowerment Zone ``Area Coordinator''
--Conducted general park management planning
--Conducted park clean-up projects
--Collaborated with international, national, and local private
entities to partner with WPA on specific park projects
--Developed Foundation Board
--Developed proposal to do a masterplan study
--Requested and received proposals from architects/engineers for
participation in the masterplan study
--New roadways throughout the park
--Two state-of-the-art playgrounds
--Restoration of fieldhouse/visitors' center
--Convened WPA meetings in various properties surrounding the park
--Caused lake to be treated and stocked with fish
--Submitted several projects (with budgets) to the county for funding
--30 new park ``awareness signs'' are being installed
--Eight WPA members scheduled for summer employment
--Major foundation to undertake entranceway beautification project
WPA strongly feels, and we concur, that they are at the point of
reaching ``critical mass'' in their development. The president of WPA,
Wilbur J. McNeil, has made such a positive impression on the county of
Essex that they have appointed him to a county committee to make
recreational policy.
The most immediate WPA projects are to (1) continue showing
physical improvement within and outside the park and thereby attract
and involve more indigenous community participation, (2) continue to
build the management team, (3) attract more local institutions (e.g.
local school district, hospitals, churches, etc.) to have their
constituents to use the park consistent with their goals and
objectives, (4) raise funds and undertake the masterplan study, (5)
raise funds to implement the masterplan study thereby upgrading the
quality of open space with both passive and active recreational
opportunities within Newark, (6) provide employment and economic
opportunities within and around the park for members of the community,
and (7) reduce crime.
An appropriation of $3.5 million is hereby requested to accomplish
a broad range of initiatives, including the completion of the
masterplan, park maintenance above the level currently provided by
Essex County, the upgrading of the lake in order to return it to a
state usable for boating and fishing and the restoration of trails,
landscaping and horticultural features. The masterplan will include a
fundraising component, to involve the private sector and foundations in
the continued restoration of this historic and invaluable urban asset.
The redevelopment of former railyard into an integrated part of an
airport monorail system is the next project for which Newark is
requesting funding. In close proximity to Newark International Airport,
the City is proposing two important and distinct projects. The Port
Authority of New York and New Jersey has just completed the first phase
of an airport monorail, which, in its second phase, will cross U.S.
Route 1 and connect to a new stop on the Northeast Corridor rail line.
The location of this station is an under-utilized site of approximately
100 acres known as Waverly Yards. A former railyard, The City of Newark
now owns much of this property, and wishes to develop it to its full
potential. To do so, several critical infrastructure improvements must
be accomplished.
First, there is currently only one road leading into the site;
right-of-way acquisition through property owned by existing businesses
and roadway construction is necessary for appropriate accessibility.
Secondly, some of the area will require environmental remediation
before facility construction can take place. Finally, basic site
services, such as power, water, and communication lines need to be
brought into the location. Site clearance and acquisition of several
parcels from private owners will complete a building site of
unparalleled attractiveness. The City proposes to locate an
International Trade Center, which is currently in a study and
preliminary design phase, on the site. Private developers will have the
opportunity to purchase or lease a portion of the property for
construction of other complementary facilities.
It has been estimated that activity on this site will ultimately
generate hundreds of jobs in the trade, hospitality, convention and
transportation industries. We are requesting that this committee make
an appropriation of $6 million to help us reach our long-range goals
for the Waverly Yards, to enable the generation of job and economic
development opportunities for Newark's residents, and create needed
enhancements to a regional transportation center.
Only a mile or two away from Waverly Yards lies an area in need of
redevelopment which could have a tremendous impact on the economic
well-being of our City. There is an inventory of dozens of factory and
warehouse buildings which have become under-utilized, even abandoned.
Some of them are city-owned as a result of tax foreclosures, many
others have simply been closed by their owners. Thousands of
manufacturing and shipping jobs have been lost in the Frelinghuysen
Avenue industrial corridor. Yet Port Newark, adjacent to the Airport,
is the East Coast's busiest container port. It generates millions of
dollars in the businesses of processing, packing and distribution.
Conversely, Newark is home to a large exporting community, which makes
use of our key position on the transportation network.
The City is proposing a project which would provide supplemental
funds to retrofit under-utilized buildings to enable them to be reused
by these industries. An appropriation of $3 million to launch a pilot
program would allow us to begin a process of returning these facilities
to the tax rolls, and returning our population to work. The additional
jobs that would be generated in the distribution industry will serve to
create family incomes, which will in turn create retail demand in
Newark. The plentiful and competitively priced labor force within the
City in general, and our Enterprise Community in particular, will
provide a ready supply of employees for operations in the types of
industries we need to keep and expand.
In addition to the aforementioned initiatives, we are also aware
that the University of Medicine and Dentistry of New Jersey has
submitted testimony to you regarding an International Center for Public
Health initiative to be located in the University Heights Science Park
in Newark. We strongly support and endorse this initiative, and are
enclosing a copy of this testimony as an attachment to our testimony.
Mr. Chairman, the City of Newark has come before you today to ask
for help in changing the situation in Newark: to ask for help in
obtaining funding for projects that will create long-term economic
opportunity for people who currently have none * * * to ask for help in
presenting the chance for some of Newark's currently unemployed
population to earn a decent salary through which a family can be
supported. Thank you for your time and consideration
______
Prepared Statement of the University of Tulsa
During the 1920's and 1930's the Kendall-Whittier area was at the
eastern edge of Tulsa along with the University of Tulsa. It had its
own ``downtown'' business center located along Lewis Avenue between
Third and Archer Streets. The neighborhood was added to as late as the
1940's and 1950's when later parts of the Daniels Addition were built.
Throughout the entire period the University of Tulsa was expanding and
during the 1960's small apartment complexes were built to the west of
the campus for students and other new residents.
Since then, Tulsa has grown far to the east and southeast and the
neighborhood and its people have aged. Retail, industrial enterprises,
and major highways have encroached on its formerly quiet residential
streets. Real estate entrepreneurs placed higher density apartments
where houses once stood. During the economic downturn of the 1980's,
apartment occupancy and rents fell throughout the city and older
marginal areas such as Kendall-Whittier became less competitive and
fell victim to more transient residents and the poor. These new
residents fed a perception of neighborhood decline which became fact
because owner occupancy and reinvestment were discouraged. More modern
and suburban retail centers drew business away from Whittier Square
which then began to lease to more marginal retail and adult
entertainment businesses. The schools in the area aged and student
populations dropped. Crime, primarily drugs and prostitution, became
rampant and further destabilized the neighborhood such that the
neighborhood began a very effective law enforcement advocacy during the
late 1980's. Building aging, a lack of maintenance and depressed rental
incomes caused considerable visual and structural blight. Yet the
neighborhood is a key midtown residential and business area with
significant pockets of good housing and important institutions such as
Hillcrest Hospital and the University of Tulsa.
The University, churches, and businesses of the neighborhood banded
together to do what had never been done before in Tulsa. They
contributed 50 percent of the cost to produce a neighborhood plan and
challenged the city to match it. The city did match the funds and a
neighborhood plan was produced to guide neighborhood growth.
The Kendall-Whittier Neighborhood Masterplan and Urban Renewal plan
that resulted from the planning effort identified as its top priority
the development of a new elementary school to replace two of the oldest
elementary schools in Tulsa Public Schools (Whittier and Kendall
Schools). In conjunction with the new park, the development of the new
elementary school will do more for the regeneration of the neighborhood
than all other projects combined. In addition, the development of the
elementary school and park will remove blight, remove habitat for
criminal elements, and improve the neighborhood's landscaping. Other
elements in the plan include the expansion and improvement of the
University of Tulsa campus, which is adjacent to the new school and
park site, and the relocation of a public library, post office, and
fire station along with other improvements to enhance Whittier Square,
the oldest business district in Tulsa outside of downtown.
The University is key to the long-term success of the plan,
acquiring and developing lands immediately to the present campus, and
making significant new contributions to the cultural, educational, and
economic health of the neighborhood, city and state--including playing
a central role in the development of a new elementary ``school of the
future,'' cited in the planning report as likely to ``do more for urban
regeneration in the Kendall-Whittier Neighborhood than all of the other
projects combined.''
Acquisition, relocation, and clearance has been underway for five
years now to develop a twenty-five acre site for the new school and
park from the rear property line between 4th Street and 4th Place on
the north to 5th Place on the south and from Atlanta Avenue on the west
to Columbia Avenue on the east. To date, $2,794,658 of City of Tulsa
Sales Tax funds, $1,155,000 of proceeds from the sale of property, and
$2,000,000 of Special Purpose HUD Grants have been dedicated or used
for acquisition, relocation, and clearance for the new school and park
site. For street demolition, utility relocation, park construction, and
project architecture, engineering, and administration, $500,000 of City
of Tulsa Sales Tax funds and $250,000 of Special Purpose HUD Grants
have been dedicated or used. Tulsa Public Schools will spend $8,000,000
from a bond issue passed in October 1996 to build the new Kendall-
Whittier Elementary School. To complete the school and park project, an
additional $1,500,000 is needed for acquisition, relocation, and
clearance.
Accordingly, the project has withstood two thorough reviews and has
been found to be entirely consistent with HUD laws and regulations. It
represents a true public-private partnership, and a partnership and
coalition among governmental entities. The University, the City, and
the School District have made commitments totaling over $20 million.
The University of Tulsa alone has already committed and raised $8
million; the City has expended significant funds, and has pledged City
sales tax revenues toward the plan.
In keeping with its own academic strategic plan, the University
would cooperate with the Tulsa Public Schools to develop the merged
Kendall-Whittier schools as a model school in math-science education.
This effort would accord with the University's continuing development
to regional and national eminence of its undergraduate and graduate
programs in math-science education, and would simultaneously benefit
both the University and public education.
We are respectfully requesting a grant for $1,500,000 to complete
the acquisition, relocation, and clearance for the school and park
site. After two years and two failed attempts to pass bond issues,
Tulsa Public Schools has passed a bond issue and will begin
construction on the new Kendell-Whittier School in May 1997. They
expect to complete construction and to be able to open for classes in
August 1998. The school and park are an integrated site project. The
school must have the park site to meet State of Oklahoma certification
requirements. While the Tulsa Development Authority and Tulsa Parks
Department will begin construction on Phase I of the Park and will
complete it by October 1997, the acquisition and clearance of the
remaining parcels must occur to finish the park site to allow the
school to be certified. No local funds can be identified for the
completion of site acquisition. It will be several years before the
City can go back for a bond issue. In the meantime, the school needs to
be open.
We thank the Subcommittee for its hard work and hope that you will
give our project request your highest consideration.
______
Prepared Statement by Lynne P. Brown, Associate Vice President for
Government and Community Relations, New York University Center for
Cognition, Learning, Emotion and Memory
Research into cognition, learning, emotion, and memory can help
educators, physicians, and other health care givers, policymakers, and
the general public by enhancing our understanding of normal brain
development as well as the many disabilities, disorders, and diseases
that erode our ability to learn and think, to remember, and to emote
appropriately.
New York University is seeking $10.5 million over five years to
establish at its Washington Square campus a Center for Cognition,
Learning, Emotion and Memory. The program will draw on existing
research strengths in the fields of neural science, biology and
chemistry, psychology, computer science, and linguistics to push the
frontiers of our understanding of how the brain functions, and how we
learn.
Such exploration into the fundamental neurobiological mechanisms of
the nervous system has broad implications for human behavior and
decision making as well as direct applicability to early childhood
development, language acquisition, teaching methods, computer science
and technology development for education, the diagnosis and treatment
of mental and memory disorders, and specialized training for stressful
occupation.
cognition, learning, emotion and memory studies at nyu (clem)
New York University is poised to become a premier center for
biological studies of the acquisition, storage, processing and
retrieval of information in the nervous system.
To be housed at NYU's Washington Square Campus within the Center
for Neural Science, the new Center will capitalize on the university's
expertise in a wide range of related fields that encompass our computer
scientists who use MRI imaging for research into normal and
pathological mental processes in humans, our vision scientists who are
exploring the input of vision to learning and memory, our physical
scientists producing magnetic measurements of brain function with a
focus on the decay of memories, our linguists studying the relation of
language and the mind, and our psychiatrists conducting clinical
studies of patients with nervous system disorders.
The New York University Program in Cognition, Learning, Emotion and
Memory (CLEM) focuses on research and training in the fundamental
neurobiological mechanisms that underlie learning and memory--the
acquisition and storage of information in the nervous system. Current
studies by the faculty at NYU are determining why fear can facilitate
memory; how memory can be enhanced; what conditions facilitate long-
term and short-term memory; and where in the brain all these memories
and processed and stored. The research capacity of this Center
capitalizes on our expertise in physiology, neuroanatomy, and
behavioral studies, and builds on active studies that range from the
mental coding and representation of memory to the molecular foundations
of the neural processes underlying emotional memories. Our faculty use
electrophysiological and neuroanatomical techniques to study the
organization of memory in the medial temporal lobe. Together these
researchers bring substantial strength in psychological testing,
computational sophistication, advanced tissues staining and electrical
probes, and humane animal conditioning. These core faculty are well
recognized by their peers and have a solid track record of sustained
research funding from federal agencies and private foundations: total
costs awarded and committed for their research for full project periods
from all sources presently total $7 million. Additional faculty are
being recruited in areas of specialization that include: the cellular
and molecular mechanisms operative in neural systems that make
emotional memory possible, neurophysiological studies of memory in non-
human primates, computational modeling of memory, and
neuropsychological and imaging research on normal and pathological
human memory.
Colleagues in the Biology Department are doing related work in the
molecular basis of development and learning. Given the important input
of vision to learning and memory, the Center has strong links with the
many vision scientists based in the Psychology Department who work on
directly related topics that include form, color, and depth perception,
memory and psycholinguistics. Colleagues in behavioral science study
learning and motivation, memory and aging. Physical scientists explore
the magnetic measurement of brain function, with a focus on the decay
of memories. CLEM also shares research interests with colleagues in the
Linguistics Department, who study the relation of language and the
mind.
Research linkages extend to computational vision studies, now
centered in NYU's Sloan Program in Theoretical Neurobiology. The Sloan
Program works closely with computer scientists at our Courant Institute
on Mathematical Science, with colleagues at the Medical Center in
Psychiatry, who use MRI imaging for research into normal and
pathological mental processes in humans, and in Neurobiology, who are
conducting clinical studies of patients with nervous disorders,
especially memory disorders.
What is unique and exciting about the establishment of such a
comprehensive center at NYU is the opportunity to tap into and
coordinate this rich multidisciplinary array of talent to conduct
pioneering research into how the brain works. In this, the ``Decade of
the Brain,'' NYU is strategically positioned to be a leader.
EARLY CHILDHOOD AND EDUCATION
Research into the learning process as it relates to attention and
retention clearly holds important implications for early childhood
development. Although most of a person's brain development is completed
by birth, the first few years of life are critically important in
spurring intellectual development. For example, research has already
shown that in their early years, children need human stimulation, such
as playing and talking, to develop the ability to learn.
With more immigrant children in schools, language development is
another crucial area of study. If a child's brain were more receptive
to acquiring sounds during the first few months of life, and language
in the first few years of life, then students may learn a second
language more quickly if taught in the lower grades instead of waiting
for high school.
In the midst of a national debate on education reform, thousands of
education innovations are being considered without the advantage of a
fundamental understanding of the learning process. CLEM researchers,
coupled with educational psychologists, can contribute to a better
understanding of how parents can stimulate their children's cognitive
growth, how children learn at different stages and use different
styles, how educators can accommodate those styles, and how educational
technology can be harnessed to increase retention and memory.
At NYU, these efforts will be enhanced by our scholars and research
conducted in our School of Education and our New York State-supported
Center for Advanced Technology.
COMPUTER SCIENCE AND TECHNOLOGY DEVELOPMENT
As we refine our knowledge of how the brain acquires, processes,
retains and retrieves information and images, we will also be able to
improve the design, development and utilization of computer science and
technology. As we reach a better understanding of how children learn,
we can more effectively harness computer technology in the service of
education.
At NYU, this effort is enhanced by the presence of our New York
State-supported Center for Digital Multimedia, Publishing and
Education, which brings together educators, laboratory scientists and
software designers who explore how interactive multimedia technologies
enhance learning and develop prototype teaching models.
SPECIALIZED TRAINING
Research into how cognition and emotion interact can have
applicability to other diverse areas of interest including retraining
of adult workers, job performance and specialized training for high
risk or stressful jobs such as military service and emergency rescue
work.
______
Prepared Statement of Michael Weinstein, President, AIDS Healthcare
Foundation
SKILLED NURSING NEED RESIDENTIAL CARE FACILITIES
Mr. Chairman and Members of the subcommittee: The AIDS Healthcare
Foundation (AHF) is a leader in HIV medicine. It has distinguished
itself by detecting trends and taking action, particularly when
emerging patterns of the disease have a major impact on the quality and
delivery of care. This philosophy permeates its outpatient healthcare
clinics as well as its nursing facilities (houses). AHF is engaged in
the transition from exclusively hospice care to adding skilled nursing
care at the houses. Presently, over 60 percent of the 50 beds operated
by AHF are skilled nursing/step down care (aggressive treatment) beds
under CLHF (Congregate Living Health Facilities) licensure. About 40
percent are hospice (palliative) beds. A year ago 100 percent of the
beds were hospice care. AHF will be re-opening Chris Brownlie House,
its third facility, in early May, 1997. We expect an even higher ratio
of residents at Brownlie housed under the CLHF/Skilled Nursing Need
program. The houses are strategically located in three of the major
HIV/AIDS epicenters: Downtown, West Hollywood and South Central Los
Angeles. The demographics in these areas represent a mixture of ethnic,
gender, sexual orientation, drug users, socio-economic, cultural and
linguistic diversity.
AHF started to make the transition from exclusive hospice to adding
skilled nursing care over two years ago. Hospice does not attempt to
``cure'' the underlying disease. Instead, it is designed to relieve the
symptoms and pain and allow the disease to follow its normal course. In
HIV, however, aggressive anti-viral therapy is many times the best way
to provide palliative care, as it can enhance the quality of life. For
instance, AZT is considered aggressive therapy as it is anti-
retroviral. It is also one of the most effective drugs that penetrate
the central nervous system and therefore it is utilized to ameliorate
dementia and relieve symptoms. What we started to see over two years
ago was that some residents would get better and were ready to be
discharged but did not have appropriate places to go; with their
chronic condition they were too healthy to go to an acute hospital kind
of setting but too fragile and still in need of skilled nursing care
for a board and care facility. They needed a sub-acute/intermediary
type of program that would handle their non-acute but chronic
condition. The choice was between expensive hospitalization or board
and care living arrangements. The first choice was too intensive and
the second unprepared to handle this level of care. Many times
individuals would be released to residential facilities, home shelters,
or previous home situations regardless of availability of home support.
This resulted in their return to the hospices in much worse shape than
when they had left. Their situation went from a stabilized chronic
condition to that of recurrent acute episodes requiring either
hospitalization or skilled nursing.
AHF formalized its intermediary/skilled nursing care program in
May, 1996 to better serve this growing but unattended population. These
individuals must show a skilled nursing need and have an estimated life
expectancy of five years or less. They may need skilled nursing
intervention such as but not limited to those listed in Attachment A.
Once these individuals are stabilized and move from an acute episode to
a relieved or a manageable or chronic status, they are moved to an
appropriate level of care within or outside the AHF system of care when
available. Many of these individuals are referred from among 3,000
patients presently managed through AHF's outpatient healthcare centers.
The need has shifted from hospice to skilled nursing need. However, the
funding sources have not followed this shift.
In addition to its intermediary/skilled nursing care program, AHF
is spearheading at its houses a drug regimen adherence program, under
its CLHF licensure, targeted to the homeless, drug addicts, and
patients experiencing severe reactions to ``cocktail treatment.'' These
individuals need an inpatient, out-of-home protective living
arrangement. They need observation given that the level of professional
care precludes treatment in a home environment due to lack of (home)
care giver support. AHF has developed multi-disciplinary protocols
integrating medicine and the psychosocial fields. These protocols
include the integrated work of physicians, nurses, social workers,
administrators, spiritual counselors, activities coordinators and
volunteers.
The consequence of either not starting combination therapy or
starting without the appropriate guidance and support could be
disastrous for the individual and other individuals they might have an
HIV high risk involvement with. There is a tremendous fear among health
care providers that individuals who have false starts with anti-
retroviral combination therapy may develop a resistant strain of the
virus, which will render current therapies impotent. Furthermore, this
strain may be directly passed on to an HIV negative person in the usual
transmission modes of bodily fluid exchanges such as semen, mother's
milk, or blood. This newly infected person will also be unresponsive to
existing anti-retroviral therapy. Some providers throughout the nation
are beginning to ration and deny these medicines to individuals they
feel will not follow this highly choreographed therapy. Instead of
writing-off these individuals who have issues with compliance and
depriving them of these life-saving medicines, we want to provide an
effective program that can start them off and keep them on track with
their new drug regimen.
AHF wants to enhance this model and use it as a demonstration
project for replication in other areas of the country. Some needed
upgrades include augmented staff training to keep up with the fast
developments in HIV medical therapy, facility upgrades to diversify
funding opportunities and qualify for Medicare certification, and
equipment enhancement to address the multiple needs of this population.
The intent of the AHF Houses program is to medically rehabilitate
individuals who are able to go back to a less intense level of care or
the labor market once they have gone through either the skilled nursing
and/or the drug adherence programs. AHF believes that a relatively
small amount of transition funds will go a long way in making this
program stable and financially feasible once some basic infrastructure
is in place.
Facility Upgrade
Some structural and infrastructure upgrade will allow the houses to
meet code for Medicare certification and allow the program to diversify
its sources of income. Some of these changes include, but are not
limited to: installing and maintaining generators (for self-sufficient
power); expanding residents' room doors; renovating and expanding
nurses' stations; installing piped oxygen systems; developing an
occupational and physical rehabilitation area; purchasing audio/visual
equipment for patient and staff training and education; and purchasing
therapy equipment and furnishings. The estimated amount needed for
facility and infrastructure upgrade totals $1,560,000.
Staffing
Given the pace of HIV treatment therapy, it is crucial not only to
have an upgraded facility that meets the needs of licensing and payor
source agencies, but also the latest training and knowledge. With the
introduction of protease inhibitors, the field of HIV became more
complex than ever. The advent of a newer generation of drugs and
assessment assays ranging from viral load measurement to tests
detecting viral resistance to a particular drug by genotyping, will
only increase demand for provider sophistication. It is a challenge to
organize all this knowledge and create a systematic program that leads
to effective training and development. An organized team of staff
members solely dedicated to this task of on-going training and
development is crucial for the success of this program. These
individuals will also collect and categorize the body of knowledge
gained through the planning, implementation and evolution of this
program. This information will be of tremendous value to institutions
throughout the United States. This component is estimated to cost
$155,000.
AHF is soliciting transitional funds to upgrade its facilities and
for program development. Once established, the program should be self-
sufficient, as it will allow the houses' programs to access a variety
of funding sources. The time frame for a complete transition is
estimated to be two years.
The following is an approximate breakdown of AHF's three-site
operational budget.
----------------------------------------------------------------------------------------------------------------
Chris Brownlie Carl Bean
house house Linn house
----------------------------------------------------------------------------------------------------------------
1989............................................................ $2,000,000 .............. ..............
1990............................................................ 2,100,000 .............. ..............
1991............................................................ 2,200,000 .............. ..............
1992............................................................ 2,400,000 $1,000,000 ..............
1993............................................................ 2,500,000 2,600,000 ..............
1994............................................................ 2,600,000 2,700,000 ..............
1995............................................................ 2,750,000 2,700,000 ..............
1996............................................................ 2,750,000 2,800,000 $1,800,000
1997............................................................ \1\ 1,200,000 2,800,000 2,700,000
----------------------------------------------------------------------------------------------------------------
\1\ Reopened as 15 bed facility.
The sources of funding for the houses are diverse. Most of this
funding has been secured for hospice, and not necessarily for CLHF/
Skilled Nursing programs. A good portion of CLHF care is currently
uncompensated, but funds could be accessed by upgrading programs and
facilities.
Percentage
MediCal, private insurers, state grant............................ 45
Local, Los Angeles County government.............................. 25
Ryan White Care Act, Federal...................................... 10
Private fundraising, Foundations and Corporate giving............. 10
-----------------------------------------------------------------
________________________________________________
100
AHF has been able to secure state bond, city and county government
funds for building, renovations and equipment needs.
----------------------------------------------------------------------------------------------------------------
Brownlie house Bean house Linn house
----------------------------------------------------------------------------------------------------------------
State Bonds--Construction....................................... $700,000 $5,500,000 $3,500,000
City/County--Construction and Equipment......................... 200,000 750,000 186,000
----------------------------------------------------------------------------------------------------------------
The following budget is an estimate of the resources needed to make
this program financially viable. We expect AHF to secure a diverse
array of funding sources once its programs and facilities are upgraded.
Facility upgrades:
Renovation and expansion of Nurses' stations
($40K3 facilities)............................. $120,000
Widening (50 doors $2,000 per door)............. 100,000
Inside stairs for better accessibility.................... 40,000
Conference/education rooms ($45K2)............... $90,000
--------------------------------------------------------------
____________________________________________________
Subtotal................................................ 350,000
Infrastructure and equipment:
Upgrading and/or installing call system ($30K3).. 90,000
Installation and maintenance of generators
($50K2)........................................ 100,000
Occupational rehabilitation room and equipment
($90K3)........................................ 270,000
Therapy equipment and furnishings ($35K3)........ 105,000
Installing pipe-in oxygen ($50K3)................ 150,000
Installing suction systems ($15K3)............... 45,000
Enhancing security systems ($25K3)............... 105,000
Negative pressure rooms ($20K3).................. 60,000
Kitchen upgrades--therapeutic diets ($35K3)...... 105,000
Therapeutic whirlpool ($15K3).................... 45,000
Audio/visual equipment ($45K3)................... 105,000
--------------------------------------------------------------
____________________________________________________
Subtotal................................................ 1,210,000
Training and development staffing:
R.N. educational coordinator.............................. 55,000
Project assistant/data analyst............................ 30,000
Staff benefits--24 percent................................ 20,000
Training and development fees, materials, equipment....... 50,000
--------------------------------------------------------------
____________________________________________________
Subtotal................................................ 155,000
--------------------------------------------------------------
____________________________________________________
Grand total............................................. 1,715,000
==============================================================
____________________________________________________
Attachment A
aids healthcare foundation--skilled nursing care
In order to provide skilled nursing care for people who need
skilled care but no longer need an acute hospital level of care, AIDS
Healthcare Foundation provides the following services based on
certification by a physician:
Patients whose medical condition requires continuous, skilled
nursing intervention of the following nature:
--Regular observation of blood pressure, pulse and respiration as
indicated by the diagnosis or the medication (although not as
only skilled need).
--Regular observation of, and treatment interventions for, skin
conditions such as decubitus ulcers, edema, color and turgor.
--Intake and output as indicated by the diagnosis or medication in
concert with other skilled needs.
--Wound care, including, but not limited to: postsurgical wounds,
decubitus ulcers, leg ulcers, etc.
--Tracheotomy care, nasal catheter maintenance.
-- Gastrostomy or other tube feeding. (Not as only skilled need
except when gastrostomy is less than 90 days old).
--Colostomy care for newly post-op or debilitated patients. (Chronic
colostomy care alone should not be a reason for continued
skilled care.)
--Bladder and bowel training for incontinent patients or where a
condition of total or severe incontinence where training has
failed to improve.
--Patient is bedridden or comatose.
--Patient has a condition which requires a high degree of prolonged
medical nursing support and supervision such as complex
regiments of oral and/or parenteral medications, and diet to
control diabetes, cardiac conditions, seizure disorders,
hypertension, tumor conditions, obstructed pulmonary
conditions, infectious conditions, and pain.
Supporting indications include (must be combined with above
conditions):
--Dependence for activities of daily living--dependent upon degree.
--Cases in which the documented history and/or diagnosis gives clear
indication of progressive incapacitation.
--Generalized weakness or feebleness.
Our admissions coordinators are always happy to assist anyone
needing more information. They can be reached at 213-468-9533 or 213-
468-9534.
fight for the living * * *
______
Prepared Statement of Dennis E. Lower, Executive Director, University
Heights Science Park, Newark, NJ
PROJECT DESCRIPTION
The International Center for Public Health is a strategic
development initiative that will create a world class, infectious
disease research and treatment complex in University Heights Science
Park, Newark, New Jersey. Science Park is located in a Federal
Enterprise Community neighborhood. The International Center will have
substantial local, regional, national and international impact as it
addresses many critical social, economic, political and health related
issues. The International Center is a $70 million anchor project that
launches the second phase of a fifty acre, $300 million mixed-use urban
redevelopment initiative, University Heights Science Park. The facility
will total 144,000 square feet and house two tenants: the Public Health
Research Institute (PHRI) and the University of Medicine and Dentistry
of New Jersey's (UMDNJ) National TB Center, one of three Federally
funded TB centers.
PHRI, the core tenant creating the International Center, is a
nationally prestigious, 55 year old biomedical research institute that
employs 110 scientists and staff in the research of infectious diseases
and their underlying molecular processes. This facility will permit
them to double their research staff and budget. Presently they conduct
research programs in tuberculosis, AIDS, drug discovery, diagnostic
development, and the molecular pathogenicity of a broad range of
infectious diseases. A major focus of PHRI research is the study of
antibiotic resistance of life-threatening bacterial organisms, and the
development of a new generation of antibiotics.
The other International Center tenant will be UMDNJ's National
Tuberculosis Center. The TB Center is one of three Model Tuberculosis
Prevention and Control Centers in the United States funded by the CDC.
It will add an important clinical component to the International Center
for Public Health, since many TB patients also manifest other
infectious diseases. The TB Center was founded in 1993 in response to
the resurgence of tuberculosis in this Country. At that time Newark had
the nation's second highest rate of TB cases for a major city.
Other collaborators in the development of the International Center
include the New Jersey Department of Health & Senior Services (NJDHSS)
and the pharmaceutical industry. Responsible for overseeing all
statewide public health initiatives, NJDHSS will contract with the
International Center to have cutting edge molecular epidemiology
services provided to the State of New Jersey. Expanding the strategic
use of molecular epidemiology to direct public health activities will
facilitate prompt identification and containment of emerging and re-
emerging pathogens. New Jersey's major biomedical industry companies
will also participate in the International Center. An infectious
disease consortium will be developed to serve as a forum for
disseminating fundamental research on the underlying molecular
processes of infectious disease organisms. This research will
contribute to private industry development of new drug therapies for
antibiotic resistant microorganisms. Private industry R&D facilities
contiguous to the International Center are also being explored.
THE ANCHOR PROJECT FOR UNIVERSITY HEIGHTS SCIENCE PARK
University Heights Science Park (UHSP) is a collaborative venture
of Newark's four higher education institutions, the City and Community
of Newark, and private industry designed to harness university science
and technology research as a force for urban and regional economic and
community development. The university sponsors, New Jersey Institute of
Technology (NJIT), The University of Medicine & Dentistry of New Jersey
(UMDNJ) and Rutgers University at Newark, annually conduct nearly $100
million of research in Newark, much of it federally funded. Essex
County College trains technicians in eleven science and technology
fields, and prepares Newark residents for employment with Science Park
technology companies. The private industry Park sponsors include the
following Newark based companies: Public Service Electric & Gas, The
Prudential Insurance Company, First Union National Bank and Bell
Atlantic of New Jersey.
UHSP is designed as a 50-acre, mixed-use, science and technology
park in Newark's Central Ward, adjacent to the Park's four higher
education sponsors. It is located in a Federal Enterprise Community
neighborhood. At buildout UHSP will include one million square feet of
technology commercial space, 75,000 square feet of technology incubator
space, up to 20,000 square feet of retail support business
opportunities, an 800 student technology high school, two blocks of new
and rehabilitated housing and a community day care center. The $10
million first phase of Science Park has been completed, and includes
the NJIT Enterprise Development Center 2 (a technology business
incubator), a 100 child day care center and the CHEN Building (housing
the industrial liaison laboratories for the Center for Biomaterials and
Medical Devices). CHEN is the acronym for the Council for Higher
Education in Newark, the coalition of four universities who founded
University Heights Science Park. For almost two decades CHEN has
jointly sponsored educational, housing, and retail/commercial projects
in Newark's public schools and the neighborhoods of University Heights.
The NJIT technology incubator was completed in Fall 1996, and is
already 80 percent leased. More than half of the incubator companies
are MBE/WBE's. In addition, over half of the children in the Science
Park day care center are from the surrounding community, and the
majority of day care center staff are from Newark. The construction of
the International Center will anchor the second phase of Science Park,
and serve as a magnet to attract pharmaceutical, diagnostic and other
biomedical companies to Science Park. The Center will have the same
impact on the Park as an anchor store does in a retail shopping mall.
how the international center for public health enhances and implements
VA-HUD OBJECTIVES
Veterans Administration (VA).--VA sponsored research includes
investigation of drug-resistant HIV, aspects of Gulf War Syndrome, and
Sigma Factors in M.Tb. The International Center will contribute to the
achievement of these objectives in the following way:
--PHRI is presently in discussions with the VA to explore the
epidemiology of tuberculosis in the VA system. No studies have
yet been performed to look at tuberculosis transmission on a
national level with molecular epidemiological techniques.
Studies of tuberculosis transmission have a particular value
for the VA system, whose collection represents the only
geographically representative source of TB strains in the
nation. The project will type strains submitted and alert VA
medical centers to the presence of related strains, thus
providing warning of nosocomial or other local outbreaks.
The Department of Housing and Urban Development (HUD).--A major HUD
objective is to effectively implement welfare reform as required by the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996. In addition, HUD is seeking to expand the economic and community
development roles of universities to assist in the revitalization of
distressed urban neighborhoods. The International Center will
contribute to the achievement of these objectives in the following
ways:
--Newark is a federally designated Enterprise Community (EC), and as
such is already part of a Federal strategy to attract and
support economic development activity that will create jobs in
the urban core. The 50-acre Science Park is located within the
boundaries of one of the EC neighborhoods. The development of
the $70 million International Center for Public Health will
generate 1,500 direct and indirect construction and permanent
jobs. The permanent jobs include custodial and clerical
positions, lab technicians, medical personnel, researchers, and
administrators. Science Park will work directly with the Essex
County College (one of its sponsoring educational institutions)
and their Technology Training Project (TTP) to train Newark
residents as lab technicians for the International Center. TTP
is privately sponsored by New Jersey's biomedical industry, and
has been in existence for nearly 30 years. TTP trains 50
technicians annually, all of whom are high school graduates or
adults looking for a new career.
It is one challenge to acquire necessary job skills, but it is
another for urban residents to have the means to travel to
where the jobs are. In the last 20 years Newark has lost 35,000
private sector jobs, a number of which have moved to New
Jersey's western suburbs. This project redevelops urban land,
preserves open green space, and utilizes existing public
transportation to the doorstep of the Park. The development of
Science Park is Newark's chance to reverse that job exodus by
utilizing existing university resources and providing City
residents with access to the technology jobs of the 21st
century. The International Center serves as the cornerstone to
launch the 50-acre urban redevelopment initiative. At buildout
the Science Park will have generated $300 million of
construction, 5,000 direct and indirect construction jobs, and
6,600 direct and indirect permanent jobs with an annual payroll
of $275 million. The International Center serves as a magnet to
attract other biomedical and pharmaceutical research and
development companies into the Park. The development costs for
the Center include the site preparation of three additional
adjacent building pads. These sites will be simultaneously
marketed to private biomedical companies, and will generate $60
million of additional construction, and another 1,500 direct
and indirect construction and permanent jobs.
--The development of the International Center for Public Health in
University Heights Science Park accomplishes the objective of
HUD's Office of University Partnerships: the university
expansion of economic and community development roles to
revitalize distressed neighborhoods. Science Park is sponsored
by four institutions of higher education.
REQUEST FOR ASSISTANCE
The University Heights Science Park is requesting $5 million from
the United States Senate VA-HUD and Independent Agencies Subcommittee
for fiscal year 1998 to support the Phase II development of Science
Park: the construction of the International Center for Public Health.
Such support will leverage Phase II development that totals $130
million, and creates nearly 3,000 direct and indirect construction and
permanent technology jobs. These requested funds will be used
specifically for site acquisition, demolition and infrastructure in a
Federal Enterprise Community neighborhood in Newark, NJ.
On behalf of University Heights Science Park, I want to thank the
Committee for the opportunity to present this request. We appreciate
your consideration of our proposal, and hope to receive your support
for the creation of the International Center for Public Health at
University Heights Science Park, Newark, NJ.
______
Biographical Sketch of Dennis E. Lower
AREAS OF EXPERTISE
Real Estate Development and Financial Analysis
Development and implementation of $300,000 to $115 million real
estate projects (totaling $800 million); financial structuring and loan
agreement negotiations; financial proforma development and analysis;
bid solicitation for construction services; contract negotiations;
market feasibility and strategy development, site feasibility analysis.
Planning and Administration
Program development, budgeting and management, staff recruitment
and supervision; RFQ/RFP solicitation for professional services;
contract administration; creative analysis and problem solving; Board
management; grantsmanship; strong written and oral communication
skills; strong computer and Internet skills.
Government Relations
Federal, state and local relations involving program funding and
development; public hearings and permitting approvals; direct
negotiations with elected officials; structuring of public/private
partnerships; public policy development.
Community/Human Relations
Community consensus building in planning redevelopment projects;
negotiation of community agreements; public speaking; neighborhood
needs assessment; conflict resolution, strong interpersonal skills.
RELEVANT EMPLOYMENT EXPERIENCE
Executive Director, 1994 to Present, University Heights Science
Park, Newark, NJ.
University Heights Science Park is a collaborative venture between
four public universities, the City of Newark and private industry. The
project is designed to commercialize university research and redevelop
40 blighted urban acres adjacent to the universities. The $270 million,
mixed-use project will include 1 million SF of technology research,
laboratory and office space, an 800 student science and technology high
school, 100 units of housing, a children's day care center, and
ancillary retail space. As the first Executive Director I am
responsible for planning and developing the Park, and to date have
accomplished:
--Development of a 40 acre Land Use and Implementation Plan;
--Assisted in securing $48.5 million for the project;
--Construction of two research and technology commercial buildings
that house Science Park offices, a 100 child day care center
and a technology incubator;
--Initiated the development of a strategic business, marketing and
financing plan to recruit technology based companies to Science
Park;
--Negotiation of a joint agreement with The Newark Public Schools to
develop a $30 million Science Park High School, groundbreaking
to occur March, 1998;
--Negotiation of a community partnership agreement articulating
Science Park redevelopment principles with respect to
acquisition, relocation, and local resident participation goals
in construction, and permanent Park employment; and
--Developed the New Jersey Technology Fast 50 Awards Program
recognizing the fastest growing technology companies in New
Jersey, for the purpose of marketing the Science Park to NJ
technology companies.
Deputy Director of Project Development, 1992 to 1994, Acting
Executive Director, 1991, Director of Project Development, 1986 to
1991, Casino Reinvestment Development Authority, Atlantic City, NJ.
The CRDA is a New Jersey finance and community development
authority created in 1986 with the mandate to invest $1.5 billion of
casino gaming revenues at below market rates in publicly initiated
residential and commercial real estate projects and community
development programs statewide. The Authority's 13 member Board
includes two Casino CEO's, the Mayor of Atlantic City, the Chair of the
Casino Control Commission and the State Treasurer. I was employed by
the Authority at its inception, and my responsibilities included:
--Developing and implementing policies and procedures for a statewide
loan program;
--Soliciting and evaluating developer loan proposals and securing
Board approval to invest $430 million of CRDA funds in 50
statewide projects totaling $790 million;
--Conducting financial proforma analysis and program reviews on all
development loan proposals;
--Developing and implementing 4 Redevelopment Plans in Atlantic City;
--Negotiating and structuring all development project financings;
representative projects include office buildings, entertainment
facilities, baseball stadiums, hotels, supermarkets, social
service facilities, factories, high and low-rise residential
complexes, infrastructure replacement, medical facilities and
direct loan programs;
--Negotiating with legal counsel all loan, credit and bond documents
for approved projects;
--Coordinating all aspects of real estate development, including:
preparation of supplementary federal and state funding
applications; preparation of residential and commercial
relocation plans involving 450 families and businesses;
acquisition of 800 privately and city owned parcels, with 225
acquired through condemnation; site preparation through
demolition and environmental remediation; site plan and
building design review; and REQ and REP solicitations for
developer, professional and construction services.
--Coordination of 6 major law firms in land acquisition, project
financings and project implementation;
--Serving as the primary community liaison for all Atlantic City
redevelopment plans;
--Hiring and supervising 14 Authority staff;
--Setting the monthly agenda for the Board of Directors' meeting and
presenting all actions requests;
--As Acting Executive Director, responsible for total Authority
operations, project financings, management of Board of
Directors, and supervision of 30 staff.
Founder and Executive Director, 1981 to 1986, National Shared
Housing Resource Center, Philadelphia, PA.
Founding Executive Director of a national non-profit housing agency
that promotes alternative affordable housing through education,
technical assistance, real estate development and direct service
delivery. I secured finding through private foundations, federal and
state governments, and fees for service. My responsibilities included:
--Developing a 12 member Board of Directors and a 12 member National
Advisory committee of U.S. Congressional members, housing,
aging and finance professionals;
--Hiring and supervising a 12 person staff;
--Program development, grantsmanship and fundraising;
--Writing technical assistance publications;
--Conducting 175 training and technical assistance workshops in 25
states on building and zoning codes, proforma development and
analysis, financing marketing and residence management which
resulted in the development of 300 housing programs nationwide;
--Serving as developer for 30 units of housing;
--Developing and administering a low-interest housing loan fund;
--Developing a national legislative agenda resulting in legislation
amending HUD and HHS policies on Section 8 subsidies, SSI
payments, food stamps and capita] gains sales tax exemptions.
OTHER PROFESSIONAL ACTIVITIES
Presenter/Speaker on Economic and Social Impacts of Casino Gaming
at various professional meetings in New Orleans, Philadelphia, and
Washington, D.C.
Presenter/Speaker at numerous professional conferences on urban
planning and development issues.
Lecturer, Harvard Graduate School of Design, Summer Professional
Seminar Program on resort development.
Partner, Coral Bay Partners, a land development venture in St.
John, USVI.
Professional Memberships: Council on Urban Economic Development
(CUED), American Planning Association (APA), and Association of
University Related Research Parks (AURRP).
monographs and selected testimony
Designing Shared Housing for the Elderly: Social and Architectural
Considerations (with Dr. Sheree West and Hugh Zimmers, FALA), November,
1985.
Shared Housing for Older People: A Planning Manual for Group Shared
Residences, April, 1983.
National Policy Workshop on Shared Housing: Findings and
Recommendations (with Dr. Joan Ward Mullaney and Drayton Bryant), June
1982.
State of New Jersey--Written and spoken testimony before the Joint
Committee on Software Technology, August, 1995.
New Orleans City Council--Written and spoken testimony on the
Economic and Social impacts of Casino Gaming, September, 1993.
U.S. House of Representatives, Select Committee on Aging--Written
and spoken testimony on Shared Housing on three occasions: June 1985,
Erie, PA; November, 1982, Washington, D.C.; October 1981, Denver, CO.
EDUCATION
Gordon-Conwell Theological Seminary, South Hamilton, MA; Master of
Divinity, 1979.
Wheaton College, Wheaton IL: Bachelor of Arts, Philosophy, 1971.
Boston University Hospital, Boston, MA; Pastoral Clinical
Counseling Certificate, 1980.
______
Prepared Statement of Dr. Mary Louise Cole, President of ICARE Bay
Point Schools
As a former Congressman from Florida and member of the House of
Representatives Committee on Appropriations, it is my pleasure to
introduce the President of ICARE Bay Point Schools, Dr. Mary Louise
Cole, the spokesperson for our organization. U.S. Representative Clay
Shaw and Senators Connie Mack and Bob Graham also support this program.
If the Department of U.S. HUD has special purpose grant funds, we
request $3 Million of such funds to be used for a demonstration project
for the housing of at-risk juvenile offenders.
The ICARE Bay Point Schools in South Dade, Florida, is such a
program in need of transitional housing for juvenile offenders while
they attend school as an alternative to prison. These youth are from
low income families and also are at-risk of being homeless.
If no such funding exists, we request that the Subcommittee include
report language in its legislation that will indicate the
Subcommittee's interest in the endeavor and which will also urge the
U.S. Department of HUD to pursue the possibility of special grant
funding for such a program. Matching funds for operating can be
obtained from the State of Florida.
ICARE Bay Point Schools campus is on 45 acres south of Miami by
Biscayne Bay. The schools grew out of the InterFaith Coalition's
Hurricane Andrew's Recovery Effort (ICARE) to rebuild homes which were
destroyed in 1992. Experienced volunteers help teach construction
skills and act as role models for the juveniles adjudicated by the
courts. We believe they still have unlimited potential to grow and
learn if they have decent housing while earning their GED and learning
job skills as an alternative to being sentenced to prison and being
released prone to drugs and crime and at-risk of homelessness.
Juveniles with multiple non-violent offenses such as drug use or
car theft or burglary who are between 14-17 years of age should not be
sent to prison where they learn the habits of older and often violent
offenders and themselves become potential career criminals. However, if
they are sent back to their neighborhoods on probation, they are
influenced by their former ``gang's'' negative peer culture or negative
family situations. These are the breeding grounds for drug abuse and
future homelessness.
Although the ICARE Bay Point Schools program acknowledges that the
children's problems reflect unique interactions between individuals and
environmental conditions, we feel that the focus must be on behavior
education and behavior management. The child cannot move forward in
developing his own pattern of success if he continues to blame his
involvement in crime and negative behavior on others or the
environment. For that reason, we prefer to speak of education rather
than treatment, a school rather than a half-way house. We do not look
at our clients as mentally ill needing treatment. We view them as
students needing to learn behavior management. They need to become
motivated to set positive goals and to become educated, productive
citizens.
The success of the program over two years for 50 youth needs to be
expanded to house 200 juveniles in a demonstration project requiring
new dormitories, classrooms, and extensive site preparation. The multi-
racial and multi-ethnic demographics of Dade County, Florida, make
ICARE Bay Point Schools an ideal national demonstration project. Of the
2 Million total population of Dade County, approximately 50 percent are
Hispanic-American, 25 percent are Afro-American, and 25 percent are
Caucasian-American. Bay Point Schools approximates these demographics.
Recent research studies provide a number of insights regarding the
elements which contribute to successfully treating disadvantaged, at-
risk-of-homelessness, drug-using, delinquent youth. ICARE Bay Point
Schools is designed around these elements. This adherence to proven
design principles is the basis of Bay Point Schools success resulting
in a high percentage of youths successfully transitioning to aftercare
and, ultimately, leading law abiding responsible lives.
There is a need to seek new solutions for teenagers who are from
low income families and are at-risk of being homeless or delinquent.
The custody/clinical model has been ineffective. Two years ago, the
ICARE Bay Point Schools was established as a boarding school for 14 to
18 year old juvenile delinquents based on the theory that these boys
are not mentally ill, sick, or born bad. In place of the current
``treatment'' model (custody/clinical), a program based on education,
behavior modification, and moral development was emphasized in an
innovative boarding school approach. A comparison of the two models and
the success rate of Bay Point Schools is attached.
For generations, wealthy families, faced with a teenager whose bad
behavior was leading to trouble and embarrassment for the family,
hustled them out of town to a military or boarding school. ICARE Bay
Point Schools does the same thing for boys who are getting into
trouble, but from all walks of life. The one thing they have in common:
they have begun committing crimes judged to be more serious than just
misdemeanors. Once the positive peer climate takes effect at the Bay
Point School, the students have one thing more in common: the change in
their value system that causes them to see their former behavior as
unacceptable and motivates them to work to become positive members of
society.
Bay Point prides itself on its emphasis on leaderhip training,
which motivates its students to excel whether in the classroom, on the
playing field, or in society at large. All students are tested
quarterly and placed in classes according to the grade level they have
achieved over the last quarter. In this way, bright, motivated students
may move through several grade levels within a year. The classes are
kept small so that education can be individualized and each student can
move through the grades at their own rate of learning. Suddenly, boys
who had zero interest in their high school classes are making plans to
go to college, to follow a career. Now, the other students are working
twice as hard to follow in their footsteps.
But there is more to Bay Point than academics. It is ``in'' to be
polite, to take pride in appearance, and to work hard in class. The
secret? Peer pressure. Students feel mutual respect for one another,
their teachers, and their parents, but the students will not hesitate
to confront a student whose attitude is negative. This should come as
no surprise. We have always known teenagers listen to each other more
than they pay attention to parents or other adults.
We suggest we have found a solution to juvenile crime, and it is
not more prisons which lead to homelessness.
It is imperative that this normative peer leadership model become a
national demonstration project. We hope funds from U.S. HUD will be the
catalyst.
Thank you for your consideration.
______
Attachment 1
ICARE Bay Point Schools Discharged Report
Percentage
School............................................................ 45
College........................................................... 15
Employed.......................................................... 30
Military.......................................................... 6
Detained.......................................................... 3
The success of ICARE Bay Point Schools in returning its students to
the community as law abiding citizens is shown in the table above. In
the last two years, thirty-three of the committed youths from the
Department of Juvenile Justice have graduated from the program. From
these thirty-three, forty-six percent have returned to school in their
community, thirty percent are employed and twenty-one percent are
attending colleges (with scholarships) or have joined the military/job
corps. Of the thirty-three, only one student committed a felony after
being discharged.
______
Attachment 2
The following are characteristics of the sociological model
contrasted with those often associated with custody/clinical programs.
Custody/clinical Sociological model
Treat delinquent youth as abnormal................ Treat delinquent youth as normal.
Respond to delinquency as psychiatric syndrome.... Respond to delinquency as social fact.
Treatment model emphasizes family dysfunction, Treatment model emphasizes behavior change and life skills
early development and psychological problems. development.
Student viewed as basically deviant in character.. Student viewed as basically good and worthy of respect.
Individual emphasis: Focus on personality change Systems emphasis: Focus on behavior change to bring about
to effect behavior change. personality change.
Emphasis on one to one counseling................. Emphasis on group normative culture.
Professional staff as the sole treatment force and Line staff accountable for student life and skills
line staff as caretakers. development. Utilize specialist when requested by staff
team.
Blame family, school, line staff, parents, Hold the student, the staff, and the program accountable,
legislator, judges for the youth's inability to (only the program and its workers fail).
reform, mature or develop life skills.
Use lock-ups, drugs, one-to-one counseling to Use peer pressure, rewards, diversification of programs to
control behavior. change behavior.
Do not place necessary and proper emphasis for Pay great attention to internal systems for safe
protection of students in the living units. This environment.
results in a street culture of bullying, conning,
physically hurting, and stealing.
Since the basic assumptions are flawed, the Require no paid security department and far fewer
problems continue and become greater. The professionals. The model operates efficiently on a per diem
traditional social service leaders continuously cost far below that of custody/clinical programs.
request more money to do more and more of what is
not working.
Consider guards and locked units necessary for Consider guards and locked units impediments to security.
security.
______
Prepared Statement of The American Association of Homes and Services
for the Aging
The American Association of Homes and Services for the Aging
(AAHSA) is pleased to submit for the record our comments on the fiscal
year 1998 Administration budget request for the U.S. Department of
Housing and Urban Development (HUD). As you know, AAHSA is the largest
organization representing nonprofit sponsors of senior housing--owning
and managing over 300,000 units of market rate and federally assisted
housing--including the largest number of sponsors of HUD Section 202
elderly housing facilities. The housing needs of older persons and
federal budget proposals affecting their ability to be suitably and
affordable housed are of critical importance to our members.
This committee has shown strong support and leadership over the
years to help ensure that the elderly are appropriately housed in
suitable, affordable, decent and safe housing. We have great
expectations that your committee will sustain that leadership and
provide the means necessary for federally assisted elderly housing to
continue as a viable resource for the growing numbers of low-income
elderly. As nonprofit sponsors of elderly housing, we consider
ourselves partners with the federal government. We have a mission of
helping those whose needs are the greatest and striving to provide
housing to all low-income elderly who need it. Despite the tremendous
good our successful partnership has accomplished, it is still not
enough. The poor elderly continue to have unmet housing needs. HUD's
1996 study on worst case housing needs shows that 1.2 million
households are headed by an elderly person where residents were
spending more than 50 percent of their income on rent or are living in
severely substandard housing. For a nation with our vast resources and
committed to caring for vulnerable populations including low-income,
frail elderly, this is both a shameful and daunting statistic. We
believe that part of the federal government's mission should be to
foster an environment that allows aging seniors to live in suitable,
affordable and decent housing that maintains their individual dignity
and independence. We continue to believe that working as a nonprofit
organization in an effective partnership with HUD and Congress, we can
help to accomplish that goal.
We believe the federal budget should not only reflect fiscal
responsibility, but should reflect our tradition as a caring and
compassionate nation. The quality and effectiveness of these programs
serving a vulnerable population are an expression of that tradition.
Unfortunately, while the Administration's overall HUD budget calls for
increases in some programs, inexplicably, other housing programs
benefiting the elderly suffer reduced funding--and in certain
instances, outright elimination. Also of particular concern, is having
adequate funding to renew expiring Section 8 rental assistance
contracts without subtracting funds from other housing programs or
pitting one needy population against another.
In this context, for fiscal year 1998, AAHSA is especially
concerned with funding for: Section 8 Project-Based Assistance; Section
202 Supportive Housing for the Elderly Program; Service Coordinators;
and Modernization and Retrofit.
SECTION 8 PROJECT-BASED RENTAL ASSISTANCE
We do not envy the difficult position in which the committee finds
itself in fiscal year 1998. The increased strain on HUD's discretionary
spending account--including the surge in costs to renew expiring
Section 8 contracts in fiscal year 1998--is a most troublesome
condition needing a pressure relief valve. From our perspective, that
pressure is best alleviated by a sufficient budget to renew expiring
contracts that does not squeeze out other discretionary programs at
HUD. While it is clear that the greatest number of Section 8 contracts
will begin to expire this fiscal year, it is not yet clear that
Congress has committed to both renewing these contracts and ensuring
that other existing HUD programs serving the poorest of the poor,
including the very-low income and frail elderly, will be protected.
AAHSA is pleased that HUD has also taken a strong stance in favor of
renewing all expiring contracts and urges the committee to renew all
Section 8 contracts expiring in fiscal year 1998.
The importance of maintaining project-based rental assistance
cannot be overstated for AAHSA members. Elderly housing works
spectacularly well, delivering high quality housing and appropriate
supportive services, at affordable rents to low income seniors. In the
recent legislative proposal on multifamily restructuring unveiled by
HUD, we were gratified to learn that HUD also adheres to the project-
based approach for elderly housing. HUD's proposal would exempt Section
202 and Section 8 elderly housing facilities from the tenant-based
contract renewal requirements. Elderly housing facilities have needs
that are distinct from other multifamily housing and tenant-based
vouchers do not work as well for older persons. Also, most seniors have
no desire to relocate which the tenant-based approach is designed to
facilitate. Project-based assistance is the right solution, it works in
elderly housing, and it should be continued.
Recommendation: We urge you to renew expiring Section 8 contracts
in fiscal year 1998; and, to renew all existing project-based rental
assistance contracts for federally assisted elderly housing facilities.
SECTION 202 SUPPORTIVE HOUSING FOR THE ELDERLY PROGRAM
When we testified before this committee last year, we said that HUD
needs adequate resources to accomplish its mission, and there are
certain HUD programs--such as the Section 202 elderly housing program--
that work well and should be preserved and supported. This year, that
message is no less relevant. It is a major disappointment to elderly
housing providers that the Administration's budget recommends a
devastating reduction in funding for the Section 202 elderly housing
program by requesting only $300 million to develop 3,865 units in
fiscal year 1998. Given that in fiscal year 1997, Congress appropriated
$645 million to fund 6,836 units, this represents less than half the
funding (46.5 percent) of current levels. In comparison to fiscal year
1996--$830 million for 8,743 units--this request is little more than
one-third funding (36 percent). Over the years, unit levels for Section
202 has dwindled from the late 1970's--when over 20,000 units per year
were funded--to the current levels of approximately one-third that
number.
