- DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR 1998

[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]

DEPARTMENTS OF LABOR, HEALTH AND HUMAN
SERVICES, EDUCATION, AND RELATED AGENCIES
APPROPRIATIONS FOR 1998

========================================================================

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION
________

SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
EDUCATION, AND RELATED AGENCIES

JOHN EDWARD PORTER, Illinois, Chairman

C. W. BILL YOUNG, Florida DAVID R. OBEY, Wisconsin
HENRY BONILLA, Texas LOUIS STOKES, Ohio
ERNEST J. ISTOOK, Jr., Oklahoma STENY H. HOYER, Maryland
DAN MILLER, Florida NANCY PELOSI, California
JAY DICKEY, Arkansas NITA M. LOWEY, New York
ROGER F. WICKER, Mississippi ROSA L. DeLAURO, Connecticut
ANNE M. NORTHUP, Kentucky

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full
Committee, and Mr. Obey, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.

S. Anthony McCann, Robert L. Knisely, Susan E. Quantius, Michael K. Myers,
and Francine Mack, Subcommittee Staff
________

PART 6

RELATED AGENCIES
Page
Railroad Retirement Board......................................... 1
United States Institute of Peace.................................. 353
Corporation for Public Broadcasting............................... 539
National Labor Relations Board.................................... 655
National Commission on Libraries and Information Science.......... 989
National Council on Disability.................................... 1041
Physician Payment Review Commission............................... 1125
Prospective Payment Assessment Commission......................... 1199
Institute of Museum and Library Services.......................... 1245
Social Security Administration.................................... 1289
Corporation for National and Community Service.................... 1545
Occupational Safety and Health Review Commission.................. 1693
Federal Mine Safety and Health Review Commission.................. 1773
Federal Mediation and Conciliation Service........................ 1839
National Education Goals Panel.................................... 2003
National Mediation Board.......................................... 2079
Armed Forces Retirement Home...................................... 2161

________

U.S. GOVERNMENT PRINTING OFFICE

40-763 O WASHINGTON : 1997

------------------------------------------------------------------------

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office,
Washington, DC 20402

COMMITTEE ON APPROPRIATIONS

BOB LIVINGSTON, Louisiana, Chairman

JOSEPH M. McDADE, Pennsylvania DAVID R. OBEY, Wisconsin
C. W. BILL YOUNG, Florida SIDNEY R. YATES, Illinois
RALPH REGULA, Ohio LOUIS STOKES, Ohio
JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania
JOHN EDWARD PORTER, Illinois NORMAN D. DICKS, Washington
HAROLD ROGERS, Kentucky MARTIN OLAV SABO, Minnesota
JOE SKEEN, New Mexico JULIAN C. DIXON, California
FRANK R. WOLF, Virginia VIC FAZIO, California
TOM DeLAY, Texas W. G. (BILL) HEFNER, North Carolina
JIM KOLBE, Arizona STENY H. HOYER, Maryland
RON PACKARD, California ALAN B. MOLLOHAN, West Virginia
SONNY CALLAHAN, Alabama MARCY KAPTUR, Ohio
JAMES T. WALSH, New York DAVID E. SKAGGS, Colorado
CHARLES H. TAYLOR, North Carolina NANCY PELOSI, California
DAVID L. HOBSON, Ohio PETER J. VISCLOSKY, Indiana
ERNEST J. ISTOOK, Jr., Oklahoma THOMAS M. FOGLIETTA, Pennsylvania
HENRY BONILLA, Texas ESTEBAN EDWARD TORRES, California
JOE KNOLLENBERG, Michigan NITA M. LOWEY, New York
DAN MILLER, Florida JOSE E. SERRANO, New York
JAY DICKEY, Arkansas ROSA L. DeLAURO, Connecticut
JACK KINGSTON, Georgia JAMES P. MORAN, Virginia
MIKE PARKER, Mississippi JOHN W. OLVER, Massachusetts
RODNEY P. FRELINGHUYSEN, New Jersey ED PASTOR, Arizona
ROGER F. WICKER, Mississippi CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York DAVID E. PRICE, North Carolina
GEORGE R. NETHERCUTT, Jr., Washington CHET EDWARDS, Texas
MARK W. NEUMANN, Wisconsin
RANDY ``DUKE'' CUNNINGHAM, California
TODD TIAHRT, Kansas
ZACH WAMP, Tennessee
TOM LATHAM, Iowa
ANNE M. NORTHUP, Kentucky
ROBERT B. ADERHOLT, Alabama

James W. Dyer, Clerk and Staff Director

DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED
AGENCIES APPROPRIATIONS FOR 1998

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Wednesday, March 19, 1997.

RAILROAD RETIREMENT BOARD

WITNESSES

GLEN L. BOWER, CHAIRMAN, U.S. RAILROAD RETIREMENT BOARD
JEROME KEVER, MANAGEMENT MEMBER
DAVID LUCCI, ASSISTANT TO LABOR MEMBER
MARTIN DICKMAN, INSPECTOR GENERAL

Remarks by Mr. Porter

Mr. Porter. The subcommittee will come to order.
We want to welcome aboard the Inspector General of the
Railroad Retirement Board today. We're pleased to have each of
you here.
We understand that Mr. Speakman is ill and unable to be
here today, and Mr. Lucci, you're sitting in for him.
Mr. Lucci. That's correct.
Mr. Porter. I want to start with some general remarks, and
I ask your indulgence for just a minute.
Mr. Chairman, your term concludes in August. And since
neither you nor the President have indicated what your future
plans may be, I wanted to take a few minutes to discuss your
tenure and to thank you for your service to our country. You
have been at the Board nearly seven years now. In my 17 years
of service in Congress, I don't think I've ever seen a single
individual make such a dramatic difference in a Government
agency.
You began in 1990 with an agency that was regarded by many
as you indicate in your written statement as one of the worst
run in Government. Since that time, you have turned the agency
into one of the best run, a model for all other Federal
agencies to emulate.
What I most appreciate is that you came to us with a plan
and a commitment. You laid out performance goals and outcome
measures. You told us what you would accomplish, when you would
accomplish it, and how much it would cost. That in itself was a
dramatic change in the culture of Government here in
Washington.
But you not only talked a good game, you delivered. The
agency met all of its performance goals on time or ahead of
schedule, and you did it with less money than you originally
told us it would require.
During all of this process, the agency got more efficient
and more consumer driven with declining staff, fewer offices,
and ultimately less funding. We asked you for a full accounting
of your service in your opening statement, which is an
unusually long 47 pages. I commend it to all of our members and
staff as an example of how Federal managers ought to run their
agencies.
I think anyone who does take the time to read it will come
away amazed at the breadth and depth of accomplishment and
change that has taken place at this agency.
Mr. Bower, I want to thank you for your tenure, your
innovation, your dedication to performance, and for all of your
service to our country.
Now I want to make a few comments to the Management Member,
the Labor Member and the Inspector General. Obviously, the
agency's turnaround is due in large part to your efforts and
your predecessors as well. While I understand you have had your
disagreements, you share great credit for the great turnaround
of the RRB and I want to thank each of you for your service.
While we do not know Mr. Bower's future plans at the
moment, we do know that you will be here for some time. You
have a tremendous opportunity and in some ways, a challenge
equally as difficult as the one you have already undertaken.
You must make the transition from turnaround to permanence. You
can institutionalize excellence. If we are going to make
Government work for people, you must succeed in this
transition.
We are asking each of our agencies to focus on outcomes and
results for people. The RRB is six years ahead of most of the
other agencies in Government. In my judgment, you're the model.
The subcommittee is making sure that each Government agency
under its jurisdiction fully implements the Government
Performance and Results Act to make the change in the culture
of Government the RRB has already made.
The RRB can, if it chooses, be among the first to
successfully implement GPRA, to institutionalize performance
measurement and reporting, and to institutionalize excellence.
But that can only happen with strong leadership, and that's
going to be your leadership. And we hope that you will be able
to continue the real progress that has been made at RRB under
Glen Bower's leadership.
Now, Mr. Chairman, not all of the 47 pages, but a small
summary, please.

Opening Statement

Mr. Bower. Well, Mr. Chairman, let me first say that I am
humbled and grateful for your very generous comments. And on
behalf of the other officials and the employees of the Railroad
Retirement Board, I want to thank you for recognizing the
improvements that we've made.
We have submitted the unusually long 46 or 47 page
statement, which we ask to be made a part of the record. You
have recognized two of the gentlemen at the table specifically.
And to my right is one of your constituents, the Management
Member of the Board, Mr. Jerome Kever.
During fiscal year 1996, the Board paid $8.2 billion and
recovered $100 million in retirement and survivor benefits, and
paid $97.1 million and recovered $32.1 million in unemployment
and sickness insurance benefits. For fiscal year 1998, our
administrative request provides for $88.8 million and 1,198
FTEs excluding 44 FTEs reimbursed by the Health Care Financing
Administration.
Of the $88.8 million, not less than $2.9 million would be
used to invest in technology improvements to enhance customer
service. The 1,198 FTES represents a reduction of 83 from the
level we expect to fund in fiscal year 1997.
The request also includes $206 million plus a 2 percent
contingency in general revenue funds for vested dual benefits
to certain people who qualified for both social security and
railroad retirement benefits before 1975. This is $17 million
less than 1997, as the eligible population continues to
decline, as is illustrated on our chart, a rather precipitous
decline over the years.
[The information follows:]

[Pages 4 - 5--The official Committee record contains additional material here.]