Because Section 202 is one of a few new construction housing
program at HUD, we are concerned that some policymakers mistakenly view
the program as serving future and not current housing needs, thereby
relegating the program to a lower funding priority than other HUD
programs. Part of our alarm is reflected by HUD Secretary Andrew
Cuomo's prepared testimony on the Administration's budget proposal
before this committee in mid-March where he failed to once mention
elderly housing. We view with skepticism the assertion that restoring
funding to Section 202 deprives other HUD programs of needed funds. In
other words, we do not believe the argument that ``Congress is robbing
Peter--other HUD programs, to pay Paul--Section 202.'' This is short-
sighted, misguided, and insensitive to the many elderly who are
currently languishing on multi-year waiting lists. In addition, this
approach does not anticipate the changing demographic trends and
burgeoning numbers of elderly who, as a group, are considered the
fastest growing segment of our nation's population, particularly the 85
and above age group. Section 202 is a deserving HUD program that works
and it's funding should be restored to current levels to address the
tremendous demand for housing by the very-low-income, and the growing
elderly population. Section 202 should not be the sacrificial lamb in
HUD's budget.
As an indication of our commitment to helping to reduce costs to
the federal government, we are interested in pursuing a strategy to
reform the Section 202 program that involves restructuring the
financing and subsidy components of the older loan projects. Under this
proposal, a project would have the option of having it's existing HUD
mortgage forgiven and replacing it's existing Section 8 contract with a
Project Rental Assistance Contract (PRAC). We believe there are mutual
benefits to the federal government, nonprofit sponsors, and residents
by enabling the pre-1990 Section 202-loan projects to convert to the
revised Section 202 capital advance with a PRAC. Converting Section 202
loans to grants while simultaneously restructuring Section 8 contracts
to PRAC's makes good sense, since it basically eliminates the Section 8
payment that is needed for the mortgage payment. This would remove that
elderly housing inventory from the Section 8 account and assist HUD by
reducing the amount of funds necessary for Section 8 contract renewals.
Although our intent is to begin the conversion program with Section 202
projects, as nonprofit sponsors, we eventually want to extend the
conversion option to other federally assisted elderly housing,
including nonprofit sponsored Section 236 elderly housing projects. HUD
has been supportive of the conversion concept and as we continue to
work with the department on the details, we look forward to working
with this committee to refine the proposal.
Recommendation: We strongly urge you to restore funding to Section
202 in fiscal year 1998 to a sufficient amount to at least maintain
current unit levels with multi-year rental assistance contracts. We
urge your support for the proposal enabling nonprofit sponsors of
elderly housing to convert to a Section 202 capital advance and project
rental assistance contract.
SERVICE COORDINATORS
Service coordinators make a vital contribution to the lives of
frail, older persons by facilitating needed support services to help
them maintain their independence while also helping them meet their
obligations of tenancy. Service coordinators serve as a crucial link to
effective delivery of home and community-based services, as a cost-
effective measure in long-term care strategies, and as a part of the
continuum of care for older persons in federally-assisted housing.
Beginning with the fiscal year 1995 rescissions, separate funding
for service coordinators has not been requested by the Administration
or provided by Congress for federally assisted elderly housing
facilities. Instead, service coordinator funding has been folded into
various block grant approaches. In fiscal year 1998, the Administration
recommends that $50 million of public housing funds be used for a host
of supportive housing activities, including service coordinators. It
has been our experience for the last three fiscal years that only a
small portion of these funds will accrue to federally assisted elderly
housing, and the lion's share of these funds will principally go to
various supportive services programs for public housing residents. For
these reasons, we have reservations about this approach.
Mr. Chairman, we are very appreciative of the strong support for
the service coordinator concept that you and your committee have
provided over the years. Last year, the House included language in the
subcommittee report allowing service coordinators as a part of routine
operating expenses, and directed HUD to include the costs of service
coordinator funding in their future Section 8 budget submissions.
However, HUD did not include that cost in their fiscal year 1998 budget
request, and the consequences may be immediate and significant for some
existing projects that currently have service coordinators. Some of
these projects have a critical need for service coordinators but do not
have adequate reserve funding (through excess residual receipts), or
their residents cannot absorb the extra costs associated with a rent
increase. In fiscal year 1998, the first projects that were funded
under the service coordinator awards program will have their existing
contracts expire and they have little hope of sustaining a service
coordinator because of inadequate reserves or insupportable rent
increases. These projects would be able to retain their existing
service coordinator if HUD allowed the costs for service coordinators
as an eligible project expense in order to make a meaningful difference
in the lives of very frail, very needy, and very vulnerable elderly
persons.
Recommendation: We strongly urge you to allow service coordinators
as an eligible project expense in order to meet the needs of existing
elderly housing projects that cannot support a rent increase, that are
lacking in reserves, or whose existing service coordinator contract is
expiring.
MODERNIZATION AND RETROFIT
As we have stated previously, many nonprofit-sponsored federally
assisted elderly housing facilities are aging and have critical capital
improvement needs for modernization and retrofitting. Many of these
facilities require retrofitting of community space and individual units
to accommodate the needs of aging residents for the delivery of
supportive services to help them to remain in their homes. Since the
program was revised in 1990, the Congregate Housing Services Program
(CHSP) retrofit component has not been implemented because of a lack of
funding. Implementing CHSP/retrofit would allow projects to modify,
renovate, and modernize their physical plant to accommodate supportive
services for their frail elderly residents.
AAHSA strongly supported previous action taken by this Committee
urging HUD to implement CHSP/retrofit. For the third year in a row
since the pre-1995 rescission, the Administration's fiscal year 1998
proposal does not request funding for CHSP although the pressure for
modernization and retrofit in federally assisted elderly housing
continues to expand. AAHSA believes the retrofit program should be
funded, implemented, and given the opportunity to work. Also, AAHSA has
advocated that Section 236 projects be allowed equitable access to
their excess rents--to retain the excess funds from rents generated by
their individual facilities that are presently returned to HUD--for
their project's use.
Recommendation: We urge you to restore funding in fiscal year 1998
for CHSP at the pre-rescission fiscal year 1995 level, to direct HUD to
implement the retrofit program, and to allow Section 236 elderly
projects to retain excess rents for modernization and retrofit needs.
Thank you for this opportunity to testify. AAHSA is pleased to be
able to contribute to the committee's deliberation on these critical
issues, and we urge your support for the recommendations outlined in
our testimony. We hope that our comments will assist in helping you
formulate a budget that is responsive to the increasing needs of very-
low-income elderly. If you desire additional information, please
contact Gerard Holder, AAHSA Associate Director for Housing Policy
(202-508-9476).
______
ENVIRONMENTAL PROTECTION AGENCY
Prepared Statement of the Consortium for Citizens With Disabilities
Housing Task Force
INTRODUCTION
Mr. Chairman and Committee Members, the Consortium Citizens with
Disabilities (CCD) Housing Task Force is grateful for the opportunity
to provide testimony to your Subcommittee on the housing needs of
people with disabilities. The current goals of the CCD Housing Task
Force are to (1) highlight the acute and increasing housing crisis
facing people with disabilities; (2) advocate for new HUD resources to
replace the federally assisted housing that is no longer available to
people with disabilities; and (3) advocate that HUD be directed to
fully utilize mainstream housing programs on behalf of people with
disabilities.
The Consortium for Citizens with Disabilities (CCD) is a Washington
based coalition of over 100 consumer, advocacy, provider and
professional organizations who advocate on behalf of people of all ages
with disabilities and their families. The CCD Housing Task Force
focuses specifically on housing issues which affect people with
disabilities, particularly the availability of affordable, community
based housing options and the protection of their fair housing rights.
The individuals whom we represent--most of whom have very low incomes--
may be current participants of HUD assisted and public housing
programs, may be on federal housing program waiting lists, or may need
to apply for federal housing assistance at some future time.
The CCD Housing Task Force strongly believes that housing is often
the cornerstone to independence. If a person--with or without a
disability--has access to decent, safe, and affordable housing, then he
or she can concentrate on getting an education or job training, or a
job, and become a viable and productive part of the community.
BACKGROUND
Today, in virtually every part of the United States, people with
disabilities face an extreme crisis in the availability of affordable
housing which meets their needs and desires. In cities and towns across
the country, as people with disabilities struggle to find good quality
housing they can afford, they are beginning to understand the real
implications and bitter reality of recent federal housing policies--
policies that have dramatically reduced the federally subsidized
housing units that are available to people with disabilities.
These policies were enacted by the Congress in 1992 and 1996 in
order to permit public and assisted housing providers to designate
``elderly only'' housing. As we move into the appropriations process
for fiscal year 1998, people with disabilities and their advocates
understand that, unless Congress acts to replace the hundreds of
thousands of federally subsidized housing units which are no longer
available to people with disabilities, an increasing number of people
with disabilities will be forced into homelessness, or will continue to
live in extremely substandard housing, or will remain unnecessarily in
inappropriate institutional settings.
In September of 1996, in its report entitled Opening Doors:
Recommendations for a Federal Housing Policy to Address the Housing
Needs of People with Disabilities the CCD Housing Task Force
conservatively estimated that 273,000 units of public and assisted
housing would be lost to people with disabilities by the year 2000 as
the direct result of ``elderly only'' designated housing policies. This
loss consists of 115,000 designated units in federally-funded public
housing and an additional 158,000 units in HUD assisted housing (i.e.
202/Section 8, ``covered Section 8 projects'', Section 8 Loan
Management Set-aside, Section 236, Section 221, etc.).
This significant loss of housing supply for people with
disabilities is the direct result of the implementation of ``elderly
only'' designated housing policies by federal public and assisted
housing providers. The bitter irony of this loss of housing opportunity
is that it comes at the time when people with all types of disabilities
are now increasingly able to live successfully in homes of their own--
if those homes are decent and affordable.
ASSISTED HOUSING LOSS
Much of this loss has already occurred in the HUD assisted housing
inventory, since no HUD approval is required to limit or preclude the
admission of people with disabilities to the 650,000+ efficiency and
one-bedroom units developed over the past 25 years. For example, a
recent survey of one urban county in Michigan conducted by the
Technical Assistance Collaborative Inc., indicates that 3,000 of the
5,000 HUD assisted housing unit inventory has been converted to
``elderly only'' housing, a loss of 60 percent.
To make matters worse, this county has very little federal public
housing and extremely long waiting lists for Section 8 certificates and
vouchers. Only 10 McKinney Shelter Plus Care rental subsidies are
available for people with disabilities who have already become
homeless. Fortunately, some of the new Section 8 certificates
appropriated by this Subcommittee for fiscal year 1997 may soon be
awarded for people with disabilities in this county to offset this
profound loss of assisted housing.
PUBLIC HOUSING LOSS
The CCD Housing Task Force is very concerned about the impending
loss of many thousands of public housing units that were previously
available to people with disabilities. Thus far, HUD had approved 50
Public Housing Allocation Plans, designating approximately 22,000
public housing units as ``elderly only''. However, a recent HUD Notice
minimizing PHA allocation plan requirements has prompted a significant
increase in the number of allocation plans being submitted to HUD.
Currently seven plans are pending and more PHA's are in the process of
preparing plans.
During the next 12 months, HUD predicts that an additional 174
plans will be filed. Using the approximate loss of public housing which
has occurred from the 50 HUD approved plans as the benchmark the CCD
Housing Task Force estimates that at least 90,000 public housing units
will be lost to people with disabilities by March 1998. These numbers
demonstrate that the original CCD estimate of 115,000 public housing
units lost by the year 2000 may be reached as early as 1998.
WHERE WILL PEOPLE LIVE?
Given the magnitude of this loss of federally subsidized housing,
how will people with disabilities, particularly those who waited
patiently on PHA and assisted housing waiting lists, go about obtaining
decent housing? How will the three million people with disabilities
currently receiving Supplemental Security Income (SSI) benefits be able
to afford their own apartment or home? [NOTE: SSI income is less than
25 percent of median income nationally.] What housing options are
available for people with disabilities who live with aging parents, or
who are paying 75 percent or more of their limited income for rent, or
who are living in unnecessarily restrictive congregate settings--like
nursing homes?
Until the Congress took bold action one year ago, there were very
few if any good answers to the above questions. It is a fact that:
1. The $50 million appropriation of Section 8 certificates and
vouchers included by Congress in the fiscal year 1997 HUD
appropriations bill were the first new resources targeted to replace
the significant loss of HUD assisted housing;
2. Very few PHA's have targeted their turnover Section 8
certificates and vouchers to people with disabilities who will be
turned away from the PHA's ``elderly only'' designated public housing;
3. Appropriations for the Section 811 program continue to decline,
despite the documented growing need for new housing resources for
people with disabilities;
4. Mainstream housing programs such as HOME and CDBG have not been
targeted, either by HUD or by state and local communities, to offset
the significant loss of housing opportunity experienced by people with
disabilities due to the implementation of ``elderly only'' designated
housing policies;
5. HUD continues to ignore the acute housing crisis facing people
with disabilities and the negative consequences that ``elderly only''
designated housing polices have on the available supply of housing for
people with disabilities in local communities.
Despite the mounting evidence documenting the loss of efficiency
and one bedroom units for people with disabilities in now ``elderly
only'' developments, HUD's fiscal year 1998 budget request does not
even mention the extreme housing crisis faced by people with
disabilities. The CCD Housing Task Force believes that replacing this
lost housing should be included among the HUD Secretary's core
challenges. However, as was the case in last year's budget process, HUD
has virtually ignored the impact that ``elderly only'' designation has
on its own programs, and has made no effort to measure or evaluate the
loss of housing for people with disabilities. Without a realistic
policy framework within HUD to address this issue, people with
disabilities will remain the most underserved of the groups eligible
for HUD assistance, and the group with the highest incidence of ``worst
case'' housing needs.
RECOMMENDATIONS
The CCD Housing Task Force believes that people with disabilities
are entitled to an equitable of federal housing resources, even given
the Section 8 renewal issue and the other constraints on the federal
budget. To do otherwise will return us to the era when people with
disabilities had few if any rights to housing, and when their housing
choices were often limited to expensive, restrictive, and inappropriate
institutional settings or homelessness. Therefore, in order to ensure a
``fair share'' approach, the CCD Housing Task Force makes the following
recommendations for fiscal year 1998, which are based on the documented
housing needs of people with disabilities and the extreme housing
crisis caused by the implementation of federal elderly only housing
policies.
Section 8 Tenant Based Rental Assistance
The CCD Housing Task Force believes that Section 8 tenant based
rental assistance is one of the most effective tools for helping people
with disabilities live integrated lives in their home communities. It
is also the program which can most quickly provide alternative
resources to people with disabilities, who would have otherwise been
eligible for federal housing units now designated as ``elderly only''.
HUD's fiscal year 1998 budget requests incremental Section 8 rental
assistance only for people in welfare to work programs and ignores the
critical need for rental subsidies for people with disabilities
recognized by the Congress last year.
The CCD Housing Task Force seeks your continued support for $50
million in new Section 8 incremental rental assistance specifically for
people with disabilities. We urge you to again appropriate funds for
this assistance and not rely on the already under-funded Section 811
Supportive Housing Program for Persons with Disabilities. Your
willingness to provide incremental funding for new Section 8
certificates and vouchers sends a strong, clear, and very positive
message to those people with disabilities desperately in need of decent
and affordable housing. Many of these people are living in communities
where virtually all of the federally funded efficiency and one-bedroom
units have been converted to ``elderly only'' housing. For them,
Section 8 rental assistance is their only hope.
Section 811 Supportive Housing For Persons with Disabilities
The CCD Housing Task Force has major concerns with HUD's fiscal
year 1998 appropriations recommendations for the Section 811 program.
During the past seven years, people with disabilities and their
advocates have worked closely with HUD and the Congress to re-tool the
Section 811 program, thereby facilitating the development of smaller,
scattered-site housing in the community for individuals with
disabilities. However, we continue to believe that HUD views the
Section 811 program as ``the'' disability program--a view which
provides no policy direction for HUD or grantees to target mainstream
programs (i.e. HOME and CDBG) for people with disabilities. The Section
811 program is one of those success stories where non-profit
organizations have worked in partnership with federal and state
governments to provide people with disabilities with needed housing in
the community. Therefore, the CCD Housing Task Force believes that it
is time for the flexibility and innovation now provided with other HUD
programs (i.e. HOME, McKinney Supportive Housing Program, etc.) be
offered to the non-profits developing housing within the Section 811
program.
The fiscal year 1998 budget proposes $174 million for the Section
811 program--the same level of funding HUD requested last year.
Fortunately, Congress ignored HUD's recommendation and added $20
million back to the program for a total fiscal year 1997 appropriation
of $194 million. Unfortunately, even that level represents a cut of
$193 million from the appropriation for the Section 811 program in 1995
and 1996. HUD justifies the cuts to Section 811 by stating that all
programs must be cut. Yet, the CDBG and HOME programs are held sacred.
The Section 811 program cannot be targeted to do more with less
funding! The CCD Housing Task Force seeks your support for additional
funding for the Section 811 program. The Task Force supports tenant
based rental assistance as part of the Section 811 program--if
additional funds are available. HUD published a Notice of Fund
Availability on this rental assistance on April 10. Despite HUD's good
intentions, this NOFA makes PHA's the only eligible applicants for this
rental assistance. Unfortunately, since the NOFA was published it has
become very clear that many PHA's are unwilling to apply for these
funds. Since non-profit organizations were originally the only ones
eligible for Section 811 funds and since they have first hand knowledge
of the housing crisis facing people with disabilities, the CCD requests
that you provide HUD with the authority to make non-profts eligible
applicants for the tenant-based rental assistance funded through this
program.
Section 8 Renewals and Section 8 Turnover
The CCD Housing Task Force supports the renewal of all Section 8
expiring contracts for the certificate and voucher programs and for
Section 8 assisted housing. Many people with disabilities would be
seriously harmed should Congress not renew these commitments. Those
harmed would include residents of 202/Section 8 projects developed for
people with disabilities before the Section 811 program was spun off
and more than 200,000 people with disabilities now using Section 8
certificates or vouchers.
In addition, the CCD recommends that--as PHA's increasingly seek to
designate ``elderly only'' housing--Section 8 turnover subsidies at the
PHA could be re-directed to people with disabilities who would have
otherwise been eligible for admission to public housing.
HOME and Community Development Block Grant Programs
The CCD Housing Task Force believes that the solution to the
housing crisis facing people with disabilities lies with HUD mainstream
housing resources, including the HOME and CDBG programs. Unfortunately,
HUD has provided no guidance or direction for state or local
governments regarding the use of these funds to off-set the loss of
federally subsidized housing for people with disabilities occurring
from designation. Without this guidance, local and state housing and
community development officials are often reluctant to change existing
program activities, despite the priority housing needs of people with
disabilities documented in their Consolidated Plans.
The CCD Housing Task Force supports continued funding for the HOME
and Community Development Block Grant programs provided that a ``fair
share'' of these federal resources are directed to meet the housing
needs of people with disabilities--including addressing the loss of
federal public and assisted housing for people with disabilities, which
is occurring due to ``elderly only'' designated housing policies.
Government Accounting Office Report
The CCD Housing Task Force believe that it is imperative that HUD
and the Congress have reliable data on which to base policy decisions
related to the housing needs of people with disabilities. HUD efforts
in the past in relation to the housing needs and usage of people with
disabilities have been half-hearted and incomplete. Unfortunately, HUD
continues to ignore the impact of federal housing designation
policies--as well as the fact that people with disabilities want and
should live in their home communities. The CCD Housing Task Force
requests that you include a report by the U.S. Government Accounting
Office in the fiscal year 1998 HUD appropriations bill.
SUMMARY
The CCD Housing Task Force is grateful for the opportunity to
provide this testimony. If there are any questions, please contact one
of the co-chairs of the CCD Housing Task Force--Andrew Sperling 703-
524-7600; Kathy McGinley 202-785-3388; Suellen Galbraith 703-642-6614;
and Michael Allen 202-467-5730.
______
Prepared Statement of the Arc
INTRODUCTION
The Arc is the largest voluntary organization in the United States
devoted solely to the welfare of the more than seven million people
with mental retardation and their families. There are more than 1,100
state and local chapters of The Arc nationwide. For two decades, a top
priority of The Arc has been to make community-based services and
supports, including an appropriate variety of housing options, more
available to people with mental retardation. The Arc also seeks the
deinstitutionalization of people with mental retardation residing in
large, inappropriate, and extremely expensive institutions--places
which many people with mental retardation have been forced to call
home, often because there is nowhere to live in the community. The
people whom we represent--most of whom have very low incomes may
already be consumers of HUD programs or on waiting lists for a variety
of HUD programs both generic and disability-specific.
The Arc's deep concern--at the local, state, and national levels--
for the availability of a range of housing options in the community is
reflected in the opening paragraph of its Mission Statement which is
included on the cover page of this testimony. The Arc is grateful for
the opportunity to provide testimony to the Subcommittee on the housing
needs of people with disabilities. Our recommendations are most
detailed in relation to Section 8 tenant-based rental assistance and
the Section 811 Supportive Housing for Persons with Disabilities
program. However, we have also included comments on a number of other
programs.
Housing can be the cornerstone to independence. If a person--with
or without mental retardation--has access to decent, safe, affordable
housing and appropriate supports in the community, then he or she can
concentrate on getting an education, or job training, or a job, and on
making friends and being a viable and productive part of the community.
BACKGROUND
Today, in virtually every part of the United States, people with
mental retardation and other disabilities face a crisis in the
availability of affordable housing which meets their needs and desires.
In cities and towns across the country, hundreds of thousands of people
with disabilities are: living in seriously substandard housing
conditions; paying 50 percent-75 percent or more of their limited
income for rent; living at home with elderly parents; living in
restrictive congregate settings; or are homeless. Many others remain in
inappropriate institutional settings because there is no housing
available to them that they can afford.
People with mental retardation and other disabilities are currently
the population group most in need of federal housing assistance. The
U.S. Department of Housing and Urban Development (HUD) 1994 Report to
the Congress on Worst Case Housing Needs states that people with
disabilities often have multiple housing problems and are the group
most likely to live in severely inadequate housing. Unfortunately, this
1994 report, as well as a more recent report issued in March of 1996,
significantly underestimates the number of people with disabilities who
have priority housing needs.
There are numerous reasons why people with mental retardation face
a housing crisis, including:
--The lack of a comprehensive federal housing policy for people with
disabilities--ranging from rental housing to homeownership;
--Federal, state, and local budget constraints such as the loss of
almost all new Section 8 tenant-based rental assistance
beginning in fiscal year 1995 and continuing cuts to the
Section 811 program;
--The implementation of ``designated housing'' which already has and
will continue to result in a loss of housing options in the
community; and
--Continued widespread discrimination and ``Not In My Backyard''--
``NIMBY'' policies.
The designation of ``elderly only'' subsidized housing is the most
recent factor which has contributed to the critical housing shortage
for people with disabilities. In 1992 and 1996, Congress passed
legislation which permits both PHA's and HUD assisted housing providers
to limit or exclude people with disabilities from living in certain
subsidized housing developments by designating housing as ``elderly
only''. These public housing and assisted housing developments, which
contain virtually all of the studio and one bedroom federally
subsidized housing units in the country, make up over two-thirds of the
federally subsidized housing resources that low income people with
disabilities were eligible for prior to the passage of this
legislation.
Opening Doors: Recommendations for a Federal Policy to Address the
Housing Needs of People with Disabilities developed by the CCD Housing
Task Force reports that, from 1993 through the year 2000, the
implementation of elderly only designated housing policies will result
in at least a 50 percent decrease in the supply of HUD public and
assisted housing units previously open to people with disabilities.
Overall, based on estimates of the number of people with disabilities
who will be displaced from subsidized housing waiting lists, there will
be a decrease of at least 273,000 units that would have otherwise been
occupied by people with disabilities.
--Already approximately 50 public housing allocation plans that
``designate'' elderly-only housing have been approved by HUD--
leading to approximately 22,000 now elderly-only units. More
and more plans arrive at HUD weekly and the Department has
estimated that 174 plans will be submitted in the next twelve
months.
--Unfortunately, there is no record of how many assisted housing
units have been lost. However, a CCD survey of one Michigan
county showed that 60 percent of the assisted housing units
that once were open to people with disabilities have been
designated as elderly-only.
Despite this dramatic decrease in the supply of subsidized housing
available for people with disabilities, until Congress acted last year,
no new resources for people with disabilities were authorized or no new
funds were appropriated to address this loss. HUD continues to ignore
the fact that people with disabilities face a housing crisis. HUD's
neglect of the needs of people with disabilities last year was bad
enough. However, even after Congress added $50 million for Section 8
tenant-based rental assistance for people with disabilities and more
funds for the Section 811 program for fiscal year 1997--HUD did not
request the $50 million for fiscal year 1998 and, once again, proposed
yet another cut to the Section 811 program. Once again, we are
dependent on the understanding and wisdom of Congress.
One thing that is very obvious is that the housing lost to people
with mental retardation and other disabilities as a result of
designating elderly-only housing must be replaced. Where will people
with disabilities, many of whom have been on waiting lists for years,
find alternative housing resources? What about those people with
disabilities who used to be eligible for this housing who will now be
turned away? What about those people who are living at home with aging
parents, who fear for their children's future? What about those people
living in institutions who should be living in their communities?
People with mental retardation and other disabilities are entitled
to an equitable share of federal housing resources, even in an era of
federal fiscal constraints. Therefore, in order to ensure a ``fair
share'' approach, The Arc makes the following recommendations for
fiscal year 1998 based on the documented housing needs of people with
disabilities and the housing crisis which they now face.
SECTION 8 TENANT-BASED RENTAL ASSISTANCE
The Arc strongly believes that Section 8 tenant-based rental
assistance is one of the most effective tools for helping people with
mental retardation live integrated lives in their home communities. For
one thing, access to Section 8 assistance helps people with mental
retardation afford living in the community. Unfortunately, most people
with mental retardation have low paying jobs and they would not be able
to live on their own without a rent subsidy. Medicaid is often a source
of service funding for people with mental retardation. But, while
Medicaid can help people get the services and supports they need,
people still need a rental subsidy to allow them to be able to afford a
place to live. Access to tenant-based assistance is even more critical
now when so many other options have been closed to people with mental
retardation.
HUD's fiscal year 1998 budget requests incremental Section 8's only
for people in welfare-to-work programs. HUD's budget request--once
again--makes no mention of the need for Section 8 tenant-based rental
assistance for people with disabilities and ignores the funds that were
added for fiscal year 1997. The Department's Section 8 priorities are
in direct conflict with HUD's own data that show that people with
disabilities have some of the worst case housing needs faced by any
individuals in the nation. HUD's actions also are extremely problematic
since a bi-partisan effort in Congress authorized and appropriated
funds for Section 8's for people with disabilities for fiscal year
1997. Congress recognized the loss of housing as a major problem but
HUD continues to refuse to do so.
The Arc seeks your support for continuation funding for the $50
million in Section 8 tenant-based rental assistance specifically for
people with disabilities. We urge you to again appropriate funds for
this assistance and not rely on the already underfunded Section 811
Supportive Housing for Persons with Disabilities Program. The housing
crisis faced by people with mental retardation and other disabilities
is getting worse, not better. A one-time infusion of 8,400 Section 8's
does little to offset the estimated loss of over 273,000 units. We also
urge you to work to ensure that the broadest range of people with
disabilities have access to this rental assistance.
section 811 supportive housing for persons with disabilities
The Arc has major concerns with HUD's fiscal year 1998
appropriations recommendations for the Section 811 program. Reviewed in
the context of the immerse housing crisis faced by people with
disabilities and on HUD's own (incorrect) view of the Section 811 as
``the'' disability housing program, the HUD recommendation appears not
only to be very poor public policy, but also dangerous to people with
mental retardation. Section 811 has expanded the available housing
stock and options within communities while assuring a level of
individualized supports required by some individuals with severe
disabilities. The Arc has many members/chapters who have acquired or
developed housing through the Section 811. In most cases, our members
will be the first to admit that projects developed in the past have
been too large and too segregated. However, for the past seven plus
years, we have worked closely with HUD and the Congress to make the
Section 811 program into something that can provide small, scattered-
site housing in the community for individuals with disabilities.
The Section 811 program has provided people with mental retardation
with access to critically needed housing in the community. In many
cases, it is this access to that prevents or ends institutionalization.
For some people, a group home has been a ``layover'' on the road to
living independently in the community. For other individuals, with
ongoing stronger support needs, housing options funded through Section
811 continue to be necessary and appropriate.
The fiscal year 1998 HUD budget proposes $174 million for the
Section 811 program. This is the same level of funding that HUD
requested last year. Fortunately, Congress ignored HUD's recommendation
and added $20 million back to the program for a total fiscal year 1997
appropriation of $194 million. Unfortunately, even that level
represents a cut of $193 million from the appropriation for the Section
811 program in each of fiscal years 1994, 1995, and 1996. HUD justifies
cuts to Section 811 by stating that all programs need to take a cut.
Why then are programs like the HOME and CDBG held sacred and funded at
current levels? In addition, why are neither of these programs held
more accountable for contributing to the availability of decent, safe,
affordable, and accessible housing for people with disabilities?
At the same time that HUD requests less money, the Congress and HUD
have directed 25 percent of Section 811 funds to tenant-based rental
assistance. While it appears that this rental assistance will be very
useful for people with mental retardation and other disabilities, The
Arc cannot be the only group to wonder why HUD keeps trying to do more
in this program--with less money. This only harms people. The Arc
supports tenant-based rental assistance as part of the Section 811
program only if additional funds are added to the program--not
subtracted.
The Arc seeks your support for more adequate funding for the
Section 811 program. Section 811 is one of those success stories where
non-profit organizations have worked in partnership with federal and
state governments to provide people with mental retardation and other
disabilities with needed housing in the community. We ask that you urge
HUD to streamline the program so that the more innovative components of
the program can be used more conveniently, such as the acquisition or
development of units in condominium, cooperative, and multi-family
housing developments. We also request that you urge HUD to include non-
profit organizations as eligible applicants for the tenant-based rental
assistance funded with Section 811 funds. Non-profits are the
traditional HUD partner for Section 811 funds.
The Arc also believes that there are other problematic
appropriations issues in addition to the Section 8 tenant-based rental
assistance which we are seeking and Section 811.
The Arc seeks your support for requirements that ensure that funds
from both the HOME and CDBG programs are targeted to people with mental
retardation and other disabilities. These two programs, which never
seem to face funding cuts like other HUD programs, currently do little
to ensure that there is a range of housing options for people with
disabilities in the community. In light of the dwindling resources and
options for people with disabilities, both of these locally driven
programs should be required to help provide housing for those with the
greatest need.
The Arc seeks your support for adequate funds to deal with the
Section 8 ``renewal crisis''. Approximately 15 percent of the people
receiving Section 8 tenant-based rental assistance are people with
disabilities. Although very few people with disabilities can now access
project-based Section 8 units due to the designation of many of these
units as elderly-only, there are still many people with disabilities
living in these projects who have not been displaced. There are also
many people living in disability projects funded under the Section 202
program. It is critical that this crisis be resolved--but not by taking
funds from other important HUD programs.
SUMMARY
Thank you for the opportunity to provide you with this testimony.
We would appreciate your support. The Arc has historically attempted to
work in collaboration with HUD. We have advocated for additional
funding for HUD programs; worked for the continued existence of the
Department itself; and fought to maintain the Office of Fair Housing
and Equal Opportunity at HUD. However, we are very concerned about the
Department's continued lack of understanding of the depth and breadth
of the housing crisis faced by people with all types of disabilities--
including mental retardation and other developmental disabilities--
face. The Arc strongly believes that people with mental retardation and
other disabilities should have equitable access to all HUD programs. We
appreciate your support in the past and hope that we can continue to
work with you towards this goal.
______
Prepared Statement of the American Network of Community Options and
Resources
INTRODUCTION
ANCOR is a nationwide association of over 650 private, non-profit,
for-profit and family care agencies that together provide supports and
services to more than 50,000 low-income people with mental retardation
and other developmental disabilities. Most member agencies support
people in group homes, apartments, and other supported living
arrangements in the community. ANCOR has twenty-seven years of proven
leadership representing private providers of housing options for people
with disabilities and it receives no federal funds of any kind.
Unfortunately, all too often people with disabilities have been in
the position of competing for scarce resources at national, state, and
local levels--competing for housing assistance needed by other low-
income households in general and, frequently, in competition with other
vulnerable groups, such as people who are elderly. The need for
affordable, accessible housing in the community for people with
disabilities is tremendous and is increasing each year as a result of
the woefully inadequate supply of affordable housing and as a result of
units lost because of designated ``elderly only'' housing.
ANCOR believes it is critical that there be a federal role in
housing and that adequate funding for America's most vulnerable
citizens--people with mental retardation and other disabilities--must
continue in order to open doors to affordable housing in the community.
Unfortunately over the past few years HUD appears not only to have
understated the housing needs of people with disabilities in this
country, but has failed to lead the way in urging an appropriate
federal response. In its last two funding proposals to Congress, HUD
did not include any incremental Section 8 tenant-based assistance
targeted for people with disabilities even in the face of ample
evidence of the devastating loss of public and assisted housing as a
result of federal designated housing policy. Remarkably, at the same
time, HUD proposed a deep cut in funding to the Section 811 Supportive
Housing for People with Disabilities Program.
However, last year this Subcommittee took a stand to ensure that
people with disabilities were not forgotten. Due in no small measure to
this Subcommittee's sense of equity and commitment to protecting
America's most vulnerable citizens, a first step was taken in restoring
some of the housing lost to people with disabilities as a result of
recent federal housing designation policies. Although this issue
appears to have escaped the attention of HUD--it did not escape the
stewardship of members of this Subcommittee when it approved a separate
$50 million appropriation for tenant-based assistance specifically for
people with disabilities last year. This Subcommittee has helped to
lead the way in correcting a mistaken message sent to people with
disabilities--that their housing needs were no longer important to the
elected officials in Washington.
INCOMPLETE HOUSING DATA UNDERESTIMATES NEED AND DISTORTS LINK TO
ALLOCATION
For many adults with mental retardation and other developmental
disabilities, the Supplemental Security Income (SSI) upon which they
depend, is totally inadequate for rent. On average, adults with mental
retardation and other disabilities receiving SSI have an annual income
less than 20 percent of median income and are unable to afford housing
without assistance. On the average nationally, without assistance, it
takes nearly 66 percent of a monthly SSI check to pay the rent for an
efficiency apartment.
HUD's 1994 Report to the Congress on Worst Case Housing Needs and
its subsequent report in 1996 stated that people with disabilities
often have multiple housing needs and are the group most likely to live
in severely inadequate housing. But in spite of this evidence, HUD has
not included adequate funding in its budget proposal again this year to
begin to address the known housing crisis.
According to OPENING DOORS: Recommendations For A Federal Policy to
Address The Needs of People with Disabilities prepared by the
Washington-based Consortium for Citizens with Disabilities (CCD)
Housing Task Force and the Technical Assistance Collaborative, Inc. of
Boston, Massachusetts, HUD's reports significantly understate the
housing needs of people with disabilities. The 1996 OPENING DOORS
report estimates that for people with disabilities, there were
1,792,000 worst case housing needs as compared to HUD's estimate of
170,000. On top of this critical shortage in housing, the CCD report
also estimates a loss of more than 270,000 federally subsidized housing
units for people with disabilities over a five year period due to the
impact of recent federal designated housing policy.
ANCOR believes that this loss of units to people with
disabilities--with the concomitant result that these units are added to
the stock of housing available only to elderly people--represents the
largest single shift in housing in our nation's history. ANCOR
continues to believe that the changes in federal housing law and the
subsequent shift in housing assistance requires an immediate response
by the federal government.
As of June 1996, 58,400 people still resided in state operated
facilities for people with mental retardation and other disabilities.
This sizable pent-up demand for housing in the community, however, does
not reflect the number of people on statewide waiting lists for
residential and support services in the community. A limited survey of
some of ANCOR's members recently provided the following information
regarding the number of people with mental retardation/developmental
disabilities on these waiting lists: Arizona (138), Colorado (1,200),
Illinois (4,500), Indiana (2,900), Kentucky (1,138), Maine (330),
Maryland (5,000), Massachusetts (2,958), Michigan (3,173), Minnesota
(2,500), New York (5,439), Oklahoma (1,468), South Carolina (1,300),
South Dakota (23), Washington (2,800), and Wisconsin (8,900). According
to ANCOR's affiliate in New York--at the current rate of development,
the parent of a child with developmental disabilities must wait until
the year 2027 for a community residential opportunity.
All of the above statewide figures provide information only
something about the number of people with mental retardation and/or
developmental disabilities. This data does not reflect the number of
people with other disabilities in need of affordable housing. Nor do
these statistics reveal what is most important--the real human lives
behind those numbers.
ANCOR recommends that the Congress request a report by the U.S.
General Accounting Office on the housing needs of people with
disabilities. It is imperative that HUD and the Congress have reliable
data with which to assess the housing needs of people with
disabilities, including the impact of recent federal housing
designation policy on public and assisted housing stock, as well as the
level of resources allocated to address the shortage in housing. In
other words, Congress needs a credible baseline from which to ascertain
the growing gap in housing assistance for people with disabilities and
in order to determine future allocations of scarce resources. It is
also important that the study complete an inventory and a review of the
utilization of all HUD housing assistance that should be available to
people with disabilities--including other HUD mainstream housing
resources such as the HOME and CDBG programs.
However, exploring the problem in greater detail will be fruitless,
if our nation's housing policy and federal expenditures are not
directed to address the documented acute housing needs of people with
disabilities.
Therefore, ANCOR recommends that the Congress be consistent in its
policy by appropriating adequate funding for HUD programs specifically
designed to address the housing needs of people with disabilities and
to direct HUD to promote the utilization of mainstream housing programs
in order to increase physical accessibility and rehabilitation of
existing rental properties, development of new affordable rental
housing, and creation of homeownerhsip.
TENANT-BASED RENTAL ASSISTANCE
Tenant-based rental assistance is one of the nation's most
effective ways to provide housing for people with low and very low
incomes, including people with disabilities. It provides an opportunity
for people with disabilities to exercise choice in obtaining affordable
housing in the private market, thus empowering them to become full
fledged members of our nation's communities. However, for the past two
years HUD has failed to provide any incremental Section 8 tenant-based
rental assistance targeted for people with disabilities, even as it
targets assistance for others in need.
ANCOR recommends a separate appropriation for $50 million in new
Section 8 tenant-based rental assistance designed specifically for
people with disabilities in fiscal year 1998 to continue efforts to
address the housing gap and to replace lost housing as a result of
federally designated housing policy.
section 811 supportive housing for people with disabilities
Some people with disabilities of all ages require supports, beyond
merely rental assistance, to live in the community. The Section 811
program has proved to be one of HUD's most successful programs,
investing federal funding to increase housing stock available to people
with disabilities who have need for an array of intensive supports to
live in the community. It is unique in that the program provides a
``housing partnership'' structure with local nonprofit organizations to
develop supportive housing through a direct grant accompanied by
project-based rental assistance. The Section 811 programs should not,
however, be relied upon as the only mechanism for addressing the broad
range and growing housing needs of people with disabilities.
Nor should Section 811 program funds be reduced at a time when
there is also a crisis in affordable housing for people with
disabilities. Although ANCOR applauds the efforts of HUD to ``avert the
Section 8 contract renewal crisis,'' it is misleading to Congress and
to others to say it is doing so without harming other programs. HUD is
proposing $174 million for the Section 811 program--a $193 million
funding cut over fiscal year 1995 and fiscal year 1996 levels.
ANCOR recommends fiscal year 1998 appropriations of $265.74 million
(fiscal year 1996 funding level of $258 plus a three percent inflation
factor) for the Section 811 Supportive Housing for Persons with
Disabilities Program for capital grants and tenant assistance.
The Section 811 Supportive Housing for Persons with Disabilities
Program, like its sister program--Section 202 Supportive Housing for
the Elderly Program--was designed to be administered solely by non-
profit organizations, respecting the strong belief in the innovation of
the public-private partnership. The Section 811 program funding should
be made available only to non-profit organizations.
ANCOR recommends that Congress provide the HUD Secretary with
waiver authority to permit private non-profit organizations to
administer Section 811 tenant-based assistance. (Currently, only public
housing authorities can administer the 25 percent authorization for
tenant-based assistance under the Section 811 program.)
______
Prepared Statement of John R. Wodraska, General Manager, Metropolitan
Water District of Southern California
FISCAL YEAR 1998 APPROPRIATIONS FOR THE U.S. ENVIRONMENTAL PROTECTION
AGENCY
The Metropolitan Water District of Southern California (MWD) is
pleased to submit comments for the record, regarding programs contained
in the U. S. Environmental Protection Agency's (EPA) fiscal year 1998
budget for your Subcommittee's hearing on April 8, 1997.
MWD is responsible for meeting the supplemental water requirements
of 16 million people living in the Southern California coastal plain.
Of particular interest to MWD and our 27 member agencies are those
federal programs that provide assistance and facilitate partnerships
for addressing critical water quality issues.
MWD urges that you provide the full amount authorized by Congress
for the Safe Drinking Water Act (SDWA) State Revolving Fund for fiscal
year 1998, increased amounts for drinking water research, and that you
fully support the President's proposed fiscal year 1998 budget for
other EPA programs benefiting drinking water quality. While significant
progress has been made in improving the quality of our nation's water,
many surface and ground waters do not meet water quality standards.
Further, as our understanding of the relationship between the
contaminants found in our water supply and their effect on human health
increases, new risks have been uncovered. Adequate protection of
drinking water quality requires research to identify health effects,
contaminant sources, and effective control methods; financial
assistance for implementation of water treatment and source water
protection measures; and compliance monitoring to ensure existing laws
and regulations are upheld.
drinking water and source water protection activities
MWD supports the President's request for $98 million for drinking
water and source water protection activities within the Environmental
Programs and Management Appropriation Account. It is MWD's goal to
supply safe water that meets or surpasses state and federal standards
and will achieve the highest standards of customer satisfaction.
MWD has devoted a significant amount of time and funding to
disinfectant/disinfection by-product (D/DBP) treatment technologies.
Staff have also actively participated in the regulatory negotiation of
the D/DBP rule and the current EPA D/DBP workgroup to ensure a
reasonable health protective cost-effective regulation. The $73.9
million is necessary for EPA to develop these regulations.
MWD actively participated in the development of language on
reasonable source water protection incentives in the 1996 SDWA.
Programs for adequate protection of sources of drinking water will
improve public health protection and reduce treatment expenses. MWD
strongly supports the $23.4 million allocated for source water
protection.
DRINKING WATER RESEARCH
Research is the foundation upon which effective drinking water
quality programs are built, and MWD asks you to provide additional
support to various EPA water quality-related research programs. The
1996 SDWA made clear that more research is needed to resolve critical
questions on health effects of pathogens, arsenic, and disinfection by-
products. Consequently, we are very concerned that the proposed fiscal
year 1998 EPA budget provides about $3.5 million less for drinking
water research than in fiscal year 1997. Increased funding is needed
for research to help protect against such waterborne pathogens as
Cryptosporidium and assist in developing cost-effective regulations for
DBP's and arsenic.
We urge you to support the addition of $5 million to be earmarked
for the American Water Works Association Research Foundation (AWWARF)
for critically needed research on pathogens, DBP's and arsenic. We also
request the addition of at least $1 million for arsenic health effects
research to be earmarked for EPA to use to support its recently signed
Memorandum of Understanding with AWWARF and the Association of
California Water Agencies. Additional research on the health effects of
arsenic is critical in order to determine whether existing regulations
are sufficiently protective of human health. MWD has already committed
$50,000 of its own funds for arsenic research and many other drinking
water suppliers have made similar financial commitments.
We request that you support funding of $45.4 million for drinking
water research for fiscal year 1998 Pathogens, DBP's, and arsenic are
just three of the drinking water contaminant issues that the EPA needs
to address through research. Even greater funding will ultimately be
necessary to fully address these and other drinking water contaminants.
ECOSYSTEM AND HUMAN HEALTH PROTECTION RESEARCH
Other research programs that need your support include EPA's
request for $105.5 million for the Ecosystem Protection Research
program, that will provide environmental monitoring data and add to our
understanding of wetlands and other important aquatic ecosystems.
Wetlands act as a natural ``cleansing'' medium and help protect the
quality of our nation's drinking water. Further, EPA's request for
$53.6 million for the Human Health Protection Research program should
help promote wiser spending of limited economic resources on
environmental human health problems by developing a better
understanding of the linkage between environmental contaminants and the
true threat they pose to human populations.
DRINKING WATER TECHNICAL SUPPORT CENTER
The 1996 SDWA will continue to require extensive monitoring and
accurate laboratory analysis of very complex regulations, such as the
implementation of the Information Collection Rule. Resources have been
allocated for drinking water technical support and MWD supports the
$1.7 million for this technical assistance.
drinking water--public water systems supervision program grants
EPA's fiscal year 1998 budget allocates $93.8 million for Public
Water Systems Supervision Program grants. This funding is necessary for
states to implement the 1996 Safe Drinking Water Act regulations.
STATE REVOLVING FUNDS
EPA's recently released ``Drinking Water Infrastructure Needs
Survey'' reported that the nation's community water systems estimate
they must invest over $138 billion in the next 20 years to ensure
delivery of safe drinking water. Of this amount, approximately $12
billion is needed to meet current Safe Drinking Water Act requirements.
Low-cost financing for projects which ensure safe drinking water
supplies is critical for protecting the health of the more than 240
million Americans served by public water systems. The 1996 SDWA made
available, for the first time, low-cost financing for drinking water
infrastructure and source water protection projects through a drinking
water State Revolving Fund (SDWA-SRF). The SDWA-SRF is also a source of
funding for source water assessment, administering state Public Water
Supply Supervision activities, development and implementation of
``capacity development'' programs and operator certification programs,
and for health effects research.
Adequate funding for all of these activities is essential, and MWD
strongly urges that you provide $1 billion for the SDWA-SRF, the amount
authorized by Congress for fiscal year 1998. This amount, while greater
than the amount requested in the President's budget, is still only a
small fraction of the funding needed by drinking water suppliers to
meet existing Safe Drinking Water Act requirements.
Significant investments are also needed to repair and replace aging
municipal wastewater infrastructure as well as to meet the needs of
future population growth. Low-cost financing is necessary to support
the estimated $137 billion of municipal water quality infrastructure
needs over the next 20 years as well as capital investments to protect
against nonpoint pollution sources. The President has requested $1.075
billion for fiscal year 1998 for the Clean Water Act State Revolving
Fund (CWA-SRF) to support such activities which are also vital for
ensuring protection of drinking water sources. MWD asks that you
support the President's budget request.
NONPOINT SOURCE GRANTS
Another critical source of funding for source water protection
projects is grants under the Clean Water Act's Section 319, Nonpoint
Source Program (NPS). NPS grants are particularly important for smaller
projects and projects where debt financing is unsuitable. Further, the
NPS grant program is necessary to support the many watershed management
activities fostered by the states. The President has included $100
million for NPS grants for fiscal year 1998, and MWD requests your
support of this funding.
Other EPA grant programs which help maintain or improve water
quality and need your support are the Section 106 Control Agency
Resource Supplemental Grants ($95.5 million), Wetlands Program
Development Grants ($15 million), and the Water Quality Cooperative
Agreements ($20 million). Your support for the President's fiscal year
1998 budget request for the above programs will ensure that EPA can
carry out its mission.
I would also urge your Subcommittee to support the funding request
contained in the Administration's fiscal year 1998 budget for the
Bureau of Reclamation for efforts aimed at restoring the Sacramento/San
Joaquin Bay-Delta Estuary in Northern California.
We look forward to working with you and your Subcommittee. Please
contact Brad Hiltscher, MWD's Legislative Representative in Washington,
D.C. at (202) 296-3551, if we can answer any questions or provide
additional information.
______
Prepared Statement of Rodney DeHan, Ground Water Manager, Florida
Department of Environmental Regulations and Ground Water Protection
Council
Mr. Chairman, my name is Rodney DeHan, I am the Ground Water
Manager for the Florida Dept. of Environmental Regulations and a Board
Member and President of the Ground Water Protection Council (GWPC).
This testimony is submitted on behalf of the member states of the
Ground Water Protection Council who together have primary enforcement
authority for over ninety percent of the approximate one and a half
million injection wells in the United States. Last year this Committee
provided $10.5 million to the state UIC regulatory agencies for their
continued operation and enforcement of the national underground
injection control programs and we'd like to thank you for that.
The national Underground Injection Control (UIC) program is
authorized in provisions of the Safe Drinking Water Act and its
Amendments. The administrative and enforcement responsibilities of this
program have been delegated to the states for this, the nation's
largest and most comprehensive ground water protection program.
Injection wells range in nature from very high-tech deep disposal wells
which inject hazardous and nonhazardous waste at depths from three to
twelve thousand feet underground, to simple dry wells which are used by
mom-and-pop service stations, family industries, small businesses,
farmers, and municipalities. Also included in the family of injection
wells are the approximately 175,000 wells used by the oil and gas
industry for salt water disposal and secondary recovery operations.
Each year these wells re-inject over a billion barrels of salt water
brought to the surface commingled with oil and gas production. Solution
mining wells used to recover salt, sulfur and other minerals are the
remaining type of injection well.
As regulatory programs, the Class I, or hazardous waste disposal
wells and Class II, salt water disposal wells, and Class III, solution
mining wells, are fairly mature. These types of wells have been used by
the respective industries for decades and because of the relatively
small number and the concurrent high technology being applied to their
operation, they pose less risk to ground water than do the well over
one million Class V, or shallow injection wells, some of which can be
found in every Congressional District of the United States. Yet, these
mature programs have worked only because of the state's ability to
inspect and monitor their operations. When properly sited and routinely
inspected these are among the safest means of liquid waste disposal
available. However, the continued future success of this process is in
increasing jeopardy if additional funds are not added to the UIC
program at the federal level.
With that in mind, I'd like to address the Class II well program
first.
Affecting approximately 32 oil producing states is the decline
which we are experiencing in the total production and price of oil. It
is typical that as oil production declines, the amount of produced salt
water increases. Every barrel of oil which is produced may be
accompanied by as many as 30 to 40 barrels of salt water. This salt
water is extracted from oil bearing strata and brought to the surface
along with the oil. It must then be carefully reinjected far below the
lower most underground source of drinking water. Failure to inject or
improper injection causes severe and lasting damage to the environment
and underground drinking water supplies.
With the decline in the price of petroleum and the increase in
environmental regulations many oil wells are no longer profitable and
have been shut down. This could be an even greater threat to ground
water since an inoperative well can still do serious damage to the
environment. Under law, well operators have two options. They must
either file for temporary abandonment or plug their wells and furnish
the appropriate regulatory agency with evidence that the well has
maintained its mechanical integrity. The majority of these wells are
not owned by major oil companies. Most are locally owned by small
business or are mom and pop operations. Either way, our workload at the
state regulatory agencies has dramatically increased and will continue
to do so. This is because we try to have a field inspector present to
observe mechanical integrity tests concerning operation of a well. In
cases of a temporary abandonment, our geologists and engineers must
carefully review and either approve or reject the evidence
demonstrating the mechanical integrity of a given well.
We have also been affected by increased federal reporting
requirements to the EPA and significantly more administrative paperwork
not to mention the federal budget crisis. The result has been that
while our workload and responsibilities have been substantially
increasing, our budget has been decreasing.
A second concern, of equal importance, is related to the Class V,
or shallow well program. Shallow wells are of simple construction,
compared to the other types, and are in daily use by families and small
businesses, farmers, small municipalities, and, unfortunately, also
pose a significant risk to the nation's ground water resources. We
believe many of these wells, acting as conduits, are allowing the
``mainlining'' of hazardous wastes commonly found in every day family
and manufacturing uses, directly into underground sources of drinking
water. The regulatory program for inventorying, inspecting, closing,
remediating, and monitoring these wells is new by comparison to the
other types of injection wells mentioned previously. As the state
regulatory agencies with the responsibility for implementing this
regulatory program, we are very concerned because these shallow
injection wells may pose the greatest risk of all known point sources
for contaminating ground water. We believe that by providing more, and
better trained state inspectors and enforcement officers, and more
extensive public education and outreach, the general public, who own
and operate, and whose own drinking water is affected by these simple
shallow wells, will comply with this regulatory program thereby
diminishing this substantial risk to local ground water supplies. What
the states lack, however, is enough money to do our job to the degree
you and we would like. As the front line agencies charged with running
this federal ground water protection program, states must have
additional resources to hire more inspectors and enforcement officers
to find these wells and to work with local city councils, planning
commissions, and water agencies, to inform them of the hazards
surrounding the use of these wells and suggesting to them best
management practices that can be used with these shallow injection
wells.
The goal of providing more effective enforcement and subsequently
promoting pollution prevention activities comes down to money. The
Underground Injection Control Program receives $10.5 million for the
operation of a program to regulate all four types of wells in every
state. The USEPA will propose stricter Class V well regulations, which
will add another layer to the already overburdened state agencies who
must enforce this federally mandated ground water protection program.
There is a way to enforce this program immediately and to pay for
it. If EPA was provided an additional $5.5 million next year for the
specific purpose of providing additional enforcement presence in each
state, there would be a positive impact in ground water protection.
Congress would have to mandate the specific use of these funds--to
require immediate direct enforcement through each state underground
injection control program. Nothing could relieve existing ground water
pollution threats more than this clearly defined use of additional
funds.
To obtain these pollution prevention funds, Congress might consider
shifting money from a pollution clean up program. Enhancement of the
shallow well program and more wellhead protection planning would
ultimately result in less money being needed in pollution clean up
programs. Proposals to spend more money on these other programs, with
no new funding for the enforcement of this pollution prevention
program, causes an imbalance in EPA enforcement efforts that was
probably unintended by both EPA and Congress. Simply as an example, if
funding for the UST program grew more slowly, the UST program would
still continue to grow as the financial capacity of small communities
expands to allow them to replace damaged tanks. However, if at the same
time the communities were to engage in locating and closing shallow
injection wells, much of which can be done with local staff and
resources already invested, they would be preventing future problems
from occurring in the first place.
In short, Congress should consider moving funding (or use funds
from cleanup programs) to balance the enforcement efforts for the
prevention of the disposal of pollutants into underground sources of
drinking water. In addition, this would be 100 percent available for
in-the-field enforcement activities. It is the first step in
eliminating them as a source of future pollution.
The level of federal assistance provided to the states for the
enforcement of federal UIC regulations has not increased as our
federally mandated responsibilities have grown. The federal funding was
$10.5 million last year and $10.5 million for the five years before
that.
All of the 23 Primacy States have reported current funding
shortfalls. The average shortfall for the States was over $350,000.
Funding shortfalls have impacted most areas of the Class II program.
The areas of field inspections and risk assessment were most commonly
impacted. Personnel shortages were mentioned by many states.
For the Class V program, a review of 1996 expenditures indicated
that the majority of states do not actively regulate all shallow
injection well types, but focus only on polluting wells due to the lack
of funding. This lack of attention to other high risk well types only
serves to hasten the day when they will be a clean-up problem.
In closing, we are requesting that the Congress consider an
additional $5.5 million funding in order to provide additional
enforcement support for the underground injection control programs in
each state. In addition, we would like to request an additional
$400,000 to sustain the Ground Water Protection Council's highly
successful education and training program used by the states which will
help them integrate their UIC program and wellhead protection planning
into the national ground water protection program. The beneficiaries of
this effort are our friends and neighbors who would be more
knowledgeable about, and more able to, protect their local ground water
supplies through their own efforts.
______
Letter From Nicholas A. DiPasquale, President, Solid Waste Management
Officials
Association of State and Territorial
Solid Waste Management Officials,
Washington, DC, April 4, 1997.
Hon. Christopher S. Bond,
Chairman, Subcommittee on VA, HUD and Independent Agencies
Appropriations,
U.S. Senate, Washington, DC.
Dear Senator Bond: It is the practice of the Association of State
and Territorial Solid Waste Management Officials (ASTSWMO) to provide
comment from the perspective of the State program managers of solid and
hazardous waste concerning the annual environmental budget proposed by
the U.S. Environmental Protection Agency (EPA). Your Appropriations
Subcommittee will soon conduct hearings regarding the EPA's fiscal year
1998 environmental budget proposal, and we know that you will move
swiftly to finalize your recommendations for the full Appropriations
Committee.
ASTSWMO is a nonprofit association whose members are the directors
of the State solid and hazardous waste regulatory programs. We believe
that our members, as practicing waste managers implementing State and
certain delegated federal program activities, have gained practical
insights into the operation of the statutes and regulations which make
up national policy for solid waste management and remediation programs.
Consequently, they are well positioned to advise the Subcommittee
regarding budgetary implications for those programs. We believe that as
State program implementers, we have a special responsibility to address
the budget for the national waste programs, and to share that
evaluation with your Subcommittee. We trust the Subcommittee will
recognize that our views are entirely bipartisan, representing the
professional opinions of State government managers who, like you, must
balance resources with genuine environmental needs. We have no special
interests other than to ensure that we can carry out effective,
environmentally sound programs in the manner prescribed by federal and
State statutes and regulations. We respectfully request that this
letter be made a part of the record of your Subcommittee's
consideration of EPA's fiscal year 1998 proposed program.
Your Subcommittee has a very strong track record in support of
sound State waste management programs and I would like to express our
continued appreciation for that support. We are especially grateful for
your recommendations in fiscal year 1997 which held State program
grants harmless from the turmoil of the EPA budget debate, and for the
substantial restoration made to the very important LUST appropriations
used by States to fund cleanups.
In this letter, we would like to address several of the waste-
related issues in the fiscal year 1998 budget, those affecting State
grant programs for hazardous waste and underground tank management, the
federal Superfund program and its relationship to State cleanup
programs, and the funding for the Leaking Underground Storage Tank
(LUST) program. These are critical elements of the national
environmental budget for our activities, and we want to share our views
with you.
STATE GRANT PROGRAM SUPPORT
The basic State hazardous waste program needs are provided for in
the categorical State grant programs which the Congress has wisely
compartmented into the new State and Tribal Assistance Grants account.
We urge the Subcommittee to continue its support of this important
account at least at the fiscal year 1998 levels proposed by the
Administration for hazardous waste assistance ($98,598,200) and
underground storage tanks regulation ($10,544,700). However, these are
virtually zero growth levels that do not account for greater reliance
being placed on State management of these programs. The increase of
only $300,000 in the hazardous waste assistance and no increase in the
tanks regulation grants are insufficient even to cover inflation losses
over the last year and will not contribute to any real improvement in
either of these program areas. We also support the modest levels of the
proposed pollution prevention grant funding ($5,999,500), but note that
these too reflect zero growth from fiscal year 1997. Additionally, we
are concerned that these grants continue to be focused on small
demonstration projects rather than on assisting the comprehensive
institutionalization of pollution prevention within States programs.
Looking at the whole of the waste prevention program grants, the static
levels hardly reflect the Administration's stated theme of enhanced
prevention of future remedial waste sites.
It's important that the Congress continues to understand that these
federal grant funds only supplement State program funding. Despite
greater and greater emphasis on devolution of more waste program
elements to States, these federal funds have not been increased for
some time, and the ability of States to provide any greater share of
support is minimal. Consequently, we cannot overemphasize the
importance of maintaining the proposed levels of funding for these
State waste programs as an absolute minimum. Realizing the difficulties
your Subcommittee faces in finding additional funding for any program
this year, we still would suggest that these prevention programs are
logical candidates for a modest increase over the proposed levels.
SUPPORTING FEDERAL PROGRAMS
Most States do not have the vast technical capacity available to
the federal government, and in many ways we are dependent upon the EPA
for technical assistance. For that reason, we would ask that the
Subcommittee be selective in its directions and appropriations to that
Agency as you address the internal Agency budget for such areas as
general funding support for science and technology, hazardous waste,
solid waste, underground tanks, pollution prevention, and CERCLA and
LUST cleanup program offices. When these office appropriations are cut
without guidance to continue support for States, the State programs
dependent upon technical assistance from EPA effectively lose resources
as well. We recognize the need to make the federal government more
efficient and to economize, but we would caution that the indirect
effects upon States need to be carefully considered by the Congress as
it downsizes federal programs.
TRUST FUND SUPPORT FOR BOTH NATIONAL AND STATE CLEANUPS
Many observers consider the CERCLA or Superfund program to be an
entirely federal effort, but to those directly involved with the
implementation of the program, it is apparent that States are
substantially involved in the decisions and execution of these
cleanups. States are required to make a match of ten percent of
remedial action costs borne by the trust fund, and they are heavily
involved in site-specific decisions in those cases. The Congress
recognized the necessity for meaningful State involvement in the CERCLA
decision making process and codified requirements at Section 121(f) of
the statute. However, the capacity to provide such meaningful State
involvement does require State resources. EPA has responded by
supporting basic State program structure through very modest levels of
CORE grants, and by funding assistance through cooperative agreements
for the development of State capabilities for the conduct of some
program elements such as preremedial investigations and emergency
response. State cleanup programs are very interactive with federal
Superfund activities and, as a result, State waste managers are
generally supportive of EPA's Superfund program requests for CERCLA
cleanups.
We are supportive of this year's goal for the Hazardous Substance
Response Trust Fund (or Superfund) of accelerating the site cleanup and
completion rates. The NPL pipeline is now full with a backlog of sites
awaiting cleanup funding, and we agree that with continued improvements
and efficiencies, we should expect greater progress in cleanup
completions. However, to be quite frank, we don't know whether there is
enough pending work for the full $700,000,000 in additional funds
requested in fiscal year 1998, nor that the infrastructure exists to
spend it effectively. While we could support a significant increase in
Superfund appropriations in fiscal year 1998 if the funds can be
constructively used for cleanup activities and properly coordinated
with States, we still remain concerned that we would be increasing the
spend-down of the trust fund at a time when there are no new revenues
restoring that fund. We are worried that this could create a crisis
situation in the reauthorization process if the fund revenues are not
restored before legislative reform.
Should Congress, after a thorough review of EPA's planning for the
additional $650 in NPL cleanup activities, see its way clear to
increasing Superfund cleanup appropriations in fiscal year 1998, we
strongly recommend that it be conditioned upon early and complete
consultation with States, and require careful cooperation with State
managers in order to improve the efficiency and applicability of
cleanup decision-making. States must agree with the work schedules to
maintain meaningful involvement of scarce State technical resources in
the process, and to be able to meet their cost share of any additional
fund-financed cleanups. We also believe enhanced State involvement will
contribute positively to remedy selection decisions, and add to the
efficiency and cost effectiveness of the cleanups.
The final point we would like to address is the fiscal year 1998
appropriations level for the Leaking Underground Storage Tank (LUST)
program. The Congress made a remarkable difference last year when it
increased the funding level for fiscal year 1997 to $60,000,000, up 25
percent from the inadequate fiscal year 1996 level of $45,000,000. Yet,
this program was funded in fiscal year 1995 at a level of $69,914,000,
and we believe that was a more accurate reflection of need. This year,
the Administration has recommended a level of $71,210,700 for fiscal
year 1998, and we strongly urge the Subcommittee to support that level.
You may wonder why we would focus so heavily on this waste program
area, as it is not the largest, nor the most central to our overall
membership. That is simply because we think it is the single waste
program most vulnerable to failure if it is inadequately funded over
time. This program will be around for a long time, and the mistaken
impression given a few years ago that EPA was going out of the LUST
cleanup business is simply wrong. A vast inventory remains to be
addressed. Our understanding of the available data is that of an
estimated 317,488 tanks with confirmed releases, the cumulative
cleanups through fiscal year 1996 of 152,683 still leaves us with
164,805 tanks to be cleaned up. Consequently, it is obvious that there
are more than a few years work remaining to be done, even if no more
leaking tanks were confirmed. Leaking underground storage tanks
represent one of the major sources of ground water contamination in the
country, and this cleanup program is one that has resulted in direct
and immediate environmental results.
We are tracking the ongoing upgrade tanks program and conclude that
only 29.7 percent of the existing, active underground tanks now meet
the 1998 technical compliance standards. That means a great deal of
upgrading work remains to be done. Because a major source of LUST
cleanup candidates comes from the universe of tanks being uncovered for
upgrade to technical compliance, we think this means that a great deal
of remediation work remains undiscovered. As those older tanks are
uncovered and upgraded, it is our experience that many more releases
will be discovered and added to the LUST funded inventory for cleanup.
It also means there is a great deal of regulatory compliance work ahead
for State programs.
Individual State tank cleanup funds simply cannot complete this
cleanup task unaided by the federal government. EPA has estimated that
on average, at least 85 percent of the total LUST appropriation is
provided directly to States under cooperative agreements. Many States
use this source of federal funds to provide technical oversight of
responsible party cleanups, and this is accomplished by skilled,
qualified State employees. Many States still have not recovered from
the 34 percent reduction in LUST funding in fiscal year 1996, and are
struggling to maintain their current cleanup progress. To maintain our
level of effort and achieve a little gain in this uphill cleanup
effort, States need the additional $11,210,700 this year's Presidential
budget proposes. This is not a case where we question the ability to
use the additional funds for cleanup. We know the work is there, and
the State infrastructure exists to spend it wisely and efficiently.
In closing we thank you for your consideration of our views and for
your past support of waste program efforts. Your Subcommittee has been
the key to adequate funding in the difficult budget years just past and
we have great confidence that you will be central to a successful
outcome for the fiscal year 1998 process as well. We are ready at any
time to assist your staff in exploring our proposals in greater detail,
and would welcome their inquiries. Should you consider it useful to the
Subcommittee, we would volunteer to testify on any aspect of our
program knowledge as you proceed with the difficult task of evaluating
national needs and making the hard choices that lie ahead. Please
contact ASTSWMO's Executive Director, Thomas Kennedy, at telephone
number (202) 624-5828 or fax number (202) 624-7875 for any further
information or assistance.
We hope that our information will constructively assist you in that
task. Thank you for your past support of waste program efforts, and for
your consideration of these recommendations.
Sincerely,
Nicholas A. DiPasquale,
President, ASTSWMO.
______
Prepared Statement of the City of Miami Beach, FL
Mr. Chairman and Members of the Subcommittee: The City of Miami
Beach would first like to thank the subcommittee for all its diligent
efforts throughout the past to assist local governments in need. Now,
as you begin the long and tedious process of crafting the fiscal year
1998 VA, HUD and Independent Agencies Appropriations Bill, the City of
Miami Beach would like to request the subcommittees assistance with
regards to two important initiatives.
The first project for which the City is seeking assistance is the
Coastal Erosion Prevention Initiative. The City of Miami Beach, being
entirely located on a barrier island, is surrounded by beaches on one
side and canals on the other. This situation makes erosion control one
of the most important issues for the City as well as the State of
Florida, and one that desperately needs addressing.
The City of Miami Beach has approximately 39 miles of waterfront
properties with seawalls. The seawalls act as a barrier which protects
properties from tidal action. Loss of seawalls can result in loss of
property and pose a danger to waterway navigation. Individual property
owners are responsible for the maintenance and repair of seawalls, but
the City is required by law to protect property and life and,
therefore, maintains the responsibility for ensuring that the seawalls
are adequately repaired or replaced.
The existing situation with regards to the City's seawalls is that
they are in extreme disrepair. Years of marine traffic and harsh
weather have left a system of seawalls which are crumbling or washed
out, and these damaged seawalls are having a direct and damaging effect
on property owners, as well as the roadways and bridges that connect
the City to the mainland. In addition to the damage that lies below the
waterline, the tops of these seawalls have been eroded by wind and
rain, providing an unattractive and potentially dangerous situation for
both residents and tourists.
As a result of this situation, the City of Miami Beach has
developed a proposal to reconstruct the public seawalls in a way that
will make them more durable, while at the same time making them more
aesthetically pleasing and environmentally friendly. The proposed
project would cut off the existing seawalls at the water line, leaving
the underwater wall intact--replacing the wall in areas where the
underwater wall is damaged or compromised. At the water line, large
boulders would then be brought in and placed along the waterline with
additional boulders being stacked at a 45 degree angle to a level
comparable with the top of the previous seawall. These boulders will
provide the same erosion control as the former wall, but with much less
potential to fail after years of use. The City will plant native
coastal species along the edge of the breakwater to stabilize reinforce
and protect the shoreline. Once this ``living seawall'' is in place the
City plans to complete the project with the installation of an
interpretive trail/bikepath and other access improvement to creating a
much more effective erosion control device and urban wetland preserve
and waterfront park for public enjoyment.
The second part of the Coastal Erosion Prevention Initiative
centers around the beachfront coastline of Miami Beach. As you may
know, beaches are Florida's number one tourist attraction, as well as
being a vital front line defense for our multi-billion dollar coastal
infrastructure. Wind, storms and at times hurricanes do great damage to
the vegetation and coastal forests that shield the adjacent structures,
and once these trees and plants are gone, sand freely blows inland
causing damage to other delicate ecosystems located further in from the
beach. The City of Miami Beach, in order to prevent further ecological
damage, proposes the restoration of specific coastal species of grasses
and trees to assist in providing an anchor for existing dunes and sand
on the beach.
The City of Miami Beach requests $1.5 million from the subcommittee
to begin construction of the first part of the project which would
create the ``living seawall'' and to implement a study with regards to
the reintroduction of native plant species on the City's beaches. Any
assistance the subcommittee could provide would be greatly appreciated
by the residents of Miami Beach, in addition to the many tourists who
visit the City each year.
This brings us to the next item, Miami Beach's water and sewer
system, for which the city seeks assistance.
DESCRIPTION OF THE EXISTING WATER SYSTEM
The City of Miami Beach owns, operates and maintains the potable
water system serving customers within the corporate limits. The potable
water facilities include a water distribution system extending
throughout the city, five existing water booster pump stations, and
four welded steel ground storage tanks. A sixth water booster pump
station is planned for location on the MacArthur Causeway at Terminal
Island. Two elevated water storage tanks are located in the south area
of the City; however, both have been removed from service and at this
time there are no plans for future use of these tanks. The city's
potable water is supplied exclusively by the Miami-Dade Water and Sewer
Department (WASD), the department of the County that oversees operation
of the County's water and sewer system.
Because the City of Miami Beach is a coastal barrier island
surrounded by salt water, it was not practical or economical to develop
its own water supply system. The least costly and highest quality water
comes from the Biscayne Aquifer water supply wells located on the
mainland and owned and operated by the County. The city maintains four
large diameter metered supply interconnections with the County's
distribution system.
Previously, the potable water supply for many of the neighboring
municipalities passed through the City's distribution system. In 1989
all of these municipalities, with the exception of one, were
disconnected from the City's distribution system. The disconnection of
this last municipality is presently being completed.
The water distribution system has approximately 157 miles of water
mains ranging from 6 inches to 36 inches in diameter. The water
distribution system currently serves approximately 11,123 retail
customers. The water distribution system serves 958 fire hydrants and
622 fire lines, and has 23,000 valves of various sizes. The system has
11,415 service connections.
Total water consumption in fiscal year 1994 was in excess of 24
m.g.d.
DESCRIPTION OF THE EXISTING WASTEWATER SYSTEM
The City owns, operates and maintains the wastewater collection and
transmission system serving customers within the corporate limits. All
land usage must connect to the sanitary sewer system as a matter of
City policy, and there are no septic tanks in operation within the
City. The system consists of 152 miles of lines, including both gravity
sewers and pressurized force mains, and 23 wastewater pump stations.
The wastewater system currently serves approximately 9,636 retail
customers.
All wastewater generated within the City is sent to the WASD
Central District wastewater treatment plant on Virginia Key for
treatment and disposal. The 54-inch force main which conveys the
wastewater to the plant is a subaqueous force main running from South
Pointe under Government Cut to Virginia Key. This force main is owned
and maintained by WASD. The County's wastewater collection,
transmission and treatment system is divided into three districts
referred to as the North, Central and South Districts, each served by
its own wastewater treatment plant. In addition to Miami Beach, the
Central District plant treats wastewater from the City of Miami as well
as other communities and unincorporated areas within the Central
District. The wastewater transmission system has the capability to
transfer limited quantities of wastewater flows between districts.
FIVE-YEAR CAPITAL IMPROVEMENT PROGRAM
The City is preparing a Five-Year Capital Improvement Program
containing those projects needed in order to replace and upgrade
components of the Water and Sewer Utility and to provide for the
demands to be placed upon the Water and Sewer Utility by projected
growth. In connection with the water system portion of the Five-Year
Capital Improvement Program, all four of the Water and Sewer Utility's
existing storage tanks will be replaced, all five of the existing water
booster pump stations will be renovated and upgraded and most of the
water mains throughout the System will be either cleaned and lined or
replaced and/or extended.
The wastewater components of the Five-Year Capital Improvement
Program emphasize: (1) Improvements to the wastewater pump stations,
and (2) improvements to the gravity collection system to reduce the
amount of infiltration and inflow into the wastewater system.
The cost of the projects included within the Five-Year Capital
Improvement Program is estimated at $105,208,000. The City expects to
fund these improvements on a cash flow basis primarily from the
proceeds of Series 1995 bonds and parity Bonds which are anticipated to
be issued this year. This method of funding will provide most of the
needed capital, but Federal assistance is still necessary to complete
these much needed improvements. Therefore, the City of Miami Beach
requests a 90 percent to 10 percent local/Federal split in order to
ensure that the City meets its goal.
______
Prepared Statement of Raymond J. Campion, Ph.D., President, Mickey
Leland National Urban Air Toxics Research Center
SUMMARY
Legislative Authorization.--Clean Air Act Amendments of 1990 (Title
III, Sec. 301).
Mission.--Study the health effects of the 189 air toxics designated
in the Clean Air Act, via sound, peer-reviewed health and environmental
research designed to address regulatory needs. Current emphasis is on
the assessment of actual human exposures to air toxics.
Current Funding.--$1.15 million via EPA fiscal year 1997 Assistance
Grant (not yet received from EPA).
Current Request.--$2.0 million via EPA in fiscal year 1998
(additional private sector funding anticipated).
Research Projects.--1. Human exposures to gaseous air toxics in the
outdoor, indoor and personal environments in a major NUATRC field
study.
2. Participation in CDC's National Health and Nutrition Examination
Survey (NHANES) via personal exposure assessments on NHANES subjects.
3. Feasibility studies on human exposure research involving air
toxic metals
4. Initiation of acute human health effects research, with the
emphasis on effects on the human respiratory and immune systems.
STATEMENT
Mr. Chairman, and Members of the Subcommittee, thank you for the
opportunity to provide this written testimony on behalf of The Mickey
Leland National Urban Air Toxics Research Center (NUATRC). My name is
Dr. Raymond J. Campion, and I am the President of the Leland Center.
The Leland Center was established under Title III, Section 301 of
the Clean Air Act Amendments of 1990 as a non-profit, public/private
research entity, with the expectation that the Center would help
develop new multidisciplinary scientific approaches to assessing the
potential public health risks from exposure to air toxics, and to
provide sound scientific data useful in prioritizing these risks. In
brief, the Law mandates installation of Maximum Achievable Control
Technology (MACT) on major industrial sources of the 189 compounds
listed in the Act as air toxics or hazardous air pollutants. EPA must
then determine, over a 8-9 year time frame, the residual health risks
still present to the American public from these materials.
The NUATRC has been operational for about four years, having
received an initial EPA assistance award in February, 1993. Private
sector funding has also been obtained, primarily from national
industrial firms, over a similar period. The Leland Center has used
these monies to develop a small staff, utilizing an administrative
service agreement with The University of Texas-Houston Health Science
Center. This arrangement allows the Center to take advantage of the
scientific synergies created by this relationship with The University
of Texas and the Texas Medical Center, as directed in the authorization
language. The Leland Center began its research program in 1993 with a
contractual assessment of the possible impact of air toxics in urban
atmospheres on asthma. The Center sponsored a nationally-attended
workshop on the potential effects of air toxics on asthma in early
1994. The results of this work have been published in the scientific
literature and have received a positive reception in the health
research community, including EPA scientists.
In this testimony, we will address the strategic research
directions being pursued by the Center, in order to meet our
Congressional charge in a cost-effective and scientifically-sound
manner. We have defined several ``niche'' research areas in which the
Center is involved. As a small and relatively new entity, we believe it
is important to concentrate our limited resources in research areas
that provide the greatest potential payout in terms of environmental
and public health advances. These ``niche'' areas of concentration are:
human exposure assessment in the indoor and outdoor environment; and
characterization of acute health effects from air toxics exposures,
primarily associated with the respiratory and immune systems.
STRATEGIC RESEARCH DIRECTIONS
The National Urban Air Toxics Research Center has made continuous
progress over the past three years in addressing the Congressional
charge to carry out a well-designed and focused research program on air
toxics health effects. The NUATRC has profited significantly from the
advice and counsel of our Board of Directors, appointed by Congress and
the President, and from the research direction of the NUATRC Scientific
Advisory Panel. The Panel, drawn from nationally-prominent academic and
private sector scientists, has defined a prioritized research course
that recognizes the major needs in air toxics research as well as the
limited ability of organizations like NUATRC to address all of those
needs. A major component of our activity is to reach out and involve
other national scientific resources in leveraged efforts to most
efficiently and collegially carry out these investigations. Through
national workshops and symposia, with publication in the peer-reviewed
literature of the findings of these sessions, we have interacted with
the Centers for Disease Control via their National Center for Health
Statistics, the National Institute for Environmental Health Science,
the Health Effects Institute and the Environmental Protection Agency to
assure that our research directions are complementary to these larger
organizations.
The NUATRC has developed a Strategic Research Plan which outlines
current research plans through the year 2001. This Plan undergoes
biannual review by the NUATRC's Scientific Advisory Panel as well as
review by the EPA's Office of Research and Development. This latter
step is important in forging better scientific ties with EPA so that
NUATRC research is complementary to that of EPA in the air toxics area
and also to provide a better understanding of NUATRC's directions to
EPA before implementation.
HUMAN EXPOSURE ASSESSMENT
We can report to you a significant research result from our two-
year feasibility study on personal exposure assessment technology
development. Research scientists at The University of Texas have just
completed this study, which we funded in 1995-96, which has
demonstrated two important findings:
(1) that simple inexpensive `passive' dosimeters can be used in
urban population field studies to assess actual human exposures to
specific air toxics such as benzene and toluene.
(2) that the relative importance of indoor, outdoor and personal
exposures can be assessed under a variety of behavioral conditions, to
allow the data obtained to be well characterized in terms of
experimental variables such as temperature, humidity and concentration.
A major NUATRC research study will be initiated this summer to
assess the levels of personal, indoor and outdoor exposures to a
selected list of gaseous air toxics in major urban areas. Currently,
nine proposals to do this work are being reviewed by the scientific
community and the NUATRC plans to select a laboratory to conduct this
study in early June. This work is expected to take three years to
complete, and will cost approximately $500,000 per year. It also
represents the most promising approach to apportioning the
contributions of various air toxics sources to actual human exposure
and as such will be critically important to risk assessment and risk
management decisions.
Related but independent of this effort will be a NUATRC initiative
to participate in the CDC's National Health and Nutrition Examination
Survey (NHANES). The Center has been negotiating with CDC/National
Center for Health Statistics to measure the personal exposures of a
subset of NHANES participants to provide the first indications of the
influence of environmental factors on this national health survey. We
would be using similar technology to that used in the above referenced
NUATRC study, but the value of the data would be enhanced by the
statistical power of the NHANES study. In essence, the NUATRC would
support this additional work in the NHANES program, and would have
rapid access to the exposure data for use in risk assessments. NUATRC
is committing $150,000 annually to this effort. We have also been made
aware of the interest of the NIEHS in this cooperative work with CDC,
which hopefully will lead to enhanced interactions with this agency.
The Strategic Research Plan also calls for NUATRC to begin
investigations of the feasibility of applying the passive dosimeter
technology cited above to the studies of air toxic metals. This is
similar to our approach of first assessing the feasibility of gaseous
toxics personal exposures that has led to the above studies.
AIR TOXICS HEALTH EFFECTS
As indicated earlier, the second priority research area for the
NUATRC is that related to the health effects associated with air
toxics, but particularly those effects of an acute nature dealing with
the human respiratory and/or immune systems. The Scientific Advisory
Panel elected to focus the NUATRC attention in that area, as
considerable work is already underway on cancer effects and the nation
seems to be experiencing increasing incidences of respiratory problems
such as asthma among inner city children. This research topic will
require careful development as these effects are very difficult to
establish with certainty, but we believe the science is progressing to
the point that better exposure information will provide direction to
the types of health research needed and the most promising approaches
to completing that research.
SMALL GRANTS PROGRAM
Based on the need to involve the community in air toxics health
risk issues, the NUATRC plans to start a small research grants program,
wherein young and minority investigators could compete for limited
funding that could allow more focused research approaches. This program
should result in a greater degree of involvement by the local community
and thus a greater sense of empowerment in these studies. We could also
anticipate the development of better scientific resources in smaller,
community-oriented institutions. These studies would be subject to the
same rigorous peer-review and quality control requirements as the
broader-scope national programs receive. For example, local hospital
registries could be coupled with ambient environmental data to
determine whether relationships between environmental and health data
exist. This area of small grants or pilot studies offers us the
opportunity to tap a reservoir of scientific talent that may be
underutilized and which may also provide an improved sense of
participation on the part of local community leaders.
APPROPRIATIONS REQUEST
The Mickey Leland National Urban Air Toxics Research Center
respectfully requests a fiscal year 1998 Appropriation of $2.0 million.
The studies described above, some of which are continuing efforts from
the fiscal year 1997 research program, can be estimated as follows:
Human personal exposure....................................... $500,000
Participation in NHANES....................................... 180,000
Toxic metals exposure studies................................. 300,000
Metals methodology development................................ 300,000
Small grants program.......................................... 250,000
Risk assessment symposium..................................... 50,000
Administrative................................................ 420,000
--------------------------------------------------------------
____________________________________________________
Total................................................... 2,000,000
NUATRC MANAGEMENT
As mentioned at the outset, the NUATRC is led by a nine-member
Board of Directors, composed of leading academics, regulatory and
private sector executives, all of whom are fully conversant with the
air toxics environmental health research issues. The Board has been
active in overseeing and directing the activities of the Scientific
Advisory Panel (SAP), which is evolving into a cohesive, effective and
independent research advisory group. The SAP numbers scientists and
physicians from Harvard, the Universities of Minnesota, Pittsburgh and
Washington, Brigham Young University, the Baylor College of Medicine,
the U.S. Environmental Protection Agency, and private companies,
including DuPont, Exxon, ICF Kaiser and Union Carbide. These thirteen
scientists bring different areas of scientific expertise to the table,
allowing a broad range of input to our research program. A number of
these scientists are currently participating in the national debate on
the ozone and fine particulate air quality standards, but it must be
understood that the NUATRC does not have a position on the need for or
the level of these proposed new standards, only that well-designed
research is necessary to address these questions and related questions
about air toxics.
FUNDING
NUATRC has relied on Congressional appropriations and support from
the private sector. NUATRC continues to expand its support base with
the addition of private sector partners. Thirteen major U.S. firms are
current contributors to the NUATRC research program. They include
Ashland Chemical, DuPont, Exxon, FMC Corporation, Goodyear Tire and
Rubber Company, Houston Industries, Mobil Oil, Rohm and Haas Company,
Shell, Sun Company, Texaco, Texas Eastman and Union Carbide. Corporate
contributions have risen in each of the last three years, and represent
approximately 30 percent the Congressional authorization for fiscal
year 1996. An intensive development effort is planned in 1997 to
further increase this portion in light of increased federal support.
CONCLUSION
We are most appreciative of the support we have received from the
U.S. Congress. We believe that NUATRC is progressing in the manner
anticipated by Congress, and is poised to make a significant
contribution to the science underlying air toxics health effects.
We continue to experience considerable delays in accessing
Congressionally-appropriated monies through the Office of Research and
Development of the Environmental Protection Agency. While fiscal year
1996 was indeed an unusual federal budget year, we believe that
receiving the authority to access these monies some fourteen months
after application (November, 1995 to January, 1997) represents an undue
delay. We continue to stress our need for prompt action with EPA, since
our research program cannot be continued with certainty until access to
the Congressional appropriation is assured. This has slowed our
research efforts considerably in 1996. In addition, EPA established a
starting date for the fiscal year 1996 award of September, 1996, one
month prior to the end of that fiscal year. This is causing the NUATRC
considerable difficulty in paying expenses incurred during 1996 in
anticipation of EPA release of these appropriated funds. We are
continuing to negotiate with EPA to move this starting date to an
earlier time in that fiscal year.
We are hopeful that our recent interactive efforts with EPA/ORD
officials, and the addition of EPA scientists to our Scientific
Advisory Panel will facilitate more timely receipt of these
appropriated funds. Thank you for your attention to this request.
______
Prepared Statement of the State and Territorial Air Pollution Program
Administrators and the Association of Local Air Pollution Control
Officials
The State and Territorial Air Pollution Program Administrators
(STAPPA) and the Association of Local Air Pollution Control Officials
(ALAPCO) appreciate this opportunity to provide testimony regarding the
fiscal year 1998 proposed budget for the U.S. Environmental Protection
Agency, particularly regarding grants to state and local air pollution
control agencies under Section 105 of the Clean Air Act. The
President's request calls for an increase of $4 million for state and
local air grants in fiscal year 1998, totaling approximately $157.2
million. While STAPPA and ALAPCO are pleased that the President's
budget acknowledges the need for additional funds, we believe this
increase is totally inadequate to support the many critical activities
state and local air agencies must carry out to implement the federal
Clean Air Act. Therefore, we recommend that these grants be increased
by at least $20 million over the President's request, raising the total
to $177.2 million. Although such an increase would not nearly address
our resource shortfalls, it would at least restore the approximately
$27 million in reductions that grants to state and local air agencies
have suffered since fiscal year 1995.
STAPPA and ALAPCO are the national associations of state and local
air pollution control agencies in the 54 states and territories and
over 150 major metropolitan areas across the nation. Under the Clean
Air Act, state and local air quality officials have the primary
responsibility for ensuring healthful air quality for our citizens.
These agencies must carry out a host of activities to implement
federal, state and local clean air requirements. This includes programs
to address smog, particulate matter, toxic air pollution, acid rain and
other types of air pollutants, some of which cause significant adverse
health effects, including cancer, severe respiratory ailments and
premature death. Air agencies must address new initiatives that focus
on emerging problems, as well as carry out the core elements of our
programs, which serve as the backbone of our nation's clean air effort.
the air pollution problem is severe
Air pollution poses the most widespread environmental risk to
public health. In fact, studies have shown that the adverse health
risks from air pollution far exceed those posed by other environmental
media. Among the most critical air quality risks to the public are
caused by, among others:
--Particulate matter.--This problem is responsible for tens of
thousands of premature deaths annually (according to various
scientific studies).
--Hazardous air pollution.--These emissions cause cancer,
reproductive disorders, birth defects and damage to the nervous
system.
--Ozone.--Smog (ground-level ozone) causes lung damage and impaired
breathing for approximately 50 million people in urban areas
and $1-2 billion in lost crop yield across the United States
annually.
--Regional haze.--Air pollution causes significant visibility
problems in national parks as well as urban areas throughout
the country.
federal grants have decreased
Notwithstanding the severe health and environmental problems caused
by air pollution, and the fact that Section 105 funds were never
adequate to support all the demands of the Clean Air Act, federal
grants that fund state and local air pollution control programs have
been cut significantly over the past few years. Since fiscal year 1995,
while our workload has increased substantially, funds under Section 105
of the Clean Air Act have decreased by approximately $27 million. Below
is a graph illustrating the funding cuts that state and local agencies
have experienced over the past few years.
[GRAPHIC] [TIFF OMITTED] T05MY131.000
STATE AND LOCAL AGENCIES HAVE TRIMMED FAT AND MAXIMIZED EFFICIENCIES
During this period, state and local air agencies have done what
they could to accommodate some of these cuts. Specifically, we have
maximized any opportunities to work more efficiently, trimmed any fat
from our budgets, disinvested programs that were not essential and
raised revenue on the state and local level. For example, in areas
where air quality has improved, state and local agencies have reduced
the number of monitors (e.g., lead monitors); when it saves resources,
some agencies have employed contractors for activities related to
permitting and monitoring; and agencies have increased the efficiency
of the permit process by issuing categorical permits, allowing
registration of sources, rather than requiring permits and relying on
electronic permit application and issuance to reduce the amount of
paperwork.
Notwithstanding our efforts, grant reductions have caused existing
air programs to suffer, hurting essential programs and activities.
Among the effects at the state and local levels have been reduced
staff, decreased enforcement, curtailed monitoring, decreased emission
inventory work, reduced rule development and decreased public
education.
PERMIT FEES ARE NOT THE ANSWER
State and local air quality agencies receive funding for their
programs from a variety of sources, including federal grants, state and
local appropriations, state and local permit and emissions fees and the
federal permit fee program under Title V of the Clean Air Act, which
requires the collection of fees from major sources to cover the costs
of the permit program. While the permit fees collected pursuant to
Title V are essential to our efforts, they do not solve our funding
problems for several reasons.
First, Title V fees may only support the operating permit program
and cannot be used for other activities. Second, the fee program only
applies to major sources, while most permits are issued for non-major
sources, which do not pay Title V fees. The issuance of minor source
permits is quite resource intensive. Finally, increases in costs for
air quality programs (except for permit programs themselves) are not
addressed by permit fee programs.
In other words, federal grants and permit fees support separate
activities and can not be mingled. Even if fees are adequate for major
source permit programs, which they may not be in many cases, the funds
are not available for the other elements of air quality programs.
THE WORKLOAD IS INCREASING
New efforts to address air pollution are being added to our
programs each year. In fact, EPA has proposed revisions to the National
Ambient Air Quality Standards (NAAQS) for particulate matter and ozone,
which are critical efforts that will necessitate additional resources.
The agency estimates the benefits and costs of the revised particulate
matter standard to be in the billions of dollars, with industry
expected to spend tens of millions of dollars to comply with these
standards. Yet, the proposed increase in grants for state and local air
quality agencies for all aspects of their programs, not just
particulate matter, is only $4 million. How will state and local air
agencies, who must implement the air pollution program, succeed with an
increase in grants of only $4 million?
Just as an example, one activity related to the new standards will
be additional monitoring for fine particulate matter
(PMfine), which state and local agencies will need to begin
very soon. EPA has proposed to set aside only $10.9 million for this
activity in fiscal year 1998. However, far more than that will be
necessary: estimates of needs reach $40 million in fiscal year 1998 for
PMfine monitoring, including start-up and operating costs.
Texas has estimated that it will require $1.34 million in fiscal year
1998 for PMfine monitoring alone (including capital, staff
and operating expenses). Yet EPA has only proposed to allocate $1.2
million to the entire region (including five states and several local
agencies) for PMfine monitoring equipment. The state of
Washington estimates PMfine monitoring needs of $1.2 million
in fiscal year 1998. Again, EPA proposed to allocate only $1.2 million
to the region (including three states and several local agencies) for
PMfine monitoring equipment.
To further compound the problem, while EPA has proposed to set
aside $10.9 million for PMfine monitoring, the President's
proposed increase for air grants is only $4 million. Therefore, EPA
plans to obtain the balance by reprogramming grants from other programs
that are still requirements and that are already struggling
financially. For example, monitors for ozone and larger particulates
(PM10) will still be needed, even under EPA's proposed NAAQS
revisions, yet funds for these programs may be redirected to pay for
new PMfine monitors. In addition, areas are required not
only to attain the NAAQS but to maintain them as well. EPA's strategy
for reprogramming, therefore, will provide insufficient funding not
only for PMfine monitoring, but for other, critical
programs, including ozone, PM10 and air toxics.
WHAT A RESTORATION IN GRANT FUNDS COULD ACCOMPLISH
With an increase of $20 million over the President's fiscal year
1998 request, the cuts of recent years to state and local air grants
would be partially restored. With these additional resources, state and
local air agencies could focus more on critical activities, such as
monitoring pollutants to satisfy existing and upcoming standards, data
gathering and analysis, enforcement and rule development. Specifically,
state and local agencies could accomplish the following:
Collecting Good Information
It is essential that state and local air agencies collect good data
through monitoring. This information is critical for developing
emission reduction strategies and assessing progress (e.g., under the
Government Performance and Results Act). As we noted above,
significantly more resources are necessary for monitoring fine
particulate matter--approximately $40 million will be needed nationally
in fiscal year 1998, while EPA has allocated only $10.9 million.
Approximately $10 million above EPA's request is needed for monitoring
ozone and hazardous air pollutants. Finally, the current program for
visibility and regional haze focuses on areas around national parks
(for visibility). However, regional haze concerns call for more
widespread monitoring, which would involve state and local agencies.
Small Businesses and Minor Sources
State and local air pollution control programs affect many small
businesses and minor sources in order to obtain needed emission
reductions. These types of sources are quite numerous and have special
needs that should be addressed. The EPA budget proposal does not
include additional funding specifically to address minor sources.
However, permitting and inspecting smaller sources and addressing their
special needs is a tremendous resource burden on state and local air
agencies. Typically, these sources do not pay Title V fees.
Additional resources are needed for all aspects of compliance
assistance and enforcement, but this is especially true as it relates
to small businesses. These sources need outreach and education
programs, as well as compliance assistance, specially tailored for
smaller businesses.
State and local air agencies must implement all of the federal
standards EPA develops to limit emissions of hazardous air pollutants--
there should be standards for 174 source categories by 2000. These
categories include numerous smaller sources, such as dry cleaners and
chromium electroplaters, that may not be part of the Title V program
(thus not paying Title V fees to support the program).
Other
Mobile sources contribute significantly to emissions of particulate
matter, smog precursors, carbon monoxide and toxic air pollutants.
Additional funding is needed for state and local agencies to address
these problems. (Mobile sources are not subject to Title V fees.)
Efforts requiring additional funding include (1) program evaluation and
data gathering, including the evaluation of the effectiveness of
inspection and maintenance programs, (2) transportation-related
programs, and (3) enforcement of oxygenated fuels programs, low-Reid
Vapor Pressure requirements and Stage 2 Vapor recovery. In addition, as
with small businesses, considerable outreach and education will be
essential to gain public support for and compliance with necessary
transportation control measures.
It can be very efficient and cost-effective to address pollution on
a multi-media basis. Grants of approximately $10 million could be used
for state and local agencies to carry out multi-media initiatives and
encourage them within industry.
CONCLUSION
STAPPA and ALAPCO urge that Congress increase federal grants for
state and local air pollution control agencies under EPA's budget by at
least $20 million over the President's request, bringing the total to
$177.2 million. While this increase will not adequately address our
resource shortfall, it will at least restore the substantial funding
cuts state and local agencies have incurred over the past few years. In
addition, STAPPA and ALAPCO are currently working to assess state and
local funding needs for fiscal year 1999 and beyond. Preliminary
estimates reveal that state and local agencies also will need
substantial increases beyond fiscal year 1998.
We thank you for this opportunity to provide our recommendations on
the fiscal year 1998 budget for air grants to state and local agencies.
We will be happy to answer any questions you have.
______
Prepared Statement of Julius Ciaccia, Jr., President, Association of
Metropolitan Water Agencies
INTRODUCTION
The Association of Metropolitan Water Agencies (AMWA) is a non-
profit organization composed of the nation's largest, publicly-owned
and municipal drinking water suppliers. Member agencies are represented
by their directors and managers and supply clean, safe drinking water
to nearly 100 million Americans.
AMWA member agencies are regulated by the Environmental Protection
Agency (EPA) under the Safe Drinking Water Act (SDWA) and other
statutes. As an association devoted to the protection of public health
through the provision of safe, high quality drinking water, AMWA
strongly supports adequate levels of funding for EPA's drinking water
and ground water programs.
The association sincerely appreciates this opportunity to testify
before the subcommittee.
REQUEST OVERVIEW
Like the federal government, state and local governments are
witnessing an era of limited resources. Simultaneously, regulatory
requirements on local governments continue to expand. The federal
government can help to make State and local dollars go farther by
targeting federal expenditures to areas where modest investments can
deliver significant benefits to the public. This request outlines six
such investments. AMWA's specific recommendations are:
--Health effects research: meet EPA's $35.9 million budget request.
--Continue support of drinking water research partnerships between
EPA and the AWWA Research Foundation: $5 million (to be matched
by the Research Foundation and water suppliers).
--Provide dedicated funding for arsenic health effects research: $1
million (to be matched by the Research Foundation and water
suppliers).
--EPA's Drinking Water Program: meet EPA's $105.3 million request.
--State primacy grants (Public Water System Supervision Program
Grants): fund the program at the authorized level of $100
million.
--Drinking Water State Revolving Fund: fund the SRF at the $1 billion
authorization level.
BACKGROUND
Drinking water is universally recognized as a central element in
the health and well-being of the American people. Furthermore safe,
clean drinking water is a key component in the economic health of our
communities. Through advanced research and technological capacity,
Americans enjoy the safest drinking water in the world. To ensure the
continued safety of the nation's drinking water supply, in 1974
Congress passed the Safe Drinking Water Act. The Act was amended in
1986 and once again last year. It placed the federal government
squarely in an arena traditionally the province of State and local
governments. When enacting the statute, Congress decided it was the
federal government's responsibility to set national drinking water
standards, to establish time frames for compliance and to oversee how
States implement drinking water programs. With the 1996 amendments, the
federal government assumed a new approach for determining what to
regulate and for the first time is required to establish drinking water
standards based on sound, peer-reviewed science.
HEALTH EFFECTS RESEARCH
New Requirements and Good Science
In 1996 Congress blazed a new trail in directing how federal
agencies develop regulations by requiring a new focus on good science,
which includes an increased reliance on health effects research. In
section after section, the Safe Drinking Water Act Amendments of 1996
call on EPA to approach regulatory decision making differently. The
statute requires the agency to utilize health effects data to identify
contaminants for future regulation and for setting drinking water goals
and standards. And for the first time, the law gives EPA the discretion
to consider risk trade-offs and to set standards based on such data.
Microbial Contaminants, Disinfectants and Disinfection By-products
Beyond the research needed to satisfy programmatic requirements,
funds are needed to expand the scientific community's understanding of
the health effects of microbial contaminants, disinfectants and
disinfection by-products and the effects of contaminants on sensitive
subpopulations, such as children, the elderly, pregnant women and the
sick. Through disinfection, water suppliers are able to control
microbial contamination in drinking water, but the process can produce
chemical by-products that may be human carcinogens or may cause other
toxic effects. The Centers for Disease Control, the National Academy of
Sciences and EPA's Science Advisory Board have all noted extensive
research is needed in these areas. AMWA would like to thank Members for
the appropriation last fiscal year of $10 million specifically for
health effects research. Without substantial investments on an annual
basis, Congress, EPA, States and drinking water suppliers cannot assure
American consumers that contaminants selected for regulation are the
appropriate ones or that drinking water standards have been adequately
established.
AMWA recommends that Congress meet EPA's fiscal year 1998 budget
request of $35.9 million for drinking water research. In addition, AMWA
has urged EPA to set aside $10 million per fiscal year from the
Drinking Water State Revolving Fund specifically for health effects
research, as authorized in the 1996 amendments to Safe Drinking Water
Act. The set-aside would ensure a continuous stream of funding in an
area where EPA's commitment has been inconsistent.
EPA-AWWARF Research
The American Water Works Association Research Foundation (AWWARF)
is an organization dedicated to conducting much needed research to
satisfy research needs expressed by EPA and the drinking water
community. Like other drinking water associations, AMWA strongly
supports the Foundation and its research efforts. Last fiscal year,
Congress provided $2.5 million to AWWARF. The drinking water community
matched that amount with $9.1 million and looks forward to maintaining
the long-standing cooperative relationship we have had with EPA.
AMWA recommends providing $5 million for fiscal year 1998 for EPA-
AWWARF research partnerships, with the nation's drinking water
suppliers matching those dollars.
Arsenic Research
The regulation of arsenic in drinking water poses a unique dilemma.
While the effects of arsenic at levels in excess of those typically
found in the nation's water supplies are well studied, there is a
serious scientific debate on the effects of arsenic at the low levels
commonly found. EPA has outlined a research agenda to explore and
reduce these uncertainties, and AMWA strongly supports these efforts.
In fiscal year 1997, Congress provided $1 million in arsenic research
funding.
AMWA recommends providing $1 million for fiscal year 1998
specifically for arsenic research under the aegis of Arsenic Research
Partnership which includes AWWARF, the Association of California Water
Agencies and the EPA. As in the past, the funding would be matched by
individual drinking water suppliers.
EPA'S DRINKING WATER PROGRAM
EPA's drinking water program faces the daunting task of
implementing the 1996 Amendments to the Safe Drinking Water Act. This
includes instituting a new regulatory regime and developing programs to
oversee consumer confidence report requirements, monitoring relief,
source water delineations, assessments and protection, operator
certification requirements, microbial and disinfection by-product
standards, new treatment technologies and the first ever drinking water
state revolving fund. In addition, EPA must construct a contaminant
occurrence data base and develop a method to select contaminants for
regulation. In satisfying these requirements EPA has utilized an
approach that stands as a model for future federal activities. Never
before has an agency involved the public in the regulatory process to
the extent EPA's Office of Water has. Under the aegis of the National
Drinking Water Advisory Council or NDWAC, EPA has invited private
citizens, scientists, drinking water professionals, environmental,
public health and consumer advocacy representatives, medical
professionals, economists and many others to make official and expert
recommendations on how the agency should carry out its regulatory
responsibilities. AMWA commends the agency, and specifically those in
the Office of Drinking Water and Ground Water, for taking this new
approach. The association would especially like to point out to members
of the subcommittee the effort the agency has made to take advice from
water suppliers on protecting sources of drinking water. In addition,
EPA's work to educate and motivate stakeholders on the need to protect
our nation's sources of drinking water is notable. Altogether, EPA will
have held 26 meetings and workshops across the country, with each one
attracting remarkable interest. The association is confident that each
of the regulations eventually developed by EPA will reflect this new
stakeholder-driven approach and hopefully will have a positive impact
on the way other agencies go about their work serving the public.
AMWA recommends that Congress meet EPA's fiscal year 1998 budget
request of $105.3 million to implement the Safe Drinking Water Act and
other responsibilities in the drinking water program.
STATE PRIMACY GRANTS
To comply with the Safe Drinking Water Act, Congress intended that
EPA develop drinking water regulations and that the States administer
the program to ensure compliance with and enforcement of its
provisions. Administration, compliance, and enforcement activities are
collectively known as ``primacy'' requirements, and federal grants to
the States are known as Public Water Supply Supervision Grants. The
massive demands on States arising from the Act have become increasingly
apparent given the dramatic increase in the number of regulated
contaminants over the last several years. Moreover, effective
implementation of the 1996 amendments is contingent upon an
appropriately funded primacy program. States are charged with
delineating and assessing their rivers and streams to better protect
sources of drinking water and States must also oversee the new consumer
confidence regulations, under which nearly every public water system in
the United States must mail to each customer annually a report
detailing the quality of drinking water served to them. These and other
new programs run by the States are integral to the effective delivery
of safe, clean drinking water. As federal requirements increase, State
resource shortfalls become more acute, and States are too often
threatened with the loss of primacy. Should this occur, public health
protections could suffer a major setback.
AMWA recommends Congress fund the Public Water System Supervision
Program Grants at the authorized level of $100 million.
drinking water state revolving fund
Earlier this year, EPA presented to Congress a report of drinking
water systems' infrastructure needs and identified $138.4 billion in
needs over a twenty-year period. Nearly $76.8 billion was identified as
needed in the short term. The share for large systems like those who
comprise AMWA's membership is $58.5 billion, and $10.2 billion is
needed immediately to protect water from microbial contaminants that
could cause death or illness.
It can be easy to forget that these large dollar amounts are
composed of thousands of individual projects, many of which are needed
so that systems will meet or continue to meet the requirements of the
Safe Drinking Water Act. Upgrading a treatment plant or replacing old
pipes or installing better technologies can run from a few hundred
thousand to a few billion dollars. Most project costs fall somewhere in
the middle, yet the new Drinking Water State Revolving Fund (DWSRF) is
capitalized to a limited extent. From funds provided by Congress
through fiscal year 1997, most State capitalization grants--the funds
from which loans will be made to systems--fall into the $12.5 million
to $25 million range, which is enough for perhaps one modest project in
each State. Under EPA's fiscal year 1998 request, most capitalization
grants will range from $2 million to $12 million.
AMWA is hopeful that Congress will recognize this overwhelming need
and respond by funding the new DWSRF at the authorized level of $1
billion.
CONCLUSION
Congress, EPA, the States and drinking water suppliers have before
them a monumental job: to ensure the American public continues to
receive high quality drinking water. To meet that objective requires an
investment previously not seen in this arena. Infrastructure is aging,
water systems require new and better technologies to meet the
challenges presented by contaminants found in our rivers and streams
and to meet future regulatory objectives, and regulators must expect to
base future requirements and contaminant data bases on highly accurate
research data. AMWA's member agencies look to Congress to help us meet
these challenges.
______
Prepared Statement of the American Public Power Association
The American Public Power Association (APPA) is the service
organization representing the interests of the more than 2,000
municipal and other state and locally owned utilities throughout the
United States. Collectively, public power utilities deliver electric
energy to one of every seven U.S. electric consumers (about 35 million
people) serving some of the nation's largest cities. The majority of
APPA's member systems are located in small and medium-sized communities
in every state except Hawaii. We appreciate the opportunity to submit
this statement concerning fiscal year 1998 appropriations for programs
under this Subcommittee's jurisdiction.
CLIMATE CHANGE ACTION PLAN VOLUNTARY PARTNERSHIP PROGRAMS
APPA supports the Administration's fiscal year 1998 budget request
of $149 million for Climate Change Action Plan programs operated by the
Environmental Protection Agency (EPA). These partnerships emphasize
cost-effective measures to reduce, avoid or sequester greenhouse gas
emissions in order to return them to 1990 levels. Through voluntary
agreements, public power and other electric utilities have committed to
reducing emissions by over 43 million metric tons of carbon equivalent
in the year 2000. In addition to demonstrating that important
environmental objectives can be achieved through voluntary efforts,
these EPA programs contribute to a stronger U.S. position in
international climate change negotiations. Of particular interest to
APPA member systems are the Green Lights, Energy Star and Landfill
Methane Outreach programs operated by EPA.
Green Lights Program
The Green Lights program encourages use of energy efficient
lighting to reduce energy costs, increase productivity, promote
customer retention and protect the environment. Program partners agree
to survey lighting in their facilities and to upgrade it, if cost-
effective. Environmental benefits result from more efficient energy use
and from reductions in emissions of carbon dioxide, sulfur dioxide and
nitrogen dioxide, thus improving air quality. EPA provides program
participants public recognition and technical support.
Both large and small APPA member systems participate in this
program including City Utilities of Springfield, MO; Concord Municipal
Light Plant, MA; City of Georgetown, TX; Grant County Public Utility
District, WA; Gray's Harbor County PUD, WA; Greenville Utilities
Commission, NC; Indiana Municipal Power Authority, IN; Los Angeles
Department of Water & Power, CA; Mason County PUD, WA; New York Power
Authority, NY; Norwood Municipal Light Department, MA; Omaha Public
Power District, NE; Orlando Utilities Commission, FL; Port Angeles City
Light Department, WA; Puerto Rico Electric Power Authority, PR;
Sacramento Municipal Utility District, CA; City of St. Charles Electric
Utility, IL; Salt River Project, AZ; Virgin Islands Water & Power
Authority, VI; Springfield Utility Board, OR, and Taunton Municipal
Lighting Plant, MA.
Energy Star Programs
EPA's several Energy Star programs build on the successes of Green
Lights. These important EPA programs are examples of successful public/
nonpublic partnerships that promote the use of profitable, energy-
efficient technologies as a way to increase profits and competitiveness
while at the same time minimizing pollution. They include Energy Star
Buildings, the Energy Star Transformer Program, Energy Star office
equipment and the Residential Energy Star Program. APPA member systems
participate in and support EPA's Energy Star efforts.
Landfill Methane Outreach Program
The Landfill Methane Outreach Program provides environmental
benefits by encouraging utilities to make use of landfill gas as an
energy source. Several APPA member systems participate in this program,
including Illinois Municipal Electric Agency, IL; Jacksonville Electric
Authority, FL; Emerald People's Utility District, OR; Los Angeles
Department of Water and Power, CA, and Orlando Utilities Commission,
FL. Utilities voluntarily agree to take advantage of the best
opportunities to use landfill gas in generating power. EPA recognizes
and publicizes the utility's efforts and provides technical assistance.
One of the success stories cited by EPA occurred with APPA member
system Emerald People's Utility District in Eugene, OR. This public
power utility worked collaboratively with the State of Oregon, Lane
County officials and a private investment company to develop a 3.4 MW
plant at the Short Mountain Landfill. EPUD's general manager says
landfill energy recovery is like ``turning straw into gold,'' providing
additional revenue to EPUD as well as a fee to the county.
COUNCIL ON ENVIRONMENTAL QUALITY (CEQ)
APPA supports the Administration's fiscal year 1997 budget request
of $3,020,000 for the Council on Environmental Quality (CEQ). As units
of local government APPA member utilities have a unique perspective on
environmental regulation. Public power utilities and others from
industry have experienced a general lack of consistency in federal
environmental regulation. While additional layers of government should
be avoided, a central overseer can perform a valuable function in
preventing duplicative, unnecessary and inconsistent regulations. The
council is responsible for ensuring that federal agencies perform their
tasks in an efficient and coordinated manner. For these reasons, APPA
supports the existence and continued operation of CEQ.
SUPERFUND
APPA member systems also support the Administration's request of
$2,094.2 million for Superfund cleanups. The Superfund Trust Fund as
well as Superfund research programs are critical as we consider
reauthorization of the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA), the law authorizing Superfund.
The increased emphasis on expedited settlements and administrative
relief, the Brownfields Initiative and more effective use of
alternative dispute resolution by EPA are worthy goals.
Again, APPA member systems appreciate your consideration of our
views on priority appropriations issues for fiscal year 1997.
______
Prepared Statement of Jared O. Blum, President, Polyisocyanurate
Insulation Manufacturers Association, Washington, DC
Enclosed is the testimony PIMA submitted to the House and Senate
Appropriation Committees concerning fiscal year 1998 funding for EPA's
Energy Star Homes and Energy Star Insulation programs. We support EPA's
efforts and strongly urge you to support the level of funding requested
by EPA for these programs and for the administration's Climate Change
Action Plan (CCAP). The following are some of the important points we
wanted to highlight about these programs.
--Energy use in homes accounts for 20 percent of U.S. CO2
emissions, a major greenhouse gas.
--Energy Star Homes are new homes that use at least 30 percent less
energy than required by the national Model Energy Code.
--As a result of the Energy Star Homes program, annual CO2
emissions will be reduced 10 Million Metric Tonnes by 2010
(which is equivalent to removing about 4 million cars from U.S.
roads) and $100 billion will be saved through lower energy
costs during the first thirty years following construction of
Energy Star homes.
--The construction of Energy Star Homes will have a significant
positive impact on U.S. employment and businesses (i.e.,
additional sales of U.S. services and products instead of
imported oil).
--The Energy Star Insulation program provides consumers with unbiased
and accurate information on how to select the proper insulation
for each climatic region of the country and for different
applications, saving consumers energy and money.
--Because of market barriers to energy efficient products and
building practices, the environmental and economic benefits of
Energy Star programs would not occur without EPA's help.
Thank you for your attention to this issue. If we can be of any
further assistance, do not hesitate to contact me.