special management improvement plan

When I was first appointed Chairman in 1990, I was
instructed to make significant and much-needed improvements in
the Board's administrative management. At that time, a review
team from agencies throughout the Federal Government documented
a number of weaknesses in our operations. A Special Management
Improvement Plan to address such deficiencies in six key areas
was developed in cooperation with the Office of Management and
Budget.
And I am proud to report that we successfully concluded
this effort at the end of fiscal year 1996, spending $1.5
million less than the almost $14 million that was initially
estimated. And in the written testimony there are a number of
charts that illustrate the success we've had in that regard.
Every goal contained in the plan for the targeted areas was met
or exceeded, and many ahead of schedule.
During the course of the plan, we eliminated a claims
processing backlog of almost 80,000 cases, while at the same
time improving our claims processing accuracy. We also reduced
our backlogs in a related category of work not addressed in the
agreement from about 170,000 cases in fiscal year 1988 to just
over 9,000 at the end of fiscal year 1996.
In the area of tax accounting, we have reduced a backlog of
over 50,000 transactions to 525 items.
At the start of our improvement plan, we had wage matching
agreements with 10 States covering only 48 percent of the
railroad population. By 1994, we had secured agreements with
all 50 States, the District of Columbia, Puerto Rico and
Canada, providing 100 percent coverage for all railroad
employees.
We also made great progress in improving and expanding our
debt management activities, particularly in the area of offset
of Federal tax refunds and related voluntary repayments.
Overall, the Special Management Improvement Plan was a great
success, providing us with an opportunity to not only remedy
past shortcomings, it also lays the groundwork for future
accomplishments.

agency reorganization

As I reported to you last year, a reorganization of our
management structure along functional lines was implemented in
1995. This new structure has already led to increased
efficiency, particularly in the areas of customer service,
information management and financial management. I am proud
that we have been able to reduce our staffing levels from 1,698
in fiscal year 1993 to 1,315 FTEs as of February 28th, 1997, as
is illustrated by our chart.
[The information follows:]

[Pages 7--The official Committee record contains additional material here.]

A reinvention task force of agency employees was formed in
1995. The group produced a number of recommendations including
an initiative to reduce the number of our field offices. The
number of Board offices, which stood at 89 when I became
chairman in 1990, will be 55 by the end of this fiscal year and
53 by the end of 1998.
The first chart illustrates the decline in the offices.
This in part came about because of the very significant change
in not only retirees but also in the active employees of the
railroads. We are confident that we can continue to provide
outstanding service to the customers.
[The information follows:]

[Pages 9--The official Committee record contains additional material here.]

customer service improvements

Our customer service plan sets forth clear standards of
performance, focusing on processing claims in an accurate and
timely manner, as well as responding promptly to phone calls
and correspondence from our customers. We established a toll
free Board help line, providing callers with automated
information concerning the unemployment and sickness insurance
plan and the status of their benefits. We have also established
an RRB Web site on the internet.
We centralized responsibilities for responding to priority
correspondence to provide greater coordination and control, as
well as a greater monitoring of quality, timeliness and subject
matter. The Board has made great strides in the area of
information technology, particularly in our efforts to automate
our retirement claims processing system, our unemployment and
sickness insurance system, and other operations.

administrative efficiency

And I would like to address several items that illustrate
our commitment to function more efficiently in all areas of
operation. The Board has taken an aggressive approach over the
past five years in revising contracts with service providers
with a significant reduction in costs. These include our
contracts for medical consulting opinions and the scheduling of
medical exams, both necessary for disability determinations,
and the contract for the administration of our part B Medicare
program.
Another area where we have achieved considerable success in
cost savings is in the use of electronic fund transfers. During
the first part of calendar year 1995, less than 10 percent of
our unemployment and sickness insurance benefits were paid
electronically. This percentage had increased to 77 percent by
February of 1997. For the same month, retirement payments were
63 percent electronic, as were 100 percent of Board employee
travel reimbursements and 95 percent of salary payments.
We are also using the Vendor Express payment system to make
electronic payments to the agency's vendors. If we were able to
pay all benefit payments and other disbursements
electronically, we could save $1.2 million annually by
eliminating 3.6 million checks. Fortunately, the Congress
passed a law that's effective January 1st, 1999, that will
mandate that process.
At my insistence, we have also taken steps to monitor
routine administrative costs. Self-servicing photocopying
volumes have been reduced by 40 percent and the average annual
in-house printing plant volume has decreased by about 15
million copies, compared to fiscal year 1992.
Travel expenses have declined by nearly $130,000, or over
14 percent, since 1993. We have taken aggressive action to
reduce our rental costs. We merged our satellite facility in
suburban Chicago, our downtown district office, and a large
warehouse into our headquarters building. These relocation
costs have saved about $700,000 in facility operation expenses
each year.

status of the trust funds

With regard to the trust funds, as illustrated on the next
two charts, by the end of fiscal year 1996, the book value of
the railroad retirement investments was $14.7 billion, an
increase of almost $500 million over the previous year. The
Railroad Unemployment Insurance Equity Account balance was
$128.1 million. In 1996, the RRB issued reports on the Railroad
Retirement and Unemployment Insurance Trust Funds. Both reports
continued to reflect the generally favorable conclusions of
recent years.
[The information follows:]

[Pages 12 - 13--The official Committee record contains additional material here.]

In fiscal year 1996, the holdings of the three retirement
trust funds had an average yield of 6.55 percent. Total
earnings were nearly $1.1 billion, including $148.9 million in
capital gains from the timely sale of securities. In the fiscal
years 1992 through 1996, the trust funds realized a total of
$863.9 million in capital gains. This contrasts with the prior
four fiscal years of 1988 to 1991 in which $14.8 million in
capital gains were realized.

review of regulations

In closing, I would like to point out the progress we have
made in reviewing and revising our regulations. We have issued
a Board order sunsetting all program-related interpretations or
rulings that have not been incorporated into the agency's
regulations, formal legal opinions or Board decisions. Our
objective is to establish uniform rules and interpretations
that will be available both within the agency and to the
public.
Mr. Chairman and members of the committee, I have presented
to you today a brief summary of our recent accomplishments and
goals. And now I would be willing to answer any questions you
might have.
Thank you.
[The prepared statement follows:]

[Pages 15 - 61--The official Committee record contains additional material here.]

remarks of inspector general

Mr. Porter. Mr. Dickman, do you have a statement?
Mr. Dickman. A brief statement.
Mr. Porter. Please.
Mr. Dickman. Good morning, Mr. Chairman and members of the
committee. My name is Martin Dickman. I'm the Inspector General
of the Railroad Retirement Board.
I'm here to ask for your support for our fiscal year 1998
budget. I wish to submit my testimony for the record and
summarize our priorities for the next year.
We plan to continue our audit of the RRB's 1997 financial
statements. Previously these audits were outsourced to
independent CPA firms. Their audits for 1993 through 1996
identified problems and material weaknesses. We will offer
assistance to ensure that the agency adequately addresses these
problems.
We will continue to furnish reinvention proposals to
management as the agency establishes performance goals,
implements its strategic plan and addresses the provisions of
the Government Performance and Results Act.
We will monitor the RRB's implementation of its new
strategic information resources management plan. As resources
continue to decline, the Railroad Retirement Board must focus
on the increased use of information technology.
We will assist the RRB managers in identifying ways to
automate benefit calculations and reduce manual processing. The
accuracy of benefit payments remains an important issue. And
improvements are necessary to ensure the agency can promptly
identify and correct inaccurate payments.
We will continue our efforts to identify additional ways to
improve coordination with the Department of Treasury, the
Internal Revenue Service and the Social Security
Administration.
Debt collection also remains a priority area, and we will
assist the agency in identifying and implementing methods to
reduce the RRB's outstanding receivables.
In fiscal year 1998, we will focus our investigative
efforts on cases with the most significant fraud losses. We
will assign a higher priority to disability fraud cases that
usually involve more complicated plans to defraud RRB programs.
This concludes my remarks, Mr. Chairman, and I will be
happy to answer any questions.
[The prepared statement and biography of the Inspector
General follow:]

[Pages 63 - 67--The official Committee record contains additional material here.]

implementation of gpra

Mr. Porter. Thank you, Mr. Dickman, and thank you, Mr.
Chairman.
Mr. Chairman, I want to ask you generally, how is the RRB
acting to implement GPRA? When will you make your formal
submission to OMB? What kinds of indicators are you proposing?
And will GPRA be fully implemented in the fiscal year 1999
budget cycle?
If you could please provide a comprehensive answer at this
point in the record, and then I'd like Mr. Dickman to tell us
if he would what role ought the IG to have in monitoring
compliance with GPRA and ensuring the integrity of performance
measurements.
Mr. Bower. Mr. Chairman, as you indicated in your opening
remarks, the Special Management Improvement Plan was basically
a precursor of GPRA. We were required to and did set goals,
which we as an agency monitored, and then which were monitored
by the Office of Inspector General and reported to the Office
of Management and Budget.
It is that same similar process that we would continue. We
have now six years of experience with the program. It works
when you set definite goals, and then hold your employees and
management accountable to them. It is proven that they will
meet them.
Our future goals center around basically four key
objectives. Provide excellent customer service. In that we have
a customer service plan which we monitor, and we publish the
statistics to safeguard our customers' trust funds through
prudent stewardship. We are doing that through what I think are
wise and aggressive investments that have been illustrated by
the testimony that I gave.
Part of the Special Management Improvement Plan was to make
certain the reconciliations for the deposits are made in a
timely fashion. And that will obviously continue as well as the
audit and compliance division that is checking that the
necessary taxes are paid and deposited.
We'll align our resources to effectively and efficiently
meet our mission. Part of our reorganization was very much
aimed at that. Some of that work is certainly not completed, as
our new Director of Programs continues to retool his operation.
But there's already a great success in that.
In the use of technology and automation to achieve our
mission, automation, I think, is absolutely essential. It helps
us not only to be more efficient in the processing of our
claims, which was unusually paper intensive, but it greatly
increases our accuracy and makes certain that there are no
additional backlogs that are created.
Mr. Porter. When will you make the formal submission to
OMB?
Mr. Bower. June of this year is the approximate date.
Mr. Porter. And will you fully implement in the fiscal year
1999 budget cycle?
Mr. Bower. I believe that we will.
Mr. Porter. Mr. Dickman?
Mr. Dickman. Mr. Chairman, I agree with Chairman Bower in
his analysis, in that the Railroad Retirement Board is ahead of
most agencies in the Federal Government concerning GPRA,
because of the basis of the Special Management Improvement
Plan, which laid out a plan that really parallels what GPRA
really wants.
So it makes our job much easier to monitor GPRA for the
Board. Our audit division will have in place a special group
that will monitor GPRA and will monitor the six areas that were
part of the Special Management Improvement Plan.
Mr. Porter. Thank you, Mr. Dickman.