The Polyisocyanurate Insulation Manufacturers Association (PIMA) is
pleased to submit these written comments on EPA's fiscal year 1998
appropriations for the Energy Star Programs, an element of the Climate
Change Action Plan (CCAP). PIMA is the trade association of the rigid
polyiso foam insulation industry, a product that is used in over 60
percent of new commercial roof construction, in 40 percent of new
residential construction, and in most re-insulation of existing
commercial building roofs.
INTRODUCTION
We are frequently reminded of the burden and cost to American
industry caused by environmental regulations that rely on command-and-
control approaches. In contrast, EPA's Energy Star programs, which are
completely voluntary, have a significant positive impact on the U.S.
economy and business. In addition to the economic and employment
benefits, the Energy Star programs promise to achieve significant
reductions in greenhouse gas emissions as well as other pollutants.
This testimony focuses on the Energy Star Homes program and the Energy
Star Insulation program, but much of what I say here can be applied
equally to the other Energy Star programs. PIMA is a charter partner in
the Energy Star Insulation program and we are one of 79 ally members of
the Energy Star Homes program.
Energy Star programs are well-run, relatively inexpensive
operations that have been established to address critical environmental
problems. Energy Star programs encourage the production and marketing
of energy-efficient products and increase consumer awareness of these
products and their benefits. EPA is a catalyst and a facilitator
helping to create a market transformation that favors energy-efficient
products. We believe that EPA should be applauded for its creative and
economically sound thinking in finding solutions to environmental
problems.
ENERGY STAR HOMES
As part of the country's efforts to reduce the emissions of global
warming gases, EPA launched the Energy Star Homes program in 1995.
Household energy use is a major source of U.S. carbon dioxide
(CO2) emissions, accounting for about 20 percent of total
emissions. The Energy Star Homes program reduces energy use and
prevents pollution by encouraging builders and developers to construct
energy-efficient homes. Energy improvements result from the use of
improved insulation, tighter ducts, high efficiency heating and air
conditioning, and high performance windows.
Builders who participate in the program as partners are provided
with technical support, fact sheets on technologies, sales training,
information on mortgage products, and use of the Energy Star logo and
promotional materials. In addition, EPA and its partners and allies
will be placing public service announcements and editorials to raise
public awareness of the program and recognition of the logo. Builders
participate not only because of these services, but because EPA is
working to create a market for energy-efficient home construction, so
builders willing to undertake some additional effort and risk are able
to distinguish their product from the less energy-efficient homes built
by their competitors.
Builder participation, in turn, provides increased demand for
energy-efficient products, such as the rigid foam insulation produced
by PIMA members. EPA estimates that the construction of Energy Star
homes over the next 12.5 years will increase sales for insulation by $2
billion. Also, an additional $6 billion of insulation is likely to be
sold because the Energy Star program is expected to raise the
``industry standard'' for insulation upgrades in existing homes.
Organizations that manufacture energy-efficient products or provide
related services participate in the Energy Star Homes program as
allies, promoting the program and recruiting home builders as
participants and offering builders various services that correspond
with their own business plans.
Energy Star Homes are new homes that use at least 30 percent less
energy than required by the national Model Energy Code while
maintaining or improving indoor air quality. Although the value of
these homes is greater than those that are less energy efficient (i.e.,
a higher sticker price), Energy Star homes actually cost less to own
and operate on a monthly basis than a comparable home that is not as
energy efficient. This is because the savings from lower monthly energy
bills more than cancels out the small increase to a person's monthly
mortgage payment due to the extra energy features. In addition, banks
are now providing favorable mortgages for energy-efficient homes,
lowering monthly payments even more.
The goal of the Energy Star Homes program is to increase the market
share for Energy Star homes to 10 percent of new home construction by
2000 and more than 95 percent by 2010. This will have both economic and
environmental benefits. The homes sold by the year 2000 will result in
energy savings of $1.8 billion and homes sold by the year 2010 will
result in energy savings of $100 billion.\1\ This is $100 billion that
will be spent, not on energy consumption, but on goods and services. It
is important to emphasize that money spent on goods and services
creates more U.S. jobs and results in fewer imports than money spent on
energy consumption.
---------------------------------------------------------------------------
\1\ These are savings that are locked-in over the life of a 30-year
mortgage, a time frame that results in an overly conservative estimate.
If you assume the savings will continue for the life of the home, about
90 to 100 years, the savings estimate triples to about $300 billion.
---------------------------------------------------------------------------
The environmental benefits start out small, but grow impressively
over the next 12 years. In the year 2000, the construction of Energy
Star Homes will have resulted in annual CO2 emission
reductions of 0.3 Million Metric Tonnes (MMT), which is equivalent to
removing more than 55,000 cars from U.S. roads. By the year 2010,
projected reductions in annual CO2 emissions will be 10 MMT,
which is equivalent to removing about four million cars. In addition to
the reductions in CO2 emissions, there will be similar
reductions in other pollutants associated with the generation of
electricity and the burning of fuel in home furnaces.
energy star insulation
The Energy Star Insulation program, initiated in 1996, is aimed at
energy use in the existing housing stock and is intended to educate
retail sales people and consumers about R-values and the proper use of
home insulation. Insulation manufacturers that participate in the
program will be allowed to use the Energy Star logo on their products,
which will prompt consumers to ask for an ``insulation guide'' that
will be made available at stores selling the insulation. As a condition
for using the Energy Star logo, the insulation guide will be reproduced
and distributed to retail outlets by the insulation manufacturers. As a
result, the guide will be widely distributed at little cost to the
government.
The insulation guide is an unbiased and accurate source of
information that will inform the consumer, in an easy to understand
format, about the significance of R-values and how to select the proper
R-value for each climatic region of the country. The guide will also
indicate which types of insulation are best suited for different
applications.
the importance of a well funded energy star program
Some observers have asked: If the Energy Star programs are
promoting cost-effective measures that will save people money, why does
this market transformation not occur on its own? The answer for many of
the programs can be found in the types of businesses that are involved.
In the case of the Homes program, the participants are small businesses
that do not have the resources to obtain enough information on new
energy-efficient products and construction methods necessary to take
the risk of changing their old ways of building and selling houses.
Also, in the case of energy-efficient homes, there is an information
deficit on the part of the consumer, as well, that will continue to
exist if nothing is done. The Congressional Office of Technology
Assessment, in its 1991 report, Changing by Degrees: Steps to Reduce
Greenhouse Gases, said that ``lack of information is a key obstacle to
greater investment in energy conservation'' on the part of both
individual consumers and businesses. ``It adversely affects [operation
and maintenance] practices, investment decisions, and incentives to
develop new energy-efficient technologies.'' The large number of highly
cost-effective investments in energy efficiency that are not chosen by
consumers indicated that price alone did not stimulate optimal
investment decisions. Therefore, OTA recommended an increased federal
role in information dissemination in order to overcome this barrier.
Selling a home that may have a higher sticker price, but which is
cheaper to operate and own on a monthly basis because of its high
energy efficiency, requires a different dynamic between the builder,
developer, and home buyer than existed before. To create the market for
energy-efficient homes there has to be an organized effort to educate
consumers and to teach builders how to change their old ways of
approaching consumers. Because of the critical importance of reducing
green house gas emissions (including energy-related CO2
emissions), it is clearly an appropriate role for the federal
government to plant the seeds of a new, more sustainable, market. As
the market is transformed, it will become less dependent on EPA's
efforts and the Agency will be able to reduce its support for those
products and to reallocate its resources to other programs.
CONCLUSION
PIMA urges this Committee and Congress to fund CCAP, of which the
Energy Star Programs is part, at the administration's requested level.
______
Prepared Statement of Dr. Peter Fox, Arizona State University and
Margaret Nellor, County Sanitation Districts of Los Angeles County
Mr. Chairman and distinguished members of the Subcommittee, we have
the honor of submitting testimony to the Subcommittee in support of
federal funding in the amount of $2 million through the U.S.
Environmental Protection Agency (EPA) in fiscal year 1998 for an
exciting research program focussed on reducing uncertainties about the
efficiency and sustainability of Soil Aquifer Treatment (SAT) for
indirect potable reuse of highly treated domestic wastewater (known as
recycled water). Although this study has national applicability, the
research is centered in California and Arizona. These funds will be
used to augment the over $5 million in cash and in-kind services
already committed to the investigation by the various research sponsors
and participants.
This research program is designed to provide the data necessary to
support the rational design and operation of SAT systems, to predict a
specific level of water quality improvement provided by SAT, and to
answer important public health questions. The County Sanitation
Districts of Los Angeles County, who serve over 5 million people in 78
cities in Los Angeles County, California, and Arizona State University
are the project managers for the research. We are joined in support of
this funding by our distinguished colleagues and fellow members of our
interdisciplinary investigation team including the Cities of Phoenix,
Glendale, Mesa, Scottsdale, Tempe, and Tucson Water, Arizona; the
Orange County Water District; the Water Reclamation District of
Southern California; the Los Angeles Department of Water and Power; the
City of Riverside, California; the University of Arizona; the
University of Colorado; Stanford University; and the U.S. Geological
Survey.
As the arid West continues to develop and as sources for additional
water supplies become more and more scarce, an increasingly important
source of water for agricultural and urban use is recycled water. This
water has the potential to alleviate water shortages and to provide
important augmentation to existing sources. Soil Aquifer Treatment,
which is currently in use in California and Arizona, is one technology
that has the potential to economically supplement traditional treatment
and storage systems for existing and future potable water supplies.
This study will be of value not only in the West but in a number of
other areas around the country where groundwater recharge is used to
supplement potable water supplies, to control sea water intrusion in
coastal groundwater aquifers, to control land subsidence caused by
declining groundwater levels, to raise groundwater levels to reduce the
cost of groundwater pumping, and to provide a means of treating
wastewater prior to discharge. These areas include Florida,
Massachusetts, Nebraska, Michigan, New Hampshire, New Jersey, New York,
South Dakota, Texas, and Wisconsin.
Further, our investigations of SAT will help address public health
issues that all water suppliers in the nation face, such as source
water protection and disinfection practices. The questions that will be
answered by our study will be instrumental to the identification,
characterization, and treatment of compounds in our nation's water
supply so that we may better protect the health of our citizens. Thus,
the research clearly complements the goals of EPA's National Water
Program Agenda.
THE NEED FOR THE STUDY
While groundwater recharge using recycled water has been used in
the United States for several decades and has been the subject of a
number of studies, study methodology and testing has limited the
scientific and technical community's ability to fully address a number
of complex public health questions. Most recently, in May 1996, the
National Research Council's Water Science and Technology Board
initiated a study to evaluate the viability of augmenting potable
supplies with recycled water. The purpose of the NRC study is to
provide technical and policy guidance regarding the use of treated
municipal wastewater as a potable water source. It is anticipated that
the NRC's report, which will be available in July 1997, will be useful
in assessing the feasibility and desirability of potable reuse projects
as a means of supplementing water supplies, and in identifying fruitful
lines of research. Many of those on our research team have been closely
involved in the NRC study. The project presented in this testimony has
been coordinated with the NRC study and is specifically designed to
build on and investigate critical areas of research necessary to
address the myriad of unknowns facing SAT and the indirect use of
recycled water for potable water supply.
The results of our investigation will help us better understand the
complex nature of recycled water and SAT so that we may take advantage
of the benefits offered by indirect potable reuse based on groundwater
recharge such as:
--additional water quality improvements;
--seasonal or longer-term storage without evaporative losses;
--protection of water sources against recontamination (with coliforms
and parasites) by birds, mammals, and even humans; and
--prevention of algae growth and associated water-quality problems
such as algae-derived taste and odor.
sat defined
Soil Aquifer Treatment can best be described as a groundwater
recharge method using recycled water. SAT relies on percolation of the
recycled water through soil and groundwater transport to further
improve water quality prior to reuse.
--Soil percolation encompasses several processes that occur as water
seeps downward through the soil under the influence of gravity
to enter the groundwater system. The soil acts as a filter to
improve the characteristics of the recycled water due to
physical chemical and microbiological processes.
--Groundwater transport.--After reaching the underlying aquifer,
groundwater moves slowly to extraction wells. During this
contact time with the unconsolidated aquifer material, which
includes mixing with the indigenous groundwater, further water
quality benefits are realized through a number of physical,
chemical, and biological processes.
study goals
Specific goals of the study are to:
--characterize processes that contribute to organic chemical removal
and transformation during transport through the soil
percolation zone and underlying groundwater aquifer;
--investigate and model relationships among above-ground treatment,
wetlands polishing and SAT;
--identify monitoring criteria that will provide proper assurances
regarding the elimination of viruses and other pathogens; and
--produce a framework or model within which SAT systems can be
designed and operated to meet regulatory criteria.
Field investigations and data gathering will be performed using
recharge sites in California and Arizona. The research will focus on
wetlands and infiltration/subsurface treatment as a single treatment
system for purposes of aquifer protection--primarily protection from
nitrate, dissolved organic chemicals, and pathogenic microorganisms.
The effectiveness of Soil Aquifer Treatment will be investigated and
systematically analyzed to determine the efficacy of the three
protective barriers inherent in SAT systems including: The infiltration
interface at the soil water boundary of the infiltration basin;
Percolation through the soil column; and Storage/transport in the
underlying aquifer.
The water quality benefits derived from treatment in each of the
three zones will be evaluated based on each zone's ability to minimize
organic carbon, nitrogen and pathogens.
Water quality data will be collected from at least seven full- or
pilot-scale facilities that offer a range of effluent qualities and
very different physical conditions in terms of depth to groundwater,
soil and sediment type, etc. These facilities are located in Phoenix,
Mesa and Tucson, Arizona; and Riverside, Los Angeles, Los Angeles
County and Orange County, California. Some of the more unique research
elements include the use of genetic techniques to isolate and identify
viruses; analytical methodologies capable of identifying over 90
percent of the materials comprising the organic content in water
samples; methods to isolate and characterize the estrogenic components
in groundwater and recycled water; and a public education/outreach
component to disseminate the results of the study.
Mr. Chairman, in conclusion we would greatly appreciate your
support for this necessary and worthwhile research project.
______
Prepared Statement of the Association of National Estuary Programs
Chairman Bond and Members of the Senate VA-HUD Appropriations
Subcommittee: On behalf of the Association of National Estuary Programs
(ANEP), we greatly appreciate the opportunity to submit to this
Subcommittee our views on the fiscal year 1998 funding requirements for
both the development and implementation of the National Estuary
Program. The National Estuary Program is established by section 320 of
the Clean Water Act, and administered by the U.S. Environmental
Protection Agency in partnership with the State and local governments,
interested citizens and the business community.
Estuaries are the biologically essential, economically priceless,
but fragile connections between the continent and the oceans. The
entire nation is served by coastal estuaries in numerous ways, such as
commercial and recreational fishing, boating, wildlife habitat. Through
the National Estuary Program, local governments and interested business
and industry groups come together with the State and Federal
governments to reach agreement on long-term management plans that seek
to guarantee the economic and biological productivity of the estuaries
into the future.
To date, there are 28 estuaries in the national program, 11 in the
developmental stage and 17 in the implementation stage, of their
individual ``Comprehensive Conservation and Management Plans''
(CCMP's). These management plans are each unique, but share many
characteristics in that they are all based on sound science, all
written by local stakeholder groups in partnership with the relevant
regulatory agencies, and all approved by the local and State
governments that will be principal partners in implementation. Local
citizens guide the development and implementation of their plans, and
work to leverage federal and State dollars with contributions from
local governments and the private sector.
In other words, the National Estuary Program is clearly not the
``command-and-control'' type of EPA program. Rather, it is a program
where local governments, citizens and the private sector come together
and agree as to how the management of the Nation's estuaries will
occur. Only with the full support of the local sector is the proposed
CCMP submitted to the Governor and E.P.A. Administrator for approval.
Thus, it is the States, in close coordination with the local and
federal governments, that create and implement new, non-adversarial and
cost effective CCMP's, in contrast to the ``command-and-control''
approach for environmental enhancement.
The 28 National Estuary Programs are building strong public-private
partnerships during the development and implementation of the
management plans. The Programs work closely with other coastal programs
to coordinate initiatives at the State and federal levels, putting
great effort into promoting the exchange of data and information
between the National Estuary Programs and with other coastal programs.
Only with such partnerships will the agreed-upon actions be carried
out, changes in the estuaries monitored, and actions reassessed and re-
prioritized as needed.
For fiscal year 1998 we are requesting this Subcommittee to assist
the National Estuary Program by calling for an increase in EPA's
allocation to the National Estuary Program. The National Estuary
Program is rounding the turn from the developmental stage to the
implementation stage. Our mission is complex. Through the Clean Water
Act we are charged with first developing comprehensive conservation and
management plans (CCMP's) to address point and nonpoint sources of
pollution, and restore and maintain the chemical, physical, and
biological integrity of the Nation's estuaries. Next we are charged
with coordinating the implementation of the CCMP's with the involved
States, Federal and local agencies. It is a substantial and complex
job.
FISCAL YEAR 1998 FUNDING REQUEST
As evidence of the Congressional intent to establish a true
partnership program, funding for the National Estuary Program is
provided through several sections of the Clean Water Act. This requires
us to coordinate closely with other Federal and State programs. The
National Estuary Program is funded through the following Clean Water
Act provisions:
--33 U.S.C. Sec. 1330 (National Estuary Program);
--33 U.S.C. Sec. 1329 (Non-point Pollution Control);
--33 U.S.C. Sec. 1285 (Construction Grants); and
--33 U.S.C. Sec. 1383 (Revolving Loan Funds).
As noted above, the National Estuary Program is advancing from the
developmental stage into the implementation stage. Whereas in years
past there were just a dozen or so NEP's receiving around $12 million
to develop CCMP's, there are now 17 implementing CCMP's with another 11
in the developmental stage. For this reason, we are requesting this
Subcommittee to assist the National Estuary Program by calling for EPA
to allocate $28.0 million to the National Estuary Program through the
National Estuary Program (33 U.S.C. Sec. 1330) authorization of
appropriations for fiscal year 1998, to fund the continued development
of CCMP's and refinement of approved CCMP's. The increased funding is
necessary because there are now 28 National Estuary Programs, and
federal partnership support at a minimum of $1.0 million is needed to
fully advance the mission and goals of each NEP.
Further, as the National Estuary Program progresses into the
implementation stage, the need for coordination with other Clean Water
Act programs increases. The success of the National Estuary Program's
implementation depends on our ability to do what the Clean Water Act
requires of us--coordinate with the Construction, Non-point Pollution
Control and Revolving Loan Fund programs. Our implementation funding is
contingent upon receiving a portion of these other Clean Water Act
program funds. For this reason we are requesting this Subcommittee to
assist the National Estuary Program by recognizing the significance of
fulfilling one of the central missions of the Clean Water Act by
getting 17 CCMP's approved. We ask this Subcommittee to direct the U.S.
Environmental Protection Agency to (1) give priority consideration to
the use of the following funds for CCMP Implementation, and (2) to
relay the same priority consideration to the States in agreements
concerning the use of such funds: Construction Grant Funding (33 U.S.C.
Sec. 1285); Nonpoint Pollution Control Program Funding (33 U.S.C.
Sec. 1329); and Revolving Loan Funds (33 U.S.C. Sec. 1383).
To assist this Subcommittee with your work, we offer some suggested
Report language to assist the National Estuary Program with its
mission. Thank you, Mr. Chairman, for the opportunity to present our
views to this Appropriations Subcommittee.
SUGGESTED REPORT LANGUAGE
In making this fiscal year 1998 authorization of appropriations,
the U.S. Congress recognizes the national importance of bays and
estuaries to the economic health of the country, as well as the
standard of living of its citizens. We also recognize the increasing
pressures being brought to bear on these finite resources. Further, we
recognize the success of the National Estuary Program in bringing
together local citizens with all levels of government to develop and
implement long-term management plans. Such efforts have created
enduring partnerships that are in this nation's best interest to
support. The National Estuary Program minimizes the regulatory burden
of the federal government, and reduces litigation over resource
conflict, while at the same time protecting these vital economic and
biological resources from further degradation--and actually improving
them. Therefore, it is our intent that the U.S. Environmental
Protection Agency allocate $28.0 million through the National Estuary
Program (33 U.S.C. Sec. 1330) authorization of appropriations for
fiscal year 1998. Further, it is our expectation that the U.S.
Environmental Protection Agency will give priority consideration and
support to the use of the Construction Grant Program (33 U.S.C.
Sec. 1285), the Nonpoint Pollution Control Program (33 U.S.C.
Sec. 1329) and the Revolving Loan Funds (33 U.S.C. Sec. 1383) for the
implementation of approved CCMP's. The U.S. Environmental Protection
Agency should likewise relay the same priority consideration to the
States in agreements concerning the use of these funds.
______
Prepared Statement of John H. Sullivan, Deputy Executive Director,
American Water Works Association
INTRODUCTION
The American Water Works Association (AWWA) appreciates the
opportunity to present its views on the Environmental Protection Agency
(EPA) budget for fiscal year 1998. AWWA is the world's largest and
oldest scientific and educational association representing drinking
water supply professionals. The association's 55,000 plus members are
comprised of administrators, utility operators, professional engineers,
contractors, manufacturers, scientists, professors and health
professionals. The association's membership includes over 3,800
utilities which provides over 80 percent of the nation's drinking
water. Since our founding in 1881, AWWA and its members have been
dedicated to providing safe drinking water.
AWWA utility members are regulated under the Safe Drinking Water
Act (SDWA) and other statutes. AWWA believes few environmental
activities are more important to the health of this country than
assuring the protection of water supply sources, and the treatment,
distribution and consumption of a safe and healthful supply of drinking
water. AWWA strongly supports adequate levels of funding for EPA's
drinking water and ground water programs.
request overview
Adequate funding for capitalization of the Drinking Water State
Revolving Fund (DWSRF) and funding drinking water research are the two
major areas of concern to AWWA in the EPA fiscal year 1998 budget
request. AWWA does not believe that the fiscal year 1998 EPA budget
request for capitalizing the drinking water state revolving fund and
for drinking water research is adequate. AWWA recommends an increase
over the funds requested by EPA for these programs. It should be noted
that these programs, particularly drinking water health effects
research, involve areas where relatively small funding increases offer
significantly great public health, environmental and economic benefits
to the nation's population. In the fiscal year 1998 EPA budget, AWWA
recommends that the following funding be specifically appropriated for
the indicated purpose:
--For the drinking water state revolving fund: $1,000,000,000.
--For drinking water research: $39,500,000. (Designate adequate
funding specifically for health effects research.)
--For the EPA/AWWA Research Foundation drinking water research
partnership: $5,000,000 (to be matched by the AWWA Research
Foundation and public water suppliers).
--For the arsenic research partnership: $1,000,000 (to be matched by
the AWWA Research Foundation and public water suppliers).
--For public water system supervision (PWSS) grants to states:
$100,000,000. (Total state, local and tribal drinking water
program grants: $114,300,000.)
--For the EPA drinking water program: $105,300,000.
DRINKING WATER STATE REVOLVING FUND (DWSRF)
AWWA does not believe that the fiscal year 1998 EPA budget request
for capitalizing the newly authorized DWSRF is adequate to meet the
nation's drinking water needs. The SDWA Amendments of 1996 authorized
for the DWSRF $599,000,000 for fiscal year 1994 and $1,000,000,000 for
fiscal years 1995 through 2003. The SDWA further authorizes that
authorized funds not appropriated in a fiscal year may be appropriated
in subsequent fiscal years until fiscal year 2004. Through fiscal year
1997, Congress has appropriated approximately $1.3 billion--a shortfall
of $2.3 billion from funds authorized for the DWSRF.
According to the EPA Drinking Water Infrastructure Needs Survey
released on January 31, 1997, $12.1 billion is needed in the immediate
future to protect drinking water supplies. Of this amount, $10.2
billion, or 84 percent, is needed to protect water from microbial
contaminants which can produce immediate illness or death. Over the
next 20 years $138.4 billion will be needed to upgrade the
infrastructure of the nation's water utilities.
Given that funding for the DWSRF is already behind and the enormous
need, now is not the time to be scaling back federal commitment to the
DWSRF to $725 million for fiscal year 1998. Congress and the
Administration should be playing catch-up AWWA urges Congress to
appropriate at least the $1 billion authorized for the DWSRF in fiscal
year 1998.
Although it represents only a fraction of the need, the amount
recommended by AWWA for the DWSRF will be a start and provide a source
of much needed loans for financial disadvantaged communities which
cannot obtain financing through other means. The federal funds will
leverage state resources by ultimately becoming a revolving fund that
would no longer require federal funding. The DWSRF would partially fund
the unfunded mandates of the SDWA.
Recommended action in the fiscal year 1998 budget.--Appropriate at
least $1,000,000,000 for capitalization grants for the drinking water
state revolving fund.
DRINKING WATER RESEARCH FUNDING
AWWA does not believe that the fiscal year 1998 EPA budget request
for drinking water research is adequate. The use of good science as the
foundation of the new drinking water standard-setting process under the
SDWA amendments of 1996 will require extensive drinking water
research--particularly health effects research.
Funding for drinking water research is becoming more of a critical
issue. The use of good science as the foundation of the new standard-
setting process under the 1996 SDWA Amendments will require extensive
drinking water research. The 1996 SDWA Amendments require EPA to
develop comprehensive research plans for Microbial/Disinfection By-
Products (M/DBP) and arsenic as well as other contaminants. An
estimated total of over $100 million is needed for the combined arsenic
and M/DBP research plans promulgating regulations within the next five
years as required by the SDWA amendments of 1996, and this figure does
not include other needed drinking water research on radon, sulfate,
endocrine disrupters, and other contaminants that will require
additional occurrence, treatment, and health effects research based on
EPA's new Contaminant Identification Method. It will take at least five
years to conduct the necessary arsenic and M/DBP research based on
EPA's fiscal year 1998 budget request of $35.9 million for drinking
water research (out of a total research budget request of $614.3
million)--a decrease of $3.5 million from the fiscal year 1997 level.
This level of drinking water research does not meet the statutory needs
of the 1996 SDWA Amendments and will result in either delayed
regulations or regulations promulgated without the necessary research.
Given that drinking water research has long been underfunded and
the enormous need for immediate research to meet the deadlines of the
SDWA amendments of 1996, now is not the time to be scaling back federal
commitment to drinking water research by nearly $3.5 million for fiscal
year 1998. AWWA urges Congress to restore the $3.5 million decrease and
appropriate at least the $39.5 million authorized for drinking water
research in fiscal year 1998 by the House Committee on Science in H.R.
1276.
Health effects research.--The decline in real funding levels for
drinking water programs is nowhere better illustrated than in health
effects research. As requirements to regulate drinking water
contaminants have grown dramatically, the health effects research
budget has decreased precipitously. Despite the mandate of the 1986
amendments to the SDWA, which more than quadrupled the number of
contaminants EPA was to regulate, funding for health effects research
on contaminants has dropped continuously from a 1982 level of almost
$10 million to the fiscal year 1996 EPA budget's all time low request
of less than $2 million. In fiscal year 1997 Congress designated $10
million for EPA to spend on health effects research. AWWA appreciates
this appropriation and thanks the members of the committee. Without
such substantial investments on a continuing annual basis, EPA and
public water suppliers cannot assure the American public that the
contaminants selected for regulation are the appropriate ones or that
health standards have been adequately established.
The SDWA amendments of 1996 require EPA to reserve $10 million from
the drinking water state revolving fund (DWSRF) appropriation for
health effects studies on drinking water contaminants. The DWSRF set
aside would provide a continuous stream of funding for the much needed
health effects research through fiscal year 2003. EPA is already
falling behind in the research needed to implement the SDWA amendments
of 1996 making this additional dedicated source of funding all the more
critical. AWWA urges Congress and the Administration to reserve the $10
million from the DWSRF in addition to the drinking water research funds
recommended by AWWA for the fiscal year 1998 EPA budget.
Microbial contaminants, disinfectants and disinfection by-
products.--Research on microbial contaminants and disinfectants and
disinfection by-products is a critical need. Each day there are roughly
50,000 deaths in the world attributed to microbial contamination of
drinking water. This threat has essentially been eliminated in the
United States through disinfection of drinking water. It is now known,
however, that disinfection of drinking water can produce chemical by-
products, some of which are suspected potential human carcinogens or
may cause other toxic effects. Controlling risks from these by-products
must be carefully balanced against microbial risks to ensure that when
reducing disinfection levels to lower by-product risk, significant
microbial risks faced by the majority of the world's population are not
created.
Research on disinfectants and disinfection by-products, as endorsed
by the National Academy of Sciences and EPA's Science Advisory Board,
is essential. The cost to the nation of disinfection by-products
regulation under the SDWA could be as low as several billion dollars or
as high as $60 billion or more. An appropriate investment in health
effects research will ensure that costs of regulation will be
commensurate with the health benefit and not driven to extremes because
of the lack of data.
Cryptosporidium has emerged as a microbial pathogen of major
concern to drinking water supplies. The Centers for Disease Control, in
correspondence with EPA, has pointed out that extensive research on the
health implications of the pathogen and dramatic improvements in
analytical methods for its detection are necessary before it is
possible to evaluate the public health implications of its occurrence
at low levels and determine the appropriate regulatory response.
Adequate funding for research on cryptosporidium is essential to
protect the health of millions of Americans.
Recommended action in the fiscal year 1998 budget.--Appropriate
$39,500,000 for drinking water research; and designate adequate funds
specifically for continuing health effects research to meet the
requirements of the SDWA.
RESEARCH MATCHING GRANTS
EPA/AWWARF research partnership.--In a separate statement, the AWWA
Research Foundation (AWWARF), (an organization independent of AWWA),
requested that $5 million in drinking water research funds be
designated specifically for the EPA/AWWARF drinking water partnership.
AWWARF and public water suppliers will match the grant dollar-for-
dollar. AWWA strongly believes that this kind of local/federal research
partnership is a wise and cost effective use of public funds and the
only way to secure science based drinking water regulations in these
difficult budgetary times. The AWWARF funds are being used to support
priority drinking water research needs including disinfection by-
products and cryptosporidium.
Arsenic research partnership.--The regulation of arsenic, which
occurs naturally at low levels in some drinking water supplies,
presents a unique regulatory situation. While the effects of arsenic at
levels in excess of those typically found naturally in the nation's
water supplies are well studied, there is a lack of data and serious
scientific debate on the effects of the naturally occurring low levels
of arsenic in drinking water. EPA, AWWARF and the Association of
California Water Agencies (ACWA) have joined in a partnership to
examine this complex issue. In a separate statement, AWWARF requested
that $1 million in drinking water research funds be designated
specifically for the Arsenic Research Partnership. AWWARF and public
water suppliers will match the grant dollar-for-dollar.
Recommended action in the fiscal year 1998 budget.--Appropriate
$5,000,000 specifically designated for the EPA/AWWA Research foundation
drinking water research partnership (to be matched by the AWWA Research
Foundation and public water suppliers).
Appropriate $1,000,000 specifically designated for the arsenic
research partnership (to be matched by the AWWA Research Foundation and
public water suppliers).
public water system supervision grants
To comply with the SDWA, Congress intended that EPA develop
drinking water regulations and that the states implement and administer
the program to ensure compliance with and enforcement of its
provisions. Implementation, administration, compliance and enforcement
activities are collectively known as ``primacy'' requirements and
federal grants to the states are known as Public Water System
Supervision (PWSS) grants. The massive demands on states arising from
the SDWA have become increasingly apparent because of the dramatic
increase in the number of regulated contaminants over the past few
years.
As each regulation is added, state resource shortfalls become more
acute. The SDWA authorizes a federal share of up to 75 percent, but
federal funding has approximated only 35 percent. The difference
between state and federal shares of the program has become so great
that states have been threatened continuously with the loss of primacy.
Should this occur, public health protection will suffer a major
setback. According to the Association of State Drinking Water
Administrators, the present PWSS needs in all states is over $200
million per year with additional regulations scheduled to be
promulgated over the next few years. Additionally the SDWA Amendments
of 1996 added new responsibilities for the states such as source water
assessments, a consumer confidence report program and alternative
monitoring programs.
EPA's budget request for fiscal year 1998 would not raise PWSS
funding for states from its present level of $90,000,000. The increase
in state, local and tribal drinking water program grants to a total of
$104,300,000 reflects an increase for tribal grants only and not the
PWSS grants to states. AWWA strongly urges Congress to appropriate the
$100,000,000 authorized for PWSS grants to states as the minimum
necessary.
Recommended action in the fiscal year 1998 budget.--Appropriate
$100,000,000 for Public Water System Supervision (PWSS) grants to
states. (Total state, local and tribal drinking water program grants:
$114,300,000.)
EPA DRINKING WATER PROGRAM
EPA's drinking water program took on greatly increased
responsibilities in the 1996 SDWA amendments. These responsibilities
included developing a new regulatory process requiring additional
science and risk analysis for regulations, create a contaminant
occurrence data base and methodology to select contaminants for
regulation, promulgate microbial and disinfectant/disinfection by-
products regulations, identify new treatment technologies for small
systems, administer the newly created drinking water state revolving
fund, and develop regulations and guidelines for consumer confidence
reports, operator certification programs, source water assessment and
monitoring relief
In satisfying these requirements, EPA has involved the public in
the regulatory process to an extent not equalled by another federal
agency and stands as a model for federal rule making. EPA has involved
private citizens, scientists, drinking water professionals, medical
professionals, public health officials, economists, and environmental
and consumer advocacy representatives, as well as other experts in
providing recommendations and how to carry out these new regulatory
responsibilities. EPA and the Office of Drinking Water and Ground Water
are to be commended for taking this new approach which should result in
better regulations that protect public health.
Because of its exemplary approach to reforming the regulatory
process, the EPA drinking water program budget request should not be
cut to meet overall federal budget constraints. AWWA believes that the
funding requested for the EPA drinking water program in the EPA fiscal
year 1998 budget request is vital to continue this new regulatory
approach and urges Congress to appropriate the requested funds.
Recommended action in the fiscal year 1998 budget.--Appropriate
$105,300,000 for the EPA drinking water program.
This concludes the AWWA statement on the fiscal year 1998 EPA
budget.
______
Prepared Statement of James H. Schlender, Executive Administrator,
Great Lakes Indian Fish and Wildlife Commission
Agency involved: Environmental Protection Agency
Fiscal year 1998 Appropriations requested: $330,280
Project: Intertribal Lake Superior basin initiative
Project description: To build on previous successes, the Commission
requests that Congress earmark $330,280 from the EPA's fiscal year 1998
Great Lakes National Policy Office and Coastal Environmental Management
(CEM) Programs to:
--through intergovernmental partnerships and liaison with other
organizations, develop, coordinate, and implement tribal
strategies to protect the Lake Superior ecosystem in
conjunction with the Binational Program, Lake Superior Lakewide
Management Plan (LaMP); International Joint Commission (IJC)
meetings; and State of the Lakes Ecosystem Conference (SOLEC)
forums at a cost of $60,000; and
--assess off-reservation environmental impacts from activities
proposed by Crandon Mining Company and other potential mining
projects in Wisconsin at a cost of $196,404; and
--expand cooperative contaminant studies for fish, animals, and
plants used by tribal members under rights reserved in the 1837
and 1842 treaties with the United States at a cost of $73,876.
Authorization: The Clean Water Act designates the Great Lakes
National Program Office (GLNPO) to develop and implement action plans
to carry out the United States' responsibilities under the Great Lakes
Water Quality Agreement and subsequent amending Agreements. GLNPO is
directed to perform these functions in cooperation with tribal
agencies, among others. 33 U.S.C. Sec. 1268(c). In the Commission's
view, this is sufficient authority for Congress to provide funding for
tribal organizations, such as the Commission, to undertake initiatives
related to Great Lakes water quality. In fiscal year 1997, GLIFWC will
administer $101,383 in Coastal Environmental Management (CEM) funds
from the EPA to facilitate tribal participation in the Binational
program and address environmental concerns from activities proposed by
Crandon Mining Company.
BACKGROUND
Comprised of eleven tribal governments located throughout
Minnesota, Wisconsin, and Michigan, the Commission's purpose is to
protect and enhance treaty guaranteed rights to hunt, fish, and gather
on inland territories ceded under the Chippewa treaties of 1836, 1837,
and 1842; to protect and enhance treaty guaranteed fishing on the Great
Lakes; and to provide cooperative management and protection of these
resources. Tribal members rely upon fish, wildlife, and plants for
religious, ceremonial, medicinal, subsistence, economic, and cultural
purposes. Any contamination from environmental degradation threatens
the health, safety, and economy of Chippewa people.
It is essential to maintain and expand EPA funding levels in fiscal
year 1998 or much of the Tribes' progress in the environmental arena
will be lost. Existing Commission funding sources, in particular BIA
funds, are increasingly stressed because of a required expansion of
Commission services to its member Tribes throughout the 1837 ceded
territory. Recent court developments have resulted in tribal
implementation of treaty rights in the entire 1837 ceded territory
which includes the northern third of Wisconsin and the central portion
of Minnesota. Continued progress on environmental initiatives depends
upon the Commissions's fiscal year 1998 EPA Appropriations request
being funded.
GREAT LAKES DECISION MAKING AND INTERGOVERNMENTAL PARTNERSHIPS
COMPONENT
EPA's Indian Policy stresses the themes of strengthening tribal
self-government and working with tribes on a government-to-government
basis. Unfortunately, lack of adequate funding has made this policy
ineffective in regard to tribal participation in the development and
implementation of strategies to protect the Great Lakes ecosystem. The
Commission is requesting that Congress earmark $60,000 immediately from
the Great Lakes National Policy Office or Coastal Environmental
Management (CEM) Program to rectify this problem and to:
--provide a capacity-building grant to enable the Commission to
participate in Great Lakes environmental policy-making, and
--provide funds for technical projects so that the Commission is able
to contribute to technical working groups and adequately review
technical documents.
EPA funding will be used by GLIFWC to research environmental
issues, facilitate discussion and build consensus between tribal
leaders, and develop formal positions to be forwarded to appropriate
agencies. These efforts would complement the ongoing efforts by
Commission member tribes to develop their governmental positions.
Funding from EPA is also needed to facilitate the Commission's long
term participation in the development of Remedial Action Plans (RAP's)
and the Binational Program to Restore and Protect Lake Superior. The
Commission is proposing to participate in both the Binational Program's
Task Force of senior governmental natural resource managers and
Workgroup comprised of technical and scientific professionals.
The Commission would further assist member tribes in establishing
meaningful liaison with the wide number of organizations working to
protect the Great Lakes basin ecosystem, including the International
Joint Commission (IJC) and the Binational Executive Committee for the
Great Lakes.
ASSESSMENT OF OFF-RESERVATION ENVIRONMENTAL IMPACTS FROM PROPOSED
MINING ACTIVITIES
Tribes are concerned that mining development within the 1837 and
1842 ceded territories will have environmental impacts upon treaty
harvested resources. The Commission is requesting a $196,404 earmark
from EPA to fund scientific and policy analysis capabilities to address
mining related issues. Currently 15 mineral deposits have been
identified in the ceded territory. These deposits are expected to
possess a wide range of mineral resources including copper, zinc,
uranium, lead, and vanadium.
The extraction of these resources poses significant environmental
dangers. For this reason, mining proposals will be highly controversial
both politically and scientifically. Tribes will require sound science
and rational policy development to effectively address mining issues.
The Commission's ability to provide this expertise to its member tribes
will assist in analyzing technical issues, communicating factual
information, and developing partnerships with other governments and
resource managers. Funding to address off-reservation environmental
concerns is particularly urgent given the Wisconsin Department of
Natural Resource's announcement that it intends to complete and submit
its Environmental Impact Statement (EIS) for public comment in 1998.
COOPERATIVE CEDED TERRITORY CONTAMINANT STUDIES
The Commission is requesting a $73,876 earmark from EPA to fund
cooperative contaminant studies in the 1837 and 1842 ceded territories.
Tribes are concerned that the fish, wildlife, and plants upon which
they rely for subsistence, cultural, and economic purposes are becoming
degraded, threatening their health, safety, and reservation economies.
Tribal members retain a close relationship to their environment and
are directly impacted when toxins enter the Great Lakes food chain.
Under treaty reserved rights, tribal members harvested, processed, and
consumed: 86,045 walleye; 1,740 musky; 1,757 northern pike; 11,045
whitetailed deer; 153 bear; 5,725 ducks; geese; and 70,424 pounds of
wild rice from 1993 to 1995.
In recent years, potentially dangerous levels of mercury, PCB's,
and other chemicals have been documented in fish throughout the Great
Lakes region. Scientific studies have confirmed the direct correlation
between consumption of fish with high mercury and PCB levels and
adverse health effects. These include short-term memory and attention
deficits in children. The Wisconsin Department of Health recommends
limiting consumption of fish with .5 ppm and no consumption of fish
with 1 ppm or greater. Given the tribes' heavy consumption of fish, the
risks are obvious.
In 1996, the Commission collected 384 walleye samples from 66 study
lakes in Wisconsin to test mercury levels and establish a baseline from
which contaminant trends can be identified in the future. Samples were
then tested in a laboratory under a cooperative agreement with U.W.-
Superior's Lake Superior Research Institute. Geographic Information
System (GIS) maps were prepared from this data informing both tribal
members, and their non-Indian neighbors, which lakes possessed walleye
containing mercury levels at or above .5 ppm--the level at which the
Wisconsin Division of Health advised pregnant women, breast feeding
mothers, and children should restrict their consumption of fish.
Findings and data from this tribal project is now being used by the
University of Wisconsin Medical College at Milwaukee in Agency for
Toxic Substance and Disease Registry (ATSDR) research analyzing
environmental risks to Indian people who consume fish. On the last page
of this testimony I have submitted a GIS map indicating mercury levels
in fish harvested and consumed by Lac Courte Oreilles tribal members
including myself.
The Commission requests $13,726 annually to continue testing methyl
mercury levels of fish harvested on long term study lakes and lakes
with insufficient data. This will assist scientists in monitoring long
term mercury trends in walleye harvested by tribal members and more
effectively protect the health and safety of tribal members in lakes
previously not sampled.
``Monitoring the health of wildlife provides an early warning
system for declining quality of ecosystems, allows understanding of the
effects of environmental pollutants at the population level, and serves
as a means for estimating risks to human health''. (Contaminants in
Minnesota Wildlife 1989-1991, Keren L. Ensor, Minnesota Pollution
Control Agency, July 1993). To address tribal concerns the Commission
is requesting an EPA earmark of $20,000 to conduct heavy metal testing
on wildlife and establish a baseline from which contaminant trends can
be identified in the future. This program would be integrated into
ongoing ecosystem inventories and assessments being conducted by the
Commission in the 1837 and 1842 ceded territories.
In addition to harvesting natural resources for subsistence and
cultural purposes, tribal members also harvest and market Lake
Superior's commercial fishery. This fishery is important to the economy
of tribes on Lake Superior and from 1993 to 1995 totaled 405,319 pounds
of lake trout; 366,563 pounds of siscowet trout; 977,023 pounds of
white fish; and 143,317 pounds of herring. Trend information on
contaminants is needed to determine if contaminant levels are
increasing, decreasing, or remaining stable. Spatial information (i.e.
GIS mapping formats) on contaminants in indicator species is needed to
determine whether contaminant levels differ among areas within the Lake
Superior basin that are fished, harvested, consumed, and marketed by
tribal members.
The Commission is requesting $40,150 to establish baseline
contaminant levels for mercury, copper, cadmium, lead, PCB's, and
organochlorines in eight indicator species of Lake Superior fish.
Composite samples are to be taken from spawning reefs in conjunction
with ongoing stock assessments and include all Lake Superior fishery
food chain levels--bottom feeders, prey and predators.
The expanded program we propose would provide more and better data
on ecosystem contamination, permitting contaminant analysis from a
long-term perspective. Our goal is to provide more complete information
so that tribal members can make well-informed decisions about eating
natural resources harvested under treaty, and involved governments can
adopt necessary pollution control measures.
______
Prepared Statement of Gary A. Glenn, President, Massachusetts
Foundation for Excellence in Marine and Polymer Sciences
I am proud to submit this testimony on behalf of a grouping of
communities in Vermont, California, Massachusetts, Hawaii, and
elsewhere that are involved in testing a low cost, ecological
technology for reviving and reusing wastewater. The communities are
putting their own hard pressed resources into this cost effective but
still experimental technology, and are pleased that Congress has
provided funds to EPA to assist in the project. The data from the
locations where the new technology is being tested, taken together, and
in accordance with EPA guidelines, will provide the best conceivable
basis for determining the extent to which this technology can be
adopted by communities across the country. The different locations
represent varied geographical conditions so that the results will
represent a true cross section of the United States. In order to
complete testing at the demonstration projects already begun, and to
provide for assembly and testing of a demonstration ecological unit, we
request $2.25 million for fiscal year 1997. These funds will allow
approximately $1.5 million for a project in the State of Hawaii that
will focus on use of native Hawaiian plants and animals in wastewater
cleansing; and $750,000 to continue essential testing of the state-of-
the-art facility in Vermont.
This project fits very well into the ideas and concepts enunciated
by both parties in this Congress. This technology is intended to be
community-based and community-specific, as opposed to being centrally
mandated. Each and every local community in the United States will be
able to select from a menu of wastewater treatment options, and can
weigh cost factors, speed of clean-up, size of facility, and water
reuse alternatives. Thus local communities (as well as counties and
states) will have expanded freedom in deciding upon wastewater
treatments.
The role of the federal government in this project is very limited,
very specific, and very short term. The only reason for federal
government involvement is to collect carefully calibrated data on the
operation of each system so that local communities will have the data
necessary for decision making. Once this data has been collected over a
period of time sufficient to demonstrate the technology's effectiveness
and cost, no further federal funds will be necessary for demonstrating
the system.
It is intended that operation of advanced ecologically engineered
systems will be less expensive for treatment of wastewater than other
kinds of technologies. This will save taxpayer dollars at the federal,
state, and local levels.
The purpose of advanced ecological engineering systems is to treat
wastewater and its by-products by using natural processes of sunlight,
plants, and animals in a carefully balanced ecosystem. Untreated or
inadequately treated sewage, septage and sludge have become one of the
world's most pressing problems, causing the contamination of drinking
water supplies and coastal marine waters. This is a particularly acute
problem in the U.S. because of our high rate of consumption and
multiple use pressures on our water systems. Public support for
environmental conservation and reuse of resources continues, but new
methods for dealing with the protection of our waters are needed.
The ecologically engineered system that has been developed by Dr.
John Todd and his associated scientists and engineers removes both
nutrients and toxic substances from polluted water by channeling it
through a series of cylindrical tanks or raceways placed in rows inside
a greenhouse. The tanks are exposed to sunlight and contain a carefully
designed progression of bacteria, algae, snails and fish. Wastewater is
pumped into the first tanks where microscopic bacteria attack or
consume organic matter, thus causing their populations to grow. Algae
thrive on the nutrients released by the bacteria, and they increase.
Snails consume the algae, and the cycle goes on, all the while
transforming the wastewater. Further on, different varieties of plants
are grown on the surface of the water, allowing their oxygen-rich roots
to fall beneath the surface where snails and higher organisms graze. In
the last tanks fish such as tilapia and bass swim around in clean
water. By imitating the way nature purifies water, only more quickly
and thoroughly, this system represents a dramatic departure from
conventional methods.
This ecological wastewater system is truly effective--not only
because it uses new and unexpected ways of treating wastewater, but
also because it asks all of us as citizens to think about what
``waste'' means. The traditional method of dealing with vast quantities
of wastewater produced by our homes and businesses has been to add
chemicals to kill the potentially toxic organisms and to neutralize the
toxic inorganic chemicals. All cities in America have at least one and
often several major treatment plants that attempt to kill and/or
neutralize wastewater toxicity. These plants use the same kind of
approach that farmers use with unwanted bugs (applying chemical
pesticides) or localities use with solid waste (burning it or dumping
it in the ocean or filling the land with it). The principle behind
ecological engineering is deceptively simple: let nature take care of
breaking down the toxins in wastewater in its own way, that is, with
natural organisms including microbial life forms, plants, and animals.
In practice, however, the engineering of a dedicated living ecosystem
containing hundreds or thousands of organisms is phenomenally complex.
It is only because of scientific breakthroughs in microbiology, plant
science and pathology, biotechnology, and ecology/environmental science
that have occurred in recent years that this kind of system engineering
is now possible.
The Massachusetts Foundation for Excellence in Marine and Polymer
Sciences is acting as the coordinator for the various locations where
this nature-based technology is being tested. We collect data from all
locations, prepare comparative reports, and interact with EPA on
matters of consortium interest. On behalf of the participating local
and state entities, we request the support of this committee in
providing continuation funding from EPA so that we can maintain
operations, testing, and facility assembly at demonstration sites in
Vermont, Hawaii, California, Massachusetts, and elsewhere.
______
Prepared Statement of Dr. Robert J. Mason, Director, Environmental Lung
Center, National Jewish Medical and Research Center
Mr. Chairman, and Members of the Subcommittee, thank you for the
opportunity to submit testimony to the hearing record regarding the
newly established Environmental Lung Center at the National Jewish
Medical and Research Center in Denver, Colorado. The National Jewish
Center, formerly the National Jewish Center for Immunology and
Respiratory Medicine, is the world's foremost center for the study and
treatment of lung disease.
As you know, there was a $750,000 set aside in fiscal year 1997 EPA
Appropriations for research at the Environmental Lung Center. We are
currently in the process of applying for that funding through the
Environmental Protection Agency's peer review process and, after some
preliminary discussions with EPA officials, we believe that a very
productive relationship with the agency has been fostered. Essentially,
the mission of the Environmental Lung Center will be to provide the
sound science necessary to assist the agency with regulatory policy in
specific areas.
Generally speaking, the Environmental Lung Center is building upon
100 years of expertise in this specific science. The goals of the
Center include discovering the molecular mechanisms for environmental
and lung disease, including asthma and lung cancer; providing a
scientific basis for evaluating health hazards of indoor air pollution;
identifying the genetic and molecular basis for individual
susceptibility to environmental lung disease; and identifying the risk
and effect of air pollution on patients with pre-existing pulmonary
disease.
This research is extremely important given the fact that in the
United States, lung disease is the leading cause of death. It is now
well known that man-made environmental and occupational pollutants
contribute significantly to the rising numbers of those afflicted,
particularly impacting residents and commuters to urban areas and those
who work in occupations such as mining, construction, textiles and the
military. Indoor air pollution and improper ventilation also cause the
spread of respiratory illnesses. To eradicate these illnesses and
address general environmental concerns, the Clean Air Act authorized
EPA to set exposure standards for six widespread air pollutants. As you
know, these standards continue to provoke heated debate in the
scientific and regulatory communities. Our task is to find out the
extent to which the exposure thresholds are true, as measured against
individual susceptibility, and to assist the regulatory bodies in this
country to come up with decisions regarding toxic thresholds of
compounds and the medical relevance of the EPA's fixed testing-station
data to surrounding populations.
As the only high ranking institute in the nation that concentrates
on lung disease and the only one that sees patients as well as conducts
research, National Jewish has made great contributions to the
advancement of medical knowledge about the effects of environmental
pollutants on the human pulmonary system. Its location in Denver is
significant in that the city is plagued with environmental pollutants
(nearly 300,000 Colorado residents have chronic lung disease, which is
well above the national average, although our patients come from all 50
states). Our dedicated research at National Jewish has shown definite
linkages between certain types of ambient air pollutants and asthma. We
are currently exploring this further, along with the effects of certain
pollutants on other lung and pulmonary diseases.
The Environmental Lung Center's research efforts will range broadly
from studies of molecular biology and immunology, to direct studies of
air pollution on patients with lung disease. The focus of our work
during the current year will be on the special features of the lung as
an immune organ, the pathogenesis of oxidant and particulate inhalation
injuries, and two specific cohorts of patients, chronic beryllium
disease and asbestosis. For the purposes of this testimony, I will
describe the proposed studies in a very general way that will give the
Subcommittee a view into the complexities of determining safe levels of
airborne toxins given human susceptibility factors.
We know that the lung has a unique microenvironment to suppress
inflammation so as to minimize injury to its delicate gas exchange
units. We believe that alterations in these specific adaptations
account for individual susceptibility to environmental hazards. So, in
terms of the immune system, we will focus on the critical components of
immunity affecting the mucosal (pertaining to the mucous membranes)
immunity. These components are called the gamma/delta T lymphocytes. In
addition, we will focus on two surface-active proteins which are a
unique part of the immune system of the lung. We have been able to
clone these proteins and make recombinant proteins for determining
precise structure and function relationships. We are studying the
effects of these proteins to block specific infections. In another
project, we will characterize the antioxidant properties of the lung
which are critical to protection to the ozone and particulates. We will
begin our studies on respiratory viral infections, which we believe
greatly worsen the effects of air pollution, particularly those with
pre-existing lung disease. One of the most common occupational
pulmonary diseases in the aerospace industry is chronic beryllium
disease. We are close to determining the molecular mechanism of this
important immunologic disease. This will be the first time that an
antigen receptor on a T lymphocyte has been defined precisely for a
metal. We also have a cohort of patients with asbestosis which will
provide us with the opportunity of evaluating the value of sputum
cytology for the detection of lung cancer in this highly susceptible
population. Although it may seem that sputum cytology would be useful
for screening for lung cancer, earlier studies (which may have been
flawed) with lower risk patients did not establish the benefit of this
approach for this purpose. This may be worth exploring again in the
future since lung cancer is the number one killer in this country.
In the next year we are requesting $750,000 to continue these
projects and develop our ability to perform gene transfer and gene
knock out experiments in mice. The most exciting new technology is the
use of inducible promoters to turn on a certain gene in a specified
cell at a particular time. The technical components for doing this in
the respiratory epithelium are available, but accomplishing this feat
remains an exciting but formidable challenge for the next year. With
this technology we will be able to turn on a specific gene at a
particular site in the lung to defend against an environmental agent of
interest.
The major thrust for the next five years is to take advantage of
modern molecular biology and genetics in order to study environmental
lung disease. Never before have researchers had the ability to
determine the genetic basis for individual susceptibility and the
molecular mechanisms of disease. Our institution is internationally
known for its research in immunology, and we want to utilize this
expertise to study environmental lung disease. In order to accomplish
this goal, we need to expand our research facilities and core units in
order to accommodate these new programs. We will commit at least 2.5
million dollars in matching funds, and we are requesting 2.0 million
dollars to develop these research facilities.
Mr. Chairman, we believe that we are the best partner to provide
the type of sound scientific research necessary to assist the agency
with its regulatory decision-making goals. Our desire is to grow this
relationship and hope that the subcommittee will provide $750,000 to
continue this relationship for another year. Mr. Chairman, our mission
is taking us to a new level of research, compounding our need to
renovate and expand our current research laboratory. Therefore, we
would also like to take this opportunity to present our need for $2
million as a federal share, to be matched by National Jewish, in order
to expand our research space. This federal investment will enhance our
nation's commitment to protecting the health and safety of its workers,
citizens and individuals the world over. The research conducted by the
Center will lead to medical breakthroughs and environmental findings
that will assist the federal government to set new standards for both
government and business. Your support for these efforts will save lives
and ultimately, save costs for the federal government and for
businesses who are currently struggling to comply with new standards.
Thank you.
______
Prepared Statement of Terrence J. O'Brien, President, Metropolitan
Water Reclamation District of Greater Chicago
I am Terrence J. O'Brien, President of the Metropolitan Water
Reclamation District of Greater Chicago, and on behalf of the Water
Reclamation District, I want to thank the Subcommittee for this
opportunity to present our priority for fiscal year 1998, and express
our appreciation for your support of our requests over the years. The
Metropolitan Water Reclamation District (MWRD) is the sponsor for the
federally approved combined sewer overflow (CSO) project, the Tunnel
and Reservoir Plan (TARP), in Chicago, Illinois. Specifically, we are
asking that $30 million be included to continue construction of this
project in the Subcommittee's VA, HUD and Independent Agencies
Appropriations Bill for fiscal year 1998. The following outlines the
project and the need for the requested funding.