integration of special improvement plan with gpra

Mr. Chairman, one point I hope has come across is that we
don't want you to reinvent the wheel with GPRA. You've already
done an enormous amount of work in developing goals and
measuring performance. I think perhaps the most important thing
said in your 47 page statement is on page 19, where you say,
the agency will incorporate goals and objectives consistent
with the improvement plan in the performance plan being
developed to implement GPRA.
We believe that's the right approach. And I wonder if you
could tell us how you integrate the two processes, though.
Because your plan preceded GPRA in a real sense, and now you
have to integrate that with the law.
Mr. Bower. I think that really is, the plan that we have in
place is merely an enhancement of that plan, to comply with
GPRA, and to add any of the portions that were not covered by
the Special Management Improvement Plan. One of the things I
should point out, we currently have a Bureau of Quality
Assurance. By the first of May, a group within the agency is to
report back as to how that part continues or is reconstituted,
which will be part of our continuing monitoring of our success,
with accuracy and other statistics.
Mr. Porter. Mr. Chairman, in my opening statement I alluded
to the Special Management Improvement Plan, and the six
categories of performance goals contained in them. That plan
came to an end in fiscal year 1996 when you met all of your
goals on time and under budget.
We discussed last year how you might institutionalize that
process, so we not only don't lose the gains already made, but
you maintain consistently high standards and make gains in new
areas. I will have several questions on specific items for the
record. And you have reported on this at some length in your
written statement. But I would like you to tell us generally
how you will develop the SMIP process into an ongoing
initiative, and how will it be integrated into your strategic
planning and the GPRA process.
Mr. Bower. I would say that the single greatest success of
the Special Management Improvement Plan is that it got the
backlogs behind us, so we can now focus primarily on the
future, rather than worrying about a backlog that started 20
years ago. Building upon the Special Management Improvement
Plan, the agency is instituting measurement goals for all of
its categories of work, and is closely monitoring things.
Because we are far more automated than we were and will
continue to be, and hopefully with the help of this Congress
and the President's budget, with the technology enhancement, we
will be able to automate even more of our processes and become
basically a paperless environment. Of course, there are built-
in checks with the automated processes also that catch the
errors, but also reduce the number of errors to start with.

audit of financial statements

Mr. Porter. The next question is for both you, Mr.
Chairman, and Mr. Dickman. For the first time in fiscal year
1997, the Inspector General will perform the audit of the
board's financial statements in-house, as Mr. Dickman said in
his statement. In the past, we have discussed the significant
problems and material weaknesses cited by outside auditors in
issuing a disclaimer of opinion. You both have been working to
eliminate those impediments to a clean audit.
Please indicate any significant changes made to the draft
1995 audit before it was submitted in final form, and tell
usthe status of the 1996 audit and any disclaimers. Mr. Chairman, why
don't you proceed first and then Mr. Dickman.
Mr. Bower. Actually, I think Mr. Dickman ought to answer
that.
Mr. Porter. Mr. Dickman ought to answer that alone. All
right.
Mr. Dickman. Mr. Chairman, there were three material
weaknesses as cited by Peat Marwick. Those material weaknesses
have continued: the accuracy of benefits, overall control
environment and railroad tax deposits. I don't know whether in
the future we could or any outside firm could ever give a clean
report when you have problems. We don't control our own destiny
concerning the financial interchange with the Social Security
Administration, which involves a very cumbersome project.
There's a lag time involved where, if things aren't
finalized until June, and by then the financial statement audit
is already done. So they can't get accurate numbers, so any
accounting firm would be, I don't think it would be very
professional of them to ever put their imprimatur there and say
these numbers are accurate when they really don't know it.
The other major problem is concerning the railroad tax
deposits. And that's a problem, an ongoing problem, which the
Board and the Inspector General have made numerous overtures to
the Department of Treasury and to the IRS to get more
information concerning the accuracy of the tax deposits.
Because the Board does not, is in a blind. They do not know
what deposits are actually there. And they don't know if the
IRS has made an agreement, if some railroad has contested a
deposit be returned that they made in some previous years.
The Board previously did not even know whether there was
going to be a refund or not. In one case many millions of
dollars were involved. That has a tremendous effect obviously
on the accuracy of any audit.
So there are certain things I think until, and we all know
the problems the IRS has at the present time and the Department
of Treasury, the Board does not control its own destiny in this
matter. When you have to interact with Social Security, which
is a new agency right now, and they're doing their own
redesign, and then you have to interact with the IRS, you're
going to have these built-in problems.
The accuracy of benefit payments I believe down the road as
the Board becomes more automated and as it moves, as the
Chairman says, to a paperless type of operation, I think that
you could see that. But the accuracy of the interchange between
the Social Security Administration and the accuracy of the tax
deposits would remain an ongoing problem.
Mr. Porter. So first of all, you're saying that you can
never get a clean audit, at least under the present procedures.
Mr. Dickman. Under the present environment. I'm not saying
that down the road two years, three years from now that the
Board couldn't come to some agreement with the IRS and with
Social Security so that we get these numbers.
Mr. Porter. Could this subcommittee help you with IRS, for
example?
Mr. Dickman. I believe that, I can't speak to that. I know
that the Board has considered either some legislation or has
been speaking to the IRS concerning this. It comes down also to
a matter of confidentiality concerning the matters and the IRS
guards it very jealously as to whether they want to disclose
those matters or not.
Mr. Porter. Am I correct that while you can't get an audit
at a particular time because there are so many things that you
can't confirm the accuracy of over subsequent time, you could
ultimately confirm their prior accuracy?
Mr. Dickman. Right. But there would be a tremendous lag
time.
Mr. Porter. Yes. But ultimately you can confirm for an
earlier time frame that things were done accurately or not?
Mr. Dickman. Well, I think with the Social Security
Administration you can, because the Board and Social Security
Administration are cooperating with more online interchange
between them, between their systems, on a day-to-day basis.
But with the IRS, if a railroad is contesting some prior
tax deposits that they made, and this might be being contested
for two years, three years, four years, and all of a sudden, it
comes to fruition. The IRS says, we really owe you, with
interest, $15 million, $20 million. That's a problem. I mean,
that is always going to be there.
Mr. Porter. But isn't this a problem with the financial
statements of any corporation, that they have to footnote them
and say that there are some things open that we just can't
confirm at this time, because we don't know?
Mr. Dickman. Right. These three areas or these material
weaknesses, I don't think, you know, they're out there, they're
being addressed. I think outside of these the audits of the
financial statements are very clean.
Mr. Porter. Thank you.
Mr. Wicker.

medicare carrier contract

Mr. Wicker. Thank you, Mr. Chairman.
Mr. Bower, it's my understanding that the Railroad
Retirement Board has the authority to select and enter into
contracts with intermediaries to perform functions concerning
payment for services covered under part B of Medicare for
railroad retirement beneficiaries, and that this authority has
been delegated since 1966. Considering the changes in health
insurance and the Medicare system since that time, is it
necessary for the Railroad Retirement Board still to be
involved in these activities?
Mr. Bower. Absolutely not.
Mr. Wicker. Would you expand on that?
Mr. Bower. Starting with at least the Grace Commission, if
not before, and in a 1984, I believe, General Accounting Office
study, a 1990 or 1991 study by the HHS Inspector General, and
in 1993, by the Congressional Budget Office, all have
identified millions of dollars worth of potential savings, the
minimum of those estimates has been $6 million and it's been up
to $10 million. Those are dated figures, so it's probably
substantially more than that.
I don't believe, if there ever was a reason why the
Railroad Retirement Board should have administered Medicare
part B, and it's only part B, the time is long past. And the
most significant change that is magnifying the difference in
cost is the fact that when I started as Chairman, almost seven
years ago, most of the claims were processed by paper in both
systems. Now 80 percent of Medicare part B claims are
electronically processed, for all the regional carriers except
the Railroad Retirement Board, where about 80 percent are not
processed electronically.
And therein lies a tremendous difference in the cost
perclaim, millions of dollars worth of savings potentially.
Mr. Wicker. Okay. Well, let me give anyone else the
opportunity to challenge the potential savings or to give a
contrary view.
Mr. Lucci.
Mr. Lucci. As the Chairman said, the Labor Member of the
Board injured his back several days ago. He did come out here
in anticipation of testifying. Yesterday his condition
deteriorated, and at our advice, myself and the rest of the
staff, he went home.
With respect to this issue, the Medicare, which is very
important to the railroad community and to rail labor, as with
all the other subjects that have come up today, I would hope,
and I would request of the Chairman that we be given an
opportunity to provide comments for the record in the same time
frame as we answer any questions that are submitted for the
record.
Because I know he feels strongly about that, and there is a
case to be made. We feel that the national Medicare contract
handled the way it's handled now is critically important to the
service levels that we provide to our constituents, to the rail
community. We feel that can't be done as effectively if that is
broken up among all the regional carriers.
We feel that it gives the Board tremendous leverage to
intervene in problems and get problems solved. We feel the
technologies that Mr. Bower mentioned, can be incorporated into
a system that still features a national contract for railroad
retirees. It's an integral part of the overall railroad
retirement system. And if it's ever to be changed, it's going
to have to be done, I think, with the cooperation and the input
of both labor and management, and also retirees, because
they're the ones ultimately that pay for these systems.
Mr. Wicker. Mr. Bower, this decision in 1966 was made by
the Social Security Administration. Is it your view that
legislation would be needed to follow your point of view?
Mr. Bower. Well, it is my understanding, it might be done
more than one way, but the most permanent and cleanest way
would be that Section 1842(g) of the Social Security Act be
repealed.
Mr. Wicker. Okay. The bottom line cost is the per claim
reimbursement rate that HCFA pays to regional carriers to
process part B Medicare claims. It's my understanding that
United Health Care processes Medicare claims for both HCFA and
the Railroad Retirement Board. Last year, I understand that
HCFA and the Railroad Retirement Board reimbursed United Health
Care at different rates within my home State of Mississippi.
How does this make sense?
Mr. Bower. I don't think it does.
Mr. Wicker. How can this happen?
Mr. Bower. It illustrates the difference between the two
contracts. In the four States that United Health Care is the
regional carrier, including your home State, roughly 80 percent
of the claims by providers are submitted electronically, and
therefore the per unit cost difference, which I believe is 23
cents for the regional carrier, between our contract, which is
done about 80 percent by paper. And that illustrates probably
in the best way possible in terms of cost savings why a
separate contract for less than 2 percent of the eligible
Medicare population ought to be eliminated and merged into the
national contracts.

oig administrative costs

Mr. Wicker. I see. On page three of your testimony, you
make reference to more than $500,000 that the Board supplements
the budget of the Office of Inspector General, to pay for
various operating costs of that office. Why is this being done,
and is this a common practice for IGs across the Government?
Mr. Bower. It's being done because 10 or 11 years ago, when
the office was established, the Board then entered into a
memorandum of understanding with the Inspector General to
basically pay the rent, communications, postage, and a variety
of other services. That may or may not have been a wise
decision at the time.
But since then, a law has been passed which gives specific
ability of the Inspector General, those under the Inspector
General Act, to submit their own budgets. I believe that it is
unwise, should be eliminated, and the full cost of operating
the Office of Inspector General ought to come out of the budget
of the Office of Inspector General.
And to my understanding, it is not common practice
throughout other agencies.

statement from labor member

Mr. Wicker. Thank you. Chairman Porter, I assume there will
be no objection to Mr. Speakman being allowed to supplement the
answer of Mr. Lucci.
Mr. Porter. We will be happy to receive their statements in
the record.
Mr. Wicker. Thank you, Mr. Chairman.
Mr. Porter. Thank you, Mr. Wicker.
Mrs. Northup.
Mrs. Northup. Mr. Chairman, I'm going to pass at this time.

financial statement audits

Mr. Porter. All right.
Mr. Dickman, other than cost and staffing factors, are
there any substantive disadvantages to performing the audit in-
house as opposed to hiring an outside auditor?
Mr. Dickman. There will be some, as far as experience-wise,
although members of my audit staff have obviously followed the
various CPA firms that have been doing the audit. There will be
some little glitches, I assume, when they're doing it for the
first time, standing alone.
I think, obviously, that they can do the job and do the job
well. My main concern that an outside auditor should continue
to do it, was mainly based upon the cost of it, that it was
very cost-effective to out-source it. A public accounting firm
also gives the aura of a more independent, hands-off type of
judgment or view of the agency. Those are the main concerns.
[Additional information follows:]

The cost and resources are the major disadvantages.
However, the OIG performance of the financial statement audit
would be difficult, given our significant decreases in staff.
We have lost five staff members who were CPAs, many of whom
were trained for conducting the financial statement audit by
GAO. We estimate that 3 full-time OIG positions ($201,000)
would be required to perform the audit. Also, if only OIG staff
performed the audit, we would require the assistance of a firm
to review the actuarial assumptions at an estimated cost of
$10,000. The latest contract cost ($90,000) equates to
approximately 1.5 full-time equivalent positions.
Even though my staff has worked closely with the CPA firms
over the years, the private firms are more experienced and are
able to perform the financial statement reviews much more
efficiently. This also helps the agency because the CPA staff
require less of the agency's time.
Finally, as I stated previously, the opinion of an
independent CPA firm provides a broad based perspective and is
perceived as more independent.

automation initiative

Mr. Porter. Mr. Bower, the budget includes approximately a
million dollar increase for the administrative expenses of the
Board. That includes, however, a $2.9 million increase for a
technology initiative. Therefore, your budget is actually
decreasing by about $2 million except in the area of
technology.
As you know, we believe that judicious investment in
technology and training can result in the substantial gains in
productivity necessary to improve agency performance during a
period of personnel downsizing. We've made such investments in
the Social Security Administration, the Federal Mediation and
Conciliation Service, and others.
How would the $2.9 million be used, and could you submit a
plan indicating total funding for the initiative, a time line
for completion of the initiative, and the specific purposes and
acquisitions of the initiative?
Mr. Bower. Mr. Chairman, to answer the last part, first, we
absolutely can. In fact, before this was submitted as part of
the President's budget, we had to submit a plan that contained
most of that information.
And I know that the committee is reluctant normally to
earmark funds for specific things. This is a case where if you
choose to appropriate it, I certainly hope that you will,
either specifically in the appropriation or at least through
report language.
The areas are for integrated work flow automation, that is
$1.2 million. We plan to expand and upgrade our microcomputing
capability throughout the agency. Three hundred thousand
dollars for disk storage devices. We need to purchase direct
access storage equipment to replace aging and unreliable
equipment and support new systems. About $700,000 to purchase a
document imaging system, which is very important to getting
away from this paper-intensive environment that we're in.
About $650,000 to implement centralized, agency-wide local
area networks and LAN server operations. About $63,000 to
procure assorted system development tools to increase
productivity by programmer-analyst staff.
Is there a time frame by which you need our plan?
Mr. Porter. No, you can submit that just for the record
when you have it available.
Mr. Bower. All right.
Mr. Porter. Since you've done such a fine job, I don't want
to keep you here longer than is necessary. I have other
questions I want to submit for the record, for all of you to
comment on. And of course, we invite the Labor Member and the
Management Member to provide whatever material they would like
for the record on all these questions.
Mr. Porter. But here's the last question. What are your
thoughts on the future of the agency, the challenges that need
to be addressed, the problems that need to be solved, and the
recommendations for future initiatives? In other words, you
start with a vision and perhaps end with a vision. Can you give
us kind of a look to the future?
Mr. Bower. Mr. Chairman, I indicated on I believe page 46
or 47 of my unusually long statement, that I will be submitting
soon a list of suggestions that I think are important to the
future of the agency. I think we're on the right track in many
regards. I will be submitting those shortly. One of them is
that I think that we do need to get rid of the Medicare part B
program. Contrary to popular belief, the beneficiaries will be
better served and the Government will save a great deal of
money.
I would anticipate I will be submitting these ideas within
the next week. And I will be happy to discuss them with you and
your staff at the appropriate time.
[The information follows:]

[Pages 76 - 129--The official Committee record contains additional material here.]

Mr. Porter. Well, let me thank you, not only for your good
47 page statement, but your oral summary. Mr. Dickman, for your
statement, for all of your answers to our questions, and most
especially for the absolutely fine job you've done at the
agency and the great service that you've given to our country.
Thank you. Thank you all.
Mr. Bower. Thank you, Mr. Chairman.
Mr. Porter. The subcommittee will stand briefly in recess.
[The following questions were submitted to be answered for
the record:]

[Pages 131 - 352--The official Committee record contains additional material here.]

Wednesday, March 19, 1997.

UNITED STATES INSTITUTE OF PEACE

WITNESSES

RICHARD H. SOLOMON, PRESIDENT, USIP
HARRIET HENTGES, EXECUTIVE VICE PRESIDENT, USIP
CHARLES E. NELSON, VICE PRESIDENT, MANAGEMENT AND FINANCE

Mr. Porter. The subcommittee will come to order.
We are next very pleased to welcome the Peace Institute and
Dr. Richard H. Solomon, its President.
Dr. Solomon, would you introduce the people that you have
brought with you, your colleagues, and then proceed with your
statement.

Introduction of Witnesses

Mr. Solomon. Good morning, Mr. Chairman. On behalf of my
colleagues, on my right is Dr. Harriet Hentges, who is our
Executive Vice President. And on my left is Charles E. Nelson,
Esquire, a lawyer, not a doctor, who is our Vice President for
Management and Finance. And behind the three of us are some of
our troops, those who help us run the programs. And we're
delighted to be here this morning.

opening statement

Mr. Chairman, I won't repeat--it's not 46 pages--but an
eight page statement. Let me, however, hit the high points.
This is my fourth opportunity to testify before you on
behalf of the budget of the U.S. Institute of Peace. This year
we're seeking $11,160,000, the same amount we asked for last
year. It's a 3 percent reduction over our 1996 appropriation.
What we are hoping to do is maintain stability in our
programs at a time when frankly, there's a good deal of demand
for the training programs, the policy development activity, and
the other programs that we have developed and promote. But we
are very mindful of the Congressional objectives of deficit
reduction and efforts to balance the budget.
During the four years that I've testified, each year I've
come to you with a somewhat different focus or theme as to what
the Institute is up to and where we are in our development as
an independent organization funded by Congress. In the first
year, I stressed what had been accomplished in a process of
management review with some restructuring of the Institute's
operations in an attempt to maximize the programmatic impact of
the appropriation that Congress did provide us.
Subsequently, we looked at the way we were trying to
refocus the substantive work of the Institute in the post-Cold
War period, when the character of international conflict was
changing dramatically--and frankly--where a gap was emerging
between the way our Government had been operating during the
Cold War years and the changing requirements of functioning in
the post Cold War period.