INTRODUCTION
The Metropolitan Water Reclamation District was established in 1889
and has the responsibility for sewage treatment, flood control and
stormwater management in Cook County, Illinois. In fact, the District
was established, in response to an epidemic which killed 90,000 people
in 1885, for the purpose of addressing the local sewage problems and by
1900, had reversed the flows of the Chicago and Calumet Rivers to carry
combined sewage away from Lake Michigan, the area's main source of
water supply. The District has been involved with major engineering
feats since its inception.
In an effort to meet the water quality goals of the Clean Water
Act, to prevent backflows into Lake Michigan, and to provide an outlet
for flood waters, the Metropolitan Water Reclamation District of
Greater Chicago designed the innovative two-phase Tunnel and Reservoir
Plan. TARP Phase I, which was judged by the EPA on two occasions as the
most cost-effective plan available to meet the enforceable provisions
of the Clean Water Act, is a combined sewer overflow elimination
system. TARP Phase II, also under construction, will provide flood
control relief to hundreds of thousands of residents and businesses in
the Chicagoland area.
TUNNEL AND RESERVOIR PLAN
TARP Phase I is an intricate system of drop shafts, tunnels and
pumping stations which will capture combined sewer overflows from a
service area of 375 square miles. Chicago will remove four times the
amount of combined sewer overflow (CSO) pollution as Boston's projected
removal--for approximately the same cost. The Calumet system will
provide 3.6 million pounds of biological oxygen demand (BOD) removal
versus Boston's one million pounds of BOD removal per year. In fact,
Chicago's CSO pollution problems are worse than the combination of
Boston, New York, and San Francisco's pollution problems. The Chicago
Metropolitan area's annual BOD loading is 43 million pounds per year.
This contrasts with the combination of Boston, New York, and San
Francisco's combined annual BOD loading of 35 million pounds.
A good portion of the remainder of the TARP system is to be built
in the southeast side of Chicago and the southern suburbs (Calumet
system), a low-income, highly neglected and highly polluted area. This
community suffers from tremendous land, air, and water pollution--
literally a dumping ground for multi-media pollution ranging from
chemical waste to serious water pollution.
Due to the enormous risk to the community, the Water Reclamation
District, as the local sponsor, cannot afford to leave the citizens
vulnerable. Therefore, it is imperative that this work must continue.
Because the construction industry is already doing work in the area,
the climate is favorable for proceeding with this work at this time,
producing a significant cost savings. What we are seeking, then, is
funding to advance federal work.
We have a proven and cost-effective program. In fact, we have
estimated that TARP's cost is about a quarter of the cost of separating
the area's existing combined sewer systems into separate sewage and
stormwater systems. Upon reanalysis, the EPA has consistently found the
TARP program to be the most cost-effective solution that will reduce
the impacts by the greatest degree to meet the enforceable requirements
of the Act, with the least amount of dollars. The project, while
relating most specifically to the 52 tributary municipalities in
northeastern Illinois, is also beneficial to our downstream communities
such as Joilet and Peoria. These benefits occur because of the capture
of wastewater in the tunnels during storm periods and by treatment of
the discharge before being released into the waterways.
TARP was designed to give the Chicago metropolitan area the optimal
environmental protection that could possibly be provided. More
importantly, no other project was found to be as cost-effective. In
addition, the beneficial use of the project is being enhanced by the
addition of the flood control reservoirs now being designed and
constructed by the Corps of Engineers, which will be connected to the
tunnels for additional capture and storage of combined sewage during
flood events. We believe TARP stands as a tribute to our nation's Clean
Water goals and one that is being accomplished within the most economic
constraints.
REQUESTED ACTION
The $30 million we are seeking in fiscal year 1998 funding in the
Subcommittee's bill will reimburse the local sponsor for the
construction of the Torrence Avenue Leg of the Calumet system of the
TARP project. We greatly appreciate the Subcommittee's endorsement of
our request over the years to advance the construction of this work.
This fiscal year 1998 work will go a long way to address serious water
quality, stormwater and safety problems. It will have a tremendously
beneficial impact on a community which suffers from water pollution and
significant flooding problems. The facilities plan for the overall TARP
project has been approved by the EPA and design has been completed. The
EPA has identified this particular segment of work as the next critical
section of the plan to be constructed based on significant water
quality benefits.
Once on-line, the Torrence Avenue Leg of the Calumet System will
capture 2.6 billion gallons of CSO's per year and will protect 21
square miles of the City of Chicago from raw sewage backup and
flooding.
We urgently request that this funding be included in the
Subcommittee's bill for the construction of the Calumet System of the
TARP project. We thank you in advance for your consideration of our
request.
______
Prepared Statement of Hon. Ed Jennings, Mayor, City of Gainesville, FL
the sweetwater branch/paynes prairie stormwater project
Mr. Chairman: On behalf of the City of Gainesville, Florida I
appreciate the opportunity to present this written testimony to you
today. The City of Gainesville is seeking federal funds in the fiscal
year 1998 VA-HUD Appropriations bill, in order to assist our efforts to
protect the Florida aquifer from stormwater runoff. In particular, we
are hopeful that the Subcommittee will provide the City with $2 million
as an EPA Special Assistance Grant.
In Gainesville, the Sweetwater Branch basin contains approximately
1,710 acres and is located in the southeast central portion of the
City. The outfall from this basin discharges into Paynes Prairie, a
state owned preserve and park system, which eventually flows into the
Alachua Sink, a natural sink hole that drains directly into the Florida
Aquifer. This Aquifer provides the majority of drinking water to
Florida's a residents and has a direct impact on Florida Everglades.
The Sweetwater Branch drainage basin contains urban, commercial,
industrial, and residential area stormwater runoff. Because the branch
runs through some of the oldest portions of Gainesville, most
stormwater runoff is directly discharged into the Branch with very
little flooding or pollution removal treatment. The runoff has the
potential to affect threatened and endangered wildlife such as the Bald
Eagle, the Woodstork, the Florida Sandhill Crane, and the Southeastern
American Kestrel. In addition, many domestic water wells are used to
obtain water from surficial and intermediate aquifers in the area. In
summary, the situation has created a concern among environmentalists,
business leaders, and concerned citizens throughout the region that
Paynes Prairie and the Florida aquifer are being compromised.
With this in mind, the City of Gainesville, Alachua County, St.
Johns River Water Management District, Florida Department of
Environmental Protection and local citizens are all seeking a
comprehensive ecosystem management solution to the problem of
stormwater runoff from downtown entering Sweetwater Branch, Paynes
Prairie, and the Alachua Sink. The project devised by these groups
would reduce or eliminate the sediment, debris, nutrients and general
pollutants currently being discharged. Current projections are that the
project would consist of the following three components:
--the purchase of undeveloped property in the vicinity of State Road
331 and Sweetwater Branch;
--the construction of maintainable sediment and debris removal
systems; and
--the construction of maintainable nutrient removal systems.
An in-depth engineering analysis of the creek system, property
topography, associated wetlands, and other pertinent factors is needed
to determine the optimum and appropriate scope of property purchase and
facilities construction. The City is prepared to pay some of the cost
for this analysis, but we are simply unable to bear the entire burden.
As a result, we request that the Subcommittee appropriate $2 million as
an EPA Special Assistance Grant to assist our efforts. Once the project
construction is complete, Gainesville Stormwater Management Utility, a
public utility, would provide the required annual maintenance for the
facility and no federal maintenance funds would be needed.
This is a critical and much needed project for the City of
Gainesville, as well as the entire State of Florida, and we
respectfully ask the Subcommittee for its consideration of the
Sweetwater Branch/Paynes Prairie Stormwater Project.
______
Prepared Statement of Joe L. Mauderly, Senior Scientist and Director of
External Affairs, Lovelace Respiratory Research Institute
It is proposed that the U.S. Environmental Protection Agency
establish and support a National Environmental Respiratory Center for
the purpose of coordinating research and information transfer
concerning health risks of breathing airborne contaminants in the
environment. Federal support is specifically requested as part of the
fiscal year 1998 appropriation through an account the Subcommittee
determines to be appropriate.
THE ENVIRONMENTAL RESPIRATORY HEALTH DILEMMA
U.S. Health Burden of Respiratory Disease
The magnitude of the national health burden caused by respiratory
diseases is not widely appreciated. These diseases now kill one out of
four Americans. Among cancers, the second leading cause of death, lung
cancer is the single largest killer. Nearly 195 thousand new cases of
respiratory tract cancer will be diagnosed this year, and 166 thousand
Americans will die from these cancers. Lung cancer kills more than
twice as many women as breast cancer, and more than twice as many men
as prostate cancer. Pneumonia and heart-lung failure are the terminal
conditions for many of our elderly. Excluding cancer, chronic
respiratory diseases and pneumonia are the third leading cause of death
in the U.S., killing over 188 thousand Americans in 1995. Asthma,
growing unaccountably in recent decades, now afflicts 15 million
Americans, including 5 million children. The incidence of asthma
increased 61 percent between 1982 and 1994, and asthma deaths among
children nearly doubled between 1980 and 1993. Viral respiratory
infections are the most common cause of hospitalization of infants and
cause a tremendous loss of productivity in the adult workforce.
Occupational lung disease is the number one work-related illness in the
U.S. in terms of frequency, severity, and degree of ``preventability''.
Worldwide, three times more people die from tuberculosis than from
AIDS.
Critical Uncertainties Regarding Contributions of Airborne
Environmental Contaminants
Pollutants inhaled in the environment, workplace, and home are
known to aggravate asthma and contribute to respiratory illness, but
the extent of their role in causing respiratory disease is not clear.
It is known that it is possible for airborne irritants, toxins,
allergens, carcinogens, and infectious agents to cause cancer,
degenerative disease, and infections directly, or indirectly through
reduction of normal defenses, but the portion of such diseases caused
by, or strongly influenced by, pollution is uncertain.
EPA is repeatedly faced with estimating the health effects of
environmental air pollution on the basis of very limited information
and in the presence of large uncertainty. For example, environmental
radon gas is estimated to be the second leading cause of lung cancer
(after smoking), but this estimate comes from our experience with
uranium mining, in which the exposure conditions and exposed population
were quite different from those in the general environment. As another
current example, it is estimated that as many as 40 thousand Americans
may die annually from breathing particulate environmental air
pollution, but this estimate comes from epidemiological data that do
not provide a clear understanding of individuals who were affected, the
nature and magnitude of their exposure, the biological processes by
which death might have occurred, or the extent to which the effects of
particles were independent of other pollutants.
It is difficult to associate health effects with specific pollutant
sources. Most environmental air contaminants have multiple sources
which produce species of overlapping, but slightly different physical-
chemical types. There are few biological markers of exposure which can
be used to link health effects to past exposures to pollutant classes,
much less to specific pollutants and sources. This makes it very
difficult to associate specific pollutant species with specific health
effects, identify and prioritize the sources whose management would
most efficiently reduce the effects, and compare potential health gains
to the financial, technological, and lifestyle commitments required to
achieve them.
EPA faces a critical problem because we have little scientific or
regulatory ability to deal with pollutant mixtures. It is recognized
that all exposures to air pollutants involve inhalation of complex
mixtures of materials, but there is very little research on the health
effects of mixtures, or the significance of interactions among combined
or sequential exposures to multiple pollutants. The present approach to
implementing the National Ambient Air Quality Standards (NAAQS)
addresses individual contaminants, or contaminant classes, in
isolation. There is little framework for considering the effects of
pollutant mixtures, and little ongoing research that will provide a
basis for such a framework. We know that multiple pollutants can cause
common effects, such as inflammation. We know that some pollutants can
amplify the effects of others. We can presume that a mixture of
pollutants, each within its acceptable concentration, could present an
unacceptable aggregate health risk. We face the possibility,
exemplified by current uncertainties about particulate matter, that a
pollutant occurring in a mixture might wrongly be assigned sole
responsibility for a health effect that, in fact, results from the
mixture or an unrecognized copollutant that varies in concert with the
accused species. This issue will become increasingly important as
pollutant levels are pushed ever lower, and needs coordinated,
interdisciplinary attention.
As air pollutant levels are reduced, the problems of correctly
linking health effects to the correct species and sources, and of
making difficult cost-benefit policy judgments, will increase. The
levels of many environmental air contaminants have decreased due to
technological developments and regulatory pressures. For example,
between 1985 and 1995, concentrations of airborne lead, sulfur dioxide,
and carbon monoxide in the U.S. decreased 32 percent, 18 percent, and
16 percent, respectively, and levels of airborne particulate matter
decreased 22 percent between 1988 and 1995. Levels of ozone levels and
several other pollutants have also decreased. As background levels are
approached, decisions regarding: (a) the benefits of further reductions
in man-made pollution; (b) the need to consider pollutants as a mixture
rather than as individual species; and (c) the point at which small
biological changes represent health effects warranting control, will be
more difficult and will require additional focused, coordinated
research.
EPA is repeatedly faced with estimating effects in particularly
sensitive or susceptible subpopulations. For example, the proposed new
NAAQS for ozone and particulate matter are driven largely by effects
thought to occur in exercising asthmatics and elderly people with
preexisting lung and heart disease, respectively. It is seldom
appropriate to conduct studies in which adverse effects are
intentionally elicited in the most sensitive people. Until recently,
there has been little emphasis on developing laboratory animal models
of human heart-lung conditions thought to render people susceptible to
pollutants. More emphasis needs to be given to developing and
validating these research tools, and to coordinating such efforts
across agencies and research disciplines.
EPA repeatedly faces uncertainties regarding the relevance of
laboratory results to human health risks. As one of several examples,
uncertainties about the relevance of the lung tumor response of rats to
diesel exhaust to human lung cancer risk has impeded the development of
unit risk estimates and delayed completion of EPA's diesel health
assessment activity. Much of our understanding of the toxicity of
inhaled airborne materials comes from studies using animals and cells
to identify toxic agents, understand biological responses, and
determine relationships between dose and effect. Such studies produce
detailed information on the response of animals or cells, but there is
too little emphasis on ensuring that the responses are similar to those
that occur in humans. Development of information having little
relevance to humans wastes resources. The validation of responses of
animals and cells used to provide the scientific basis for national
environmental policy needs to be given greater emphasis and
coordination.
Lack of Interagency and Interdisciplinary Coordination
EPA does not have the mandate or resources to resolve all of these
interrelated issues alone; the resources of other agencies and non-
federal sponsors are critical. Current efforts are funded by EPA and
other agencies, including CDC/NIOSH, FDA, DOD, DOE, NIH (NHLBI, NIEHS,
NCI, NLAID, NIDA), and by health advocacy organizations, industry,
labor, and private foundations. Existing coordinating activities within
and among these groups do not provide sufficient integration and
synergism. Progress will require a wide range of laboratory
researchers, atmospheric scientists, epidemiologists, and clinical
researchers. Focusing and resolving the issues will require
interactions among researchers, health care professionals, and policy
makers in an iterative manner that fosters rapid information transfer
and development of joint investigative strategies. There is no
mechanism for national coordination of this interagency and
interdisciplinary effort. As a result, some efforts are duplicated and
some important issues are being inadequately addressed. The lack of a
national center for focusing and facilitating this effort will
increasingly create inefficiencies and impede progress.
There is also no national center for collecting and disseminating
information on the health impacts of airborne environmental
contaminants. Researchers, federal agencies, Congress, industry, and
the public do not have a centralized source of information on ongoing
research or recent findings.
There is no designated national interagency user facility with the
specialized facilities, equipment, core support, and professional
collaboration required for many types of investigations to study the
complex airborne materials and health responses of concern.
Investigators seek access to specialized facilities in EPA and other
laboratories on an individual basis, but there is no coordinated
national effort to facilitate the work of investigators in
universities, federal laboratories, and industry by identifying and
providing shared resources or standardized samples.
EPA and other agencies have intramural research centers or
administrative structures that serve internal programmatic coordination
needs, but these efforts rarely extend across agency lines. EPA and
other agencies also fund extramural centers to study, or facilitate the
study, of specific issues related to environmental respiratory health.
EPA's Mickey Leland National Urban Air Toxics Research Center funds
research and information transfer on the class of compounds designated
in the Clean Air Act as ``air toxics''. The Leland Center serves a
useful coordinating and research sponsorship function for air toxics,
but does not have the facility or scientific resources to meet the
broader needs described above. NIEHS center grants at universities
provide core support and coordinating functions for thematic
collections of projects on occupational and environmental health, but
again, are not suited to meeting the broader needs.
The lack of a national coordinating center is notable, considering
its small cost compared to the loss of productivity, the reduction in
quality of life, and the loss of life caused by respiratory diseases
and considering the importance now ascribed to the role of
environmental factors in respiratory disease.
THE NATIONAL ENVIRONMENTAL RESPIRATORY CENTER (NERC)
Location and Staffing
The Lovelace Respiratory Research Institute (LRRI) proposes to
establish a national center to meet the coordinating, user facility,
and information needs described above. The physical location of the
NERC will be the government-owned Inhalation Toxicology Research
Institute facility on Kirtland AFB in Albuquerque, NM. This facility is
already developed at taxpayer expense, having been established by the
DOE to conduct research on long-term health risks from inhaled
radioactive particles. Having fulfilled that mission, the facility was
recently released from DOE laboratory status, and is now leased by LRRI
to conduct respiratory health research for federal agencies, industry,
and private sponsors. This 270,000 square foot, world-class facility
contains $50 million in government-owned equipment, and has unmatched
potential as a national user facility. The facility is well-equipped
and staffed for intramural and collaborative research on airborne
materials of all types, including reproducing pollutant atmospheres,
conducting inhalation exposures of animals, determining the dosimetry
of inhaled materials, and evaluating health effects ranging from subtle
genetic and biochemical changes to clinical expression of disease.
The interests and expertise of LRRI are well-matched to the
proposed activities of the Center. While managing the facility for DOE,
LRRI contributed heavily to our present understanding of the
respiratory health impacts of airborne pollutants. LRRI has conducted
research for EPA, and has contributed heavily to the research cited as
scientific basis for air quality regulation. The group is well-known
for its efforts to understand airborne materials, link basic cellular
and tissue responses to the development of disease, validate the human
relevance of laboratory findings, and coordinate complex
interdisciplinary studies. The LRRI group has conducted the world's
most extensive research program on the effects of combined and
sequential exposures to multiple toxicants. The group is well-known for
its participation in advisory roles on EPA committees, and for
coordinating multidisciplinary and interinstitutional efforts.
LRRI envisions a ``virtual center'' that will also encompass nearby
institutions and an expanding group of collaborating investigators
nationwide. Academic affiliation with the University of New Mexico,
primarily through its Health Sciences Center will extend research and
training capabilities. Other local technology and collaborative
resources include Sandia and Los Alamos National Laboratories, the
National Center for Genome Resources, and the growing New Mexico
biotechnology and clinical research communities. The NERC would
interact closely with the Leland Center and with intramural research
centers within EPA and other agencies.
Principal Functions
1. Provide information resources.--The Center will provide
centralized information resources to researchers, EPA and other
agencies, congress, industry, and the public. Literature searches,
topical summaries, and answers to specific inquiries will be provided
via the internet, electronic mail, and telephone. Emphasis will be
given to providing access to relevant information nationwide through a
single point of contact and assistance.
2. Facilitate interagency and interinstitutional coordination.--The
Center will coordinate meetings, workshops, information transfer, and
other activities aimed at integrating and prioritizing national
research efforts and integrating results into useful summaries.
3. Provide user facilities and facilitate access to research
resources.--The Center will disseminate information on the availability
of specialized facilities, equipment, collaborative resources, and
samples at the Center and elsewhere, and will facilitate the use of
these resources by researchers in other institutions.
4. Provide training.--The Center will provide graduate training
through the Toxicology, Biomedical, and Public Health programs at the
University of New Mexico, and by hosting thesis research from other
universities. Postdoctoral and sabbatical appointments will also be
provided. Workshops and training courses will be conducted.
5. Conduct and sponsor research.--While it is envisioned that
limited intramural research will be conducted with Center funding,
intramural research will be principally funded by direct sponsorship of
Agencies, industry, and the public through grants, contracts, and
donations. Through the Center, extramural research aimed at critical
information gaps not addressed by other sponsors will be funded.
funding of the national environmental respiratory center
LRRI seeks authorization and subsequent appropriations through EPA
for core funding, with additional sponsorship from other agencies for
research aligned with individual agency mandates and strategic goals.
An initial appropriation of $2 million per year for 5 years,
beginning in fiscal year 1998, will establish the Center and its core
information, educational, and administrative functions. This amount
will provide for critical computing and communication infrastructure,
and limited facility renovations and equipment acquisitions. This
amount will provide very little intramural or extramural research
support; additional support for these purposes will be sought in
coordination with the lead sponsoring agency as the Center is
established. The goal is to develop research support principally
through sponsored programs, and to use the core Center support
principally to provide coordinating and information services and
sponsor limited collaborative research.
______
Prepared Statement of the American Chemical Society
fiscal year 1998 budget request for the environmental protection
AGENCY'S RESEARCH AND DEVELOPMENT
The American Chemical Society urges Congress to support the
Administration's fiscal year 1998 request for the Environmental
Protection Agency's Science and Technology Account ($614.3 million) and
for Superfund Research ($39.8 million). The combined research funding
from these EPA accounts would provide the Office of Research and
Development (ORD) with the minimum resources needed to focus on the
greatest risks to human health and the environment, and also to
determine where the greatest contribution to reducing those risks can
be made.
Since the American Chemical Society believes that ORD should be the
highest priority in the Agency's budget, appropriate funding for ORD
should be supported even at the expense of other EPA programs.
Additional funding above the requested level could be well spent for
research in support of decisionmaking and to avoid future environmental
problems. If ORD is supported at the requested level (a $50 million
increase to $554 million), then:
--The Science to Achieve Results programs receive almost $115 million
for extramural grants and fellowships, which are awarded in
peer-reviewed competitions to conduct important environmentally
related research, and for the Environmental Research Centers,
which continue with level funding.
--In-house research continues to be strengthened through risk-based
priority setting, peer review, and competitions for research
projects.
--Work increases to reduce uncertainties in priority areas such as
risks to children, endocrine disruptors, drinking water
disinfectant byproducts and microbes, particulate matter, and
urban toxics.
--Quality science is provided in support of the Safe Drinking Water
Act Amendments and the Food Quality Act, passed by Congress
last year.
--Research leads to a better understanding of stresses on the
ecosystem and links to human health.
--New tools, technologies, and methods for pollution prevention are
developed and introduced. The Advanced Measurement Initiative
accelerates the application of enhanced measurement and
monitoring tools. Testing continues to determine the
performance of environmental technologies developed in the
public and private sectors.
The Superfund Account also transfers funds for research purposes to
the National Institute for Environmental Health Sciences and to the
Agency for Toxic Substances and Disease Registry. These transfers
should be supported at least at the fiscal year 1997 level of funding--
$32.5 million and $64.0 million, respectively.
Your support for the Science and Technology Account request and the
transfers for research from the Superfund Account will help to secure
the quality science and research needed for sound decisionmaking and
cost-effective regulations.
______
Prepared Statement of the Water Environment Research Foundation
The Water Environment Research Foundation (WERF or Foundation)
appreciates the opportunity to submit this statement and request for
funding to the Subcommittee. WERF is a non-profit organization that
funds and manages water quality and wastewater technology research. It
is a unique public/private partnership between municipal utilities,
corporations, academia, industry, and the federal government, together
focusing resources on developing good science and technology for
rational environmental decision making. The results of WERF's research
allow regulators to better understand the costs and benefits of
different regulatory approaches and to select the least-cost
environmentally-beneficial approach.
WERF was created in response to the fact that federal funding for
practical wastewater treatment technology and process research has
declined from $15.6 million annually to virtually nothing today.
Likewise, funding for municipal water pollution engineering research at
the U.S. Environmental Protection Agency's (EPA's) Water Research
laboratory in Cincinnati has fallen from $7.4 million in 1982 to almost
zero today. Overall EPA water quality research funding has fallen from
$67 million in 1980 to $26 million in 1996. Most of the available money
is being used by EPA to support the development of regulations. This
has resulted in the stagnation of advances in wastewater control
technology and missed opportunities for better, more cost-efficient
wastewater management, and has prevented our nation from achieving full
benefit from the $65+ billion federal investment in wastewater
infrastructure.
WERF provides an objective forum for peer reviewed water pollution
control research to benefit the public and private sectors. Each year
WERF surveys its Subscribers, as well as a broad cross section of the
water quality profession, to develop consensus on the most pressing
scientific and technological research needs. Once the statistical
analysis of the survey is complete, WERF synthesizes the data into a
comprehensive 5-Year Research and Development Plan. To the extent
funding allows, research proposals are solicited on a priority basis.
An independent advisory Research Council, made up of experts from
municipal utilities, academics, engineering firms, regulatory agencies
and equipment manufacturers, helps WERF select researchers, oversees
studies, and provides periodic review and advice. WERF's customer
orientation facilitates creation of a consensus-based research agenda
addressing the needs of the people who govern and manage water quality
protection facilities. WERF's close association with the users of
research results, the Water Environment Federation, and EPA ensures the
practical application of findings.
WERF's funding is overwhelmingly contributed by municipal agencies
that represent more than half of the sewered population of the United
States. WERF members also include equipment manufacturers, consulting
firms and large industrial companies. These members are geographically
diverse and represent most of the country, including 38 states. WERF
has also received modest federal funding through the EPA budget (in
fiscal years 1991, 1993, 1994, 1995, and 1996) and through
Congressional add-ons to EPA's budget (in fiscal years 1991, 1992,
1993, and 1996). The appropriations bill passed by the Congress for
fiscal year 1997 included $1.5 million for WERF.
Since its inception in 1989, WERF has leveraged federal funding at
a 6:1 ratio including in-kind contributions and co-funding from
municipal utilities and the private sector. Only 12.6 percent of the
Foundation's budget is used to pay for fund raising and administrative
costs. The rest is spent on research. Since its inception in 1989, WERF
has initiated over 100 research projects valued at some $30 million.
Completed research has resulted in 25 published reports, with ten
additional reports expected to be printed by the end of 1997. Reports
due in 1997 include studies on optimizing wastewater treatment plant
operations, biosolids stability criteria, guidance for performing use-
attainability analyses and wet weather protocols (among others).
WERF respectfully requests that this Subcommittee include a $5
million appropriation for the Foundation in the fiscal year 1998 EPA
budget so that the critical research agenda developed by the Foundation
and its public and private partners (including EPA) can be carried out
to the fullest extent possible. This amount would reflect federal
matching of state and local government commitments to WERF. Simply
stated, the technology of today is based upon the research of the past.
The promise of the future is based on the research of today.
______
Prepared Statement of the California Industry and Government Coalition
on PM-10/PM-2.5
Mr. Chairman and Members of the Subcommittee: On behalf of the
California Industry and Government Coalition on PM-10/PM-2.5, we are
pleased to submit this statement for the record in support of our
fiscal year 1998 funding request of $1.0 million in the EPA budget for
the California Regional PM-10/PM-2.5 Air Quality Study.
The San Joaquin Valley of California and surrounding regions exceed
both state and federal clean air standards for small particulate
matter, designated PM-10/PM-2.5. The 1990 federal Clean Air Act
Amendments require these areas to attain federal PM-10/PM-2.5 standards
by December 31, 2001, and the proposed PM-2.5 standards by mid 2003.
Attainment of these standards requires effective and equitable
distribution of pollution controls that cannot be determined without a
major study of this issue.
According to EPA and the California Air Resources Board, existing
research data show that air quality caused by the PM-10/PM-2.5 problem
has the potential to threaten the health of more than 3 million people
living in the region, reduce visibility, and impact negatively on the
quality of life. Unless the causes, effects and problems associated
with PM-10/PM-2.5 are better addressed and understood, many industries
will suffer due to production and transportation problems, diminishing
natural resources, and increasing costs of fighting a problem that begs
for a soundly researched solution.
PM-10/PM-2.5 problems stem from a variety of industry and other
sources, and they are a significant problem in the areas that are
characteristic of much of California. Typical PM-10/PM-2.5 sources are
dust stirred up by vehicles on unpaved roads, and dirt loosened and
carried by wind during cultivation of agricultural land. Soil erosion
through wind and other agents also leads to aggravation of PM-10/PM-2.5
air pollution problems. Chemical transformation of gaseous precursors
are also a significant contributor to PM-2.5, as are combustion
sources.
The importance of this study on PM-10/PM-2.5 is underscored by the
need for more information on how the federal Clean Air Act Amendments
standards can be met effectively by the business community, as well as
by agencies of federal, state and local government whose activities
contribute to the problem, and who are subject to the requirements of
Title V of the Clean Air Act. There is a void in our current
understanding of the amount and impact each source of PM-10/PM-2.5
actually contributes to the overall problem. Without a better
understanding and more information--which this study would provide--
industry and government will be unable to develop an effective
attainment plain and control measures.
Our Coalition is working diligently to be a part of the effort to
solve this major problem, but to do so, we need federal assistance to
support research and efforts to deal effectively with what is
essentially an unfunded federal mandate.
Numerous industries, in concert with the State of California and
local governmental entities, are attempting to do our part, and we come
to the appropriations process to request assistance in obtaining a fair
federal share of financial support for this important research effort.
In 1990, our Coalition joined forces to undertake a study essential to
the development of an effective attainment plan and effective control
measures for the San Joaquin Valley of California. This unique
cooperative partnership involving federal, state and local government,
as well as private industry, has raised more than $14 million to date
to fund research and planning for a comprehensive PM-10/PM-2.5 air
quality study. Our cooperative effort on this issue continues, and our
hope is that private industry and federal, state and local governments
will be able to raise an additional $13 million over the next three
years to fund this important study.
The following is a list of PM-10/PM-2.5 research projects which are
in progress:
--Planning.--Development of protocols for emissions, field
monitoring, data analysis and modeling.
--Technical support studies.--Suitability of data base; (1995
Integrated Monitoring Study); micrometeorological parameters;
fog formation/dissipation; ammonia from soils.
--Modeling.--Demonstration of modeling system for application in
SIP's.
--Data analysis.--Analysis of existing data to aid project planning.
--Demonstration studies.--Almond, fig, walnut, cotton, harvesting;
unpaved agricultural roads; unpaved public roads; unpaved
shoulders of paved roads; dairies, feedlots, poultry, dry
cereal grain.
For fiscal year 1998, our Coalition is seeking $1.0 million in
federal funding through the U.S. Environmental Protection Agency to
support continuation of this vital study in California. We respectfully
request that the Appropriations Subcommittee on VA, HUD and Independent
Agencies provided this additional amount in the EPA appropriation for
fiscal year 1998, and that report language be included directing the
full amount for California.
The California Regional PM-10/PM-2.5 Air Quality Study will not
only provide this vital information for a region identified as having
particularly acute PM-10/PM-2.5 problems, it will also serve as a model
for other regions of the country that are experiencing similar
problems. The results of this study will provide improved methods and
tools for air quality monitoring, emission estimations, and effective
control strategies nationwide. Consequently, the beneficial results of
this study will contribute to national policy concerns as well.
The Coalition appreciates the Subcommittee's consideration of this
request for a fiscal year 1998 appropriation of $1.0 million for EPA to
support the California Regional PM-10/PM-2.5 Air Quality Study.
______
Prepared Statement of the Association of State Drinking Water
Administrators
introduction
The Association of State Drinking Water Administrators (ASDWA) is
pleased to provide written testimony to the VA, HUD and Independent
Agencies Subcommittee on Appropriations for fiscal year 1998. ASDWA
represents the drinking water programs in each of the fifty states and
six territories in their efforts to ensure the provision of safe,
potable drinking water to over 250 million consumers nationwide.
ASDWA's primary mission is the protection of public health through the
effective management of state drinking water programs that implement
the Safe Drinking Water Act (SDWA).
request overview
Adequate funding for state Public Water Supply Supervision (PWSS)
programs, the Drinking Water State Revolving Fund (DWSRF), and drinking
water health effects research are three areas of significant importance
to ASDWA. ASDWA also supports adequate funding for state source water
protection programs and the Environmental Protection Agency's (EPA)
Drinking Water Program to effectively address new provisions in the
SDWA.
The SDWA, if fully implemented, contains provisions that will
significantly improve the provision of safe drinking water in this
country. In order to ensure this success, ASDWA respectfully requests
that the following funding be appropriated for the indicated purpose:
--State Public Water Supply Supervision (PWSS) Programs.--$100
million (as authorized)
--Drinking Water State Revolving Fund.--$1 billion (as authorized)
--Drinking Water Health Effects Research.--$35.9 million
--EPA/AWWA Research Foundation Drinking Water Research Partnership.--
$5 million (to be matched by AWWARF and water suppliers)
--Arsenic Health Effects Research Partnership.--$1 million (to be
matched by AWWARF)
--EPA Drinking Water Program.--$105.3 million
--State Source Water Protection Programs.--$10 million
state public water supply supervision (pwss) programs
With passage of the SDWA, states must implement myriad new
requirements--many with very short timeframes for program development
and implementation. The new law requires states to develop drinking
water state revolving loan fund programs; delineate and assess all the
source waters in the state within a two-year timeframe; develop
capacity strategies to ensure that water systems have adequate
financial, managerial, and technical capabilities; provide drinking
water quality information annually to the public in a readily available
and accessible format; and expand operator certification programs,
among other provisions. This is in addition to their current
responsibilities which have not been reduced. While states support
these new provisions to improve drinking water quality in this country,
they also recognize that successful implementation will require
significant new resources.
ASDWA has testified that state PWSS programs have been
significantly underfunded in the past with states already contributing
approximately 65 percent of the funds necessary to implement this
Federal law. The President's budget request for fiscal year 1998 does
not raise the PWSS funding level for state programs from the fiscal
year 1997 funding level of $90 million even though the SDWA authorizes
states to receive $100 million for fiscal year 1998. The only increase
provided is $3.78 million for Indian tribes.
Now that the SDWA Amendments of 1996 have been enacted, it is
critical that states have the resources necessary to develop and
implement the new provisions of the Act as well as resources to support
the ongoing activities of state and Federal drinking water programs to
protect public health. States are concerned that without the infusion
of additional resources, they will be unable to successfully meet many
of these new requirements. States must begin work today to ensure
adequate capability to meet the deadlines for many of these provisions.
The SDWA authorizes $100 million per year through fiscal year 2003
to support the PWSS Program. The authorization level recognizes the
increased responsibilities placed on state drinking water programs
under the Act and reflects Congressional awareness that these programs
must be undertaken in addition to current state responsibilities. These
existing state responsibilities include requirements to continue
regulation of 84 contaminants, the conduct of sanitary surveys to
ensure water system integrity, certification of laboratories to analyze
compliance monitoring samples, certification and training of water
system operators, review of water system plans and specifications for
infrastructure improvements, enhancement and expansion of data
management systems, the conduct of disease surveillance investigations,
and response to emergency situations.
ASDWA respectfully requests that the Subcommittee appropriate the
$100 million as authorized to support the PWSS Program for fiscal year
1998.
drinking water state revolving fund (dwsrf)
The new SDWA authorizes $1 billion annually for fiscal year 1995
through fiscal year 2003 to establish and support drinking water state
revolving funds (DWSRF). The primary purpose of the DWSRF is to
facilitate water system compliance with national primary drinking water
regulations through the provisions of loans to water systems to improve
drinking water infrastructure.
In January 1997, EPA released its Drinking Water Infrastructure
Needs Survey Report to Congress that identified a total need of $138.4
billion for community water systems to comply with the requirements of
the SDWA over the next 20 years--$34.4 billion of which is needed now
to address current SDWA compliance and SDWA-related needs. Of the $34.4
billion current need, $10.2 billion is needed to meet treatment
requirements for microbiological contaminants such as total and fecal
coliform and Giardia that can lead to gastrointestinal illness and in
extreme cases, death; $1.9 billion is needed to address compliance
requirements for other acute and chronic health risk contaminants
including nitrate; and $22.3 billion is needed for replacement of
distribution piping that poses a threat of bacterial contamination to
community drinking water systems.
The remaining $104 billion will be needed over the next 17 years to
support ongoing installation and rehabilitation of drinking water
transmission and distribution systems; to meet treatment requirements
that ensure public health protection against both acute and chronic
contaminants; to provide adequate storage; and to address
rehabilitation and development of drinking water sources.
According to the EPA report, the $138.4 billion in needs should be
considered conservative since many water systems were unable to provide
documentation for all of their needs for the 20-year period and some
systems were not able to provide adequate documentation for all of
their identified needs. In addition, the survey examined only the needs
of community water systems and did not include the needs for nonprofit
non-community water systems.
In addition, a portion of the DWSRF may be used to support other
non-infrastructure related activities such as health effects research,
assistance for disadvantaged communities, and technical assistance and
training. In order to maximize the use of the funds for both
infrastructure and non-infrastructure related activities, it is
imperative that the full authorization of $1 billion be appropriated
rather than the President's request of $725 million.
ASDWA respectfully requests that the Subcommittee appropriate the
full $1 billion in drinking water state revolving loan funds as
authorized for fiscal year 1998.
drinking water health effects research
The use of sound science as the foundation of the new SDWA
standard-setting process will require extensive drinking water
research, particularly in the area of health effects. Research is
needed for microbial and disinfection by-products, arsenic, radon,
sulfate, endocrine disrupters, and other contaminants that will require
additional occurrence, treatment, and health effects information. Much
of this information will be needed in order for EPA to determine
whether a particular contaminant should be regulated in the future. EPA
must also consider the implications of health effects on sensitive
subpopulations such as children, the elderly, pregnant women, and
persons with a history of serious illness. ASDWA supports the fiscal
year 1998 budget request of $35.9 million for drinking water research
to ensure that future standards are based on sound science and credible
health effects data.
ASDWA also strongly supports the continuation of the EPA/AWWA
Research Foundation Drinking Water Research Partnership and the Arsenic
Health Effects Research Partnership funded at $5 million and $1 million
respectively. Such public/private partnerships represent an effective
mechanism to leverage additional dollars and to ensure that the
appropriate focus remains on priority drinking water research needs. As
in the past, these resources will be matched dollar-for-dollar by the
AWWA Research Foundation.
ASDWA respectfully requests that the Subcommittee appropriate $35.9
million for drinking water health effects research; $5 million for the
EPA/AWWA Research Foundation Drinking Water Research Partnership; and
$1 million for the Arsenic Health Effects Research Partnership.
epa drinking water program
With the passage of the 1996 SDWA, the EPA Drinking Water Program
assumed many new responsibilities including development of a new
regulatory process requiring additional science and risk assessment in
order to promulgate regulations, development of a national contaminant
occurrence database, identification of new treatment technologies for
small systems, administration of the new DWSRF, development of
regulations and guidelines for consumer confidence reports, and
development of source water protection guidance.
To address many of these issues, EPA has actively sought
involvement from interested stakeholder groups through the auspices of
the National Drinking Water Advisory Council. While this commendable
outreach effort has significantly added to the Agency's workload, it
should result in the development of guidance, policies, and regulations
that are supported by a broad spectrum of interested parties including
states, water utilities, and the general public.
The President's budget request of $105.3 million for the Office of
Water's Drinking Water Program will allow the Agency to publish
guidance on water system capacity, develop national guidelines on
operator certification, oversee funding to water systems through states
to ensure improvements of drinking water infrastructure, and continue
to develop regulations related to microbial and disinfection by-
products and the information collection rule.
ASDWA respectfully requests that the Subcommittee appropriate
$105.3 million for the EPA Office of Water's Drinking Water Program to
implement the new provisions of the SDWA.
state source water protection programs
The 1986 Amendments to the SDWA, required states to develop
programs to protect wellhead areas from contaminants that may have any
adverse effect on public health. Although a total of $145 million was
authorized as grants to states to assist in the development of these
programs, no funds were ever appropriated. In spite of this, almost 45
states managed to develop some form of wellhead protection program.
Many of these programs, however, have been significantly underfunded
and will need additional resources to meet the numerous new
requirements under the SDWA Amendments of 1996.
In addition, the new SDWA significantly expands on requirements to
protect sources of drinking water through the development of state
source water protection programs. Both surface water and ground water
are included as sources of drinking water that must be delineated and
assessed in each state. Although the statute is clear about the
requirement to identify sources of contamination, it is relatively
silent on the next step of implementing programs to prevent source
water contamination. Unfortunately, the limited funding and short
timeframe for states to develop and conduct these assessments and
delineations will likely prevent many states from actively implementing
source protection programs.
The SDWA of 1996 provides various funding authorizations for states
to ensure the coordinated and comprehensive protection of source waters
within their state. The appropriation of a portion of these funds could
be used effectively by the states to enhance current ground water
protection programs and to move into source water protection
activities.
ASDWA respectfully requests that the Subcommittee appropriate $10
million for states to ensure coordination and comprehensive protection
of source waters.
The states look forward to the opportunities and challenges
provided by the new SDWA. They welcome the opportunity to focus
resources on those issues of greatest concern to their citizens, to
improve partnerships with local governments, and to provide drinking
water systems with funding to meet critical infrastructure needs. A
strong drinking water program supported by the Federal government,
states, water utilities, and the public will ensure that the quality of
drinking water in this country continues to improve and that the public
can be assured that a glass of water is safe to drink no matter where
they travel or live. Achieving these goals, however, will require a
significant financial commitment from all parties. This testimony
acknowledges the major contributions that have been made by all parties
and asks the Subcommittee to provide adequate funding at the Federal
level to ensure the successful implementation of the SDWA.
ASDWA appreciates the opportunity to present its funding requests
for the Subcommittee's consideration.
______
Prepared Statement of Billy Frank, Jr., Chairman, Northwest Indian
Fisheries Commission
Mr. Chairman, and honorable Members of the Committee, I am Billy
Frank, Jr., Chairman of the Northwest Indian Fisheries Commission
(NWIFC), and on behalf of the tribes in Washington State, I would like
to thank you for the opportunity to offer written testimony concerning
the Environmental Protection Agency's (EPA) fiscal year 1998
appropriations.
We are specifically requesting that programmatic funding levels to
the Northwest tribes be included in EPA's budget under Section
104(b)(3) of the Clean Water Act. The purpose of our request is to
continue implementation of the model Coordinated Tribal Water Quality
Program for twenty-six participating tribes and tribal organizations in
Washington State for fiscal year 1998. Strong congressional support for
and implementation of this tribal initiative began in 1990 and is
present today. However, we are losing ground in the implementation of
this effort. Erosion of base level funding is jeopardizing the federal
government's long-term investment in this efficient and effective
tribal water quality protection program. It is essential that it
continues into the future.
We respectfully request Congress to either:
(1) Appropriate $3.10 million into the EPA's funding base.--Under
Section 104(b)(3) of the Clean Water Act, Section 319 of the Clean
Water Act, or within EPA's Assessment and Watershed Program,
appropriate $3.10 million into EPA's funding base for twenty-six (26)
participating tribes and tribal organizations in Washington State to
fully implement the model cooperative tribal water resource program for
environmental protection, or
(2) Direct the Agency to utilize existing $3.10 million in agency
funding.--From existing Section 104(b)(3) of the Clean Water Act,
Section 319 of the Clean Water Act, or EPA's Assessment and Watershed
Program funds, provide $3.10 million for twenty-six (26) tribes and
tribal organizations in Washington State to continue implementation of
the model cooperative tribal water resource program for environmental
protection.
Justification for this funding request is based on:
--legal rights and obligations for the federal government to protect
the treaty-reserved rights of the tribes,
--the United State's trust responsibility to protect the health and
environment of the tribes on a government-to-government basis,
--cost effectiveness by utilizing a cooperative intergovernmental
strategy to accomplish national clean water goals, and
--minimize conflict between multiple jurisdictions who manage water
quality.
We ask that you put monies in the above-mentioned mechanisms. By
placing these funds in the EPA General Assistance Program (GAP), which
are dedicated to planning, it limits the tribe's ability to proceed
with implementation activities.
To assist the Committee members, I would like to summarize
background relevant to our request.
BACKGROUND
The NWIFC request is on behalf of our nineteen (19) member treaty
fishing tribes and the Hoh, Chehalis and Shoalwater Bay Tribes in
western Washington, and the Yakama Indian Nation, Colville
Confederated, Spokane, and Kalispel Tribes in eastern Washington. The
funding request is to continue implementing the model Coordinated
Tribal Water Quality Program that began in 1990.
Washington State has been blessed with bountiful rivers and
streams. Five species of Pacific salmon and three species of anadromous
trout utilize Washington State's streams during the fresh water stages
of their life cycles. Historically, there were ample supplies of fish
for ceremonial, subsistence, commercial and recreation purposes. Old
growth conifer removal, riparian zone impacts, farming activities, and
channelization of the streams has reduced the productive capacity of
these streams to extremely low levels. Currently, there are concerns
that hundreds of salmon stocks are at significantly low levels and many
warrant a threatened or endangered listing status under the Endangered
Species Act.
In 1979, the United States Supreme Court re-affirmed the treaty
tribes' right to harvest half of the harvestable number of anadromous
fish passing through tribal usual and accustomed areas. In 1980, the
federal district court held that the United States and the State of
Washington must not permit degradation of fish habitat which would
diminish the treaty harvest right, including point and non-point
pollution sources. The federal courts have recognized that protection
of water quality and other attributes of fish habitat are necessary to
secure the Constitutionally protected rights of the tribes to harvest
fish.
The sovereign authorities of the Tribes and the legal principles
enunciated in United States v. Washington and other federal court
decisions support justification upon which the tribes are involved with
on and off-reservation environmental issues. As a result of federal
court decisions, the State of Washington has recognized the tribes as
``co-managers'' of the fish resource and water quality in our state. As
co-managers in Washington, the tribes must have the resources to
adequately participate in environmental protection programs.
The Environmental Protection Agency's (EPA) Indian policy (1984) of
working with federally recognized tribes on a government-to-government
basis concerns more than 375 Indian tribes in the lower 48 states
controlling over 52 million acres of land base. In our state, tribal
reservations make up approximately six percent (6 percent) of the State
of Washington. Our tribes also have retained treaty rights not ceded to
the United States. These usual and accustomed fishing grounds include
most of the State of Washington. The combined area of Indian
reservations nationally is larger than all of New England, yet EPA now
devotes only a tiny fraction of its personnel and funds to
environmental protection for the tribes.
This is clearly a discriminatory prioritization of federal funds.
On a national level, tribal reservations represent three percent (3
percent) of the land base of this nation. Although the EPA has worked
closely with the states to implement adequate environmental programs,
until recently, little has been done to accomplish the same for the
tribal governments. Indian tribes are over two decades behind the
states both in resources received from the EPA and in technical
assistance provided by the EPA in developing tribal water program
offices. A ``front end'' investment will promote cooperation and
increased tribal involvement in environmental protection as has been
the case between the EPA and state governments for the past twenty
years. Already, the Coordinated Tribal Water Quality Program is
enabling cooperative interjurisdictional partnerships and has been
matched by an additional $2 million in federal, state and tribal funds.
We want it to be recognized that we do support and appreciate the
successful efforts that have been made to improve EPA Indian Programs
and tribal funding. And further, we support the President's fiscal year
1998 budget request of $38.6 million for the General Assistance Program
(GAP), and the $9.8 million increase for tribal water quality
management programs through Section 106 of the Clean Water Act. We see
these activities as important and positive steps, but believe that we
have a long way yet to go in meeting the existing environmental
protection needs in Indian Country.
Additionally, since the GAP funding is legislated for program
development, there must be complimentary sources of implementation
funding for these tribal programs. Tribes in Washington State are
further along in the development of their programs than EPA's Indian
funding policy development. While EPA is accomplishing important
strides in improving their Indian Programs, tribes with previously
established programs are experiencing a break in support while EPA
plays catch-up with tribes across the nation. Our request for Section
104(b)(3) funding is intended for stabilizing existing program
implementation activities. Another possibility may be within Section
319 of the Clean Water Act. However, because of legislated formula, the
$100 million available nationally translates into only $300,000 (one-
third of percent restriction) for tribal programs. This means that 535
tribal governments (including Alaska Native Villages) must compete for
a very small pool of tribal non-point source pollution management
program funds. Clearly, a means must be found to support the long term
funding of tribal programs that seek to protect tribal treaty rights
such as ours, or the efforts being made by EPA will not be successful.
TRIBAL/STATE ROLES
Beginning in 1990, the State of Washington has supported tribal
involvement in environmental protection both off and on-reservation.
The State is committed to work with the tribes on a government-to-
government basis as ``co-managers'' of the water resources in the
implementation of this program (see attached letter). The federally
recognized Indian tribes in Washington have developed a process with
state, local government officials, and representatives of agriculture,
industry, and environmental communities to address water resource
issues on a government-to-government basis. The results of these
discussions have outlined a cooperative process between the tribes,
state agencies and programs, and local units of governments in areas of
environmental protection. This process was highlighted as a case study
example to countries around the world at the 1992 United Nations
Conference on Environment and Economic Development in South America.
The tribes must be part of the solutions to prevent and control
water pollution in Washington State. The tribes must participate in
these activities to protect their governmental interests and treaty
fishing rights. Neither we, nor the resources, can afford to lose
programs integral to our intergovernmental cooperative watershed
program. The Cooperative Tribal Water Quality Program is one such means
to protect our nation's environmental heritage.
CONCLUSION
For the past six years, Congress has recognized the importance of
the Coordinated Tribal Water Quality Program and supported funding for
the tribes to participate in environmental programs which helps EPA
realize its long-range objective of including tribal governments as
partners in decision-making and program management on reservation
lands. Adequate and stable funding is necessary to maintain this
coordinated tribal environmental program.
We appreciate the difficulty Congress is facing in making decisions
for this next fiscal year. In the case of the EPA, Congress and the
Administration will probably direct their resources to address those
areas of highest risk to human health and the environment. Therefore,
we want to reiterate that tribal reservations and protection of their
treaty resources have not been adequately addressed for the past twenty
(20) years and represents the highest of risk to this nation. To do
otherwise, would represent environmental genocide to Native Americans.
Sufficient and permanent funding is necessary to continue the
tribal cooperative program. Certainty of funding is necessary for the
tribes to hire permanent and professional staff to implement this
program. Without an ongoing investment by Congress, much of the good
that has been accomplished to date will be lost.
Please consider our request for $3.10 million for the Washington
State Tribal Water Quality Program. Once again, thank you for the
opportunity to provide testimony. Thank you also for your assistance in
helping to develop a national model program of how tribal governments
can address environmental protection in a cooperative watershed
approach with state and local governments.
Thanks to this Committee, we are making significant progress. This
initiative is being supported at all levels of our governments. We hope
you and the Committee will continue to look favorably on our request.
letter from gary locke
State of Washington,
Office of the Governor,
Olympia, WA, April 14, 1997.
Hon. Christopher S. Bond,
Chairman, Senate VA, HUD and Independent Agencies Appropriations
Subcommittee, Washington, DC.
Dear Chairman Bond: The purpose of this letter is to express my
support of the twenty-six federally recognized tribes in Washington
State in their efforts to continue implementation of the Coordinated
Tribal Water Quality Program. This program is a national model that
demonstrates how tribes can address their water quality protection
needs in coordination with local, state and federal governments.
Tribes are an integral part of protecting and improving water
quality in Washington State. The Coordinated Tribal Water Quality
Program helps our governments work together to address both on-
reservation and off-reservation water quality issues. This cooperative,
watershed based program replaces interjurisdictional barriers with
government-to-government partnerships.
I urge your continued support of this important and effective
program.
Sincerely,
Gary Locke,
Governor.
______
FEDERAL EMERGENCY MANAGEMENT AGENCY
Prepared Statement of Brad Iarossi, P.E., Legislative Officer,
Association of State Dam Safety Officials
The Association of State Dam Safety Officials (ASDSO) is pleased to
have the opportunity to comment on the Clinton Administration's fiscal
year 1998 Budget Request of $432,000 for the dam safety program in the
Federal Emergency Management Agency's (FEMA) budget.
ASDSO is a national organization of more than 1,500 state, federal
and local dam safety officials and private sector individuals dedicated
to improving dam safety through research, education, and communication.
Our goal is to save lives, prevent damage to property and maintain the
benefits of dams by preventing failures.
I would like to first begin by commending Chairman Bond for his
outstanding leadership on including the National Dam Safety program
into the Water Resources Development Act (WRDA) of 1996. (The Dam
Safety Program was formerly a Presidential Directive). This legislation
recognized the need for a federal role in dam safety and established a
cost-effective means to improve state dam safety programs. We
appreciate your leadership and look forward to your continued support.
While much progress has been made to advance dam safety in this
country, the fundamental goals of this program have yet to be
completely realized. Dam safety is an ongoing effort and much more
needs to be accomplished.
The fiscal 1998 budget request of $432,000 for the dam safety
program in FEMA's budget falls short of the funds needed to
successfully implement the program. This request is an alarming step
backwards for public safety at a time when natural disasters, including
the recent floods in Ohio, Kentucky, and Indiana, continue to ravage
our country. Situations like these call for increased federal attention
and funding to dam safety, not less.
ASDSO respectfully opposes the Administration's fiscal year 1998
proposal for the dam safety program and requests the Subcommittee's
support for full funding of the $2.9 million appropriated in fiscal
year 1998 in order for FEMA to implement the program. In doing so, we
suggest that the $2.9 million be appropriated to conduct the following
activities:
--$1 million for incentive grants to states to upgrade their dam
safety programs;
--$500,000 for training programs for state dam safety inspectors;
--$1 million for a federal research program developed to improve
techniques and equipment for rapid and effective dam
inspections and updated devices for monitoring dams for safety
purposes; and
--$400,000 for FEMA to administer the program.
This modest, yet vital funding would help to reduce the risks to
life and property due to dam failures by providing states with
resources to improve their dam safety programs. Compared to the $54.3
million spent on repair costs in 1994 (most recent available
statistics), investment in prevention will reduce the loss of life,
property damage and much larger expenditures after dams fail.
SAFETY AND REGULATION
Regulation is essential for the reduction of the hazards involved
with dams. That responsibility rests almost entirely with the states.
States regulate about 95 percent of the 75,187 dams on the National
Inventory of Dams. While the majority of states have been working to
improve their programs in the last 20 years, most are still struggling
with minimal budgets and staff. A handful of states do not even have
adequate programs in place to regulate the safety of their dams. The
1995-96 National Inventory of Dams revealed that a majority of high or
significant hazard dams do not have Emergency Action Plans in place
which would mean the difference between timely downstream evacuation
and disaster.
Safety is essential to all regulated dams, but most importantly to
the approximately 9,500 dams determined by regulators to be high-hazard
(category I), meaning they could threaten human life and cause
significant downstream damage should they fail. Even more significant
are the 1,800 dams which are considered to be unsafe. Many of these are
also in high-hazard locations. This means they have deficiencies which
leave them more susceptible to failure. Thirty-five percent of the
high-hazard dams have a last inspection date prior to 1990. A recent
survey conducted by the Association of State Dam Safety Officials
(ASDSO) showed thousands of other dams are in need of rehabilitation to
keep them from becoming unsafe. These repair projects are put on hold
because of a lack of funding
Every member of this subcommittee has high-hazard dams impounding
water within their state. Nearly every member of the subcommittee has
at least one unsafe, high-hazard dam operating in their home state.
California, Pennsylvania, Missouri, Texas, and North Carolina have over
500 high hazard dams each in their states. North Carolina has the most
high hazard dams. In Ohio there are 450 unsafe structures. In New York
there are 372 high-hazard dams, and of these 57 are unsafe. Missouri
has 658 high-hazard dams with 87 classified as unsafe. Tennessee has
136 high-hazard dams of which 28 are unsafe. In nearby Maryland there
are 55 high-hazard dams with six being unsafe.
A chart of states' dam inventory data is included at the end of
this written testimony.
need for full funding of fema's dam safety program
Over the past year, flooding across the country resulted in scores
of deaths and millions of dollars in property damage. Statistics have
shown that downstream damage and dam repairs caused by recent failures
in only eight states totaled $54.3 million. In California, flood-waters
that descended from the Sierra Nevada mountains in January caused dams
to overflow and levees to brake in 32 places. Nine people were killed,
and more than 120,000 people were evacuated. Property damage exceeded
$1.7 billion. This does not include emergency relief costs to states
and to the federal government.