Institute's increased relevance in today's world

This year I want to try to focus on the issue of relevance
of our programs in today's world, and especially our effort to
develop training programs which would help personnel of the
U.S. Government deal with the changing needs of conflict
management and peace making in today's world, and particularly
our effort to develop innovative new programs in fulfillment of
our charter, taking advantage of the value added that an
independent agency such as our own has the opportunity and the
possibility of providing.
In that context, let me mention a major international
conference that we will be convening at the beginning of April.
I believe all members of this committee received invitations to
it. We call it ``Virtual Diplomacy.'' ``Virtual diplomacy'' is
an assessment of how the global information revolution is
transforming international affairs and opening up new
possibilities for managing international conflict by peaceful
means.
I just might say as a footnote, I was intrigued to hear in
the previous presentation how electronics are being used to
make one government administrative operation more effective.
Virtual diplomacy tries to recognize, I think, that the
agencies of government have been less out in front in many ways
than the international business community in making use of the
internet, teleconferencing, international satellite
communications, and some very interesting and important ways to
promote democratization, and to manage or resolve international
conflict.
In support of this program, which we anticipate will
attract well over a thousand participants, we will be looking
at how these new technologies of communication could network
together--for example, U.S. military that are in charge of
peace keeping operations working together with the non-
governmental organizations who have to implement the
humanitarian assistance programs working with our military.
Also, in our training programs and in some of our policy and
technical development efforts, we are showing the way that
these new technologies can contribute to that effort.
At the conference, we will have a representative of Radio
B92 from Belgrade. A very dramatic story developed over the
last few months where, as you may remember, the Milosevic
government attempted to annul the results of elections in 14
cities that gave the opposition power. They were resisting
implementation of those election results, they cut off access
of the opposition to the use of their independent radio.
But then the internet provided a way for the opposition to
get their message out. It got out of the country to the
Netherlands where Radio Free Europe picked it up and
rebroadcast their messages back into the former Yugoslavia and
enabled the demonstrators to sustain their protests against the
Milosevic government's attempts to annul the elections. And
ultimately, they triumphed; they prevailed.
That's a very interesting example of where technology comes
together with political change and where the outcome was
clearly in the direction of support for our foreign policy
goals of wanting to encourage democratization.

bosnia: implementing the dayton accords

Another example of the relevance of our work concerns the
situation in Bosnia where we are promoting a number of programs
designed to implement the Dayton accords. Here we have a major
U.S. Government investment in peace in central Europe. I forget
what the total is, something on the order of $6 billion. The
tendency is to say, all right, once the military's in there and
has stabilized the situation, it's time to bring the troops
home. But this may put at risk the follow-through on that
substantial investment of money, if not of lives.
What the Institute is trying to do is work with the U.S.
Government in the follow-through, to make sure that, whether
it's the Bosnia Dayton Peace Accords, the peace settlement in
Cambodia, or other agreements of this sort, the process of
rebuilding civil society, promoting reconciliation (which in
the case of Bosnia means our taking some initiatives to get the
religious communities together) facilitating war crimes
accountability, or helping the various Government agencies in
Washington coordinate their efforts, then our value added, our
contribution to this process will be to make sure that the
follow-through, as I said at the outset, does sustain Uncle
Sam's investment in the peace settlement.

north korea: nuclear issues and beyond

Finally, just let me underline the Korea situation. Three
and a half years ago, when I began this work, it looked as if
we were headed back to a major military confrontation on the
Korean peninsula over the North Korean nuclear program. We
initiated a working group process that brought together the
best informed people who knew the Korean situation, and we
catalyzed or helped the government develop a political program
which over the following year-and-a-half succeeded in getting
the nuclear issue under control. The North Koreans have now
frozen their nuclear program. And the prospects of a military
confrontation for the moment have eased somewhat.
But the Korean situation remains very unstable. We were
ahead of the curve about a year-and-a-half ago in identifying
the impending food crisis. And with the prospect of mass
starvation came the issue of whether there would be major
refugee flows or some other development which could again
convert this very dangerous confrontation on the peninsula into
a war situation or at least one of significant deaths, if not
military violence.
Our working group really did refocus the way the U.S.
Government looked at this situation. And out of it came a new
series of approaches to dealing with the situation on the
peninsula, one of which, and--this is a matter of our current
focus--is dealing with some temporary strains in working
relations between the U.S. Government and its South Korean
ally, because of the difficulty of figuring out how to deal
with the crisis and the potential collapse of governing
authority in North Korea.
We see in Albania and Central Africa, how destabilizing
these failed state situations are. And in the case of the
Korean peninsula, we have 37,000 troops at risk there. And our
position in northeast Asia involving Japan, China, and Russia,
makes this particular area of the world especially sensitive.
So we continue to play a catalytic role in a very timely
fashion on the issues of the Korean Peninsula. We are now
looking at the prospect of initiating a so-called Track II or
semi official dialogue with the North Korean leadership on the
issue of promoting arms control on the peninsula, so that
finally, after five decades, we can begin to walk the North
Koreans to the issue of demilitarizing a great deal of their
economy and reducing the threat to American and allied forces
across the DMZ.
So these three issue areas that I've focused on are
innovation on the issue of the electronics information
revolution and how it affects the management of foreign
affairs, Bosnia and Korea are examples of, I believe, the
immediate relevance of our work.
Now, the key points I would just leave you with: Although
the U.S. Institute of Peace is a small organization, its
charter is exceptionally relevant to the challenges facing our
Government in foreign affairs. And our flexibility and
independence enable us to do things that the big policy
implementing bureaucracies of the Government just aren't
organized and able to do. We're able to think ahead of today's
crises. We're able to be innovative regarding policy and
methods of operation. And we do that in part by building
bridges between private sector resources and those involved in
Government operations.
One of the things we've discovered, whether it's working on
Bosnia or Korea, is that part of our effectiveness is getting
the bureaucrats out of their offices, where issues of protocol
and daily routine close them off from thinking ``out of the
box,'' as we might say, and get them meeting with well-informed
people in a situation where their thinking does get stretched
and where they may see new opportunities.
And finally, our impact, I think, is focused very much
today on training professionals--in our military and in the
State Department--on more effective ways of carrying out their
business.
As a final point, let me emphasize that we are planning for
the future of our operations in anticipation that over the next
five years, we hope to move into a permanent facility--an issue
related to your interests and concerns for more structured
management and planning and performance evaluation of all
Government-funded operation.
Thank you very much, Mr. Chairman.
[The prepared statement follows:]

[Pages 357 - 369--The official Committee record contains additional material here.]

cambodian issue

Mr. Porter. Dr. Solomon, I know you had a great deal to do
with the negotiated settlement in Cambodia. And I don't think
I've had an opportunity to tell you that I was pleased to be
able to lead a Congressional delegation that included Ms.
Pelosi, originally. She was unable to go because of her
responsibilities at the Ethics Committee. But I took a group of
Members of Congress to China and Hong Kong, but also stopped
for some time in Cambodia to see the situation on the ground
there, and to understand the challenges, the great challenges
faced by our Ambassador, Ken Quinn.
I say that as a prelude to looking at what the President
did, not for you but to you in his budget. And I realize that
this agency is a relatively young one, I think 1984 or 1985 was
about the date you began. You began with something around $1
million. And now you have made a great deal of progress, and
really have done an excellent job of moving the agency forward.
I think in a certain sense, you're grateful to even exist in
these tough budgetary times, and grateful for whatever support
the Administration and Congress might provide.

funding for foreign affairs and conflict resolution

But I believe, very frankly, and I've told the President
this directly, that we are shortchanging ourselves in the area
of foreign affairs and conflict resolution in a way that we
will look back on this time and say, how could we have missed
the boat so badly. I told the President if he would propose a
$4 billion increase in foreign assistance, I would support it,
and I'm a Republican, and I'm interested in balancing the
budget, obviously.
But I think we are just through the muscle into the bone of
our foreign assistance programs. This delegation went to China.
Here we have Jim Sasser in an embassy compound that hasn't
changed one whit since I was there in 1981. It looks like
Shabbytown, and we're supposedly the great superpower. Canada
has better facilities than we have. We've cut our diplomatic
corps, pushed out all our senior people and put in younger ones
to save money, without experience, not that they're not good.
I'm just appalled with what we've done to diplomacy,
foreign assistance and conflict resolution, very frankly. And
my difficulty, of course, will be that if the President
suggests this number, it's going to be very hard to go beyond
it in this area.
I would commend--let me go back to Cambodia for just a
second. Here's a country where the United States, first working
with the parties, with the U.N., through the U.N., we've made
such great progress in getting a warring situation, after years
of horrors within that country, into having elections. And
while the results are certainly still out, the next election is
going to be absolutely critical to determining whether they go
back to killing one another or living in peace.
We've got an ambassador there who's doing the best he can
with very limited resources. More resources would mean more
progress in that case, clearly. And here we are without the
kind of resources and support and help where we can really make
a difference between war and peace in a way that no one else
can. And not having, I believe, the resources that he needs.
And I'll give Ms. Pelosi a chance to answer this, but
Robert Samuelson, in today's Washington Post, had an article on
the CPI; it was on leadership. And he said something that I've
very reluctantly come to, because I've simply been disappointed
time after time. But I believe he's exactly right. This
President refuses to lead. All he does is read the polls, see
which way the public is going, if they don't support foreign
assistance, he isn't going to bring it up, he isn't going to
fight for it, he isn't going to provide that leadership.
And God knows, if you're a President who's been elected for
the last time in your career to the highest post in the world,
it's certainly a time to forget the polls and start providing
the kind of leadership that your country needs, not only in
balancing the budget and getting control over the entitlement
programs, which obviously impact what wecan do here on
discretionary spending, but also in providing the kind of leadership
that the world looks to, to the United States.
We are the beacon of hope for people everywhere. And if we
aren't there to help, if we aren't there to resolve the
conflicts, if we aren't there to provide the assistance on the
ground--look at Bosnia. We are going to pull out. What's going
to happen afterwards. Couldn't you do something more to prevent
warfare? Certainly you could. And you're doing everything you
can. But more resources would mean more progress.
And I just think that in some areas, it is just appalling
to me that we don't have the leadership that we need to advance
the causes and the principles this country stands for. There's
never been a greater opportunity in our history to do that.
Never. And here we are starving ourselves in the areas where we
could really do something about it.
And yes, we have problems in the Congress with people that
think all we ought to do is build a wall around America and
live apart from the rest of the world. But in my mind, that can
only be overcome, it can only be overcome by Presidential
leadership, and by God, we aren't getting it.
I can't tell you how disappointed I am in this President
and what we have not done, when the promise and the opportunity
is so great.
Now, I'm going to yield to the gentlelady from California,
who may want to answer all that. I'm yielding to her not only
to answer that, but because she's the ranking member next door
on the Foreign Operations Subcommittee that has jurisdiction
over all of this. And I know she wants to get back there and
try to straighten things out there.
Ms. Pelosi. First of all, thank you very much, Mr.
Chairman, for yielding, and I join you in welcoming Dr.
Solomon, Mr. Nelson and Ms. Hentges. I read your very
impressive resume, and appreciate your pronouncing your name
for me.
A couple of things. Let me talk about where we agree. First
of all, I think you're absolutely right, it was music to my
ears that you would support a $4 billion increase in foreign
assistance, because it is indeed, I think, in our national
interests to live up to our goals to promote democracy, to give
humanitarian assistance in its own right, but also the fact is,
it's a good investment economically because it would produce
markets for our products, non-proliferation, the list goes on
and on.
I disagree with the gentleman's characterization of the
President's leadership. However, I have to say that our
Chairman, he's earned the right to be critical, because he is a
person who has stood up for these issues regardless of party.
For a long time he has been a leader in the Congress on these
issues, human rights, promoting democracy, and the rest. And of
course, this big chunk of the domestic agenda that he has here.
I also want to say the Chairman earns the right, because he
doesn't support increased defense spending, cut taxes and a
firewall. I don't mean to characterize your economic position,
but I know that you are not among those in your party who say
that we can't have access to, put everything on the table and
let's make a decision about what our priorities are without
fencing some things off.
So as I say, you've earned the right. Everybody has the
right in our great country, but you have the credibility to
make the statement that you did.
I do think that the President is providing leadership, but
it's always in this era of a balanced budget amendment, and
I've certainly had my disagreements with the President. But in
the State of the Union address, I was very pleased that he did
address conflict resolution. Essentially he said that any
dollar we spend on avoiding conflict is of course a good
investment.
If I may, though, state of course I disagree with the
characterization of the President's leadership. But we are in
difficult times. And as I say, in this era of balancing the
budget, the difficult choices call for a special kind of
leadership.
I was intrigued by your diplomacy in cyberspace conference.
Because I was reminded of the book, Undaunted Courage, which
perhaps you've read. In there, it reminds us that when Thomas
Jefferson was President, communication and transportation were
the same. I mean, you could communicate as quickly as the
message could get there by horse or by sailboat. And that was
it. So they were exactly the same.
By the time Abraham Lincoln was President, everything has
changed. There was the steamboat, telegraph, all that had
changed in that 50, 60 years. Now imagine what that meant for
diplomacy, because it was quite different than an ambassador
being some place and taking three weeks to get a message back
and then three weeks to get a message. And now what it means to
diplomacy. So I think it's a very appropriate pursuit, and I
wish you much success with it. I look forward to hearing more
about it.
Mr. Solomon. Thank you.
Ms. Pelosi. I had a couple of comments to make, you know,
on our committee, we have very little money. It's very
difficult in the Foreign Operations Committee. So when we see
an appropriation for $11 million in this committee for the
Institute of Peace, and we see all the competing items for
funding in the Foreign Operations bill, then obviously your
justification is an important one to read. And I, too, think
that you bring a great deal to your role, certainly your
knowledge and experience.
I do have a concern, because I think an institute for peace
is very important. And we've had this discussion in the past.
And I know the Institute prides itself in developing new
approaches and serving as a bridge between the world of
analysis, as you say, and that of policy practitioners.

balance in institute programs--human rights

I'd like to know what policies you have in place to ensure
a balance of use, and the experts on staff, as well as those
with whom you contact. Because if I had one question about what
you do, it is that I don't see the position that I have on
human rights, for example, and I know that hundreds of my
colleagues in the Congress share, appropriately represented in
your impressive list of resources in your book.
And I think that misses the point. I don't think you should
have a tilt, and not only that, I think that even if you ended
up with that conclusion, it would be much more legitimate if
there was more of a perception of balance in the input.
Mr. Solomon. May I respond?
Ms. Pelosi. Would you like to respond? Please.
Mr. Solomon. You've hit on an area that is very much a
matter of concern, and I'm delighted that Dr. David Little, who
is on our staff and leads a special Institute initiative on
issues of religion, ethics and human rights, is precisely
promoting an evaluation of how to more effectively implement
the human rights dimension of our foreign policy.
Several years ago, we ran a study group that looked at
Tibet--how could one encourage the Chinese leadership to
improve the situation in Tibet. We have convened an initial
working group with the human rights NGOs, trying to get them to
tell us what seems to work best in not just setting policy but
in fact applying it: Do sanctions work best; do various
enticements; do various other approaches to making human rights
an effective element of our foreign policy and not just a
matter of polarization?
And that is a project that over the next year or year-and-
a-half, we will wrap up with the objective of providing the
Government with a considered evaluation of what can be done to
make this element in our foreign policy work well.
You mentioned balance. First of all, our board of
directors, which is nominated by the White House and confirmed
by the Senate, are politically balanced. And it is my
obligation as the CEO of this organization to make sure that
there is represented a range of opinion and skills, in people
with the kind of background to in fact professionally give the
best objective advice on issues related to the problems that
are embodied in our charter.
Another staff member here, Neil Kritz, is a lawyer. He is
world recognized now as a leader on the issue of transitional
justice--how do you bring to account those who are responsible
for the war crimes in Bosnia, the genocidal violence in Rwanda
or in Cambodia? Last year, I tabled three big volumes that Mr.
Kritz had put together, evaluating the best experience of other
governments in dealing with this ongoing problem.
Those books had an introduction by Nelson Mandela, because
Kritz had worked directly with Mandela in dealing with the
issue of how do you deal with the bad guys in South Africa. He
is now working with the Rwandan government, and part of our
project in Bosnia deals with this fundamental human rights
issue.
Ms. Pelosi. Very important. I think that Nelson Mandela was
an example to world. But how do you do enough, exercise enough
justice so that there is some justice, but without being so
vindictive that you perpetuate the problem.
Mr. Solomon. You rip the country apart. Right.
Ms. Pelosi. And on the other hand, if you don't do enough,
then you still leave all of the anger still out there. So I
think it's a very important project. But I also think the rule
of law, respect of human rights and the rest of that is so
critical to other kinds of transitions as well.
I hope that more effective doesn't necessarily mean no
sanctions. Because I don't even think the sanctions, I think
the sanctions are useful as a lever. But they have to be
credible. But that's not our discussion here.

role of the private sector

I was concerned, because you used the term, from the
private sector. And I didn't know whether that meant business
sector, you said that you think ahead, that you're innovative
and you're able to create the bridge between the private sector
and government and those in government operations. What do you
mean by that?
Mr. Solomon. I think I was referring specifically to the
incorporation of electronic communication technologies into
daily operations. And I think the record's very clear that
private business, faced with the day to day, bottom line,
profit or loss situation, has incorporated the technologies
much more rapidly.
Walt Wriston of CitiBank wrote a book about this in the
mid-1980s. Because satellite communications had totally
transformed international banking, international financial
institutions in our country in the private sector had to keep
up. Our governmental operations have been much slower. We're a
decade or more behind. And the ``virtual diplomacy'' conference
is designed to get those issues out in technicolor, out in
public so that hopefully we can wire up Uncle Sam.
Ms. Pelosi. Don't get me wrong. I don't think the term
private sector has a negative connotation. But I am concerned
that a number of questions were raised by the public about the
impact of the revolving door from Government to business and
back again, and the ability to have a balanced foreign policy
does not favor somebody's last employer or prospective
employer.
What steps is the Institute taking to deal with this? Are
staff members allowed to have outside clients, to serve on
corporate boards? Is there any disclosure of business
interests, or consultancies required?
Mr. Solomon. The short answer is, our staff are not allowed
to earn income outside of their employment with the Institute
of Peace, with minimal exceptions, which have to be approved by
the board, and those exceptions generally are teaching. So when
Dr. Little teaches, he receives some compensation for teaching
on the weekends or at night. But the short answer is, our staff
does not have outside income.
Ms. Pelosi. Do they serve on corporate boards?
Mr. Solomon. No, we do not.
Ms. Pelosi. And any disclosure of business interests or
consultancies, whether they're allowed to do that?
Mr. Solomon. Well, they would be disclosed if they were
there, but they're not there.
Ms. Pelosi. Thank you very much, Mr. Solomon. Again, it's
always a pleasure to see you. We'll be going at this, I'm sure,
for a while. But I think what you do is important. I just would
hope that many more of us could be more enthusiastic about it
in terms of seeing a more balanced point of view that is
legitimate, that has support in the Congress and that the
credentials of those people who support this view would be
respected by the Institute. Because I heard what you said about
experience.
Mr. Solomon. If you have any questions about issues of
balance or feel that there are activities or perspectives that
are not represented that we should be looking at, please, let's
have a discussion.
Ms. Pelosi. Well, you have been most open about that, and I
appreciate that. Thank you very much.
Thank you, Mr. Chairman.
Mr. Porter. Thank you, Ms. Pelosi.
I'm going to take a second to reply. [Laughter.]