Lack of proper maintenance and resources put the nation at risk of
future disasters. The National Oceanic and Atmospheric Administration
predicted March 17 that heavy snows in the High Plains and Rocky
Mountains will lead to the worst spring flooding in a decade.
Putting the weather aside, statistics show that 25 percent of all
dams in this nation are over 50 years old, and by the year 2020, that
number is expected to jump to 85 percent. We must plan now to make
certain that these structures will be safe and that they will continue
to provide the benefits for which they were built.
It is therefore incumbent upon the federal government to recognize
the need for a strong National Dam Safety Program and to fund it to the
fullest extent possible.
conclusion
Dams are a critical part of our national infrastructure. They
provide benefits upon which our communities and industries depend.
However, along with the benefits is the need to maintain safe and
reliable structures.
It is unfortunate that, historically, most state dam safety
programs do not receive additional funding or personnel until loss of
life occurs as a result of dam failure. The total economic and social
damage of one dam failure, not to mention the incalculable loss of
life, easily exceeds the cost of the dam safety program. Full funding
of the National Dam Safety Program would provide the needed tools to
help improve the national infrastructure and would encourage states to
advance their safety programs, thereby enabling them to prepare for
disasters before they strike.
We strongly urge this subcommittee to recognize the benefits of
this modest investment in public safety by providing full funding of
the $2.9 million in order for FEMA to implement the National Dam Safety
Program. ASDSO looks forward to working with the subcommittee and its
staff on this critical public safety issue and would be happy to
respond to any questions.
1998 STATE DAM INVENTORY DATA
----------------------------------------------------------------------------------------------------------------
State
Total Total State State high- regulated Government
State national regulated \2\ hazard \3\ known ownership \5\
inventory \1\ deficient \4\
----------------------------------------------------------------------------------------------------------------
Alabama................................. 1,570 1,704 184 150 25
Alaska.................................. 99 87 18 ............. 55
Arizona................................. 274 212 73 23 92
Arkansas................................ 1,184 1,215 154 44 364
California.............................. 1.512 1,220 272 ............. 536
Colorado................................ 1,648 1,809 275 189 486
Connecticut............................. 707 2,679 238 NR 251
Delaware................................ 73 88 8 NR 76
Florida................................. 572 NR NR NR 15
Georgia................................. 4,951 4,704 359 30 633
Hawaii.................................. 129 129 72 ............. 27
Idaho................................... 343 431 100 13 80
Illinois................................ 1,212 1,212 155 NR 355
Indiana................................. 663 1,212 241 NR 311
Iowa.................................... 2,465 2 514 66 2 1,437
Kansas.................................. 6,057 13,113 189 30 1,363
Kentucky................................ 941 915 144 3 374
Louisiana............................... 381 311 12 ............. 90
Maine................................... 498 462 47 278 19
Maryland................................ 273 358 55 6 162
Massachusetts........................... 1,528 2,921 324 28 686
Michigan................................ 910 1,049 79 21 381
Minnesota............................... 930 850 40 NR 530
Mississippi............................. 3,191 3,328 238 10 121
Missouri................................ 3,452 3,832 658 87 208
Montana................................. 3,187 3,518 152 6 829
Nebraska................................ 2,035 2,035 88 ............. 977
Nevada.................................. 463 571 107 13 130
New Hampshire........................... 613 3,106 87 ............. 583
New Jersey.............................. 806 1,580 183 32 350
New Mexico.............................. 501 522 156 3 156
New York................................ 1,633 5,645 372 57 676
North Carolina.......................... 2,699 4,369 839 40 199
North Dakota............................ 481 524 26 5 280
Ohio.................................... 1,654 2,673 480 450 454
Oklahoma................................ 4,550 4,388 165 12 87
Oregon.................................. 827 3,705 122 ............. 186
Pennsylvania............................ 1,291 2,842 728 9 502
Puerto Rico............................. 36 36 33 ............. 31
Rhode Island............................ 186 506 17 ............. 80
South Carolina.......................... 2,256 2,237 143 5 283
South Dakota............................ 2,392 2,252 48 4 140
Tennessee............................... 1,044 593 136 28 382
Texas................................... 6,894 7,190 802 116 2,642
Utah.................................... 636 1,819 187 NR 150
Vermont................................. 334 1,034 49 ............. 134
Virginia................................ 1,496 467 101 48 325
Washington.............................. 653 865 94 13 238
West Virginia........................... 537 346 242 49 233
Wisconsin............................... 1,165 983 136 NR 722
Wyoming................................. 1,230 1,368 83 5 163
-----------------------------------------------------------------------
Total............................. 75,401 100,467 9,496 1,804 19,607
----------------------------------------------------------------------------------------------------------------
\1\ Includes Federal and non-Federal dams over 25 feet in height or 50 acre-feet in volume; or anything above 6
feet in height with downstream damage potential should it fall.
\2\ Includes all dams under State regulatory control.
\3\ High-hazard by State definition derived from State inventory in column 2.
\4\ Dams with identified deficiencies by State definition (varies State to State) derived from State inventory
in column 2.
\5\ Derived from national inventory in column 1 = Not reporting. Some States do not keep data on ``high-hazard''
and/or ``unsafe'' categories.
Note: Inventory sizes vary from State-to-State because of number of dams, but also because State laws vary on
which dams are included under their jurisdiction.
______
Prepared Statement of John N. Peabody, Jr., President, American
Federation of Government Employees Local 1983
Good morning Mr. Chairman, members of the subcommittee. I
appreciate this opportunity to provide information to the subcommittee
as the elected representative of the bargaining unit employees who work
at the National Emergency Training Center (NETC) in Emmitsburg,
Maryland.
As you may be aware, the training center is a multi-purpose
facility housing several elements of the Federal Emergency Management
Agency (FEMA) including the United States Fire Administration (USFA)
and most of FEMA's training division. NETC is the home of the National
Fire Academy (part of the USFA) and the Emergency Management Institute
(part of the training division) who together provide most of FEMA's
training and education for Federal, State and local emergency managers,
the fire service, and allied professions.
Also located at NETC are the studios of the Emergency Education
Network which broadcasts fire and emergency programs nationwide. In
addition, NETC has the world's finest library for fire and emergency
information. This facility is a national asset and is the envy of the
rest of the world's fire and emergency services. However, budget cuts
and staffing cuts are constraining and even crippling many of the
important services we provide.
FEMA's Director, James Lee Witt, has clearly given the top priority
to promoting hazard mitigation and to more efficient and effective
response and recovery operations. He has been remarkably successful,
and we appreciate and applaud his efforts. It is a pleasure to work for
an agency that is respected for helping to solve problems instead of
causing problems. Unfortunately, the reinvention of FEMA has had
significant costs, and the staff at NETC have had to ``pay'' in many
ways to the detriment of our programs and the organizations and people
we serve.
The staff understand that Mr. Witt has been placed in a very
difficult situation. As FEMA began to be more successful and effective,
there were rising expectations for each new disaster. And the disasters
have increased in both number and complexity (75 in fiscal year 1996--a
record number!) So, what in 1993 seemed like a requirement for running
a hundred yard dash 30 times a year has turned into an endless marathon
across the country at sprint speed. At the same time, the folks with
the green eyeshades at the Office of Management and Budget have been
telling FEMA to do more and more with less and less.
The director has been faced with the dilemma of meeting an
avalanche of new requirements with very limited resources. So, he has
had to take resources from some missions and functions and apply them
to the highest priority needs. This approach was reasonable in the
short run, but in the long run it has had a significant impact on NETC.
We do not believe that it is the intent of Congress to force the
Director to continually re-cut an ever-shrinking pie. We support FEMA
and the Director's initiatives, but we think we are important too, and
it is our hope that Congress will provide the necessary positions and
funds for us to do our job.
Simply stated, our job is to help develop and maintain the highest
possible level of professional skills and knowledge for the Nation's
fire services, emergency managers, and allied professions. Just as the
Armed Forces must constantly train and exercise to maintain readiness
and improve their skills, the Nation's first responders must do the
same. Quality training and education do not come cheap, but ignorance
is much more expensive.
The remainder of this statement outlines employee concerns and our
recommendations for corrective actions in two areas--the Emergency
Management Institute and the United States Fire Administration.
The Emergency Management Institute (EMI) is operated by the
training division of FEMA's preparedness, training, and exercises
directorate. EMI has a staff of 42. EMI has been fortunate compared to
USFA in recent years. EMI has enjoyed good management and a relatively
stable budget. The staff have been very productive, and morale has been
good. Feedback from across the country (and even from other countries)
has been very, very positive. EMI training and related activities is
helping Federal, State, and local agencies, private sector
organizations, and individuals to reduce damage potential and respond
effectively and efficiently to emergencies.
The problem facing EMI is its success has created an enormous
growth in interest/demand for training, and EMI is having to decide who
can be served and when. It is very difficult to tell a community that
they will have to wait for a year or more because we do not have the
travel money or the staff time to give them what they want and
certainly need. This situation has suddenly gotten worse because EMI
has recently lost 2 valued employees, had its travel budget cut by 36
percent, and had course development funds cut by $700,000.
The EMI staff believe that more could and should be done. The need
is there and the benefits are readily apparent. One only has to ask
officials in Oklahoma City or Los Angeles or Sioux City or a thousand
other communities across the country.
The following recommendations are provided for your consideration
to enhance training division capabilities at the Emergency Management
Institute:
I. Provide additional staff (FTE)
--4 training specialists in exercise design and control to conduct
offerings of the very popular integrated emergency management
course for medium and small cities.
--2 training specialists in structural engineering and design to
develop and conduct additional hazard mitigation courses for
architects, engineers, building contractors, and building
officials.
--2 training specialists in managing the consequences of terrorism to
support the interagency training in this area.
--2 training specialists in response and recovery operations.
--2 program assistants to provide training support.
--Total: 12 additional positions--$850,000 additional S&E.
II. Provide additional funds
--Restore the 36 percent travel budget cut ($37,000) and add $60,000
(total travel increase $97,000). These travel funds will make
it possible to go to the States to pilot test new courses and
help the States conduct community-specific training. It should
be noted that it is more cost effective to send instructors to
the students than to bring students to the instructors.
--Restore the 6.5 percent cut in program (EMPA) funds ($700,000) and
add $600,000 to develop, test, and deploy new courses that have
been requested by the States (total EMPA increase $1.3
million).
--Total $1.4 million.
At this time, I would like to address the situation at the United
States Fire Administration (USFA).
USFA employees are very hard working and mission oriented. They
have achieved a solid record of accomplishments, and they want to
maintain the high standards of quality service that Congress and the
American people expect. However, the employees are concerned that
Congress may not be aware that there are serious problems facing USFA.
The problems which are outlined below all stem from a growing
disparity between increased responsibilities and shrinking resources.
Over the years, since 1979, the nature of the challenges facing the
fire service has changed dramatically, and USFA has been asked to
assist in a broad range of activities concerning arson, hazardous
materials, terrorism, firefighter health and safety, emergency medical
services, incident command systems, disaster response, and integrating
new technologies into the fire service. During this same period, USFA
staff had to suffer a number of very painful cuts.
In 1979 when USFA became part of the Federal Emergency Management
Agency (FEMA), USFA had 240 employees which included a staff of 80
working in the National Fire Academy (NFA) and a staff of 12 dedicated
to public education. Currently, USFA is authorized only 101 positions
(FTE) including only 37 in NFA and only 1 full-time person devoted to
public education. So, fewer people have been expected to do more and
more. Many of the staff now have more on their plates than they can say
grace over. To make matters worse, the difficulties facing the staff
have been exacerbated by recent cuts in funds for facilities
maintenance, travel, employee training, and research.
So, what impact does all this have on the staff and on mission
accomplishment? (The following problems are shown separately but are
essentially intertwined.)
1. Very few vacancies have been filled within USFA in recent years
(some positions have been taken by FEMA to meet other priority needs).
The work of these unfilled positions has been given to remaining staff.
The result--some important areas are not receiving enough staff time
and attention. Staff are frustrated and morale is low.
2. The new technologies available today require new skills, but
USFA has not been able to hire new people who have these skills and
lacks employee development funds to train current staff to develop
these skills in-house. The result--USFA will not be able to meet the
future needs of some of its customers in the fire service.
3. In fiscal year 1997 travel funds have been cut by over 37
percent. The result--there will be substantial reduction in attendance
at meetings of fire service groups across the country for coalition
building, program coordination, technical assistance, project
monitoring, etc.
4. Over the past few years, funds have been shifted from research
to development of a simulation laboratory in NFA and for other
purposes. The result--so far in fiscal year 1997, there have been no
new initiatives in firefighter health and safety research or in
adapting new technologies for prevention, detection, and suppression.
Many USFA employees are not only concerned and upset about the
current difficulties, but also feel that USFA should be doing more--
much more in every area symbolized by the four ``stars,'' outlined in
Public Law 93-498.
1. The first star is the National Fire Data Center. This
underfunded, poorly staffed group does not have one statistician to
analyze the data and does not have sufficient resources to help the
States expand and improve the national fire incident reporting system.
Good data is essential to define the fire problems in each State and
indicate where more research, training, and public education may be
needed.
2. The second star is research into new fire technologies. Some of
the funds originally allocated for these purposes have been cut and/or
diverted to other purposes. The staff feel that more needs to be done
to investigate ways to make protective clothing, self-contained
breathing apparatus, communications, and other equipment lighter,
stronger, more effective, and less expensive. Other under-explored
areas include alternatives to sprinklers, use of compressed-air foam in
structural firefighting, and use of advanced technology developed by
the Department of Defense in firefighting.
3. The third star is public education. Even the best pamphlets,
public service announcements, and news magazine articles will not reach
the low-income populations that have a significant number of fires in
the United States. A new, more aggressive approach is needed. USFA
should have the staff and resources to work with each State to help
build coalitions/partnerships with State and local agencies, school
districts, churches, and community groups to coordinate a broad range
of fire, crime prevention, hazard mitigation, and other public safety
programs for a comprehensive safety campaign. The one full-time person
assigned to public education cannot do this job.
4. The fourth star is training and continuing education of the
management of the fire service across the country. The staff of NFA are
stretched to the breaking point. The staff have no back-up. They are
five miles wide and one inch deep. And, they are asked to do more and
more. Management wants new courses developed for independent distance
learning to reach 300,000 students in the fire service and allied
professions. However, the staff are not themselves trained to develop
distance education programs. They recognize the potential, but are
frustrated that they lack the skills to develop effective training in
this new milieu and do not have the resources to hire those that do--
either as employees or as contractors/consultants.
When all aspects are considered, the four ``stars'' could be and
should be shining brighter.
In summary, the staff believe that the cuts have been too deep for
too long and have gone beyond what Congress had intended. Therefore, we
appeal to you to restore the USFA to an appropriate level commensurate
with mission requirements (our recommendations are attached).
You may hear from others who might not support our requests because
of concerns about the cost. However, we believe that the cost of having
an effective USFA will be more than offset through saving tax dollars
in other areas.
For example, when USFA was a larger and stronger organization, it
helped bring about a dramatic reduction in the number of fires, fire
deaths, and injuries. However, since USFA was weakened, the decline
slowed and leveled off. If a revitalized USFA can help reduce the
numbers further, it will benefit everyone. If you just consider the
staggering social and financial costs to treat burn injuries, the
potential savings in this alone could be a dramatic return on
investment.
united states fire administration/national fire academy supplemental
budget request
I. Critical, additional staff needs
National Fire Academy
--2 Distance education specialists
--1 Simulation laboratory manager
--1 Computer media specialist
--1 Branch chief for distance delivery programs
National Fire Data Center
--2 statisticians
Fire Prevention and Public Education
--2 Public education specialists
--2 Arson prevention specialists
--1 Fire management specialist (wildfire)
Technology and Research
--2 Fire protection engineers
--1 EMS specialist
Support
--Convert 5 term employees to permanent (no cost)
Total
--15 additional positions--$1 million additional S&E cost
II. Additional Funding Needs
--Restore $2.2 million for research;
--Restore travel funds to $250,000;
--Provide $50,000 for individual employee training and development;
--Provide $2 million additional per year for 4 years to develop,
test, and deploy distance education courses;
--Provide $2 million additional per year for 4 years for the national
arson prevention initiative combined with improved public
education initiatives;
--Provide $1 million additional per year to meet increased operating
and maintenance costs;
--Total: $7.5 million
Note.--The requested positions and funding should not be taken from
other elements of FEMA. ``Robbing Peter to pay Paul'' would cause more
harm than good.
______
Prepared Statement of Larry A. Larson, Executive Director, Association
of State Floodplain Managers
The Association of State Floodplain Managers (ASFPM) is pleased to
have the opportunity to advise you of our overall support for the
budget request of the Federal Emergency Management Agency (FEMA) for
fiscal year 1998. In particular, we support the agency's request for
$50 million for a Pre-disaster Mitigation Fund.
Association members are your state and local ``partners'' helping
to reduce current and future flood losses. Our members consist
primarily of state and local officials engaged in flood disaster
mitigation, coordination with the National Flood Insurance Program,
coordination with the Corps of Engineers and other federal agencies
involved with floodplain issues, floodplain management planning and
protection of public health and safety. Also among our members are
private flood planning, engineering, and mitigation specialists.
In the face of major amounts needed for disaster response, it is
critical to explore ways to mitigate disaster losses. Significant work
has already been done through cooperative FEMA, state and local efforts
to plan and implement mitigation strategies. It is important to note,
however, that it can be difficult to define and give an accurate dollar
figure to the losses which, as a result of mitigation, did not occur.
When a disaster happens, it is much easier to count up and document the
damage than to count up and document damage that did not occur because
of mitigation.
FEMA Director James Lee Witt has focused significant attention
during his tenure on the importance of mitigating disaster impacts
before they happen. As the former Arkansas State Emergency Management
Director, he understands first hand the kinds of steps that could be
taken by local and state governments in cooperation with others, which
could result in important reductions in loss of life and damage to
property in the event of natural disasters. These kinds of measures,
however, do require planning, organizing, often political decisions and
cooperation among various groups and interests.
In response to the seemingly ever increasing dollar and human costs
of natural disasters, FEMA has made major strides toward more rapid,
efficient response during and after disasters. Progress has also been
made towards streamlining, simplifying, and improving internal agency
processes. The strong focus on mitigation has produced results. An
especially clear example involved the relocation of thousands of houses
and other buildings from the floodplain following the major Midwest
floods of 1993. When, incredibly, the same areas flooded again in 1995,
the homes were not there to flood.
Due to the foresight of the House and Senate Appropriations
Committees, FEMA was asked to undertake a new effort to explore avenues
of pre-disaster mitigation in the current fiscal year. The agency's
initial efforts in that regard have made clear the need for a more
substantial initiative, which will save taxpayers more than the cost of
the mitigation measure.
ASFPM strongly and enthusiastically supports the pre-disaster
mitigation initiative. Although the details have not been finalized, we
are supportive because we recognize the importance of FEMA having this
ability to step outside of regular program areas to bring creative and
thoughtful effort to a potentially very fruitful endeavor. Successful
mitigation could result in major cost savings. We urge the Subcommittee
to provide at least the $50 million sought in the FEMA fiscal year 1998
budget request.
The current flooding in North Dakota demonstrates the need for pre-
disaster mitigation. It especially demonstrates the need for greater
levels of mitigation for critical facilities, including hospitals and
water supply facilities. All too often, people first think of
structural measures, such as levees and dams. These measures are
expensive; they require continual maintenance, and they are always
subject to overtopping and failure. These failures cause more
catastrophic damage. The focus for the pre-disaster mitigation funds
must include non-structural measures.
On another matter, we urge the Subcommittee to take action again
for fiscal year 1998 to provide an additional $50 million in borrowing
authority for the National Flood Insurance Fund. Although that matter
may be addressed by the authorizing committee, if it becomes necessary,
we hope that the VA-HUD Independent Agencies Subcommittee could again
provides assistance to ensure that the Flood Insurance Fund can
continue to pay the claims filed by flood insurance policy holders. An
exceedingly large amount of flooding has occurred in recent years,
taxing the resources of the Flood Insurance Fund (which is funded by
policy premiums and administrative fees). Changes in the NFIP were
effected by the 1994 Flood Insurance Reform Act designed to update,
correct and improve the NFIP and to reduce losses through mitigation
measures. Many of those improvements are just now being implemented
through finalized regulations. Studies mandated by that Act will, no
doubt, also point toward further improvements. In the meantime, in the
face of dramatic instances of severe flooding, it seems wise and
prudent to continue the additional $50 million in borrowing authority
beyond its current September 30 expiration date.
______
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Prepared Statement of Steven Charvat, CEM, NCCEM President, Emergency
Management Coordinator, City of Phoenix, AZ
The National Coordinating Council on Emergency Management (NCCEM)
appreciates the opportunity to comment on the 1998 budget request by
the Federal Emergency Management Agency (FEMA). NCCEM is a national
organization dedicated to promoting the goals of saving lives and
protecting property during emergencies and disasters. With over 1,600
members, NCCEM is the primary organization that brings together
emergency management and disaster response professionals from
government, the military, the private sector, and volunteer
organizations at the local, state and federal levels.
NCCEM supports FEMA's fiscal year 1998 request, and we urge you to
provide the full funding requested. It could be much higher, and not be
wasted. However, in deference to the laudable efforts by both Congress
and the Administration to control runaway federal spending, we are not
begging for large additions to the request.
Nevertheless, we in NCCEM want to state most strongly that this
nation cannot afford any further erosion of our preparedness to deal
with emergencies and disasters--which now have to include the
consequences of terrorist acts. In the name of budget balancing, we
have seen the scissors waved not only over after-the-fact disaster
relief, but over the planning and preparedness funds which are the only
way those post-disaster relief costs can be forced down.
Some areas are particularly important, from our perspective:
State and Local Assistance.--This item in FEMA's budget now
subsumes the old Emergency Management Assistance (EMA) program. The
money provided through EMA to each of more than 5,000 local
jurisdictions has never been a princely sum, but it has had a catalytic
effect. In a quick survey two years ago, a dozen local jurisdictions
reported receiving EMA funds in the range of $20,000 to $30,000 a year,
which represents anywhere from 6 percent to 30 percent of their
emergency management departmental budget. Because it has been a 50-50
match program, every million dollars cut from EMA has meant two million
dollars less in emergency preparedness.
NCCEM believes it is most important to maintain FEMA's funding for
State and Local Assistance (SLA). This item has been cut as far as
possible, and if any more reductions are made to FEMA's budget, NCCEM
urges that they be borne by programs other than SLA.
Some local programs already are suffering greatly, in part because
of FEMA's recent conversion to the more flexible Performance
Partnership Agreement (PPA) with states. Before the PPA, a percentage
of EMA funds was required to be passed on by states to local
jurisdictions. It provided a minimum-level skeleton emergency
management program for many jurisdictions, and served to cement the
local/state/federal partnership that is vital to an effective disaster
response. Under FEMA's new Performance Partnership Agreements, the
agency is eliminating the distinction among its various funds-sharing
programs. Thus there no longer is a requirement for any funds to be
passed through to the local level; FEMA merely expects states to work
cooperatively with local jurisdictions.
That works well in some states, not so well in others. The
uncertainty of funding levels creates serious difficulties for some
local jurisdictions, whose programs depend on a regular amount of
federal funding to maintain stability and continuity. Even if a
specific pass-through percentage is not mandated, NCCEM would like to
see FEMA require states to consult and share the funding with
jurisdictions, or face some consequence, such as greater FEMA control
over their state programs. Aggressive action is needed to assure that
local governments get an adequate share of available federal money for
disaster preparedness.
Program stability and continuity also would be enhanced if SLA
funding could be on a two-year cycle. Many states operate on a biannual
budget cycle, and all states require time to adjust to change funding
formulas. Thus NCCEM urges that a transition period of at least two
full fiscal years be provided for a state to accommodate to agreed
changes.
Mitigation.--NCCEM fully supports FEMA's request for a $50 million
pre-disaster mitigation fund. We all recognize the importance of
mitigation, but it can be costly. Federal leadership is important in
this area, both in disseminating information and providing seed money
to encourage the application of more state and local resources to
mitigation activities. More will be needed, but the $50 million
appropriation is a solid start.
Disaster Relief Funds/Stafford Act.--NCCEM favors retaining the
original language of the Stafford Act, relating to a 75 percent federal
cost share for disaster relief. Already, despite the current nominal 75
percent federal share, the federal government effectively contributes
less than 50 percent of the cost of local government disaster response
and recovery.
Consistent application by FEMA of all regulations and policies
would greatly help state and local governments prepare by learning from
the experiences of others who have undergone Presidentially declared
disasters. Right now, the rules change from disaster to disaster, and
FEMA even tries to apply revised rules in mid-recovery instead of
prospectively.
Above all, though, NCCEM urges this committee to appropriate all
the funds requested by FEMA. The programs are too important to the
nation's health to suffer any further cuts. And with FEMA's current
emphasis on mitigation, this money spent up-front will help reduce the
growing sums spent on disaster relief after the fact.
Thank you for hearing us. Please contact our headquarters at the
address on the letterhead if there is any further information we could
help you gather.
______
Prepared Statement On Behalf Of University of California at San Diego's
Scripps Institution of Oceanography and Columbia University's Lamont-
Doherty Earth Observatory
On behalf of the University of California at San Diego's Scripps
Institution of Oceanography and Columbia University's Lamont-Doherty
Earth Observatory, we urge you to include $5 million in the FEMA
Mitigation section of the fiscal year 1998 Veterans Affairs, HUD, and
Independent Agencies appropriations bill to improve the quality and
U.S. utilization of seasonal to interannual climate prediction data for
weather-related disaster planning and mitigation.
Scientists are close to being able to forecast long-term climatic
conditions and the likelihood of extreme events, providing an
opportunity to allay the devastation and uncertainty they bring. These
funds could be used to capitalize on opportunities associated with
emerging forecasting capabilities on seasonal-to-interannual time
scales. This will allow the United States to build optimal decision-
making into weather- and climate-sensitive sectors of the economy, such
as agriculture, construction, energy production and use,
transportation, insurance and water resources management.
This funding would be used for a peer-reviewed, competitive,
external grants program to support the development of regional
partnerships (Federal, State, local governments, scientists, and the
private sector) to improve and utilize climate prediction information
in weather-related disaster planning. The funding should be included in
FEMA (Mitigation Directorate) section of the bill and could be
accompanied by language directing FEMA to work in consultation with the
NOAA, USDA and the Department of the Interior on the development of the
Request for Proposals and the proposal review process.
Recent catastrophic flooding provides a stark example of the huge
cost of natural disasters to the U.S. economy. As the nation sacrifices
to balance the federal budget while still investing in economic growth,
health and national security, the costs of unmitigated natural
disasters are no longer affordable. Investments must be made now to
improve prediction, mitigation and response to natural disasters and
reduce future costs.
Hydrometeorological hazards, from droughts to tornadoes, are
responsible for 85 percent of the Presidentially-declared disasters in
the United States. Floods have caused a greater loss of life and
property, and have disrupted more families and communities than all
other natural hazards combined. In a 1-year period, Hurricanes Andrew
and Iniki, the March 1993 ``storm of the century,'' and the Midwest
floods cost the country over $50 billion. NOAA's Climate Data Center
estimates that 15 major weather-related disasters alone resulted in
direct and indirect losses of $70 billion between August 1992 and
January 1996.
Continued U.S. population growth, increased urbanization, increased
capital and physical plant and concentration in hazard-prone areas
virtually guarantee that economic losses from weather-related disasters
will continue to rise. The rising toll of insured losses, government
expenditures and other indicators provide mounting evidence that the
U.S. government must develop resilience to weather-related disasters.
Some weather-related disasters, if predicted far enough in advance,
offer opportunities for active intervention and significant cost-
mitigation. Today public and private decision-makers have access to
operational weather forecasts and warnings of extreme events which
allow for some protection of life and property from immediate threats.
This information is only of limited value, however, for long term
planning and strategic mitigation. Recent research offers exciting new
capabilities to forecast climatic conditions, seasons to a year in
advance.
While there is an ongoing program in seasonal/interannual climate
research and experimental forecasting, there is no program targeted at
applying these new insights in a focused mitigation research effort. $5
million should be included in the FEMA Mitigation section of the fiscal
year 1998 Veterans Affairs, HUD, and Independent Agencies
appropriations bill to improve the quality and use of seasonal to
interannual climate prediction data for weather-related disaster
planning and mitigation.
This program will allow the U.S. to build optimal decision-making
into weather- and climate-sensitive sectors of the economy, such as
agriculture, construction, energy production and use, transportation,
insurance and water-resources management. These partnerships should
also include emergency response professionals and promote coordinated
regional planning and action.
Research advances offer cost-savings opportunity.--Much of what
makes weather-related disasters so terribly disruptive is that there is
inadequate time to prepare. Scientists are on the verge of being able
to issue long-term guidance on climatic conditions and the likelihood
of extreme events providing a chance to allay the devastation and
uncertainty they bring. This program will help to shift the focus from
reaction to anticipation on the basis of seasonal to interannual
climate predictions and comprehensive, coordinated regional planning
and action.
Partnership is critical.--Because warnings and dissemination
necessarily involve both the giving and receiving of information,
partnership is therefore fundamental. Reducing losses caused by extreme
weather events requires that probability prediction of extreme
conditions be transferred to the user community, including various
State and local agencies, private industry and the public, and that the
user community be actively involved in the creation of appropriate
prediction-information products. By providing funds to link researchers
and local users, the program will encourage regional partnerships to
integrate all available knowledge so there is benefit from the
continuous flow of new knowledge from ongoing research.
Interagency partnerships.--A key component of this program is
linking research agencies with agencies affected by weather/climate-
related disaster. This program should leverage the interest and
expertise of other federal agencies and should include FEMA, NOAA, the
Department of Interior and the Department of Agriculture.
Evaluation component.--The program will include an evaluation
component requiring that each project ensure that the work performed
contributes to reduction in future damages and hardship in a reasonable
amount of time and in a cost-effective manner and that regional
partnerships are effectively transferring ideas or technology into
information products that can be readily understood and applied by
users to identify, assess, and mitigate natural hazard risks. The
program should also develop the means to disseminate information
nationally on best-practices developed by regional partnerships.
External grants program.--A majority of the program funds should be
used for an external grants program. FEMA should quickly release a
joint request for regional partnership proposals which use seasonal to
interannual climate forecasts to mitigate costs of extreme weather
events and capitalize on economic opportunities which these forecasts
provide to critical sectors such as energy, transportation, and
agriculture. Successful partnerships should address the need for
improvements in research, the translation of research results into
cost-effective mitigation approaches, and the dissemination of this
information to those who can act. Regional partnerships should also
include a cost-sharing component which increases during the life of the
partnership.
______
Prepared Statement of Dr. Anjay Elzanowski, the Humane Society of the
United States [HSUS]
On behalf of The HSUS, the nation's largest animal protection
organization, representing more than 4.7 million members and
constituents. We thank you for the opportunity to present testimony
today. We are going to limit our comments to the controversy
surrounding appropriations for the Bion spaceflights, in which animals
are flown on an unmanned, automated satellite.
Bion spaceflights are a joint venture between the U.S., France, and
Russia. The most recent flight (Bion 11) alone cost the U.S. $13.6
million and Bion 12, to be launched in 1998, will cost American
taxpayers $19.6 million.\1\ Previously, the U.S. contributed $25
million for Cosmos flights launched since 1974.\2\ In 1996, the House
of Representatives voted 244 to 171 to slash the funding for animal
experiments in Bion 11.
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\1\ Budgetary Resource Requirements for Bion 11/12. Life &
Biomedical Sciences and Applications Division, NASA. 1995
\2\ Life Sciences input to FOIA U95-1013, NASA. 1995
---------------------------------------------------------------------------
Bion 11 involved extremely inhumane experiments on young rhesus
macaques. The primates were subjected to a combination of acute pain
from the wounds inflicted in the process of instrumentation and severe
distress caused by the start and landing, immobilization, and motion
sickness resulting from space flight. It is unlikely that an average
Animal Care and Use Committee would approve this project because of its
cruelty and doubtful benefits.
One of the macaques, Multik, died after returning to Earth. Multik
choked on his own vomit while under anesthesia, which suggests
inadequate care (NASA's official report on the cause of death is still
outstanding). NASA reacted by suspending its participation in primate
research on the Bion 12 mission. However, NASA's announcement does not
guarantee that primates will not be used by the other participating
countries or on subsequent missions. The announcement mentions the use
of other animals referred to as ``appropriate models''. Therefore, it
is important to avert any further escalation of unnecessary and
egregious harm done by NASA and its partners to sentient animals, as
they have done during the last two decades.
The HSUS requests the inclusion of language in the fiscal year 1998
VA, HUD and Independent Agencies Appropriations Bill that prohibits
NASA from the use of any Bion funds for flights and/or experiments
involving non-human mammals.
BION'S INHUMANITY
The macaques were strait-jacketed for the entire two weeks of
flight (to prevent them from tearing out wires implanted in their
limbs). These wires, which were tied to 14 electrodes, were implanted
into arm and leg muscles, tunneled under the skin and exited from a
hole in the monkey's back. A thermometer was surgically buried in each
monkey's abdomen, with a wire exiting another hole in the back. To
fully immobilize their heads, metal Evarts crowns (``halos'') were
fixed to their skulls using eight screws. The research protocols call
for multiple survival surgeries, at least six including de-
instrumentation, and state themselves that the surgeries are very
painful.
Dr. Roger White (Board-Certified Anesthesiologist, Mayo Clinic)
characterized the implantation processes as ``the most invasive
experimental procedures ever imposed on an animal'' and the
immobilizing head crown as ``particularly aggressive, to the point of
being macabre as well as cruel.''
Dr. Jennifer Leaning (Board-Certified Internal/Emergency Medicine,
Harvard Medical School) reviewed the Bion 11/12 protocols and stated
that ``this kind of animal experimentation might have proceeded only a
few years ago with little or no comment or objection. Now it cannot and
must not. If humane alternatives cannot be identified, as the
investigators assume, then this project should be abandoned or
radically revised and reviewed again.''
The animal protection community has drawn public scrutiny to the
inhumanity in the Bion project. These concerns were validated in two
independent reviews of the Bion project. The first review, which
resulted in the Fettman Report of April 1995, followed in the wake of
the resignation of Dr. Sharon Vanderlip, Chief of Veterinary Services
at NASA's Ames Research Center (ARC) in Moffett Field, California. In
her resignation letter to NASA Administrator Dan Goldin, Dr. Vanderlip
wrote: ``In my 15 years as a laboratory * * * veterinarian, I have
never encountered the arrogance and blatant disregard for policies,
regulations and animal welfare that I witnessed at the [ARC] * * *.
During my service * * * (July 1993 until my resignation in March 1994),
a review of the medical records of the non-human primates indicated
NASA's failure to provide appropriate surgical monitoring, pre- and
post-operative care, and analgesia. Post-operative deaths were not
uncommon * * *. NASA officials told me NASA had no control over the
care of Bion monkeys in Russia. Veterinarians participating in the
project who had visited the Russian facility and observed the animals
on location told me conditions were `draconian' and that the animals
received food of little or no nutritional quality.''
Dr. Vanderlip also tells of being ``specifically ordered to
disregard the animal welfare act, violate regulations, and to purge
documents of botched experiments.'' She adds that: ``[many] of the
individuals associated with the animal research component of Bion 11
are the same individuals who demonstrated a total lack of respect for
or understanding of animal welfare, laws, policies and procedures while
I was Chief of Veterinary Services for NASA.''
The second review (the Fettman Report of August 1995) was in
response to 27 allegations of inadequate or negligent care made by
People for the Ethical Treatment of Animals (PETA). These failings
resulted in the death of more than 20 primates at the ARC. The
investigation found that ten of the allegations were true and that
seven of the remaining seventeen allegations could not be proved nor
disproved by the NASA/ARC medical records. The investigation found poor
communication between the animal caretakers, project managers and
veterinarians, and medical record-keeping inconsistent with standard
operating procedures.
The report cites chilling incidents of neglect and mistreatment.
Two squirrel monkeys died of water deprivation. A monkey described as
lethargic, limping, bruised and anorexic from a recent surgery, was
deemed fit a week later and then died during surgery the following
week. Monkey # 524 was accidentally overdosed on Telazol. Monkey # M103
had lesions associated with chair restraint and complications with the
instrument implantation sites intermittently over a three year period.
The panel found that Rhesus monkeys being used for the Bion project
were ``chaired'' for days at a time and were being checked only twice a
day.
In addition to the two Fettman investigations, NASA convened a
``Task Force'' on July 1, 1996 for what was to be the final review of
Bion 11/12. The lone ethicist on the panel objected to the absence of
an ethical review of the project. The panel agreed that no subsequent
Bion studies should proceed without an ethical review process in place.
The panel also recommended a broad study of NASA's entire life sciences
research program, including a look at the care and treatment of
animals.
Responding to the panel's recommendations, NASA's ARC convened a
workshop that resulted in the ``Sundowner Report.'' This is a two-page
document that ends with a surprisingly progressive statement:
``Vertebrate animals are sentient * * *. Unless the contrary is
established, investigators should consider the procedures that cause
pain or distress in humans may cause pain or distress in other sentient
animals.''
When confronted with pain and distress inflicted upon the Bion
macaques, this statement shows a disturbing incoherence between NASA's
declarations and deeds. At the recent Public Responsibility in Medicine
and Research (PRIM&R) Conference (San Diego, March 1997) NASA's
delegate used the ``Sundowner Report'' as a smokescreen by discussing
it without any reference to their irresponsible experimentation in Bion
11.
NASA's use of animals is on the rise. While all other federal
agencies report a decrease in the use of rats and mice, NASA's use has
increased by 227 percent.\3\
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\3\ Davis, C. Animal use Trends in the United States 1986-1994.
Tufts University School of Veterinary Medicine, 1996. p. 17.
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BION'S INEFFECTIVENESS
As it often happens, the inhumaneness reveals a poor experimental
design. NASA's data from Bion 11 is of highly questionable relevance to
human beings on several counts. The number of monkeys on this flight
was two, with one dying shortly after the flight. It doesn't take a
statistician to figure out that a sample of one or two can yield
unreliable data. This problem is compounded by the usual pitfalls of
extrapolating information from animals to people (macaques and humans
belong to different families of primates) let alone extrapolating data
from immature, restrained animals to adult, unrestrained astronauts.
Long-term restraint affects most body functions including bone
metabolism, and severe distress compromises research on the regulatory
physiology. These known pitfalls of animal experimentation for
biomedical purposes are aggravated in space by the fact that large
animals, that may in some respects simulate human conditions, have to
be immobilized and small animals, such as rodents, are too dissimilar
to provide relevant data. These are problems that continue to be
overlooked by NASA even though they were cited as problems during the
peer reviews. As a result, 22 years of flying rats and monkeys into
space, suspending rats by their tails for weeks at a time, and
confining monkeys in full body casts for weeks on end has yielded a
morass of conflicting information that generates more animal research
rather than helping understand human medical problems.\4\ \5\
---------------------------------------------------------------------------
\4\ Globus, R.K., Bikle, D.D. and Morey-Holton, E. Effects of
Simulated Weightlessness on Bone Mineral Metabolism. Endocrinology,
Vol. 144, No. 6, pp. 2264-2270, 1984.
\5\ Anderson, S.A. and Cohn, S.H. Bone Demineralization During
Space Flight. The Physiologist, Vol 28, No. 4, 1985. pp. 212-217
---------------------------------------------------------------------------
It is obvious that human studies are much more relevant to human
health problems. In addition, human experiments in space are not
compromised by the extreme distress and restraint. According to Dr.
David O. Wiebers (Board-Certified Neurologist, Mayo Clinic): ``[H]uman
data would be far more valid and cost-effective than animal data. Many
of the surgical procedures are minor for humans (anesthesia being
necessary in animals for restraint.) A cooperative human subject would
not require some procedures which are done for fixation. * * * I am
convinced that this project as currently designed will provide no
meaningful information. * * * Based on my medical training and
experience, it is not unrealistic to expect that these experiments
could be done with human subjects, if they need to be done at all.''
The details of Bion 11/12 research program are specified in two
proposals: ``Musculo-Skeletal Physiology and Behavior'' and
``Regulatory Physiology''. All of the tests called for by the Musculo-
Skeletal proposal can be performed, with modifications, in humans. In
fact, many astronauts do provide tissue samples. Several studies, some
of which were conducted at NASA facilities, have examined the effects
of simulated weightlessness on humans, many of which involved the
biopsy of the participant's bone, bone marrow or muscle tissue.\6\ Bone
biopsies are performed for patients suffering from osteoporosis. NASA
routinely requires astronauts to submit to dual energy X-ray
absorptiometry (DEXA) scans which enable researchers to definitively
measure calcium resorption and determine where the most bone loss
occurs. The possibilities of obtaining useful human data will be
rapidly increasing with the progress of medical technology.
---------------------------------------------------------------------------
\6\ Arnaud, S.B., Sherrard, D.J., Maloney, N., Whalen, R.T. and
Fung, P. Effects of 1-Week Head-Down Tilt Bed Rest on Bone Formation
and the Calcium Endocrine System. Aviation, Space and Environmental
Medicine, 1992; 63:14-20.
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There is no obvious need for studying the decrease of bone density
in space and Bion 11/12 does not provide any valid rationale for doing
it. NASA admits that bed-rest provides a good simulation of
microgravity and that more studies of this type are needed.\5\ \7\ It
is textbook knowledge that the decrease in skeletal mass in astronauts
is caused by a decrease in the load that bones are subjected to and the
mechanisms of this process can and have been studied in humans.\8\
According to Dr. Paul W. Gikas, Emeritus Professor of Pathology (The
University of Michigan Hospitals, Ann Arbor, MI): ``This information
has been known for years, and I question the need for additional
studies. If there is adequate justification for additional studies,
these experiments could be done with human subjects. Currently, open
biopsies as well as large bore needle or trocar biopsies of bone and
skeletal muscle are being performed to study various disease processes
in humans who have given informed consent. Such studies conducted in
human volunteers would obviously eliminate the disadvantages of not
producing human data.''
---------------------------------------------------------------------------
\7\ Tipton, C.M. and Hargens, A. Physiological adaptations and
countermeasures associated with long-duration spaceflights. Med. Sci.
Sports Exerc., Vol. 28, No. 8, pp. 974-976, 1996.
\8\ Cotran, Ramzi S. Robbins, Pathologic Basis of Disease, Fifth
Edition, W.B. Saunders Company, Philadelphia, pp. 1214, 1216, 1220,
1221.
Out of nine parameters listed in the Regulatory Physiology proposal
only one--brain temperature--cannot be measured in unrestrained humans.
The Scientific Advisory Council of The HSUS strongly believes that the
measurement of 8 out of 9 parameters in unrestrained humans is by far
more reliable and useful than the measurement of 9 out 9 parameters in
stressed and immobilized animals.
Instead of obtaining questionable data from animals, NASA should
recruit astronauts willing to provide the necessary tissue samples,
information that would help their fellow astronauts. The astronauts in
the American space program are devoted to the betterment of that
program and the future welfare of their fellow astronauts. Astronauts
on spaceflights as early as the Gemini series and on several of the
Apollo and Skylab missions submitted to a battery of pre- and post-
flight examinations and sampling.\5\ \9\ If bone and other routine
biopsies are really necessary, participation in a mission can and
should be made contingent upon giving an informed consent to these
biopsies.
---------------------------------------------------------------------------
\9\ Fogelman, I. and Ryan, P. Measurement of Bone Mass. Bone, 13,
S23-S28 (1992).
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CONCLUSION
In conclusion, we believe that (1) the philosophy and design of the
Bion program were flawed from the very outset; (2) flying animals into
space, at least in the way it has been done by NASA so far, is terribly
inhumane, ineffective scientifically, and wasteful economically; (3)
information that is useful for future manned flights should be obtained
in humans, hundreds of which have and continue to spend time in space;
and that (4) given the budgetary constraints that our space program
continues to experience, any tax dollars appropriated to NASA should be
restricted to only vital studies meeting the highest standards, not for
highly questionable animal research.
______
Prepared Statement of Dennis Olivares, President, International
Federation of Professional and Technical Engineers, Local 29
INTRODUCTION
Madam Chairman and Members of the Subcommittee: I deeply appreciate
this opportunity to testify today about my recent experiences in the
federal government and the tangible recommendations I believe need to
be implemented in order to bring NASA Appropriations into line with
modern political mandates concerning cost-effective, or ``reinvented,''
government. My name is Dennis Olivares, and for the past 6.5 years I
have been employed by NASA at Goddard Spacefilght Center (GSFC) as a
Communications/Electronics Engineer. However for the last half of that
period, I have not been permitted to perform meaningful--or lately even
any--engineering or project-management-type work for the government.
Alas, where there's smoke there's generally fire, and accordingly much
of my recent career destruction stems directly from this Agency's
illicit retaliation against my longstanding, open, and occasionally
effective opposition to the waste, mismanagement, and abuse of
discretion I have personally encountered in GSFC operations and on
three major Flight Projects (ie., Space Station/EOS Platforms, ISTP/
GGS, and TDRSS). To maintain and hopefully restore my civil-service
status, I have undertaken a number of defensive initiatives which have
caused this Agency and I to be locked in legal combat for over 4 years,
but I do not intend to discuss these today. However, those ongoing
battles coupled with my official, employee--representational duties as
an elected Union Officer have provided me with many additional insights
such that I helped found and am engaged in leading the Whistleblower's
Alliance and Relocation Network (WARN) on an extracurricular basis;
many of the recommendations I make today in this Statement are derived
from the legislative proposals now being advocated by that Group, aptly
nicknamed WARN.
REQUEST SUMMARY
Senators, I am herewith requesting that this Subcommittee reexamine
the budget package submitted by my Agency and seriously consider doing
the following:
--Cutting at least $1.3 Billion from the total life-cycle costs of
the TDRSS and/or TDRSS-II Program(s);
--Totally defunding the NASA Inspector General's Operations in
perpetuity (c. $210 million per year);
--Cutting at least $20 Million from Space Technology ``R&D'' Programs
devoted to Spacecraft Data Systems;
--Cutting at least $200 Million from the EOS AM/PM Platform
Project(s) pending a formal investigation of the same;
--Cutting at least $9 Million from GSFC Quality-Assurance Operations
relating to the Unisys/Paramax Support Contract (c. $85
Million) pending a format investigation of the same; and
--Increasing funding by at least $100 Million for the Large/Small
Explorers, Earth Probes, and Spartan Programs whose historical
payback rates have been positively proven ``at the bank.''
That concludes the oral portion of my Statement. I would like the
written remainder of my Statement to be herewith appended and included
in the record without exception. Finally before proceeding, I trust
that it is recognized that I am submitting this Statement to the
Congress in good faith and complete honesty pursuant to 5 U.S.C.
Sec. 7211 and related protective statutes. Although obvious, I
reiterate this extra protection of First-Amendment rights because I am
uncertain what awaits me in the following weeks.
BACKGROUNDS
I was hired at Goddard at the tail-end of 1986 via response to an
advertisement in the Washington Post for GS-13/14-level communications,
electrical, and systems engineers. Despite my somewhat mature,
journeyman professional statue, I came into the government with, what
in retrospect has proven to be, severe naivete regarding the Merit
System as well as the actual innovation mission of NASA/GSFC. Yet for a
while, I enjoyed significant career success, although nowhere near the
levels of achievement and recognition I was able to reach in the
private sector.
Although this Agency has recently and pretextually chosen to attack
my academic credentials, technical competence, and overall
credibility--and is being sorely taken to task for such defamation--I
assure you that the following observations and conclusions are true,
valid, and objectively verifiable in copious publications of both the
print and electronic media during the past four years. If I were
remotely mistaken about any of these issues, I assure you I would not
risk this Statement here today. I firmly believe these abuses need to
be checked cold and, if possible, reversed and prohibited for the
future health and integrity of NASA.
Although I have previously had numerous low-key/low-output dealings
with the Government Affairs Committee, the GAO, and other enforcement
and investigative entities over some of these issues, it has recently
occurred to me that nothing could focus an Agency's attention on a
problem as quickly or efficiently as impinging on its future
appropriations in a way that forces a swift resolution of that problem.
To me, this amounts to a revolutionary end-run around the traditional
watchdog mechanisms which simply do not work at all or anywhere near
well enough to give a fair return on taxpayers' investment in NASA. The
spirit of the times (i.e., government accountability) and basic
concepts of justice demand that such an experiment be undertaken.
Accordingly, I have made five recommendations along these lines--five
areas where I know significant waste, mismanagement, and abuse of
discretion has occurred and is mostly still occurring. I propose that
the Congress cut these pre-identified amounts from the fiscal year 1994
and subsequent NASA Budgets, less, perhaps, 5 percent for the
administrative or litigation costs to recover those amounts, which the
GAO should certify, increase or decrease. These are not trivial sums,
and the effort would be worth it, particularly the exemplary effect it
would have on other profligate federal agencies once such seismic waves
resonate throughout the government. An agency suitably starved for
funds would thus have no choice but to take the due care and serious
efforts (which they should have done before) and recoup their misspent
funds and discipline their management problems--and quickly! The page-
limitation imposed by the Subcommittee for these purposes forces me to
disclose nothing beyond brief clues regarding the budget cuts proposed
in the five above-identified areas. I place myself at the disposition
of the Members and their staff regarding further evidence and
information to support my stated positions.
TDRSS, ATDRSS AND TDRSS-II COST OVERRUNS
The seeds of my own career destruction were inadvertently sown in
early 1987 when, despite (or, in retrospect, possibly because of) my
inexperience in government, I was chosen by the Engineering Directorate
(Code 700) to be detailed to the Tracking Data-Relay Satellite (TDRS)
Project Office (Code 405) to help them evaluate complex and voluminous
set of fixed-price and cost-plus proposals from TRW and CONTEL. These
proposals were an omnibus set of level-of-effort claims against the
government, and they were collectively referred to as ``Shuttle-Delay
and Related Claims''; for shorthand purposes they were called ``P6''
which stood for Period 6 of the Master Contract NAS5-25000 which ran
from April 1, 1986, until the end of 1993. The original nominal dollar
amount for these P6 claims totaled around $165 Million. Previously, the
P5 Technical Evaluation Team had taken a somewhat ``hard-line''
approach was instrumental in recouping around $11 Million from the
TDRSS Contractors TRW an CONTEL. They were so mortified by our P6 fact-
finding questions that they withdrew their Proposals. Later, TRW and
CONTEL resubmitted ``R1'' P6 Proposals around February of 1988. These
were revised and somewhat descoped versions of what they had sent in
earlier (i.e., with only the fixed-price part of the Contract
addressed), but now costs had been inflated up to a nominal $178
Million. Later, I was to prove that the actual overall proposed costs
were higher still--near $187.4 Million--and the Evaluation which I
spearheaded ended up recommending loaded-cost disallowances totaling
$54.3 Million dollars! This was no mean feat nor paltry sum. Although
sent to this Project as a relative ``tenderfoot,'' I quickly overcame
my deficiencies and acquired the requisite skills such that I was
recommended for promotion (to GS-14), step-increase, and cash award.
But then, ``funny things'' began to happen to me. No promotion to
this day for starters, and although the most technically competent
engineer to assist in the P6 Negotiations I was deliberately and
systematically kept away from the proceedings. Later, I learned that
about $29 Million had been recovered for the government, and I felt
good; that money was my early contribution to the ``amortization'' of
my own career costs. I more than paid for myself with that one effort,
even if I live to be 500 years old! However, $29 Million was good to
have, but over $54 Million had been proven and profusely documented. I
figured we were due about another $20 Million from the grossly
mismanaged Contractors. No manager has the discretion to hand out tips
and gratuities on that scale, so I began to ask questions that never
got answered to this day. Therefore, the Congress should slash $20
Million from the TDRSS line item(s) until such time as those answers,
or that misspent money, are forthcoming. Immediate reorganization and
restaffing of that Project Office should also be required at once; the
elevation of the TDRS Project Manager from GM-15 to SES, as has
recently been advertised, should be halted or undone as well.
Instead of answers, a wall of silence was erected in 1989, and I
was reassigned to the prestigious Advanced-TDRSS (ATDRSS, since renamed
to TDRSS-II) Procurement Development Team to keep me quiet and busy. A
$70 Million question also arose on the F7 and F8 Satellite Contracts to
TRW, but that one proved almost impenetrable for me. (I have since
learned that the NASA IG may have heeded my clues in this area at long
last.) And all that pointless showboating--and expensive--
transcontinental travel the TDRS Project Office still engages in!
Needless to say, I did not last long in Code 405, especially when I
began to openly oppose and get reluctantly changed deeply imbedded
biases which favored the awarding of the ATDRSS contract to TRW through
the political mandating of such requirements as the so-called ``Cluster
Satellite Architecture.'' The job I had was assumed by obedient in-
house service contractors--and openly advertised about a year later--
and I was sent back home to Code 735 where I essentially have not been
able to secure any further meaningful assignment. So I became active in
the Engineers' Union and the Automobile Club, and of course the quest
for legal redress. The rest of the technical details of this story have
been provided to the Congress through the Government Affairs Committee,
which details how 4 or 5 satellites, especially now that Ka-band
service has been abandoned, can do the job that the Agency has
specified for 10 satellites, which is a life-cycle-cost impact of an
additional $1 Billion or so. Space News has indicated that these funds
have already been pulled back. Good! ``Ghost stories'' about a
potential deficit in data-traffic-handling capacity in upcoming years
can be readily debunked by a critical examination of the Space Network
Mission Model.
INSPECTOR GENERAL'S OPERATIONS
Also as detailed in my 16-page Statement last year to the
Government Affairs Committee, the NASA OIG is virtually a drone entity
and wholly ineffective WARN, of which I am the current Vice-President,
has legislative proposals floating about which recommend the outright
abolition of the Office of Special Counsel (OSC) and all the Agency
OIG's as creatures of the Agencies per se. The replacement would be an
Office modeled on the autonomous Federal Reserve Board and would absorb
the individual agency IG's as direct-subordinate branches. We would
eliminate the IG's current discretion to ignore problems by having the
option to conduct either an ``audit'' or an ``investigation.'' Both
need to be utilized each time a project or an activity is brought under
scrutiny. Agency-located IG Branch Offices would be staffed with cross-
trained project engineers and auditors from the agency's ranks--
possibly on a rotational basis. Such personnel, unlike the common fare
in a typical agency's OIG, would be competent and could converse
fluently in the agency/industry jargon and would not be intellectually
unarmed in a technical discussion with a shrewd and willful project
manager or engineer whose motives might not necessarily stem from the
Code of Ethics. Much of what is currently swept under the carpet would
cease by virtue of this lone reform!
The replacement strategy is well-described elsewhere, and I will
not reiterate those details now. Instead, I simply can upon the
Subcommittee to anticipate this Enactment and totally defund the NASA-
OIG to the tune of around $210 Million annually. Substantially more
money can be saved by the self-financing OIG for the United States
which is being proposed along with its operating concept which will
establish a competent, committed, and protected corps of oversight
professionals.
in-house ``research and development'' abuses
One of the first oddities I encountered when I entered NASA from
the private-sector was all the duplication and triplication of design
efforts relating to data systems and data-handling components for space
or earth applications. Nobody else's system is good enough for
collaboration, to the extent it is even known, because it was ``Not
Invented Here''. Thus do we joke about the NIH Syndrome at Goddard.