budget priorities

Mr. Porter. I'll be brief. The President did talk about
conflict resolution in his State of the Union address, and then
he cut the budget. He talked in his State of the Union address
about the importance of biomedical research, and then he cut
the budget. The difficulty is, he talks beautifully about
national priorities, but they never come through inpractice.
And Ms. Pelosi said, well, he's got to be concerned with balancing the
budget. Well, that would be wonderful if that's what he was doing.
But we know, everyone knows, that we must restrain the rate
of increase in the major entitlement programs. It has to be
done, and yet there wasn't a word, not a word in the State of
the Union address saying that this was a national priority,
we've got to get control over this or we will be cutting
everything from biomedical research to conflict resolution to
defense and everything else that is discretionary spending. Not
a word about it and not a word since.
He got an opportunity, because Trent Lott opened the door,
to do something about the CPI, which economists, not
universally but almost universally, have said overstates
inflation. That means that it's pushing more inflation into our
economy. People are getting a greater adjustment than they
deserve. And taxes are being cut, in effect, because exemptions
are tied to the CPI as well. The door was opened, Trent Lott
said, let's appoint a panel, the President wouldn't even do
that.
If you look at the President's budget, it has none of the
courage that is needed for leading this country. Ninety-eight
percent of the savings in the budget come in the time after he
leaves office, and very frankly, the budget is simply a
political document that plays to the same lobbies that have
always been played to, because they have the biggest number of
votes. And we've got to get beyond that. We've got to have some
leadership here.
So I am disappointed in the President. And I've been making
excuses for him, like the gentlelady from California made a
minute ago. I've given up on it. I don't think there's any
leadership there, and I think we've got to figure a way around
him, unfortunately. Now I'll yield.
Ms. Pelosi. I'm only going to take a minute, because I
really have to get in the other room. I would like to return to
our common ground. I do think the President has a
responsibility to take the message to the American people to
build support for increased funding to implement our
international leadership. And that is a responsibility that,
unless we have it, we're not going to get the legitimacy from
the American people on the issue.
Secondly, on that point, our Chairman over here is stuck on
$12 billion, if you could help us with Mr. Callahan, whom I
respect enormously, but who won't go beyond $12 billion on
foreign policy.
As far as the CPI is concerned, I think we have to do two
things. We have to find out what it really is. Let's document
that. Let's call to find out what the rate of inflation is. But
when we asked our senior citizens and the rest to take a hit on
it, so we can balance the budget, we have to do that within the
context of sharing the burden. Let's look at this, let's put it
all on the table, and then I think people will be receptive to
it.
But if we say, but for you and that extra 10 bucks each
month, we would have a balanced budget, I think that we're not
creating an atmosphere in which it would be received, if it is
indeed justified. And I'm going to have to let you have the
last word without me in the room.
Mr. Porter. I thank the gentlelady. I would say that, I
will certainly do everything I can to put everything on the
table, as I've always tried to do. Secondly, I would commend to
everyone Richard Samuelson's op-ed piece today that I think
really hits the nail right on the head on that particular
issue.
Now back to the Peace Institute. [Laughter.]
Mr. Porter. I'm sorry, but sometimes----
Mr. Solomon. Speaking of conflict resolution----
[Laughter.]
Mr. Porter. Well, the difficulty is that there is a lot of
support in the Congress that is latent for addressing issues
that everyone realizes has to be addressed, but will never
come, the leadership will not come from this institution. It
has to come from the White House. The President is the only one
that can pull the Nation together and aim us in the direction.
Well, I think I've probably said a lot more than I should
or intend. But I've just been very, very frustrated that we
aren't addressing the needs of this country and particularly
the needs of this country regarding the rest of the world. And
we've been slashing at the time when we really ought to be
reaching out. And that to me is disappointing.

long term vision for the institute

Dr. Solomon, you know that my long-term vision for the
Peace Institute is a counterpart to the War College, an
institution that offers certificates or degrees in conflict
resolution, so that we begin to develop a professional class of
individuals, not just State Department personnel, who have the
professional skills to contribute to conflict resolution all
over the world.
Are you beginning to move in that direction, and can you
give us an idea of the time and cost associated with getting to
the first step, which might be a certificate program?

more on long term vision

Mr. Solomon. Your question is very timely, Mr. Chairman,
because as you know, thanks in part to the Congress, we now
have the ability to plan a permanent facility. And we are in a
sense on two tracks--on the intellectual, substantive,
programmatic track, we are institutionalizing our work; and of
course, the building will in a physical sense institutionalize
us.
Why is this appropriate? It's because I think the human
capacity for conflict and violence, for repression--as well as
for all the good things that the human race can do--all the
negative side unfortunately will endure.
We are at a time where, with the Cold War over--the end of
a period where we really worried about and focused on deterring
the nuclear holocaust and containing the threat of
totalitarianism--we are now in a period where the ability to
more constructively deal with conflict resolution, where around
the world you have ongoing violence, but at lower levels of
conflict that are less directly threatening to our survival, we
have a capacity in some ways to give, if you like, technical
assistance.
We're very lucky in this country. We have over 200 years of
developed institutions. We don't do away with conflict, because
that's part of human nature, but these institutions keep it
under control. And what we are trying to do now is to codify,
through serious professional research, that experience and to
incorporate it into training programs.
And you're aware, over the last three years, we've
developed our ``international conflicts skills resolution
training program,'' known as ICREST. We've now worked over 15
times with various government agencies and foreign governments,
to train in issues of conflict management and resolution. We
use part of our grant money to get people in the academic
community or the NGO world to tell us what are the most
effective practices, and develop curricular material for
training in conflict resolution.
We have looked at the issue of granting a certificate in
that activity. And we have concluded that we're still in a
period of maturation of this field of activity, which really is
only three, four or five years old--that is, since the end of
the Cold War. So we are moving in that direction.
I am well aware of the history of the movement for a
national peace academy, and your own interest in a more
elaborated degree-granting program. In part, of course, the
current budgetary environment is not conducive to viewing that
as a short run objective.
But our notion of how we would fulfill our vision, our
charter over the longer term is to focus at this point on
practitioner training, that is, to develop the materials, the
intellectual background and the training procedures to make our
diplomats, U.N. officials and others more effective in the
field in dealing with the humanitarian and other crises that
are so much a part of our daily world.
Secondly, we are developing educational programs that run
from secondary school--in our annual peace essay contest--
through graduate programs, which try to attract younger people
into this field, and to give them the intellectual resources to
think in new and creative ways about international conflict and
its management.
And finally, we are working with the Government to develop
practical policies which will deal with conflict--I mentioned
Korea, we talked about Bosnia, without having to send in
troops. That is, by having a cadre of more highly trained
Government and NGO professionals who can work in this area and
do the preventive interventions that will save lives and save
cost.
Over time, and I really couldn't give you at this point a
time frame, it would be, I think, very attractive to move
towards a more elaborated degree granting program. At this
stage of the game, I would say the intellectual field and the
training is not elaborated to the point where it would be a
four year program. We would end up, I think, grafting ourselves
onto an international affairs training program. And one of the
things that we can envisage is collaborating with the
universities in this city in developing training programs.
Moreover, if we build the kind of permanent facility we
have in mind, we will have teleconferencing capacity, so we can
run seminars and training programs from our home base with
university X and with foreign affairs institute Y in another
country. So that's one reason we want to build an
electronically ``smart'' telecommunications facility, to give
us this kind of outreach. Beginning with our focus on
professional training, I think over time this field will
elaborate to be something more in the way of a degree granting
program. But that's, it seems to me, a mid-to-long term vision.
Mr. Porter. Thank you, Dr. Solomon. I have some short
answer questions, practical questions, that I would ask you to
answer.

other federal funding

Do you receive Federal funding other than the appropriation
from this subcommittee and the Senate?
Mr. Solomon. No, we do not. We have done some collaborative
programs. Harriet Hentges may want to comment on that.
Mr. Porter. Do you have contracts?
Mr. Solomon. We do not have contracts.
Mr. Porter. No contracts, okay.
Ms. Hentges. We contract out.
Mr. Solomon. We contract out for services.
Mr. Porter. Yes, but I'm talking about revenue coming in.
Mr. Solomon. Right. None.
Mr. Porter. None, okay.