Some managers see such quests as healthy competitive contests, and
others view it as therapeutic to cure the ignorance of the vast numbers
of college fresh-outs we lately employed. However, I believe that both
such motivations are improper when it amounts to mere reinvention of
the wheel and does not offer substantial improvement over commercially
available off-the-shelf. I and my colleagues have estimated that the
latest Spacecraft Data System Developments done in-house by GSFC
personnel and a cadre of service contractors have spent between $15
Million and $60 Million to reinvent a ``wheel'' that does not
transport/store data any faster than the industry's norm (2 Mbps). That
is an expensive in-house training program! That is the NIH Syndrome at
its worst. Accordingly, I take a conservative estimate of $20 Million
and ask the Subcommittee to withhold this amount from next year's
``R&D'' funding in the hopes that some real advances in the state of
the art might be forthcoming.
space station platforms/earth-observing system (eos)
It is when significant aerospace-contractor effort becomes
involved, especially on macro-projects involving large and/or multiple
spacecraft, that NIH Syndrome becomes truly expensive--hundreds,
instead of merely tens, of millions of dollars get wasted. GE Astro
(now Martin Marietta) has expended around $450 Million doing
``Viewgraph Engineering'' and producing no significant spacecraft
hardware for their macro-Platform which formerly was under the aegis of
Space Station and now under EOS, where between $52 Million and $140
Million has gone into the EOS-AM design. They too could make use of
commercially available subcontracts for standard hardware which would
save tons of money. Instead, they have been allowed to get away with
proposing ultra-profitable in-house fabrications--a disastrous strategy
as GSFC Management should well know via the experiences with the 2
ISTP/Global Geospace Science Satellites.
I urge the Subcommittee to have the GAO examine this Project and
recommend a $200 Million cut to get some attention to this situation.
the quality-assurance empire at gsfc
Through the handling of a grievance over an employee who was
constructively fired for engaging in responsible oversight regarding
the UNISYS/Paramax Support Contract for Code 300, I have become aware
of substantial areas for concern. Since litigation is pending in this
area, I will merely recommend that the Subcommittee cut $9 Million from
this QA line item and dispatch the GAO to sources of information that I
shall designate at a subsequent time * * *.
suggested projects and cost-centers for increased appropriations
Based on past performance as well as prudent risk-assessment
theory, I urge the Subcommittee to increase funding for small-satellite
endeavors by at least $100 Million. Macro-spacecraft just never seem to
get off the viewgraphs, and when they do (e.g., TDRS, HST, UARS, GRO,
GOES-Next, Magellan, etc.) they are plagued by all manner of technical
troubles. The Explorers generally deliver more and quicker. EOS should
be descoped to use more small-sats as well. Spartan deserves to
demonstrate the concept of ``recyclable spacecraft'' in the manner of
EURECA.
conclusions
Poor, poor contractor oversight, desertion of role as national R&D
leader, wholesale abandonment of Merit-System Principles are the three
greatest evils that NASA must exorcise from its ranks. Also true is a
variation on the cliche ``You can't legislate morality,'' e.g., federal
integrity, in view of the current structure of government which
actually rewards that perversion of institutional cooperation (i.e.,
being a team-player) which seeks to suppress, cover-up or distort the
truth about ``controversial'' federal programs and to punish all those
who fail to go along with the scheme. These anti-values are constantly
reinforced with admonitions about not rocking the boat or about the
inability to fight ``the System,'' which needs to be totally redesigned
to attenuate all those existing disincentives to responsible government
service, especially where contractor-oversight is involved. Those who
would oppose wrongdoing or advocate and implement genuine reforms are
literally and brutally sacrificed! What follows are my supplemental
recommendations to effectuate some very badly needed reforms in a
technologically oriented agency like NASA.
supplemental recommendations
(A) Conduct a moratorium on dealings with the OSC or any agency IG
Office until such times as the following necessary reforms have been
implemented.
(B) To enable Whistleblowers to come forward as was intended, but
not realized by the Whistleblower Protection Act of 1989, abolish the
farcical Office of Special Counsel (OSC), and transfer its core
functions to either the OMB, the FBI or perhaps some wholly new and
truly independent agency to be known as the USIG (Office of the
Inspector General for the United States).
(C) Eliminate or cut back on agency Procurement Officers, who as a
professional class are usually even less well-educated than IG agents
as regards the mission, projects, and technology of the agency/
industry. They are even easier to control by unethical managers and
engineers who frequently form unholy alliances with these contract
officers to ``pacify'' complaining contractors to the tune of billions
of wasted dollars each year. They are widely thought to be ``in the
way'' by conscientious individuals, thus making the current arrangement
a kind of welfare program for procurement-types. As such, their
authority far outstrips their understanding; they are truly support
personnel who presume to lead an enterprise they do not adequately
comprehend.
As a replacement, the adoption of the private sector's ``engineer-
manager concept'' is suggested: Weed-out generic managers and
nontechnical bean-counters! Train technical engineers in the business
sciences, and retain the better procurement officers and train them in
the agency/industry technology in the manner of physics-for-poets
courses. Then give this new corps of engineer-managers plenary
responsibility, including both credit and blame, over the key aspects
of their project work. Such a new method of doing business would tend
to raise the stakes of performing well and create a much-needed locus
for accountability. The present System diffuses--and often outright
obscures--true accountability, which guarantees cost overruns, poor
employee performance, malignant management oversight, undeserved
advancement, poor overall morale, and the negative cycle just continues
to spiral inward on itself.
(D) Insist on the use of Firm-Fixed-Price Contracts for the
procurement of all major elements of hardware and engineering support
services, and then police these contracts strictly and with adequately
trained (and suitably committed) engineer-managers. Cost-Plus Contracts
have proven an absolute disaster in recent NASA spacecraft programs for
a complex array of reasons. Do not let NASA escape its mandate of last
year which requires the promulgation of cost-recovery procurement rules
for poor-performing contractors!
(E) Upgrade the overall competence of so-called Quality Assurance
Engineering groups, where far too many nontechnical, generic engineers
find a convenient haven to flex bureaucratic muscle at the expense of
rational cost and proper mission goals for agencies (like NASA) charged
with core R&D function on behalf of taxpayers. Much of this function
can be plowed directly back into the engineer-manager corps, where it
rightfully belongs; even Ford Motor Co. recognizes that ``Quality is
job one!''
(F) Strengthen Federal Unions by eliminating the gross inequities
engineered into Title VII of the Civil Service Reform Act
First, change 5 USC Sec. 7106 to equalize matters and permit
competent unions (i.e., those with scientists, engineers,
mathematicians, and programmers) to negotiate over matters of
substance, instead of only limited ``procedures.'' This would include
the prioritization of major capital projects, staffing and skill-mix
(to insure against pre-engineered incompetence), internal cost-benefit
analyzing, improper contracting-out of core agency functions,
improvident bestowal of performance awards to contractors as well as
agency units, union-initiated transfers or details of whistleblowers to
``safe havens'' to thwart illicit retaliatory campaigns, and similar
things which go to the heart of the agency's mission, productivity, and
accountability to both the taxpayers and the Merit System.
Secondly, amend 5 USC Sec. Sec. 7116(d) and 7123 to enable federal
unions to obtain temporary restraining orders and other injunctive
relief (through the currently hostile and politicized Federal Labor-
Relations Authority) for instances where they assist and subsequently
have to defend a whistleblower from agency-sponsored retaliation. At
present, the FLRA is abusing their discretion by adopting ultra vires,
nonstatutory restrictions in the application for TRO's by refusing to
seek relief for ``mere'' individuals, etc.
Thirdly, provide federal unions the statutory right to proceed
directly to federal district court for a de nova review of unfavorable
appeals from the FLRA General Counsel--at least in cases involving
whistleblower defenses. Such cause(s) of action should provide for
sanctions and/or damages against both the agency and the FLRA for
harmful error, abuse of discretion, and other willful conduct.
I hope these suggestions have been helpful.
______
Prepared Statement of Mary L. Sandy, Chair, National Council of Space
Grant Directors
the national space grant college and fellowship program
I. Historical Overview
In 1988, Congress established the National Space Grant College and
Fellowship Program which is administered by NASA. The program was
developed to ``increase the understanding, assessment, development and
utilization of space resources by promoting a strong education base,
responsive research and training activities, and broad and prompt
dissemination of knowledge and technology'' (Public Law 100-147). The
program uses state-based consortia of universities, industry and state
and private partners to:
--Build research infrastructure and capabilities in aerospace
related/high technology fields;
--Improve math, science, technology and engineering education at all
levels, kindergarten through graduate;
--Foster partnerships among industry, government and private entities
to meet Space Grant goals; and
--Enhance public science literacy.
There is a Space Grant consortium in each state, as well as in the
District of Columbia and Puerto Rico. These state-level Consortia,
which are heavily networked at the national level, represent a
tremendous national resource for high technology workforce preparation,
and U.S. research and technology competitiveness. The program now has a
well established infrastructure for fostering the creation of new and
innovative partnerships for science and technology research, as well as
for providing a venue for using technology applications at the grass-
roots local level.
By 1991, all 52 Consortia had been established. Nationally the
program has grown by over 68 percent from 348 member institutions in
1991 to 586 member institutions today. For every NASA dollar invested
in the program in 1995 (the latest year for which full data is
available), the Nation reaped rewards of more than $3 of cash and in-
kind contributions from non-program resources. For 1995, this seed
money, well spent at the state and local level, yielded:
(1) 332 Higher Education programs involving 28,000 participants
with activities including student and faculty development, new
curriculum development, publications and institution development
programs. As part of this effort five new centers, seven new majors, 22
new minors and 79 courses in aerospace-related fields of science and
technology were established.
(2) 1,700 Graduate Fellowships and Undergraduate Research
Scholarships totaling in excess of $8.5 million. These awards, while
open to all students, encourage participation by females and
underrepresented minorities.
(3) 409 programs to build Research Capability. NASA funding of $1.6
million was leveraged ten fold with $16.3 million to create programs
reaching many participants. This funding supported such activities as
seed research grants, establishment of research collaborations, and
faculty release time for the development of innovative research
proposals. Proposals won through this initiative in 1995 totaled $29.5
million.
(4) Precollege (K-12) programs which reached 700,000 participants
through 507 programs. NASA funding of nearly $2 million was leveraged
nearly five to one with state, private and other federal support. A
broad range of activities included teacher preparation and enhancement
programs, curriculum development and dissemination, and support of
student opportunities, many offering real world research and hands-on
experiences.
(5) A NASA investment of $445,758 in public service/external
relations programs which netted in excess of a five to one match.
Programs, including radio, television and other public programs--260 in
all--raised public science literacy of nearly 3 million participants.
II. The Need for Expanded Resources
Recognizing that the National Space Grant College and Fellowship
Program is a national asset, and the significant contributions of the
Space Grant Program in:
--Bringing benefits of aerospace science and technology to the people
of the nation;
--Creating community-based, public-private partnerships;
--Strengthening education and training at the K-12, higher education,
public outreach levels; and
--Building high technology research infrastructure at colleges and
universities in conjunction with industry and government
partnerships.
The National Council of Space Grant Directors has evaluated the
program's status and its needs in order to continue to adequately serve
its constituents and to meet growing program demands. This review
considered:
--The high leveraging capability of the program and its demonstrated
success in meeting science and technological goals at the state
and national levels;
--The fact that the number of program participants has grown by 68
percent since 1991 while funding to the National Space Grant
Consortia has remained flat since 1991, with an actual decrease
in national program funding;
--The growth in programmatic demands placed upon the state-based
consortia;
--The eligibility of many states/consortia (including but not limited
to Alaska, Delaware, District of Columbia, Kansas, Indiana,
Minnesota, Missouri, New Hampshire, New Jersey, North Carolina,
Oregon, West Virginia, Wisconsin) to raise their status and
funding levels to those of the Phase I awardees; and
--The need to work with state and local agencies to ensure that
aerospace technologies are available for use at the most
practical local level.
In light of the success of the program and the needs indicated
above, the Council urges Congress to provide a permanent budget
increase of $10 million to commence with the fiscal year 1998 year,
which will allow:
--An increase in the funding to the 52 consortia to bring them in
real dollars to the 1990 funding levels and permit a
continuation of the consortia programs as envisioned in the
original legislation. ($3.5 million)
--States funded at less than a Phase 1/Designated Space Grant level
to compete for full funding and appropriate designation and to
provide more equitable funding to the larger state consortia.
($2.8 million)
--Extended resources to establish a Space Grant program of state-wide
partnerships to encourage the practical application of
aerospace technology and science (e.g., local dissemination of
remotely sensed data to end users such as farmers, natural
hazards programs, land use planners, marine resource managers
and others) in partnership with established state extension and
natural resources programs. This will build the capacity to
develop appropriate deliverables and to partner with extension
networks in the transfer of technology for solving high
priority problems of individuals and communities. It will
accelerate the translation of data into useful information, and
design educational programs that foster adoption of
technologies and practices that address local needs. ($3.7
million)
The Council hopes that Congress will provide this funding as an
increase to the NASA budget in lieu of taking funding from other NASA
programs.
Ten years ago, another Congress wisely recognized the urgent need
for a technically competent and motivated workforce and created the
National Space Grant College and Fellowship Program. The Space Grant
Program has been both effective and efficient--in spite of dwindling
resources. The seed has been planted and the roots are established. But
the program is now at a critical point--it will either wither on the
vine or it will blossom and bear fruit. The National Council of Space
Grant Directors urges the committee to support the program at the full
$23.3 million level, to protect the investments already made and to
harvest the benefits of an outstanding program.
______
NATIONAL SCIENCE FOUNDATION
Prepared Statement of SRI International
the polar cap observatory
executive summary
The National Science Foundation has proposed the establishment of a
Polar Cap Observatory (PCO) funded in the amount of $25M out of their
Major Research Equipment (MRE) funds in fiscal year 1998. The requested
funding has been deferred by the Congress pending resubmission by the
NSF with appropriate supporting documentation. This memorandum
summarizes some of the key scientific, technical, and logistical issues
associated with the proposed PCO.
Science.--The polar cap region is the last remaining largely
unexplored frontier for upper atmospheric science. It is at these high
latitudes that the major interactions between the solar wind and the
Earth's environment takes place. One can always say that science is
``good'' and leading edge science is even better. Clearly, the proposed
PCO will result in new leading edge science. However, there are also
practical consequences of the polar cap science. It will provide the
heretofore unobtainable measurements needed to model and predict the
effects of the solar interactions with man's environment and thus
enable mitigating actions to be taken. For example, some solar storms
create communication outages on both satellite- and ground-based links.
They create surges on power lines that lead to power outages over very
large portions of the world. They affect the resolution of our space-
borne imaging systems. They can even lead to failures of semiconductor
components on spacecraft and thus the loss of multimillion dollar
sensing and communication platforms in space.
Technical.--The technical specifications for the PCO have been
studied and reviewed for almost a decade. The main instrument is a
powerful radar (called an incoherent scatter radar), akin to a few
others that exist in the world, none within the polar cap. However, the
radar proposed for the PCO is of a modern design (a phased array) that
would make it significantly more flexible than those currently in
operation. The added flexibility is very important because of the
dynamic polar cap environment in which the system will operate. In the
polar regions, ionospheric effects happen on time scales of seconds,
requiring electronic rather than mechanical steering of the radar
antenna. Complementing the radar is an array of sophisticated optical
instrumentation to provide a more complete picture of the polar cap
phenomenology. A technical challenge to be dealt with is the effects of
the severe Arctic environment on the instrumentation. SRI has
successfully dealt with comparable technical challenges for over 25
years with research facilities we have built and operated in Alaska,
Canada, Antarctica, Scandinavia, and Greenland.
Logistics.--The logistical challenges of building a major
instrument at a remote location are well known and planned for in the
proposal for the PCO at Resolute. We currently operate a small-scale
research facility at that location for the NSF. We operate a major
research facility in Greenland. We have dealt with and are currently
working with the major Canadian construction firm that is responsible
for construction and maintenance at Resolute and many other Canadian
arctic locations. This firm would be the construction subcontractor for
the PCO and was instrumental in working with us to develop the
construction and logistics plans for the facility. Detailed plans have
been developed and are spelled out in the successful (but yet unfunded)
proposal to NSF for the PCO.
DISCUSSION
The paragraphs which follow expand on the scientific, technical,
and logistical (including construction schedule) considerations.
Scientific Basis.--Our planet is embedded in the outer reaches of
the Sun's atmosphere which expands at a very high velocity. This solar
wind carries energy and momentum to the vicinity of the Earth. The
Earth's magnetic field, which extends far into space, plays a crucial
role in absorbing and directing this energy and momentum toward the
atmosphere. Most of the energy transfer to the Earth from the solar
wind is accomplished electrically, and nearly the entire voltage
associated with this process appears in the polar cap region. The total
voltage across the polar cap can be as large as 100,000 volts, rivaling
that of thunderstorm electrification of the planet in magnitude. This
polar cap electric field is the major source of large-scale horizontal
voltage differences in the atmosphere. Moreover, the dynamic polar
region accounts for a large fraction of the variability inherent in our
upper atmosphere, variability due to chaotic changes in the solar wind
magnetic field which produce large-scale restructuring of the cavity
that encloses the Earth's magnetic field. This restructuring visibly
manifests itself most clearly in the production of ionized plasmas and
the associated distribution of aurora high over the north and south
polar regions. In turn, the Earth's lower atmosphere (that part
responsible for weather phenomena) undergoes variations in composition
and dynamics influenced by these coupling effects through a complex,
and as yet not fully understood, feedback system. A polar cap
observatory suitably equipped with radar and optical instruments will
be able to determine the characteristics and variability of crucial
terrestrial parameters during a time when a number of satellite
platforms record the variations in the solar wind and in the Earth's
near-space region.
Presently, there are very few observations of the upper atmosphere
over the polar cap. Yet observations of this region are crucial because
this is where the solar wind most directly couples with the Earth's
atmosphere. Lack of polar cap observations represents the most
conspicuous gap in our understanding of the Earth's upper atmosphere.
The scientific need for a PCO, as summarized above, was identified
and strongly supported in a series of community-driven meetings and
symposia that resulted in a comprehensive report entitled ``The Polar
Cap Observatory: The Next Step in Upper Atmospheric Science.'' This
report was the final and consensus product of a workshop held at
Cornell University in 1989 in which more than 100 atmospheric
scientists participated.
From a more practical standpoint, the PCO will provide measurements
needed for modeling and understanding the conditions in the space
environment, called Space Weather, that can influence the performance
and reliability of space-borne and ground-based technological systems.
Space Weather storms can cause disruption of satellites,
communications, navigation, and electric power distribution grids. Both
the electric fields and particle precipitation in the polar regions are
direct indicators of the state of space weather.
In addition to space science, the PCO will contribute important
information to address critical problems in atmospheric sciences. For
example, the highest clouds in the Earth's atmosphere occur in the
summer polar region, clouds which may never have formed before the
emergence of widespread human habitation of the Earth. Clearly,
understanding the complex interplay between lower atmosphere, solar
wind, and local sources of energy and momentum in the tenuous upper
atmosphere is an important challenge for atmospheric science in its
attempts to understand and mitigate the significant, long term, and
potentially deleterious impact of man on his environment.
The proposed location of the PCO at Resolute Bay, Canada, is within
6 degrees of the magnetic north pole, well within the polar cap. There
is no location in U.S. territory within about 20 degrees from the
magnetic pole making it impossible to do the frontier polar cap
research from a U.S. location. Resolute Bay location is also at the
apex of two existing chains of radar facilities, both of which will
derive enormous benefits from the added information about energy
transferred directly from the solar wind into the polar regions.
Technical Issues.--As a result of the compelling community-wide
scientific support for the PCO, the NSF granted three awards in 1990 to
develop more detailed technical designs for the major components of the
observatory:
--A Design Study for the Incoherent Scatter Radar for the PCO;
conducted by SRI International; 1991
--Design Study for a Polar Cap Observatory Radar Data Acquisition
System; conducted by MIT; 1991
--The Polar Cap Observatory Optical Interferometry and Spectroscopy:
A Design Study Plan; conducted by University of Michigan and
Boston University; 1991
The final reports from these studies, together with the initial
comprehensive report, established both the scientific importance and
technical feasibility of constructing and operating an upper
atmospheric observatory deep within the northern polar cap.
The main component of the Polar Cap Observatory will be a state-of-
the-art incoherent scatter radar consisting of a high-power
transmitter, a large antenna, and sophisticated receiving and signal
processing equipment. The antenna will be steerable, allowing
measurements over a large portion of the polar cap. Incoherent scatter
radars provide the only ground-based opportunity to measure ionospheric
electron density, electron temperature, ion temperature, ion
composition, ion collision frequencies, and ion velocities over a range
of altitudes from 80 km to over 1,000 km. In addition, the facility
will include a suite of optical and radio devices for remotely sensing
atmospheric parameters not measured by the incoherent scatter radar.
The final Observatory will provide, by far, the most comprehensive set
of polar cap diagnostic instruments in the world, meeting the research
needs of many scientists in both the national and international
communities.
Logistical Issues.--Resolute Bay was selected as the site for the
PCO after NSF-funded visits to several candidate locations in the
Arctic. Of all the candidate sites, Resolute Bay had the most favorable
logistical support base: an airport sufficient to handle jet cargo
planes and a port capable of handling a large cargo ship. Under NSF
funding, the proposed PCO site has been instrumented as a small-scale
radio and optical observatory of polar cap phenomena. The existing
facility consists of a 1,640 square foot structure and associated power
generator building together with a small suite of scientific
instruments that have already produced some tantalizing new scientific
results. Development of this ``Early Polar Cap Observatory'' has given
SRI valuable experience in establishing, sustaining, and supporting a
research station at Resolute. Relationships have been established with
local support contractors and detailed knowledge is at hand on logistic
support availability, Arctic construction issues, and Canadian
government requirements and environmental regulations. The major
Canadian construction contractor currently operating at Resolute has
provided the expertise, designs, and costing included in the winning
proposal for construction of the PCO. Thus the best possible logistic
and construction advice has been obtained. In addition, members of the
town council of Resolute have been informed of the plans for a PCO and
are excited about its potential for providing the town with new
educational and tourism possibilities. Memoranda of Understanding have
been negotiated by NSF with the Canadian authorities concerning the use
of Resolute for the proposed PCO.
Construction Schedules.--As with any Arctic construction, the PCO
activities will be dictated by two crucial factors: the limited
shipping season and the weather. Bulky and/or massive items must,
necessarily, be transported to Resolute Bay by ship, as the
availability of air-freight for those items is limited to the cargo
capacity of a C-130 and would be cost-prohibitive. The shipping season
consists of basically a single opportunity each year, the High Arctic
Eastern Sealift, which usually arrives at Resolute Bay around the first
week in September. Items to be placed on that shipment must reach the
port in Montreal before the end of July. This constraint is determined
by the relatively short period during which the local sea ice
conditions allow vessels into this region.
The weather is, of course, also a limiting factor for construction.
For example, the foundations for the various structures cannot be
installed before the ground is clear of snow. This generally occurs in
July. Outdoor construction activities also tend to be much less
efficient during the inclement winter months.
Given these constraints, SRI proposed the following schedule,
balancing shipping and logistics considerations with the desire for
access to the facility by the scientific community as close to solar
maximum as is feasible:
In the first year, the site is prepared and the building and
antenna foundations installed. At SRI, the structural and electrical
design of the antenna will be completed and fabrication of the antenna
elements will begin.
In the second year, the antenna structure is fabricated and shipped
to Resolute Bay. Prior to shipment, the structure will be test
assembled at the fabricator's facility to eliminate uncertainties in
either fabrication or erection techniques. Members of the on-site
construction team will be present for the test assembly in California
to ensure that the assembly proceeds smoothly in Resolute Bay. At the
site, construction of the main building is completed and work is begun
on installing radar equipment, optical instruments, and data
acquisition hardware and software.
During the third year, the antenna support structure will be
completed at the site and integration of the individual antenna
elements units (AEU's) will begin. The AEU's will have been tested in
California, but they will be shipped in a disassembled state to reduce
the bulk and packaging requirements. They will then be reassembled in
an enclosed area in Resolute Bay, tested, and integrated onto the
antenna panels. Testing will begin on the antenna, the computer
network, radar instrumentation and data acquisition system.
In the fourth year, final integration and testing of the radar
system will be completed, as will final testing of the optical
instrumentation. Scientific operations will then begin.
Project Management.--During the construction phase, SRI
International will maintain a Polar Cap Observatory Project Office to
provide the day to day management of the project. Monthly, the PCO
Project Office will provide status reports to NSF and to the Canadian
Government Liaison covering such items as construction schedule,
budget, and quality control of the project. The PCO Project Office will
be responsible for coordinating infrastructure and logistics support
for all activities to be conducted at the site.
After construction is completed, SRI's PCO Project Office will
continue to serve as the center for logistics and infrastructure
support for the facility. It will coordinate the facility's use, ensure
the safety and reliability of the instruments and buildings, provide
scientific and technical advice to users of the facility, and conduct
training courses in the use of the radar.
Oversight of the project will be conducted by the NSF with the
assistance of its expert advisory panels. The Canadian Government has
chosen the Canadian Space Agency to act as the official Canadian
Government Liaison to NSF in matters relating to the PCO. In addition,
SRI and NSF will work continuously with the proper local authorities in
the Northwest Territories of Canada to provide and receive advice as
required on logistic, environmental, political, and management aspects
of the PCO project.
Timeliness.--With the approaching maximum phase of the 11-year
solar cycle (around 2001), development of the PCO is especially timely.
If construction is started in 1998, the Observatory will be operational
in time to observe near solar maximum when the most dynamic processes
and interactions occur. Also, in 2001 the suite of satellites launched
as part of the International Solar Terrestrial Physics (ISTP) program
will still be operational leading to excellent opportunities for
collaborative science. With a one-year delay, the status of the ISTP
satellites will be more uncertain. And the declining phase of the solar
cycle will have started. This phase of the solar cycle is marked by the
frequent occurrence of intense magnetic storms and by the arrival at
Earth of energetic electron streams from the Sun, so-called ``killer
electrons'' because of their deleterious effects on satellite systems.
It should be pointed out, however, that significant observations can be
made throughout the solar cycle, even through the minimum. Determining
the solar cycle dependencies of the Sun-Earth interactions is
critically important to understanding the phenomenology.
SUMMARY
The Polar Cap Observatory is truly an exciting project. In this
memorandum we have touched on some of the scientific drivers of the
PCO. Not only will it lead to important new insights in basic science,
but it will contribute immediate societal benefit in addressing
problems related to Space Weather (such as effects on man-made
communications, navigation, power distribution and space-based imaging
systems) and Global Change (including impact of man on the Earth's
climate).
Technically, the PCO incoherent scatter radar will be one of the
most advanced and powerful in the world and will reestablish U.S.
leadership in the field. It has been about three decades since the U.S.
has built an incoherent scatter radar facility, even though the success
of such facilities has been borne out by the scientific breakthroughs
they have inspired, and by the fact that they are all still operating
with continued high demand for observing time.
The site at Resolute Bay has been carefully selected on the basis
of its proximity to the magnetic pole and because logistically it is
the most favorable settlement in the Arctic. The PCO has the potential
to become a source of pride for the local community at Resolute and
will represent a shining example of U.S. ingenuity standing out in this
remote and harsh environment. It will also encourage and solidify the
historically excellent scientific collaboration between U.S. and
Canadian scientists.
Finally, we note the importance of embarking on this project as
quickly as possible to take advantage of the maximum phase of the solar
cycle and the coordinated observations provided by an international
suite of satellites launched as part of the ISTP program.
______
Prepared Statement of Bruce S. McEwen, Ph.D., for the Society for
Neuroscience
I am testifying on behalf of the Society for Neuroscience, the
largest scientific organization in the world dedicated to the study of
the brain and spinal cord, and the more than 50 million Americans with
brain disorders. Mr. Chairman, we are very grateful for this
opportunity to present our testimony and for all that the Subcommittee
has done in the past to support neuroscience research. The Society for
Neuroscience consists of more than 26,000 basic and clinical
neuroscience researchers affiliated with universities, hospitals and
scientific institutions throughout North America and abroad.
I would like to advocate for increased research funding for the
National Science Foundation (NSF) and the Department of Veterans
Affairs (VA). The Society for Neuroscience is well aware of the tight
fiscal constraints facing this nation, but we also recognize the
importance of increased funding for scientists and researchers. In the
past, the NSF and VA have faced particularly tough limitations on their
research programs due to limited federal dollars.
NATIONAL SCIENCE FOUNDATION
For fiscal year 1998, the Administration's budget request is $3.367
billion for the NSF. The Administration requested $2.5 billion for
Research and Related Activities, a 3.4 percent increase over fiscal
year 1997, which includes $330.8 million for Biological Sciences and
$129.7 million for Social, Behavioral and Economic Sciences. The
Society for Neuroscience urges this Subcommittee to raise the budget of
the NSF to $3.505 billion for fiscal year 1998, a 7.1 percent increase
or $232 million over fiscal year 1997.
We believe that NSF-sponsored research is a major source of
knowledge for today's researchers and provides a setting in which
tomorrow's researchers are trained. The NSF funds researchers at more
than 2,000 colleges, universities and other institutions in the United
States. These researchers have added to the advancement of scientific
knowledge while furthering technological developments around the world.
In fact, five out of the eight Nobel Laureates in the natural sciences
in 1996 received NSF funding at some point in their career. A further
decline in federal support would have grave effects on the NSF
resulting in a lowering of both basic science and science education.
Basic research is the key to understanding neurological and mental
disorders, and medical breakthroughs cannot be achieved without a
significant increase. The NSF funds hundreds of studies on the
fundamental properties of the central nervous system, and much of what
we know about complex higher nervous and cortical function has been the
result of basic brain research. The NSF also supports basic research in
molecular genetics, which is highly important to understanding the
brain. Much of basic neuroscience research is at the cellular and
molecular level, and it is a realistic goal that we will have a
comprehensive understanding of brain function at the molecular and
cellular level by the year 2000.
Some of the most exciting and challenging scientific research
opportunities address the mapping of function onto the structure of the
brain. The NSF plays the pivotal role in the development and support of
this multidisciplinary research area through activities that provide
unique opportunities for neuroscientists to collaborate with
investigators in mathematical, computer and information sciences and
engineering. Teaming modern brain scientists employing molecular
biology, neurogenetic, neurophysiological, psychological and
computational techniques with investigators in these other scientific
disciplines provides a broad essential scientific infrastructure which
will ultimately lead to the development of novel solutions to problems
in neuroscience research. A few examples of the important research
conducted at the NSF is listed below:
--NSF-sponsored research supports a great deal of this country's
research in developmental neurobiology, a field dedicated to
how the brain evolves, develops and changes.
--NSF-sponsored research programs have pioneered the development of
cognitive neuroscience, which combines the study of behavior
and cognition and artificial intelligence systems with basic
neurobiological studies.
NSF-sponsored research has improved imaging techniques that enable
physicians to improve the quality of patient care by altering the way
people look at themselves. These new imaging techniques are faster and
more cost-effective than in the past.
NSF-sponsored research studies the physiological and psychological
processes involved in the production and perception of speech and on
the biological bases of language in the central nervous system.
--NSF-sponsored research programs in neuroendocrinology establishes
the only activity in the federal government in which
neuroendocrinology, an area of research important for
integrating physiological processes throughout the body from
development tonging, is fostered as a distinct comprehensive
discipline supporting comparative studies across all species.
The Society for Neuroscience is deeply and firmly committed to the
basic science approach and strategy represented by the NSF. It is at
the NSF where basic and fundamental questions about brain structure and
function are supported. Research conducted at the NSF serves as the
very foundation that scientists build upon. A wide spectrum of studies,
ranging from single cell organisms to the human brain, are included in
the research portfolio of the NSF.
The NSF deserves the level of support we are requesting. The
Congress can feel comfortable in knowing that it is money well spent,
and that ultimately this research will bring benefits to millions of
citizens in this country.
DEPARTMENT OF VETERANS AFFAIRS
For fiscal year 1998, the Administration has requested $234.4
million for the VA Medical and Prosthetic Research Program, a 10.5
percent reduction over fiscal year 1997. Again, we recognize the tight
fiscal constraints faced by this Subcommittee, but we urge you to
increase funding for the VA to at least $280 million for fiscal year
1998. Without this increase, the VA will be unable to keep up with its
current research efforts. In 1986, the VA funded 2,434 investigator-
initiated research projects. Because of decreasing resources, the VA
has only been able to fund approximately 1,414 programs in 1997.
Currently, the VA only funds 15 to 20 percent of approved health
research projects--an all time low for funding opportunities for VA
researchers.
A few examples of the important research conducted at the VA is
listed below:
--VA-sponsored research in neuroscience has begun to develop
promising discoveries in brain and spinal cord trauma,
epilepsy, Parkinson's disease, amyotrophic lateral sclerosis,
schizophrenia, multiple sclerosis, Alzheimer's disease and
depression.
--VA-sponsored research is vital for the ongoing conduct of basic and
clinical studies in the cause and the effective treatment of
crippling and disabling mental disorders.
--VA-sponsored research has developed an Alzheimer's disease
assessment scale that helps diagnose the condition early while
also enhancing the quality of life for sufferers of Alzheimer's
disease by producing memory therapy, a non-pharmacological
technique.
--VA-sponsored researchers are developing treatments for
schizophrenia after finding that the severity of schizophrenic
symptoms is associated with the level of dopamine breakdown in
the spinal fluid and blood.
A decreasing level of funding in VA research, as proposed by the
Administration for fiscal year 1998, would seriously compromise, and
lead to the ultimate demise of the important research conducted at the
VA. Every day, these programs are developing new methods to understand,
diagnose and treat devastating disorders. The decreasing level of
research funding will in a very direct sense compromise the health of
tens of millions of our veterans. In addition to our veterans who will
suffer from a decrease in funding, so will society at large, as it is
advances in research conducted at the VA that have a profound and long
lasting impact all over the world.
In the past, more than half of the nation's physicians received
some part of their medical training through the VA. The VA medical
system provides an excellent opportunity to conduct large clinical
trials, and veterans receive highly skilled medical care through
various affiliation arrangements. However, inadequate funding has
inhibited the VA's ability to recruit high quality researchers as it
has done in the past. In fact, the VA has not been able to award any of
its Career Development Awards in the past two years. As a result, the
VA has had to reduce its staff, consolidate hospitals and clinics, and
lower a number of existing services at medical centers. Because of the
continuing shortfall of research funding within the VA, the status and
the very integrity of the entire VA research program is in serious
jeopardy. This would be tragic for the nation's millions of veterans.
In conclusion, the Society for Neuroscience recognizes the
constraints that the drive for deficit reduction has placed on all
discretionary programs for fiscal year 1998. We are also fully aware of
the many critical programs this Subcommittee must fund; however, we
strongly believe that the research programs we are advocating are
investments for the future, and we urge you to place NSF and VA
research among the Subcommittee's highest priorities.
Thank you for your consideration of our requests. I would be
pleased to answer any questions the Subcommittee may have.
______
Prepared Statement of John W. Suttie, Ph.D., President, Federation of
American Societies for Experimental Biology
Mr. Chairman, Ms. Mikulski, and Members of the Subcommittee: I am
John Suttie, current President of the Federation of American Societies
for Experimental Biology (FASEB). I am also a Professor of Biochemistry
at the University of Wisconsin, Madison, as well as a Professor and
Chair of the Department of Nutrition Sciences at that institution. It
is as President of the Federation that I come before you today in
support of the important life sciences research conducted at three
agencies under your jurisdiction--the National Science Foundation
(NSF), the Department of Veterans Affairs (VA), and the National
Aeronautics and Space Administration (NASA). While these agencies have
very different missions, they all have one unique characteristic in
common--the fundamental biomedical and biological research funded
through these institutions enriches the scientific knowledge base, and
results in substantial medical and technological advancements.
For those of the committee not familiar with it, FASEB is a
coalition of 14 societies with a combined membership of more than
43,000 scientists who work in life sciences research at all the major
universities and corporate research laboratories. The Federation was
created in 1912 to provide an organization that could represent the
views of the basic research scientist in the science policy debates of
its day. More than 80 years later, this still remains the fundamental
purpose of the Federation. FASEB, through its annual policy development
process, provides a vehicle for the basic scientist to be heard in
public policy deliberations which affect biomedical and life science
research in this country. We bring a unique perspective to the
difficult policy questions this Subcommittee must face in allocating
scarce federal resources.
NATIONAL SCIENCE FOUNDATION
NSF is the sole federal agency with the mission to promote a broad
program of basic research and education in science. While the focus of
the FASEB membership is on life sciences, the growing interdependence
of all scientific disciplines compels a new approach for the 21st
century. Discoveries in physics affect biology, and new mathematical
approaches have effects on physics. Findings in materials science are
of critical importance to medicine and engineering. Breakthroughs in
engineering and computational technologies are important to all areas
of the nation's economic and health-related scientific endeavors. It is
for this reason that FASEB has worked closely with the Coalition for
National Science Funding and nearly 80 other scientific societies to
request a 7.1 percent increase for the NSF in fiscal year 1998.
The scientific advancements made possible by NSF-funded research
lead to industrial development and economic growth, including new jobs,
and continue to improve the quality of life for our citizens. For
example:
--NSF-sponsored fundamental research on microorganisms lead to the
discovery of DNA-cutting enzymes, called restriction
endonucleases, that have played an essential role in the
development of the field of molecular biology and biotechnology
industry it has spawned.
--Student participation in NSF-funded research at universities
develops the workforce to support development and growth of the
biotechnology industry; NSF also supports science education at
all levels from kindergarten through postdoctoral.
--It is estimated that at least half of all economic growth in the
United States results from advances in technology. Basic
research supported by NSF fosters new advances that sustain
this growth.
Yet, despite these exceptional contributions to our nation, NSF
will be able to fund in fiscal year 1997 only a fraction of the
proposals rated highly meritorious in the peer-review process.
Moreover, the purchasing power of NSF grants is declining. In 1995, the
NSF received $3.27 billion; in 1996 that number decreased to $3.18
billion. While that amount was restored to $3.27 billion in 1997, it
still means that the NSF budget has lost 6.1 percent of its purchasing
power since 1995 because of inflation--a decrease in real average value
per grant from about $80,000 two years ago to $73,300 this year. There
has been only a modest increase of about 1 percent in the number of
grants funded by NSF since 1995. Thus, although funding of scientific
grants is central to NSF's purpose, the number of grants has stagnated
while the purchasing power has decreased. Continued decline will delay
our progress in science as important new proposals remain unfunded and
weaken the technical infrastructure that demands a workforce educated
in the disciplines of science.
Because of this alarming trend and its implications for the
nation's technological competitiveness, FASEB recommends $3.504
billion, or a 7.1 percent increase, for NSF for fiscal year 1998. This
will replace the 6.1 percent inflationary loss sustained since 1995 and
provide a modest 1 percent growth in the NSF appropriation. This small
increment would permit funding of a larger fraction of the outstanding
science projects which will contribute to our improved health, economic
growth, and quality of life. This figure is similar to the amount for
fiscal year 1998 approved last week by the House of Representatives
when it passed H.R. 1273, the National Science Authorization Act.
veterans affairs medical research
I now will focus on FASEB's recommendation for the Department of
Veterans Affairs (VA) medical research. Our nation has the obligation
to provide the highest quality health care to U.S. veterans. The VA
research and development program enhances the quality of veteran's
health care in several ways: it brings a cadre of highly trained
physicians to the VA and contributes greatly to the health needs of our
former fighting men and women. This program integrates clinical needs
with fundamental research and assures the rapid transfer of new
knowledge from the laboratory to the bedside. It has also produced
outstanding developments in the field of biomedical research affecting
the greater population at large. Recent examples include:
--VA-sponsored research was responsible for identifying new mutations
in the presenilin gene associated with some forms of hereditary
(autosomal dominant) forms of Alzheimer's disease.
--VA investigators led the successful effort to identify and clone
the gene defective in Werner's syndrome, a rare human disorder
in which the affected individuals exhibit a number of features
of premature aging. This has been considered a viable, if
accelerated, model of the aging process and the function of the
identified gene in the aging process of normal individuals is
now under investigation.
--VA researchers have applied molecular biologic techniques to the
rapid diagnosis of tuberculosis, allowing diagnosis in two days
rather than the 4-6 weeks usually necessary for growth of the
organism. This should result in earlier treatment and reduced
periods of hospitalization.
Yet, despite these important discoveries, VA-sponsored research is
in serious jeopardy. The budget for VA research has not kept pace with
inflation, resulting in missed opportunities to address research issues
related to veterans' health, deterioration of the VA research
infrastructure, and a growing inability to provide opportunities for
research career development. In recent years, there has been a general
decrease in the number of programs funded--in 1994, the number of
funded programs was below the 1981 level.
In light of this history of stagnant funding, the $28 million cut
for VA research included in the administration's fiscal year 1998
budget request would be even more devastating. This cut represents a
10.5 percent decrease in actual dollars; 15 percent when adjusted for
inflation. If adopted, it would lower the funding for this vital avenue
for research from $262 million to $234 million for the upcoming fiscal
year. The resulting damage to these highly regarded programs would be
irreparable. The VA research programs are an important part of the
nation's biomedical research foundation and a major factor enhancing
the quality of health care for our veterans and others. It is essential
that funding for VA-sponsored research be stabilized and given modest
increases.
Along with other groups, such as the over 70 organizations that
make up the Friends of VA Medical Care and Health Research, FASEB urges
the members of the subcommittee to soundly reject any cuts in these
critical programs. We further call on you to appropriate an additional
$18 million for VA research for a total of at least $280 million.
national aeronautics and space administration
Finally, Mr. Chairman, FASEB has funding recommendations for the
National Aeronautics and Space Administration (NASA). NASA's life
science research programs explore the role of gravity in fundamental
biological processes. These programs are designed to help protect and
enhance human life in space and to add to our knowledge of fundamental
biological processes for earthbound animals and plants.
In recent years, NASA has made progress in implementing merit
review for its relatively small biomedical research program in the
Office of Life and Microgravity Sciences. We are concerned that NASA
maintain a stable and viable basic biomedical research program, and
that this research not be interrupted because of delays in space
station construction or other exigencies. For fiscal year 1998, FASEB
recommends $55 million for research and analysis, $5 million above the
previous year.
Our detailed recommendations are included in the written report
previously submitted to the committee. Mr. Chairman, this concludes my
statement for the record.
______
Prepared Statement of Dr. Raymond E. Bye, Jr., Associate Vice President
for Research, Florida State University
Mr. Chairman, thank you for the opportunity to present testimony to
this Subcommittee. When at the National Science Foundation, I had the
pleasure of many hours with this Subcommittee over a number of years.
This Subcommittee has always done outstanding work by making difficult
decisions. No fiscal times in the past have been more constrained than
these times facing you and your colleagues on the Committee on
Appropriations. Yet I am confident you will continue to make the
difficult choices with the best interests of the Nation guiding you.
One of the decisions that I think this Subcommittee should be most
proud is the support for the decision made by then-Director Erich Bloch
and the National Science Board to locate the National High Magnetic
Field Laboratory in Tallahassee, Florida. The proposal to NSF
demonstrated that there was a truly unique opportunity for a federal
partnership between the NSF and the State of Florida, as well as
between the consortium involved in the NHMFL--the Florida State
University, University of Florida, and Los Alamos National Laboratory.
NSF's recent decision to extend the Laboratory for another five years
at an enhanced level of funding is commendable in these tight fiscal
times. The development of the magnet systems now in place at the
Laboratory, the world-class quality of the scientific and engineering
talent working at the NHMFL, and the new knowledge and potential
applications emerging from the Laboratory are testimony to the wise
decisions made at NSF and supported by this Subcommittee.
As the NHMFL moves toward the next century, we hope to expand the
role the Laboratory plays in an array of areas. For instance, we are
striving to enhance the federal partnership to include the National
Institutes of Health as a full partner with NSF and the Department of
Energy. This would allow major support for biological and medical-
oriented research to be conducted at the NHMFL. We are seeking the
assistance of the NSF--as the founding father of the NHMFL--to work
with us on conveying to NIH the opportunities inherent in their
involvement as a federal partner. Furthermore, upgrading and
replacement of the equipment and instrumentation at the NHMFL should
also be a very high priority for the scientific community. The federal
and state investment in this facility is substantial; as a world-class
facility, the challenge in the present and future constrained fiscal
environment is how to upgrade and advance the instrumentation to
continue to lead the world in this important area. We have begun
discussions with NSF on how to provide funding for this major research
equipment.
One of the key components that the NHMFL is focussing upon is to
assist the United States in the redevelopment of magnetic-related
industries that had all-but-vanished from the U.S. soil. Partnering
with small and large companies is key to meeting this part of the
challenge. Last month, EURUS Technologies, Inc., a small firm
specializing in high-temperature superconducting leads, relocated its
facilities from a foreign and non-Florida base to Tallahassee in order
to work more closely with the NHMFL. We are optimistic that this is the
beginning of substantial redevelopment of the U.S. magnet industry, and
we are confident the NHMFL will be a significant part of this rebirth.
The advanced instrumentation at the NHMFL is continuing to allow
new analyses in novel areas not previously explored. For instance, we
have a proposal into the U.S. Environmental Protection Agency to fund
some environmentally-related work on the Kissimmee River restoration
project in south Florida. With EPA funding for some aspects of this
Kissimmee River work, we are also discussing with the U.S. Army Corps
of Engineers a unique addition to the EPA-funded project that would
employ mass spectrometry and nuclear magnetic resonance spectrometry,
along with other unique instrumentation at the NHMFL, to provide the
USACE with analyses that would allow them to potentially make more
environmentally-sound decisions in their future construction projects.
These types of analyses, not previously possible, will allow for cost-
effective decisions to be made based upon the results of this work.
Mr. Chairman, we strongly request this Subcommittee's support for
the highest possible level of funding for the National Science
Foundation. The President's proposal to provide an overall increase of
approximately 3 percent is an absolute minimum for such an important
investment in our Nation's future. The return on your investment--the
young people educated, the knowledge developed and utilized by
industry, the jobs created and the taxes paid--makes the funding you
are able to provide the National Science Foundation probably the most
cost-effective investment this Subcommittee can make. Its overhead is
very low and its return very high; it is clearly a long-term investment
for our citizens.
Finally, I also wish to commend the support provided by this
Subcommittee to the initiatives by the Environmental Protection
Agency's Science to Achieve Results (STAR). The establishment of a
strong, merit-based university research program will do much to enhance
the quality of EPA research. The research and fellowships provided for
the requested $115 million level is also an important commitment made
by EPA. I hope this Committee is able to provide that full request.
Thank you for the opportunity to convey these views to the
Subcommittee.
______
Prepared Statement of Cornelius J. Pings, Ph.D., President, Association
of American Universities
Mr. Chairman and members of the subcommittee: I am submitting
testimony today on behalf of the Association of American Universities
(AAU) and the National Association of State Universities and Land-Grant
Colleges (NASULGC). Our two associations include universities and
colleges in every state that perform the research and education
projects funded by the National Science Foundation (NSF), as well as
scientific research that furthers the mission of the National
Aeronautics and Space Administration (NASA). While our universities
also have an interest in other agencies funded through your
subcommittee, such as the Environmental Protection Agency (EPA) and
others, this testimony will focus on NSF and NASA.
NSF
OVERVIEW
NSF plays a crucial role in the support of university research.
Although NSF represents only 3 percent of the federal budget, it
provides close to 50 percent of the federal investment in academic
basic research in nonbiomedical fields. Despite its comparatively small
size, NSF has an extraordinarily large impact on American scientific
discovery, as the only federal agency with responsibilities that cover
research and education in all science and engineering fields. Moreover,
NSF accomplishes its mission with remarkable efficiency. Only 4 percent
of the agency's annual budget goes toward its own internal operations.
The remainder, 96 percent, goes to support the actual conduct of
research and education.
AAU and NASULGC are grateful for the bipartisan support for NSF
shown by the members of this subcommittee through the years. As you
prepare for markup of the fiscal year 1998 appropriations legislation
for the Foundation, we hope you will continue your strong support for
this outstanding agency.
INVEST 7.1 PERCENT IN NSF
As you know, for fiscal year 1998 the Administration has requested
$3.367 billion for NSF. This represents a 3.0 percent increase over the
final fiscal year 1997 appropriation of $3.27 billion. While the fiscal
year 1998 NSF budget request is a good blueprint for continued
scientific and academic excellence, we along with our colleagues in the
Coalition for National Science Funding (CNSF) believe that an increase
of 7.1 percent over the current year is both warranted and appropriate.
Such an increase would compensate for two years of inflation, plus
permit 1 percent real growth in fiscal year 1998.
For three years now, NSF's budget has not kept pace with inflation.
A 7.1 percent increase would permit NSF to augment modestly the number
and size of its research and education grants. NSF is currently only
able to fund about one-third of the approximately 30,000 proposals it
receives each year, and a 7.1 percent increase would allow it to fund
more of the proposals ranked ``highly meritorious.''
The NSF provides financial support for research in all major
scientific and engineering disciplines, with a majority of funded
projects supporting the work of individual investigators with small
teams of students and technicians. Payoffs from NSF-funded research
include major scientific and technological breakthroughs, the education
and training of today's and tomorrow's workforce and an overall
increase in national productivity.
With a 7.1 percent increase in its budget, totalling $232 million,
NSF could pursue many exciting new initiatives in 1998 that would
advance the United States' scientific, technological and competitive
edge. One particular initiative--Knowledge and Distributed
Intelligence--would promote linkages and collaborations between the
science of learning and cognition and the development of interfaces and
technologies for teaching and learning. NSF's role in the proposed Next
Generation Internet project is also part of this package. This project
would create a ``smart'' infrastructure for research and education at
colleges and universities--one that facilitates collaboration across
great geographic distances as well as great intellectual distances.
A well-educated workforce is essential to the economic well-being
of the nation. As a result, NSF is dedicated to the integration of
research and education at all levels. Students at even the earliest
levels of education are provided with discovery-rich environments that
begin preparing them for tomorrow's challenges. NSF supports similar
efforts through the secondary, undergraduate, and graduate levels.
In the almost 50 years since the National Science Foundation was
created, tremendous changes have taken place in our world and society.
NSF has played a significant role in stimulating those changes through
its investment in basic scientific and engineering research and through
its development of new scientific and engineering talent. In fact, it
has been estimated that at least half of all economic growth in the
United States results from advances in technology fostered by academic
research.
NSF support has yielded invaluable results and has contributed to
an improved quality of life for all Americans. As we approach the dawn
of the 21st century, it is ever more important that the nation continue
its investment in science and engineering. Federal investment in the
NSF improves the U.S. position by strengthening our nation's worldwide
economic competitiveness and our scientific preeminence.
NASA
Many AAU and NASULGC universities also have a strong interest in
NASA programs. I would like to discuss briefly several issues affecting
NASA science programs.
First, AAU and NASULGC applaud the progress which has been made in
restoring stability to NASA's projected outyear budget. The declines
predicted in the fiscal year 1997 budget submission would have severely
damaged the entire space science enterprise, and we appreciate the
efforts that were made by Congress and the Administration to prevent
this from happening.
office of space science
We are pleased to see a number of new starts included in the NASA
science accounts. The Space Infrared Telescope Facility (SIRTF), in
particular, has long been a major priority of the space science
community, and we support its inclusion in the budget.
Mission Operations and Data Analysis (MO&DA)
Mission operations are a critical portion of the NASA Space Science
budget, allowing us to reap the benefits of the high launch rate of
recent years. Over the past several years, NASA has made substantial
progress in cutting the costs of mission operations by removing
redundancy, accepting slightly higher levels of risk, and taking
advantage of modern data processing capabilities. We applaud these
efforts and urge that NASA continue to seek out such efficiencies that
will allow greatly increased returns from existing missions.
The Office of Space Science (OSS) has requested $507.4 million for
Mission Operations and Data Analysis (MO&DA) activities in fiscal year
1998. This is a decrease of $75.9 million or 13 percent from fiscal
year 1997. The proposed reduction occurs at a time when a number of new
missions are being launched. By the end of fiscal year 1998, OSS plans
to be flying 29 spacecraft compared to 18 at the beginning of fiscal
year 1995. Moreover, NASA has proposed to cut MO&DA for Galileo by 54
percent in fiscal year 1998, MO&DA for the Compton Gamma Ray Laboratory
by 62 percent, and MO&DA for the ISTP mission by 45 percent. MO&DA
funding for small spacecraft would decline by almost 20 percent in
fiscal year 1998.
Further cuts are anticipated in fiscal year 1999. The International
Solar Terrestrial Probes (ISTP) program, for example, expects a further
drop so that the decrease from fiscal year 1997 to fiscal year 1999
would be about 85 percent, despite the fact that ISTP was originally
presented to Congress as a comprehensive study of solar-terrestrial
interactions through the upcoming solar maximum (2000-2001) of the 11-
year solar cycle. The proposed reductions would impact scientists'
ability to study this important event.
These large cuts in existing programs would be made to free up
funds for new missions being launched in fiscal year 1998, such as AXAF
and Cassini. While it obviously makes sense to phase out some missions
so others can begin, we are concerned that NASA is not properly funding
the science phases of its current missions and, through premature
downsizing, is not securing full value of the taxpayer's investment.
In August 1994, in anticipation of an overall decline in the
agency's budget, NASA cut most space science MO&DA budgets for fiscal
year 1998 by about 50 percent. Even when the budgetary picture
improved, funds were not restored. Since the 1994 cuts, the space
science community has worked hard to increase science return per dollar
by realizing efficiencies in operations. Operating costs for missions
such as Voyager and Galileo have been cut by more than 50 percent, and
recently Goddard Space Flight Center has worked to identify methods to
cut the operations cost for the ISTP program by about 70 percent.
Hubble Space Telescope was just serviced, and those savings will be
reflected in the MO&DA line. Nevertheless, the cuts imposed in 1994 are
so deep that efficiencies cannot nearly address them. We urge Congress
to restore some of the fiscal year 1998 MO&DA cuts.
OFFICE OF MISSION TO PLANET EARTH
The Office of Mission to Planet Earth (MtPE) has undergone dramatic
restructuring over the past few years as the Earth Observing System
(EOS) has been downsized from a 1990 program of large spacecraft
carrying 30 instruments at a total cost of $17 billion, to the current
1994 version of 24 fundamental measurements provided by instruments
carried on smaller spacecraft for a cost of $7.25 billion.
Nevertheless, a number of further recommendations have recently been
made regarding the Mission to Planet Earth program. We support this
reexamination and the efforts to improve its scientific component.
Specifically, NASA's Earth System Science and Applications Advisory
Committee (ESSAAC) has recommended: (1) the focus of EOSDIS be
tightened, and Principal Investigators be given a greater role in data
processing tasks; (2) all missions, starting with Chem-1, be
reexamined; and (3) the balance within MtPE be shifted to substantially
increase the current fraction of resources devoted to in-situ and
process studies, modeling and analysis (R&A and mission-oriented
science) to meet current strategic goals. Since 1994, MtPE R&A has been
significantly reduced. As the total MtPE budget has increased during
this period from $1.07 billion to $1.36 billion, R&A funding has
declined from $178.9 million to $123.6 million. While it is important
to develop and update the scientific basis for interpreting EOS
measurements, this role is very different from that of R&A, and funding
for the two is not exchangeable.
office of life and microgravity sciences and applications
Bion
We are aware that there may again be efforts to cancel U.S.
participation in the Bion 12 mission. The Bion missions are designed to
study the biological effects of low gravity and the space radiation
environment on the structure and function of individual physiological
systems and the body as a whole. While the loss of muscle and bone mass
during space flight is well documented, scientists tell us that neither
the rate nor the specific mechanisms involved are well understood. The
Bion missions have been peer-reviewed and approved by five independent
panels over the past eight years, and we continue to support the use of
merit review to determine how limited federal funds may most
productively be spent for scientific research.
Space Station Facilities and Utilization
Both Life and Microgravity sciences are moving ahead into the Space
Station era by virtue of the participation in the Shuttle-Mir program.
Initial experiments in a number of disciplines have demonstrated the
value of this early access to extended duration experiments that Mir
affords. There has been excellent international cooperation and
considerable mutual benefit at the scientific level, and this bodes
well for interactions on the International Space Station. There is,
however, a great deal of uncertainty as to the impact of the recent
developments in the Mir and Space Station programs, and there is
concern that utilization opportunities are being compromised, if not
altogether lost.
CONCLUSION
As the budget allocations available for discretionary domestic
spending continue to shrink, your subcommittee faces a very difficult
task in choosing among the many agencies of vital importance to our
nation which come under your jurisdiction. As you make these tough
choices, AAU and NASULGC hope you will continue to invest in the
premier scientific agencies whose work will improve the quality of life
and knowledge base of future generations.
Thank you again for the opportunity to submit testimony for your
consideration.
______
Prepared Statement of the American Society for Engineering Education on
Behalf of the Engineering Education Coalition
Mr. Chairman and Members of the Subcommittee: On behalf of the
Engineering Education Coalition, we are pleased to provide our views on
the fiscal year 1998 budget for the National Science Foundation. The
Engineering Education Coalition is comprised of three organizations
working together on behalf of engineering education and research: the
National Society of Professional Engineers (NSPE), the National
Association of State Universities and Land Grant Colleges (NASULGC),
and the Engineering Deans Council of the American Society for
Engineering Education (ASEE).\1\
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\1\ Member organizations of the Engineering Education Coalition
are:
The Engineering Deans Council of the American Society for
Engineering Education (ASEE), the leadership organization of the more
than 300 colleges of engineering in the United States and Canada.
The National Association of State Universities and Land Grant
Colleges (NASULGC), a higher education association whose member public
colleges and universities educate more than two million of the nation's
students each year.
The National Society of Professional Engineers (NSPE), a
professional society representing 70,000 engineers in industry, private
practice, construction, government and education.
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Mr. Chairman, we greatly appreciate the strong leadership that you
and your colleagues have shown on behalf of the National Science
Foundation (NSF). We ask your continued support for the Foundation by
providing a budget of $3.5 billion for NSF in fiscal year 1998, a 7.1
percent increase over the previous year. This $232 million increase
would enable the Foundation to make up for inflation losses over the
past three years and provide one percent real growth.
Sustaining the science and engineering base.--If the Congress
intends to foster the nation's economic growth, it must ensure there is
a strong base of scientific and engineering research and education to
support technological development. The National Science Foundation both
supports research across all scientific and engineering disciplines and
stimulates partnerships among universities, industry and government to
leverage the federal investment. Equally important, the Foundation
assists in educating the engineers and scientists whose high-level
skills are necessary for turning ideas into reality and keeping the
nation globally competitive. Consequently, the Foundation is an
important national resource whose activities must be sustained,
especially in tight budget circumstances.
Important new initiatives in research and education.--As exciting
new fields of study are created at the interface of disciplines--such
as bioengineering or human factors research--NSF is at the forefront,
with the flexibility to create new programs or reconfigure existing
ones to accommodate promising areas. An excellent example of such
leadership is the Foundation's plan in fiscal year 1998 to expand in
its current efforts in computer systems engineering to a new Knowledge
and Distributed Intelligence (KDI) initiative.
In our view, the networking and systems improvements that will come
from this effort will not only create new research opportunities in all
areas of engineering and science, but have the capacity to improve
significantly the way we work, learn and use computers.
We also are pleased that the Foundation plans to expand its
graduate traineeship program to encompass interdisciplinary work in
education and research, including awards directed at the new KDI
initiative. The special value of traineeships is that they enable the
Foundation to target key national priority areas--such as
environmentally conscious manufacturing--and to foster active faculty
involvement in recruiting women, under-represented minority and
disabled students. Traineeships also enable schools across the country
to participate; although the program is highly-competitive and merit-
based, smaller schools have been able to compete effectively by
focusing their resources and demonstrating that their proposals
dovetail with their school's strategic plan.
ENGINEERING RESEARCH
What is basic engineering research?--Engineering is a field of
study and practice most commonly associated with application
activities. However, there is another stage of engineering that is less
visible, but serves as the basis upon which applications can take
place. This stage, basic engineering research is the investigation of
the systems and processes of the natural and constructed world. It is
largely performed in the nation's universities.
NSF provides one-third of the total federal support of basic
engineering research at academic institutions. While much of that
support is through the Engineering Directorate, funding for engineering
is also provided by the Computer and Information Science and
Engineering (CISE) Directorate, the Division of Materials Research in
the Mathematics and Physical Sciences Directorate and others.
A few areas of expanded opportunity in the fiscal year 1998 budget
request for the Engineering Directorate demonstrate the leadership and
breadth of NSF activities: Learning and Distributed Systems, Next
Generation Biomedical Technologies, and Civil Infrastructure Systems.
Learning and intelligence systems.--In this area, the Engineering
Directorate is focusing on such areas as systems and network research
in optical and wireless technologies, and on methods for incorporating
biological learning mechanisms into artificial systems. For example,
one area of research aims to create molecular-sized machines for
advanced computing. Another area of research would enable development
of a system of structural materials (such as in a bridge) that could
monitor a structure's condition, detect impending failure, and control
damage.
Next generation biomedical technologies.--This research area
integrates sensor-based microelectronic-mechanical systems with
biological systems. Researchers are using their findings to develop
such devices as an artificial retina that could be controlled by human
neural systems and to design and build machines that have many of the
characteristics of biological cells.
Technologies that avoid environmental harm.--The Engineering
Directorate focuses its support in such fundamental areas of
environmental research as transforming pollutants into benign
substances, finding ways to produce fuels and useful chemicals from
living organisms, and developing sensors to better track the movement
of environmental contaminants. There is continuing emphasis in not only
remediating pollution, but in creating processes and products that
avoid pollution all together.
ENGINEERING EDUCATION
Leadership in engineering education.--Unlike many fields, most
engineers pursue a professional career after earning a baccalaureate
degree. For that reason, the quality and content of undergraduate
education is particularly important to the engineering community.
Engineering education is undergoing great renewal and change. As a
community, we are working to broaden the educational experience of our
students to prepare them for engineering practice in a global
environment. This means incorporating teamwork activities and design
experience into the curriculum, as well as making our programs
accessible to students from all backgrounds. We are also working to
better integrate research findings and experiences into the curriculum.
At the intellectual center of these efforts is the National Science
Foundation's Engineering Directorate, which is stimulating and
supporting these changes in engineering education. This is a vital,
catalytic role that merits continued strong support.
The largest and potentially most significant undergraduate
education activity conducted with Engineering Directorate funds is the
Engineering Education Coalitions program. The coalitions are consortia
of diverse engineering colleges whose purpose is to develop and
disseminate coordinated innovations in curricula. Sixty engineering
colleges currently participate in eight NSF-supported coalitions. Along
with developing innovations in the curriculum, the coalitions are
taking the best of their work and actively sharing it with the non-
coalition engineering schools.
The Engineering Directorate has also shown leadership in helping
engineering faculty members broaden their perspectives and incorporate
their research findings and real world'' experiences into their
teaching. The CAREER program recognizes young faculty members who
integrate their research and teaching activities. The GOALI program
provides opportunities for faculty members to spend time in industry,
and vice-versa. Both of these Engineering Directorate innovations have
been expanded to become Foundation-wide activities.
The importance of NSF's undergraduate division.--NSF also provides
valuable support for undergraduate engineering education--particularly
in laboratory improvement for instruction--through the undergraduate
division of the Education and Human Resources (EHR) Directorate. The
Division also provides important support for the improvement of lower
division courses in such areas as physics and chemistry. These programs
are important to all engineering and science disciplines, as well as to
the nation's future high school science and mathematics teachers. We
urge the Congress to provide the $99 million requested for the
Undergraduate Division in fiscal year 1997.
In sum, the Coalition For Engineering Education urges the
Subcommittee to provide the National Science Foundation with at least
$3.5 billion for fiscal year 1998. Strong financial support for the
Foundation is a vital, front-end investment in the nation's economic
future. Thank you for your consideration of our views.
______
MISCELLANEOUS
Prepared Statement of the American Society for Microbiology
The American Society for Microbiology (ASM), the largest single
life science organization in the world, comprising more than 42,000
members, welcomes the opportunity to submit written testimony to the
Senate Appropriations Subcommittee on VA, HUD and Independent Agencies
and provide comments and recommendations for the fiscal year 1998
appropriations for the scientific research programs within the
Environmental Protection Agency (EPA) and the National Science
Foundation (NSF).
The ASM is made up of scientists who work in academic, governmental
and industrial institutions worldwide. Microbiologists are involved in
research on problems related to human health, the environment,
agriculture, and energy. The mission of ASM is to enhance the science
of microbiology to gain a better understanding of basic life processes,
and to promote the application of this knowledge for improved health,
and for economic and environmental well being.
ENVIRONMENTAL PROTECTION AGENCY
The Environmental Protection Agency's scientific research and
development programs are of interest to many of ASM's members who work
throughout the fields of applied and environmental microbiology.
Research on environmental microbiology is essential for maintaining
air, water, and soil quality; for assuring the safety of potable water
supplies; and for providing safe means for waste disposal. Support of
applied research in the field of environmental microbiology can lead to
enhanced environmental quality and help protect human health. The ASM
believes that sound public policy for environmental protection depends
upon adequately funded programs of intramural and extramural research
based on a system of peer review to assure that support is awarded to
research programs having both quality and relevance.
The Administration's overall budget request for the Environmental
Protection Agency (EPA) in fiscal year 1998 is $7.6 billion, an
increase of $846 million over last year's appropriation. The request
includes $555 million for the EPA's Research and Development programs,
about $51 million more than the enacted fiscal year 1997 funding level.
Our testimony will focus on the EPA's Office of Research and
Development programs, including the Science to Achieve Results (STAR)
program, the Graduate Environmental Fellowship Program, the Safe
Drinking Water research program, interagency research programs, and the
EPA's peer review process.
Last September, the General Accounting Office report, Peer Review,
EPA's Implementation Remains Uneven, concluded that peer review
practices within the EPA were inconsistent. Some of the EPA's divisions
followed adequate peer review procedures while others had little or no
peer review for programs that required it. The environmental research
programs the ASM is testifying about fall within the EPA's Office of
Research and Development (ORD). According to the GAO report the ORD
``has used peer review for obtaining critical evaluations of certain
work products for more than 20 years.'' The report also stated,
however, that the EPA's peer review process could be improved even
within the ORD. The EPA has taken action to strengthen the peer review
process throughout the agency. The ASM supports efforts to ensure that
the highest scientific standards are adhered to in all the federal
government's scientific research and development programs to produce
sound, reliable science for the nation's benefit.
An important extramural research initiative, the EPA's Science to
Achieve Results program, is targeted to receive $115 million, a 21
percent increase over last year's budget of $95 million. This program
funds important environmental research proposals from scientists
outside the federal government and is a valuable resource for the EPA
in finding solutions to many of the complex environmental problems we
face today. Grants made under the STAR program last from two to three
years and provide about $150,000 of scientific support per grant year.
In 1996, the STAR program funded 195 new grants in 45 states and 136
institutions totaling $96.5 million. Additionally, the STAR program
works with many other Federal agencies including the National Science
Foundation, Department of Energy (DOE), Office of Naval Research (ONR),
and the National Oceanic and Atmospheric Administration (NOAA). Last
year 29 STAR grants were made by agencies, other than the EPA, using
their own funds. Although it is a high quality program that merits full
funding of the Administration's request, the ASM is concerned that the
STAR program has focused on environmental chemistry problems and has
not adequately funded areas of environmental research with a focus on
environmental microbiology. We urge the Congress to fund the STAR
program and to insert language that mandates the EPA to take steps to
ensure the adequate incorporation and funding of projects and
fellowships related to microbiological aspects of environmental
quality, especially those having direct impacts on human health such as
the microbiological quality of water. In this regard, the ASM also
requests that the Congress instruct the EPA to work with the National
Institute of Environmental Health Sciences (NIEHS) to develop research
activities and fellowships that will lead to safer potable waters.
Within the STAR program, the Administration's budget request
includes $15 million in fiscal year 1998, for the Graduate
Environmental Fellowship Program, a $7 million increase over last year.
This is an effort to restore the vital funds deleted by Congress last
year. The EPA's Graduate Environmental Fellowship Program is one of the
many initiatives the federal government must fully support to ensure
that we are prepared to answer the complex scientific questions of the
future. Both the public and private sectors will need a steady stream
of well trained environmental specialists. The fellowship program
encourages promising environmental graduate students to pursue careers
in environmentally related fields. The ASM supports the
Administration's funding request for this program and encourages the
EPA to fund environmental microbiology fellowships in such research
areas as bioremediation and the detection of pathogenic microorganisms
in potable water supplies and the disinfection of such waters. These
fellowships will provide adequate human resources to conduct
environmental microbiological research and apply the results of that
research to improving environmental quality. Absence of such support
will leave a shortage of qualified individuals to assist in the
prevention and remediation of environmental problems.
With the President's signing of the Safe Drinking Water Act and the
Food Safety Act into law this past year, the Administration has
proposed increasing EPA's funding by $35 million for the implementation
of these new laws. However, the Safe Drinking Water research program
would experience a $3.5 million decrease from fiscal year 1997 to bring
the funding level to $35.9 million in fiscal year 1998. This is a
result of last year's Congressional earmarks which added $5 million to
the Safe Drinking Water budget for specific programs. The EPA did not
request earmarked funds this year. The net budget result is a decrease
for fiscal year 1998 in the Safe Drinking Water research program,
unless Congress provides the additional funds.
One of the EPA's highest priorities for the Safe Drinking Water
research program is to establish standards to protect human health from
microbiological contaminants and disinfectant/disinfection byproducts
(M-DBP). The ASM believes it is imperative to provide sound reliable
science to support the EPA in its effort to promulgate responsible
regulations to protect human health from the risks associated with such
contaminants. For example, much research needs to be conducted to
control the outbreaks of human exposure to the protozoan
Cryptosporidium in our drinking water. To date, hundreds of people have
died and many thousands have become ill as a result of exposure to this
potentially lethal microbe. In 1993, 400,000 people became infected
with Cryptosporidium from Milwaukee's water supply. The ASM urges
Congress to increase funding for drinking water research in this area.
There are still many questions to be answered about the ways in which
to ensure the safety of the nation's drinking water supply. It is
essential that the EPA in conjunction with the NIEHS conduct extensive
research on the factors that lead to outbreaks of pathogens, such as
Cryptosporidium, in our water supply. The EPA must develop advance
warning systems that increase protection of public health and enable
the nation to avoid future incidents such as the devastating
Cryptosporidium outbreak in Milwaukee that was disseminated via the
municipal potable water supply. The protection of the American people
from the potential health risks of exposure to microbial contaminants
in their drinking water is reason enough to increase funding for this
program.
The ASM supports the many joint research programs supported by the
EPA. Three of these programs, currently underway, are the Joint EPA/NSF
Partnership for Environmental Research, EPA/NASA Joint Program on
Ecosystem Restoration, and the EPA/DOE/NSF/ONR Joint Program on
Bioremediation. The ASM urges Congress to continue funding for
interagency research programs which seek to find cross-disciplinary
solutions to the nation's scientific environmental problems.
NATIONAL SCIENCE FOUNDATION
The ASM welcomes the opportunity to comment on the Administration's
fiscal year 1998 budget request for the National Science Foundation.
The NSF's long standing record in fostering basic research has provided
the critical foundation for advancing the health of the nation's
people, environment and economy. Federal support for the NSF is an
investment that creates and strengthens the economic growth of the
United States and allows the United States to remain competitive in a
global market. The President's fiscal year 1998 budget request for the
NSF of $3.367 billion is only 3 percent or $97 million, more than was
appropriated in fiscal year 1997. Based on the rate of inflation, which
is approximately 2.6 percent, the NSF would be level funded for the
next fiscal year under the President's request. At the same time, our
global competitors have made commitments to increase funding for
science and technology. For example, Japan has committed to increase
its support for basic research over the next five years by 50 percent.
The United States may be in danger of losing its lead in science and
technology as the 21st century approaches if it does not increase
federal funding for basic research.
The ASM, a member of the Coalition for National Science Funding
(CNSF) and its steering committee, supports the CNSF's recommendation
of $3.5 billion for the NSF in fiscal year 1998, an increase of 7.1
percent over the fiscal year 1997 appropriation. NSF Director Neal Lane
stated before this Subcommittee that the NSF's original budget request
was $3.5 billion, a funding level that would allow the United States to
remain a world leader in the area of science and technology. The ASM is
deeply concerned with the inadequacy of the President's NSF budget
request and its impact on the NSF's ability to meet the scientific
challenges of the 21st century. The ASM urges this Subcommittee to
support the CNSF's recommendation of $3.5 billion for the NSF in fiscal
year 1998.
New initiatives within the NSF reflect the partnership between
research and education and the need to encourage research in new areas
of science. The ASM applauds NSF's proactive stance to promote research
across disciplines that will lead to the development of information
technologies in order to unify experimental and theoretical concepts. A
program called Knowledge and Distributed Intelligence (KDI). KDI is an
effort designed to realize the full potential of emerging technologies
in communications, computing and networking and revolutionize science
and engineering and the way people learn and work. The new Integrative
Graduate Education and Research Training (IGERT) initiative will
spearhead the need to provide graduate students with multi-disciplinary
research and educational training opportunities. Graduate students will
benefit from IGERT through broader training and greater flexibility in
attaining future employment. A focused program begun in fiscal year
1997, Life in Extreme Environments (LExEN), is a critical component in
understanding the interplay between microorganisms, plants and animals
in earth's environment and how humans impact the microbial world. The
study of life in extreme environments can provide important new
insights into how microorganisms evolve, and the extent their adaptive
mechanisms allow them to function in their environments. Once
researchers are able to understand these mechanisms, they will be able
to employ them in other capacities such as in bioprocessing and
bioremediation.
Members of the ASM, whose activities include research concerned
with the impact of microorganisms on the well-being of humans, animals,
plants, and the environment, are very supportive of NSF's increased
focus on microbial biology and the diversity of microorganisms, an
initiative begun in fiscal year 1996 under the auspices of the NSF's
Directorate for Biological Sciences (BIO). For years, research efforts
have concentrated on the study of microbes in human and animal health.
The unknown microbial biomass provides opportunities to discover new
knowledge about microbial life-forms and their potential application in
industry, medicine and agriculture. In addition, microbiological
research continues to provide the foundation for today's advances in
biotechnology. These advances are based on understanding the molecular
basis of microbial physiology and the genetics of viral, yeast and
bacterial plasmid vectors. Future accomplishments and their application
to increased agricultural productivity (an important by-product of
biotechnology) will not be possible without NSF funded basic research.
The NSF is one of the few government agencies that funds basic
research. Leadership by the United States in opening new avenues of
science and technology will be lost without sufficient funding for
basic research. Most of today's scientific achievements in areas such
as global warming, bioremediation of oil spills and industrial
pollution, new antibiotics and drugs, biopesticides, and gene therapy,
are the outgrowths of basic research. The United States is faced today
with many challenges that can be met only through the potential of
basic research to generate the crucial new scientific knowledge
required to advance the welfare of all people worldwide.
New knowledge is required in order to address a broad range of
societal problems including those inherent in the emergence of
antibiotic resistant bacteria, new infectious diseases facing the human
population and the agricultural community, and environmental pollution.
The NSF plays a critical role in furthering our basic understanding of
molecular and cellular processes. NSF-supported research can unravel
the basic, molecular complexities of many health issues including
cancer, aging, developmental abnormalities, and the body's immune
response. There is a long history of outstanding achievements by NSF-
funded investigators, namely:
--DNA in living organisms is the blueprint for making all the
organism's protein. A large portion of DNA, known as ``junk
DNA,'' in most organisms is not used for proteins and appeared
for a long time to have no function. Recently, however,
researchers have determined that junk DNA has a very important
function. In certain situations, it is involved in assuring
that, when a cell divides into two daughter cells, two copies
of each chromosome find their way into each daughter cell. This
is the first time researchers have identified a function for
junk DNA and it may have far-reaching impacts. For instance,
developmental abnormalities, such as Down Syndrome in humans,
are caused by the presence of more than two copies of one of
the chromosomes. Researchers can now examine the role of junk
DNA and define ways to avoid such abnormalities.
--Researchers supported by NSF have identified a gene in a common
weed that allows the plant to extract iron from soil whenever
it is starved for the essential nutrient. This discovery has
important implications for both crop yields and human
nutrition. Iron deficiency is the leading nutritional disorder
in people worldwide. Most people get their daily iron supply in
the form of plant foods. By understanding how plants absorb
iron, researchers could develop crops that are more efficient
users of iron in soil and richer sources of iron in foods.
Plants have a remarkable capacity to filter or metabolize large
amounts of particular pollutants. Scientists have used this capacity to
clean up contaminated soils, a process known as phytoremediation. Now,
with genetic engineering, it is possible to engineer ``super-
remediators.'' NSF-supported scientists have isolated and transferred a
bacterial gene that converts the ionic form of mercury into a less
toxic metallic form. The resulting plants can survive in contaminated
soil with a relatively high level of mercury. Studies to expand this
research to other toxic heavy metals are underway.
Investing in basic research is an investment in the future. The ASM
urges this Subcommittee to support a budget of $3.5 billion, a 7.1
percent increase, for the NSF in fiscal year 1998.
Mr. Chairman, on behalf of the more than 42,000 members of the
American Society for Microbiology, thank you for the opportunity to
testify on these important programs. I would be pleased to respond to
questions and to provide any additional information that you may need.
______
Prepared Statement on Behalf of the Golden Gate University, Monterey,
CA
Mr. Chairman, members of the Subcommittee, I thank you for the
opportunity to submit this statement on behalf of Golden Gate
University and its Agriculture Business Resource Center located in
Monterey, California. The Agriculture Business Resource Center is part
of the Monterey campus of Golden Gate University, and has been in
existence for twenty-six years.
Although degree programs are, and have been, the traditional focus
of Golden Gate, the Monterey campus has significantly broadened its
focus to include training programs which are targeted at specific
industries. Most notable among these programs is one oriented toward
the agriculture industry, created in response to the demands of various
growers, processors and shippers which are part of California's $22
billion per year agriculture industry.
Unlike many industries, the agriculture industry has traditionally
been under-represented in training programs except for ad-hoc
workshops. In addition, the industry has an unusually inflexible
schedule which necessitates innovative program design and delivery. For
example, many Salinas Valley growers and processors move their
operations and employees to Yuma, Arizona in the winter to ensure year-
round production. Golden Gate has responded by transporting instructors
to the Yuma sites so that employees can be trained without interruption
to production cycles.
Mr. Chairman, this subcommittee is exceedingly familiar with the
importance of the agriculture industry to the U.S. economy, and the
positive trade balances the industry has produced over the years.
California has played a key role within the industry, leading all
states in the production of more than 75 crop and livestock
commodities. In fact, California's agriculture industry produces a
total of 250 different crop and livestock commodities which generate
some $22 billion in direct production, and another $70 billion in
related activity. In 1994, the state produced exports of $12 billion
which represented 15 percent of all U.S. agriculture exports. That
trend continues today as exports are holding to record proportions.
The response to the Golden Gate Agriculture Business Resource
Center has been overwhelming. In large part, this response is driven by
the export potential for expanding the sales of California agriculture
products into existing and developing markets overseas. For example,
the Pacific rim countries continue to provide expanding market
opportunities for California agriculture products. Additionally, the
traditional European markets have further opened to U.S. products, as
have the components of the former Soviet bloc. In the case of these
``new republics,'' shipments of fresh products and seeds are increasing
at a dramatic pace.
In the domestic U.S. market, consumer tastes have changed as people
have become more health-conscious and demanded more fresh vegetables
and fruits in their diets. In addition, so-called ``convenience'' items
continue to be produced on a broader scale to accommodate the needs of
middle class families where two-earner households are prevalent.
Each of these market demands--rising market expectations in other
countries, domestic expectations of more fresh vegetables and more
convenience foods--are welcomed in the grower, processing and shipper
communities in California. But those demands which come to the growing
regions force changes and new needs within the industry.
Perhaps the greatest general need which accompanies these growing
market demands is the requirement for companies to have a skilled,
permanent, year-round workforce so as to increase job retention. This
way, all growers, processors and shippers will be better able to meet
growing domestic and export demands. At the same time, from the
employee perspective, training provides employees with enhanced skills
and knowledge levels which, in turn, allow them to advance within their
companies.
The need for a skilled, permanent and year-round workforce is very
important for companies to remain competitive in an industry which is
being driven in many new directions. As you know, for example, foreign
competition is always a threat due, in large part, to lower operating
costs. Nevertheless, Monterey County, California, as an example, has
been able to compete with Mexico and Latin America in the fresh fruit
and vegetable markets as these countries have not been able to
distribute fresh value-added products effectively in the U.S. Rather,
the value-added products exported to the U.S. from these areas remain
canned and frozen.
A large part of the success in the case noted above is rooted in
the development and adoption of new technologies which allow for light
processing and packaging of vegetables. This facilitates the ability of
the Monterey County growers and processors to better compete with lower
cost rivals. To remain competitive, however, the various technologies
must be continually updated and adapted so that cost-saving production
processes are enhanced.
An excellent example of the value of enhanced production can be
found in the value-added sector of the agriculture industry. This
sector, which came into existence in the 1960's, is now one of the
strongest segments in California's agriculture industry in general, and
that of Monterey County in particular. Over the years, since its
inception, this sector has been enhanced in great leaps.
The highly specialized, value-added sector requires in-house
company laboratories, research and development staff and equipment, the
latest automated packaging equipment, sophisticated and modern
facilities and a highly skilled workforce. This means that agriculture
companies must train and retrain employees to meet the challenges of
new and expanding technology bases.
It is the need for increased skill levels which has motivated the
various companies in the Monterey County agriculture industry to seek
ways to develop employee skills on a continuing basis. As mentioned
earlier, the companies need a skilled, year-round and permanent
workforce to meet market demands. In providing opportunities for
employees to enhance their skills, the company ensures continuity of
its workforce because employees can be promoted from within.
The Golden Gate Agriculture Business Resource Center has designed
and is carrying out a broad-scope program which addresses the needs of
the agriculture companies and employees in the Monterey County growing
regions. With its high-quality, flexible approach, the Center's
programs cover all levels of employees in a way which does not
interfere with production schedules of the individual companies.
Golden Gate implements its program through various customized
curricula designed to address the training needs of individual
companies. Companies benefit from employees who are trained in the
latest production techniques, product distribution methods, computer
technology, refrigeration engineering and a range of other subject
areas which are important to the agriculture industry. The employees
benefit from programs carried out at work sites which eliminates their
having to take time off to enroll in traditional academic programs.
The range of the Agriculture Center program crosses all skill
levels, allowing for workers with low levels of education to be trained
in ways which facilitate advancement. It is not uncommon to see lesser-
educated workers who have moved to supervisory positions from jobs in
the growing fields. The program also allows for the identification of
people coming out of the welfare system who are potentially suited for
agriculture industry employment. If, for example, a company has a need
for entry-level workers, the Golden Gate Center will design a regimen
to identify and train such personnel so that they are in a position to
fit into the company system.
A large portion of the success of the Golden Gate program is based
on a clearing-house system which monitors the educational and training
needs of the agriculture industry, particularly in the Monterey County
area. Those needs are translated into high quality training programs
which utilize state-of-the-art methods and technology for delivery. In
this sense, the Agriculture Business Resource Center is part of a long-
range, comprehensive vision to provide skills necessary for employees
seeking job advancement, displaced workers who need marketable skills
and young people looking for alternatives to traditional college
degrees. In each case, the very important agriculture sector of
California's economy will benefit, particularly that portion of the
industry in the Monterey County growing regions.
Mr. Chairman, as the demands for diversified training on the part
of the Central Valley agriculture industry have grown, Golden Gate has
adapted and expanded its programs accordingly. As part of the
evolution, Golden Gate has dedicated two buildings, located at Fort
Ord, California, which were acquired through base closure and re-use
development activities.
The buildings and the surrounding area are in relatively good
condition though in need of renovation. Golden Gate's plan is to locate
the Agriculture Business Resource Center in these two buildings, given
their proximity to the Central Valley California growing regions. From
this headquarters site, the entire area can be serviced through mobile
classrooms, distance learning and on-site training. Further, the site
will allow for additional program development in the future. The total
cost of the entire project is $2 million which includes building
renovation and internal resource development. Golden Gate will operate
the Center with its own resources.
Mr. Chairman, California is the world's sixth largest exporter of
agricultural products. For each $1 billion in export sales, nearly
30,000 jobs are created. Monterey County is the top vegetable producing
county in the nation, with the agriculture industry employing 25
percent of the county labor force. All of this is to say that there is
significant opportunity for the California agriculture industry to
expand and further enhance its role in the U.S. economy.
The Golden Gate Agriculture Business Resource Center, based on
existing industry needs and demands, can be a catalyst to move this
growth forward. In so doing, we will strengthen the state and local tax
and employment bases many times over the level of this modest grant
assistance request. I ask that you consider this request as one that is
good for the U.S. agriculture industry, and can be a model for other
states in the future.
Thank you.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
A'zera, Veronica, national legislative director, AMVETS, prepared
state- ment.................................................... 723
American Association of Homes and Services for the Aging,
prepared statement............................................. 827
American Association of Retired Persons, prepared statement...... 762
American Chemical Society, prepared statement.................... 880
American Heart Association, prepared statement................... 737
American Network of Community Options and Resources, prepared
state- ment.................................................... 837
American Public Power Association, prepared statement............ 858
American Society for Engineering Education on behalf of the
Engineering Education Coalition, prepared statement............ 921
American Society for Microbiology, prepared statement............ 923
Anderson, Julie, Acting Associate Administrator, Office of
Congressional and Legislative Affairs, Environmental Protection
Agency......................................................... 247
Arc, prepared statement.......................................... 834
Armstrong, Spence M., Associate Administrator for Human Resources
and Education, National Aeronautics and Space Administration... 601
Association of National Estuary Programs, prepared statement..... 864
Association of State Drinking Water Administrators, prepared
statement...................................................... 883
Backhus, Stephen P., prepared statement.......................... 513
Bauer, Roger, Vice Chairman, Board of Veterans' Appeals, Office
of the Secretary, Department of Veterans Affairs............... 511
Bennett, Hon. Robert F., U.S. Senator from Utah, questions
submitted by................................................... 408
Berenson, Aimee R., director of Government affairs, AIDS Action
Council, prepared statement.................................... 806
Blum, Jared O., president, Polyisocyanurate Insulation
Manufacturers Association, Washington, DC, prepared statement.. 859
Bond, Hon. Christopher S., U.S. Senator from Missouri:
Prepared statement........................................... 2
Questions submitted by.......................................
23, 44, 162, 191, 221, 351, 445, 489, 560, 645, 706........
Bordogna, Dr. Joseph, Acting Deputy Director, National Science
Foundation..................................................... 457
Bowen, Jerry, Director, National Cemetery System, Office of the
Secretary, Department of Veterans Affairs...................... 511
Boxer, Hon. Barbara, U.S. Senator from California, prepared
statement...................................................... 626
Boyd, Merle, acting principal, chief, Sac and Fox Nation,
prepared state- ment........................................... 781
Brickhouse, Eugene, Assistant Secretary for Human Resources and
Administration, Office of the Secretary, Department of Veterans
Affairs........................................................ 511
Brown, Ann, Chairman, Consumer Product Safety Commission......... 155
Prepared statement........................................... 158
Brown, Hon. Jesse, Secretary, Office of the Secretary, Department
of Veterans Affairs............................................ 511
Prepared statement........................................... 536
Brown, Lynne P., associate vice president for Government and
community relations, New York University Center for Cognition,
Learning, Emotion and Memory, prepared statement............... 815
Browner, Carol M., Administrator, Environmental Protection Agency 247
Prepared statement........................................... 257
Burns, Hon. Conrad, U.S. Senator from Montana, prepared statement 12
Bye, Dr. Raymond E., Jr., associate vice president for research,
Florida State University, prepared statement................... 917
Byrne, Leslie L., Director and Special Assistant to the
President, Office of Consumer Affairs, Department of Health and
Human Services................................................. 169
Prepared statement........................................... 170
Cagey, Henry M., chairman, Lummi Indian Nation, prepared
statement...................................................... 778
California Industry and Government Coalition on PM-10/PM-2.5,
prepared statement............................................. 882
Calkins, Charles L., national executive secretary, Fleet Reserve
Association, prepared statement................................ 732
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado:
Prepared statement........................................... 604
Questions submitted by....................................... 235
Campion, Raymond J., Ph.D., president, Mickey Leland National
Urban Air Toxics Research Center, prepared statement........... 849
Cannon, Jonathan Z., General Counsel, Environmental Protection
Agency......................................................... 247
Carozza, Shirley C., Deputy Assistant Secretary for Budget,
Office of the Secretary, Department of Veterans Affairs........ 511
Catlett, D. Mark, Assistant Secretary for Management, Office of
the Secretary, Department of Veterans Affairs.................. 511
Charvat, Steven, CEM, NCCEM president, emergency management
coordinator, city of Phoenix, AZ, prepared statement........... 896
Christensen, Michael D., Associate Administrator for Headquarters
Operations, National Aeronautics and Space Administration...... 601
Ciaccia, Julius, Jr., president, Association of Metropolitan
Water Agencies, prepared statement............................. 855
City of Miami Beach, FL, prepared statement...................... 846
City of Newark, NJ, prepared statement........................... 811
Cole, Dr. Mary Louise, president of ICARE Bay Point Schools,
prepared statement............................................. 825
Consortium for Citizens With Disabilities Housing Task Force,
prepared statement............................................. 830
Coronado, Gil, Director, Selective Service System................ 145
Prepared statement........................................... 146
Craig, Elizabeth, Director, Budget Division, Environmental
Protection Agency.............................................. 247
Craig, Hon. Larry, U.S. Senator from Idaho, questions submitted
by.............................................................
236, 403.......................................................
Cunninghame, Donna, Chief Financial Officer, Corporation for
National and Community Service................................. 81
Cuomo, Andrew, Secretary, Department of Housing and Urban
Develop- ment.................................................. 665
Prepared statement........................................... 674
D'Amours, Norman E., Chairman, National Credit Union
Administration................................................. 63
Prepared statement........................................... 64
DeHan, Rodney, ground water manager, Florida Department of
Environmental Regulations and Ground Water Protection Council,
prepared statement............................................. 842
DiPasquale, Nicholas A., president, Solid Waste Management
Officials, prepared statement.................................. 844
Dola, Steven, Deputy Assistant Secretary for Management and
Budget, Office of the Assistant Secretary of the Army for Civil
Works, Cemeterial Expenses, Army, Department of Defense--Civil. 139
Prepared statement........................................... 140
Duffy, Dennis, Assistant Secretary for Policy and Planning,
Office of the Secretary, Department of Veterans Affairs........ 511
Elzanowski, Dr. Anjay, the Humane Society of the United States
[HSUS], prepared statement..................................... 899
Fields, Timothy, Acting Deputy Assistant Administrator, Office of
Solid Waste and Emergency Response, Environmental Protection
Agency......................................................... 247
Fox, Dr. Peter, Arizona State University and Margaret Nellor,
county sanitation districts of Los Angeles County, prepared
statement...................................................... 862
Fox, J. Charles, Associate Administrator, Office of Reinvention,
Environmental Protection Agency................................ 247
Frank, Billy, Jr., chairman, Northwest Indian Fisheries
Commission, prepared statement................................. 886
Gall, Mary Sheila, Commissioner, Consumer Product Safety
Commission..................................................... 155
Prepared statement........................................... 162
Gardiner, David, Assistant Administrator, Office of Policy,
Planning and Evaluation, Environmental Protection Agency....... 247
Gibbons, John, Director, Office of Science and Technology Policy,
Executive Office of the President.............................. 433
Prepared statement........................................... 438
Glenn, Gary A., president, Massachusetts Foundation for
Excellence in Marine and Polymer Sciences, prepared statement.. 872
Golden Gate University, Monterey, CA, prepared statement......... 926
Goldin, Daniel S., Administrator, National Aeronautics and Space
Administration................................................. 601
Prepared statement........................................... 605
Goldman, Lynn R., Assistant Administrator, Office of Prevention,
Pesticides and Toxic Substances, Environmental Protection
Agency......................................................... 247
Gorosh, Kathye, project director, the CORE Center, prepared
statement...................................................... 760
Gross, Robert L., Inspector General, National Aeronautics and
Space Administration........................................... 601
Hansen, Fred, Deputy Administrator, Environmental Protection
Agency......................................................... 247
Harkin, Hon. Tom, U.S. Senator from Iowa, questions submitted by.
426, 594
Harper, Sallyanne, Acting Chief Financial Officer, Environmental
Protection Agency.............................................. 247
Hawke, John H., Jr., Under Secretary of Treasury for Domestic
Affairs, Community Development Financial Institutions,
Department of the Treasury..................................... 27
Prepared statement........................................... 29
Herman, Steve, Assistant Administrator, Office of Enforcement and
Compliance Assurance, Environmental Protection Agency.......... 247
Herrling, Gen. John P., U.S. Army (retired), Secretary, American
Battle Monuments Commission.................................... 121
Prepared statement........................................... 123
Huggett, Robert J., Assistant Administrator, Office of Research
and Development, Environmental Protection Agency............... 247
Huntress, Wesley T., Associate Administrator for Space Science,
National Aeronautics and Space Administration.................. 601
Iarossi, Brad, P.E., legislative officer, Association of State
Dam Safety Officials, prepared statement....................... 889
Jennings, Hon. Ed, mayor, city of Gainesville, FL, prepared
statement...................................................... 876
Johnson, Gary D., Chief Financial Officer, Federal Emergency
Management Agency.............................................. 193
Johnson, Jacqueline, chairperson, National American Indian
Housing Council, prepared statement............................ 804
Jollivette, Cyrus M., vice president for Government relations,
Miami University, prepared statement........................... 756
Jurado, Kathy E., Assistant Secretary for Public and
Intergovernmental Affairs, Office of the Secretary, Department
of Veterans Affairs............................................ 511
Keener, Mary Lou, General Counsel, Office of the Secretary,
Department of Veterans Affairs................................. 511
Kizer, Kenneth W., M.D., M.P.H., Under Secretary for Health,
Office of the Secretary, Department of Veterans Affairs........ 511
Knight, George, Executive Director, Neighborhood Reinvestment
Corpora- tion.................................................. 63
Prepared statement........................................... 68
Koelemij, John, past president, National Association of Home
Builders, prepared statement................................... 750
Lane, Jay, director, program planning and development, Laconia
Housing and Redevelopment Authority, prepared statement........ 740
Lane, Jay, president, Jay Lane Associates, prepared statement.... 758
Lane, Neal, Director, National Science Foundation................ 457
Prepared statement........................................... 458
Langrigan, Philip, EPA Consultant, Children's Office,
Environmental Protection Agency................................ 247
Larson, Larry A., executive director, Association of State
Floodplain Managers, prepared statement........................ 895
Lautenberg, Hon. Frank R., U.S. Senator from New Jersey,
questions submitted by......................................... 422
Lawrence, Jeff, Associate Administrator for Legislative Affairs,
National Aeronautics and Space Administration.................. 601
Leahy, Hon. Patrick J., U.S. Senator from Vermont, questions
submitted by................................................... 412
Lemons, Stephen L., Acting Under Secretary for Benefits, Office
of the Secretary, Department of Veterans Affairs............... 511
Local Initiatives Support Corp., prepared statement.............. 769
Lower, Dennis E., executive director, University Heights Science
Park, Newark, NJ:
Biographical sketch.......................................... 822
Prepared statement........................................... 820
Mason, Dr. Robert J., director, Environmental Lung Center,
National Jewish Medical and Research Center, prepared statement 873
Mauderly, Joe L., senior scientist and director of external
affairs, Lovelace Respiratory Research Institute, prepared
statement...................................................... 877
McCabe, W. Michael, Regional Administrator, EPA Region III,
Environmental Protection Agency................................ 247
McEwen, Bruce S., Ph.D., for the Society for Neuroscience,
prepared statement............................................. 913
McGinty, Kathleen, Chair, Council on Environmental Quality and
Office of Environmental Quality, Executive Office of the
President...................................................... 1
Merriman, William, Deputy Inspector General, Office of the
Secretary, Department of Veterans Affairs...................... 511
Mikulski, Hon. Barbara A., U.S. Senator from Maryland:
Prepared statement...........................................
156, 533...................................................
Questions submitted by.......................................
78, 127, 238, 593..........................................
Moore, Thomas H., Vice Chairman, Consumer Product Safety
Commission..................................................... 155
Moy, Kirsten, Director, Community Development Financial
Institutions, Department of the Treasury....................... 27
Prepared statement........................................... 32
Mullen, James H., Jr., vice president for student affairs,
Trinity College, prepared statement............................ 764
Nasif, Teresa, Director, Consumer Information Center, General
Services Administration........................................ 165
Prepared statement........................................... 166
National Council of State Housing Agencies on behalf of the
Nation's State Housing Finance Agencies, prepared statement.... 753
Nebeker, Hon. Frank, Chief Judge, U.S. Court of Veterans Appeals. 109
Prepared statement........................................... 110
Nichols, Mary, Assistant Administrator, Office of Air and
Radiation, Environmental Protection Agency..................... 247
Nicogossian, Arnauld E., Acting Associate Administrator for Life
and Microgravity Sciences and Applications, National
Aeronautics and Space Administration........................... 601
Nitze, William A., Assistant Administrator, Office of
International Activities, Environmental Protection Agency...... 247
O'Brien, Terrence J., president, Metropolitan Water Reclamation
District of Greater Chicago, prepared statement................ 875
Olivares, Dennis, president, International Federation of
Professional and Technical Engineers, Local 29, prepared
statement...................................................... 902
Opfer, George, Inspector General, Federal Emergency Management
Agency......................................................... 193
Paz, Harold L., M.D., dean, UMDNJ-Robert Wood Johnson Medical
School, prepared statement..................................... 809
Peabody, John N., Jr., president, American Federation of
Government Employees Local 1983, prepared statement............ 892
Perciasepe, Robert, Assistant Administrator, Office of Water,
Environmental Protection Agency................................ 247
Pesachowitz, Al, Assistant Administrator, Office of
Administration and Resources Management, Environmental
Protection Agency.............................................. 247
Peterson, Malcolm L., Comptroller, National Aeronautics and Space
Administration................................................. 601
Pings, Cornelius J., Ph.D., president, Association of American
Universities, prepared statement............................... 918
Quickel, Kenneth E., Jr., M.D., president, Joslin Diabetes
Center, Boston, MA and Blake E. Waterhouse, M.D., CEO, Straub
Clinic and Hospital, Honolulu, HI, prepared statement.......... 735
Rhea, Larry D., deputy director of legislative affairs, Non
Commissioned Officers Association of the United States of
America [NCOA], prepared statement............................. 725
Sandy, Mary L., chair, National Council of Space Grant Directors,
prepared statement............................................. 907
Schlender, James H., executive administrator, Great Lakes Indian
Fish and Wildlife Commission, prepared statement............... 869
Schmoll, Kathryn S., Comptroller, Environmental Protection Agency 247
Schumacher, John D., Associate Administrator for External
Relations, National Aeronautics and Space Administration....... 601
Scott, Edward, Assistant Secretary for Congressional Affairs,
Office of the Secretary, Department of Veterans Affairs........ 511
Shelby, Hon. Richard C., U.S. Senator from Alabama, questions
submitted by................................................... 399
Socolar, Milton J., prepared statement........................... 525
SRI International, prepared statement............................ 909
State and Territorial Air Pollution Program Administrators and
the Association of Local Air Pollution Control Officials,
prepared statement............................................. 852
Stevens, Hon. Ted, U.S. Senator from Alaska, questions submitted
by............................................................. 125
Sullivan, John H., deputy executive director, American Water
Works Association, prepared statement.......................... 865
Surratt, Rick, assistant national legislative director, Disabled
American Veterans, prepared statement.......................... 728
Suttie, John W., Ph.D., president, Federation of American
Societies for Experimental Biology, prepared statement......... 915
Tinsley, Nikki L., Acting Inspector General, Environmental
Protection Agency.............................................. 247
Townsend, William F., Acting Associate Administrator for Mission
to Planet Earth, National Aeronautics and Space Administration. 601
Trafton, Wilbur C., Asssociate Administrator for Space Flight,
National Aeronautics and Space Administration.................. 601
U.S. Conference of Mayors, the National Association of Counties,
the Association of Local Housing Finance Agencies, and the
National Community Development Association, prepared statement. 801
Uhlig, Mary Louise, Acting Associate Administrator, Office of
Regional Operations and State/Local Relations, Environmental
Protection Agency.............................................. 247
University of California at San Diego's Scripps Institution of
Oceanography and Columbia University's Lamont-Doherty Earth
Observatory, prepared statement................................ 898
University of Tulsa, prepared statement.......................... 813
Water Environment Research Foundation, prepared statement........ 881
Weinstein, Michael, president, AIDS Healthcare Foundation,
prepared statement............................................. 817
Whitehead, Robert E., Associate Administrator for Aeronautics and
Space Transportation Technology, National Aeronautics and Space
Administra- tion............................................... 601
Widener, Mary Lee, president, Neighborhood Housing Services of
America, Inc................................................... 63
Witt, James L., Director, Federal Emergency Management Agency.... 193
Prepared statement........................................... 202
Wodraska, John R., general manager, Metropolitan Water District
of Southern California, prepared statement..................... 839
Wofford, Harris, Chief Executive Officer, Corporation for
National and Community Service................................. 81
Prepared statement........................................... 91
Zaterman, Sunia, executive director, Council of Large Public
Housing Authorities [CLPHA], Washington, DC, prepared statement 742
SUBJECT INDEX
----------
AMERICAN BATTLE MONUMENTS COMMISSION
Page
ABMC:
Cemeteries and memorials, 1997 Memorial Day and other events
at......................................................... 125
Special events and services to the public.................... 125
American Battle Monuments Commission............................. 126
CONSUMER PRODUCT SAFETY COMMISSION
Cigarette lighters/cost benefit analysis......................... 164
Commission programs, reduced funding limits...................... 160
CPSC FTE's....................................................... 162
Information technology is needed, investment in.................. 151
Multipurpose lighters............................................ 163
1998 priorities.................................................. 163
Programs, fiscal year 1998....................................... 159
Recent accomplishments........................................... 158
CORPORATION FOR NATIONAL AND COMMUNITY SERVICE
Chief Financial Officer.......................................... 101
Financial statements............................................. 102
DEPARTMENT OF DEFENSE--CIVIL
Cemeterial Expenses, Army
Army--Interior land transfers.................................... 142
Budget overview, fiscal year 1998................................ 140
Ceremonies....................................................... 141
Claims and settlements........................................... 142
Construction projects............................................ 141
Recently completed........................................... 141
Funerals......................................................... 141
Master plan...................................................... 142
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Consumer Affairs
Air bag safety................................................... 183
Consumer Resource Handbook.......................................
185, 190.......................................................
CPSC:
Budget....................................................... 177
Initiatives.................................................. 180
Should work with DOT......................................... 184
Disseminating information electronically......................... 186
Fraud perpetrated against elderly................................ 179
OCA's effectiveness, measuring................................... 187
Other agencies, working with..................................... 181
Small Business Regulatory Enforcement Fairness Act [SBREFA]...... 175
USOCA:
Helpline data base........................................... 187
Travel fund for fiscal year 1998............................. 190
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Brownfields...................................................... 692
Decisionmaking to locals, redirection of......................... 667
Elderly care..................................................... 691
Emergency CDBG funding, use of................................... 703
Empowerment zones, review of..................................... 704
Homeless assistance for smaller States........................... 689
Homeless programs, consolidation of.............................. 690
Homeless services, proposed restrictions on...................... 690
HOPE VI reforms.................................................. 694
HUD:
Programs, additional......................................... 695
Reforms, need for............................................ 666
Staff, introduction of....................................... 670
Management transition plan....................................... 683
Manufactured housing............................................. 696
NAPA recommendations, implementation of.......................... 693
Preservation program............................................. 699
Priority:
Averting section 8 crisis.................................... 671
Expanding affordable housing................................. 672
Making welfare reform work................................... 673
Management reforms........................................... 674
Restoring public trust....................................... 673
Public housing units:
Alternatives to selling...................................... 701
To tenants, sale of.......................................... 700
Rehabilitation units, cost of.................................... 701
RESPA, proposed rule on.......................................... 697
Reverse mortgages, Senate measure on............................. 694
Section 8:
Contract renewal reserves.................................... 684
Costs, increase in........................................... 666
Reserves:
Departmental policy on................................... 687
GAO estimate on.......................................... 684
Need for varying amounts of.............................. 686
Recapturing.............................................. 688
The supplemental bill.................................... 685
DEPARTMENT OF THE TREASURY
Community Development Financial Institutions
CDFI projects.................................................... 34
Performance standards............................................ 38
DEPARTMENT OF VETERANS AFFAIRS
Office of the Secretary
Compensation original claims processing.......................... 557
Cost efficiency goals............................................ 558
Federal supply schedules......................................... 558
Health care employment reductions, savings achieved through...... 549
Medical research funding:
Reduction.................................................... 557
Reduction in................................................. 555
Medicare subvention.............................................. 553
Montgomery GI bill usage rate.................................... 546
NAPA recommendations............................................. 548
New patient mix.................................................. 551
Outreach clinics, Maryland community-based....................... 556
Per-patient cost reduction, 30 percent........................... 544
Perry Point modernization........................................ 556
Third party reimbursement legislation............................ 554
User fee proposal................................................ 543
VA health care restructuring savings............................. 543
Veterans education benefits...................................... 546
Veterans, treating more.......................................... 552
Year 2000 computer problems...................................... 548
ENVIRONMENTAL PROTECTION AGENCY
Brownfields:
Initiative................................................... 269
Sites........................................................ 279
Budget priorities................................................ 279
Chesapeake Bay Program........................................... 270
Children as a high priority...................................... 256
Clean Air Act reviews............................................ 299
Closing remarks.................................................. 350
CSI and project XL............................................... 345
CWSRF............................................................ 336
E4E program...................................................... 346
EPA/State relationships.......................................... 326
Fine particles................................................... 343
GPRA: Budget prioritization...................................... 339
Green programs................................................... 347
International program vision..................................... 283
Lake Champlain management plan................................... 303
Mercury study.................................................... 302
Methylbromide.................................................... 329
NAAQS:
Clean Air Act................................................ 297
Proposals.................................................... 271
Protocal for accessing data.................................. 278
Scientific data.............................................. 272
State grant request.......................................... 335
NAPA studies..................................................... 344
National mining strategy......................................... 332
New legislation.................................................. 256
Implementation............................................... 334
Ozone NAAQS: CEA letter.......................................... 298
Peer review...................................................... 349
PM-2.5........................................................... 342
PM and ozone standards........................................... 304
Risk decisions in 1998 budget.................................... 340
Safe Drinking Water Act.......................................... 300
Salmon, ID....................................................... 341
SBREFA........................................................... 348
South Lake Tahoe................................................. 331
Superfund:
Budget, fiscal year 1997..................................... 281
Increase, proposed........................................... 267
New York Times article....................................... 268
Reauthorization.............................................. 281
Reform....................................................... 283
Transuranic waste................................................ 328
WIPP............................................................. 327
Review....................................................... 331
EXECUTIVE OFFICE OF THE PRESIDENT
Council on Environmental Quality and Office of Environmental Quality
CEQ, elimination of.............................................. 8
Project XL....................................................... 9
Small business regulatory enforcement............................ 18
Spending priorities.............................................. 17
Office of Science and Technology Policy
National research investment portfolio........................... 440
National Science and Technology Council.......................... 441
1996 accomplishments............................................. 442
OSTP:
Budget request............................................... 442
Mission...................................................... 440
President's Committee of Advisors on Science and Technology...... 442
Science and technology, recent advances in....................... 439
Twenty-first century, shaping the................................ 440
FEDERAL EMERGENCY MANAGEMENT AGENCY
Dam safety, requirements for..................................... 219
Disaster appeals................................................. 212
Disaster assistance:
For recreational facilities.................................. 212
For sports facilities........................................ 213
Disaster close-outs.............................................. 208
Disaster cost-cutting proposals.................................. 212
Disaster criteria, timetable for................................. 214
Disaster program changes, getting Governors involved in.......... 199
Disaster relief fund, status of.................................. 206
Disasters:
Criteria for rehabilitation from............................. 209
Funding for.................................................. 208
Fallen Firefighters Foundation, Maryland representation in....... 219
Flood mitigation in Maryland..................................... 209
Hazard mitigation................................................
211, 217.......................................................
Incentives for States............................................ 218
Inspector general recommendation................................. 219
Institutionalizing reform........................................ 214
Insurance for public facilities.................................. 216
National flood insurance fund, status of......................... 218
Northridge, cost for............................................. 207
Ohio River flooding and tornado disasters, estimates for recent.. 207
Performance partnership agreements, criteria for................. 218
Private, nonprofit entities, eligibility of...................... 217
Seismic algorithm................................................ 213
State and local assistance....................................... 219
State cost share................................................. 216
GENERAL SERVICES ADMINISTRATION
Consumer Information Center
CIC program...................................................... 165
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Aeronautics program.............................................. 641
Aircraft consolidation plan...................................... 625
Consolidated space operations contract [CSOC].................... 629
Earth Observatory system data information status [EOSDIS]........ 623
Expendable launch vehicles, upgrading............................ 643
Internation space station........................................ 620
Mars mission..................................................... 639
Mergers and consolidations....................................... 642
Mission to plant Earth...........................................
627, 628.......................................................
NASA:
Budget....................................................... 625
Budget/reserves.............................................. 626
Faster, better, cheaper...................................... 640
Outreach programs............................................ 628
Response to pursuing the right paths/options................. 635
Russian situation............................................ 628
Research aircraft, plans for..................................... 625
Russian situation................................................ 631
Science missions................................................. 627
Scientific benefits.............................................. 637
Shuttle program.................................................. 636
Cost vs. Saturn/Apollo Program cost.......................... 634
Vs. Saturn Program........................................... 634
Shuttle safety................................................... 632
Space science programs........................................... 630
Space station.................................................... 637
Benefits.....................................................
635, 638...................................................
Funding caps................................................. 621
Internation cooperation...................................... 637
Out-year request............................................. 633
Program...................................................... 636
Yes or no?................................................... 634
X-33............................................................. 639
Cost effectivess of.......................................... 644
Program......................................................
635, 640, 643..............................................
NATIONAL CREDIT UNION ADMINISTRATION
CDFI............................................................. 75
Credit unions, Supreme Court decision on......................... 76
Efficiency measures.............................................. 68
Financial services, modernization of............................. 78
Home Program..................................................... 74
Hope IV in Baltimore............................................. 72
Lessions learned................................................. 67
Navajo partnership for housing................................... 74
Rural housing concerns........................................... 75
Southern Baltimore, goals for.................................... 72
NATIONAL SCIENCE FOUNDATION
.................................................................
Agricultural research, funding for............................... 479
Arabidopsis genome project....................................... 478
Communication/coordination, need for better...................... 476
Corn genome study, potential..................................... 479
Evaluation and performance....................................... 487
Federal R&D investment........................................... 465
Genome studies................................................... 477
Future of.................................................... 480
Goal setting..................................................... 471
Examination of............................................... 482
GPRA............................................................. 472
Impact of research, measuring the................................ 472
Interagency meeting, request in.................................. 480
Knowledge and distributed intelligence........................... 482
Life and Earth's environment..................................... 484
OSTP in space issues, role of.................................... 467
Public investment in research and development....................
466, 467.......................................................
Russia's role in space station................................... 468
Science and technology budget.................................... 465
Setting priorities and measuring programs........................ 488
Space program, safety of......................................... 469
Space programs................................................... 469
Strategic research............................................... 470
Success indicators............................................... 484
Year 2000:
Computer dilemma............................................. 473
Flipover..................................................... 475
Flipover issues.............................................. 476
Issue, role White House has in solving....................... 474
Issues....................................................... 474
SELECTIVE SERVICE SYSTEM
ABMC:
Informational services....................................... 153
Infrastructure............................................... 149
Infrastructure and backlog................................... 151
Memorial Day and other ceremonies............................ 153
America initiative:
Costs of service to.......................................... 150
Results of service to........................................ 152
Service to................................................... 145
Responsibilities................................................. 150
Selective Service, future of..................................... 150
U.S. COURT OF VETERANS APPEALS
Budget summary................................................... 110
Case backlog..................................................... 109
Pro bono representation program.................................. 120
VA decision process.............................................. 118
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