annual funding levels

The budget request is basically a level appropriation for
fiscal year 1998 in nominal terms. However, the total revenue
is expected to decline, because non-appropriated revenue will
decline dramatically from about $1.5 million in fiscal year
1997 to $560,000 in fiscal year 1998, for a total operating
budget of $11.72 million. Why are non-appropriated revenues
declining so dramatically, and what impact will this have on
the Institute?
Mr. Solomon. What you're seeing is an artifact of the way
our budget is constructed. It relates to the carry-forward of
so-called ``no year'' money and to certain very modest sources
of income from things like book sales. But Mr. Nelson I think
should comment on that briefly.
Mr. Nelson. The simple answer, Mr. Chairman, is that the
total figure for fiscal year 1997 includes a carry-forward from
1996. The figure for 1998 assumes that there will be no carry-
forward, and includes none.
If you look at the miscellaneous revenues, which are
basically book sales and interest in investment, that is, that
sum increased from 1996 to 1997, and we projected basically a
level amount of receipts for 1997 and 1998.
Mr. Porter. Let me see if I understand this correctly. If
we appropriate what the President has suggested in his budget,
how much actual money will you have to work with in the next
fiscal year?
Mr. Nelson. In 1998?
Mr. Porter. Yes.
Mr. Nelson. Well, it would be 11,160 plus the 560, there
may be----
Mr. Porter. So that $11.72 million is exactly correct,
then?
Mr. Nelson. Whatever is on that table.
Ms. Hentges. Yes, the $11.72 million would be correct.
Mr. Porter. And then there will be no further carry-
forward, is that correct?
Mr. Nelson. We project no carry-forward, because we think
that's the best way to run the program.
Mr. Porter. I see. You may have a carry-forward.
Mr. Nelson. There generally is some carry-forward, partly
because we make commitments and reservations for activities
that don't mature during the fiscal year. The carry-forward,
for example, from 1996 to 1997 included roughly a quarter of a
million of grants that had been approved in the prior year but
don't get signed until the following year; it includes
activities that we commit to as a programmatic matter.
In this area we've been discussing, we had set aside funds
for a facilitation in Kashmir, and the situation just hasn't
materialized in a way that makes that sensible. We're still
holding that and also, a significant trip to North Korea, for
which we were putting funds aside. And as President Solomon
mentioned, we are considering at this moment when that might
take place. But this consideration started last year.
Mr. Porter. If $11.72 million is the figure for fiscal year
1998, what would be the comparable figure for fiscal year 1997,
12 something?
Mr. Nelson. It's $12.684 million. The $12.684 million
includes 979 of carry-forward. Of that amount, about 850 is a
carry-forward from fiscal year 1996, of which 750 had been set
aside, reserved for activities of the kind I just listed.
Another 125, which doesn't even become clear until the end of
the fiscal year, is deobligations from prior fiscal years,
which you've been holding on the books until an activity
completed.

federal mediation and conciliation services

Mr. Porter. All right. Dr. Solomon, we have another agency,
the Federal Mediation and Conciliation Service, in our bill.
They perform similar conflict resolution activity domestically.
Traditionally, the Federal Mediation and Conciliation Service
has provided mediation and arbitration of labor management
disputes. However, it's beginning to branch out into preventive
mediation in non-labor management conflict resolution
domestically.
It also happens to be, in our estimation, one of the best
managed agencies in the bill. Have you had any interaction with
that agency to see how you can learn from each other, or
reinforce each others' activities in missions, and do you think
there might be something to learn from each other?
Mr. Solomon. I'll ask Harriet Hentges to respond, she has
looked into that.
Ms. Hentges. We are in the process of beginning some of
those discussions. We have a new director of education and
training, Dr. Pete Schoettle. And he came in January, and has
been talking to a number of other Government agencies, and
specifically has made arrangements to meet with people at the
FMCS.
We are aware of their training programs, and I think we
share a mission. We share a program of trying to improve the
capability of personnel. I think we perhaps can learn a lot
through this.

use of additional funding

Mr. Porter. Dr. Solomon, what was the Peace Institute's
initial budget request to OMB?
Mr. Solomon. It was $11.495 million.
Mr. Porter. And if you had additional funding, what would
you do with it?
Mr. Solomon. We would probably put it into two immediate
operational areas. One, we would do more of the professional
training in conflict management and resolution skills. And
also, there is such a demand for the kind of work that Mr.
Kritz has been doing in the area of war crimes accountability
and transitional justice issues that again, we would try to
increase our programmatic work in that area.
Mr. Porter. All right. I have a number of different
questions for the record that I would like you to answer, if
you would, please.
And I'd just like to say that I think what you're doing is
extremely important to our country, to the world, and that we
want to try to provide you with the resources you need to do
your work. I think it's impossible right now to tell what the
direction will be, and what kind of budget allocation the
subcommittee will have.
But I think if all of us would push on everyone, not just
the President, I'm singling out the President, he's simply the
leader. There's a lot of problems in getting sides together so
that we can come to grips with some of the major issues that
impinge upon the resources we have for discretionary spending.
And if we don't all press on that process, then we don't
get the media in this country involved in it and make certain
that both sides come together and make some decent decisions
for the country that will allow us to have resources, we are
going to be in trouble. And that means important priorities are
also going to be in trouble. And obviously, I don't want to see
that happen.
So thank you for the fine job you're doing at the Peace
Institute and for our country. And again, we want to try to
provide the resources that you need to do your job even better.
Thank you very much.
Mr. Solomon. Thank you, Mr. Chairman. Let me just say, on
behalf of my colleagues, we really value your encouragement and
your oversight of our work. We will do our best to make calls
with the other committee members. We've been trying over the
last several years; they're very busy people. And we understand
the importance of making our candle more visible. We don't want
to hide it under a bushel, and we will do our best in that
regard.
Mr. Porter. Thank you, Dr. Solomon. Thank you all.
The subcommittee will stand in recess until 2:00 p.m. this
afternoon.
[The following questions were submitted to be answered for
the record:]

[Pages 383 - 538--The official Committee record contains additional material here.]

Wednesday, March 19, 1997.

CORPORATION FOR PUBLIC BROADCASTING

WITNESS

RICHARD W. CARLSON, PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mr. Miller [assuming chair]. Mr. Carlson, welcome again.
Mr. Carlson. Thank you, sir.
Mr. Miller. This is your final visit to us as chairman of
the Corporation for Public Broadcasting, so we appreciate your
coming to discuss this fiscal year 1998 budget. Your successor
will then have to live with it.
Mr. Carlson. Hopefully that will be easy rather than more
difficult.
Mr. Miller. Well, the way you've got it proposed, it's
going to make it much easier for him to live with it than last
year's.
As I think you know, Mr. Porter has not arrived quite yet.
We'll go ahead and get started. But there is going to be a
series of votes, unfortunately, that could really complicate
our afternoon because it's a series of amendments and you've
got 10 minutes of debates on amendment, 15-minute vote, 10
minutes to debate, 15-minute vote. And if that happens, if they
don't roll the votes, it could complicate the next hour or so.
But let's go ahead and begin. We expect other Members to be
joining us in time.
Mr. Carlson?
Mr. Carlson. Thank you very much, Mr. Miller.
As you mentioned, today marks my final appearance before
this subcommittee. This will be the fifth time that I have made
such an appearance on behalf of the Federal investment in
public broadcasting. I must say that, over the past five years,
my appreciation of public broadcasting's task--that is the
trust that's placed in public broadcasters and in The
Corporation for Public Broadcasting; and the high standard to
which we have been held by both the Congress and the American
public--has increased with every ensuing year that I have been
involved.
The same goes for my gratitude to this committee and to its
chairman, Mr. Porter, and, of course, to you, Mr. Miller, for
your very careful and responsible consideration of our annual
appropriation request.
Mr. Miller, I'd like to speak out--and I'll only talk for
about two or three minutes. I have submitted a much more
lengthy--or more tedious, depending on how you describe it--
written statement for the record. This will be much reduced.
I am speaking in support of our request for $325 million
for public broadcasting, and that is for fiscal year 2000.
Since that number would inhibit the recent downward trend in
our appropriations, I would like to address that point directly
and right off the top.
The $325 million represents a sizeable increase over our
current funding, but please allow me to put that in context.
What we are asking is the equivalent of only 2.7 percent
more than the level of funding that public broadcasting
received back in 1990, and that is adjusted for inflation. That
is an increase of less than 3 percent in public broadcasting's
buying power from a decade previously.
Also, Mr. Miller, I'd like to point out that $325 million
is approximately $40 million below where we would have been at
this juncture had public broadcasting's upward funding curve
continued intact without the rescissions we experienced in
1995.
Mr. Chairman, hello.
Mr. Porter [assuming chair]. Mr. Ambassador, how are you?
Mr. Carlson. Yes, sir. Very well, thank you. I had just a
moment ago begun at Mr. Miller's request my statement, which is
reasonably brief. I have submitted a much longer and more-
detailed statement. The statement I have here is probably three
minutes in length. I've probably talked for about 45 seconds.
If you would----
Mr. Porter. Please proceed. Of course.
Mr. Carlson. Since I appeared before you a year ago, Mr.
Chairman, the Corporation has taken a lead in encouraging new
efficiencies in the system. You and I have discussed those
efficiencies, as well as a new search for non-Federal sources
of revenue. We've placed a moratorium, for instance, on grants
to new stations. We have been addressing the issue of
overlapping markets. It has been a problem in different areas
of the United States. We have been looking into that in an
aggressive way.
Personally, I'm a strong proponent of those improvements,
as are many members of this committee. Public broadcasting's
essence, of course, is to be noncommercial. At the same time,
we have got to see to it that we are lean and fit enough to
survive in a new world of deregulation, of competition, and of
considerable technological change. At the same time, it is
crucial that public broadcasting remain able to carry out its
mission.
Historically that mission has meant two things to the
Congress and to the American public. The first is universal
service. The second is education.
The fact is, Mr. Chairman, we really would not be public
broadcasting at all if our signal is not available to virtually
all Americans, as it is now. It is small and rural stations
which will be the first to feel the pressure of more drastic
budget cuts.
Likewise, public broadcasting means education. An increase
in buying power of less than 3 percent over a decade, which is
what this appropriation request is, seems to me to be prudent
and reasonable.
The efficiencies I mentioned just a moment ago, which are,
without question, a healthy development in this system,will
help, over time, I think, to recoup some of the decline in Federal
support that we have experienced. That decline has been substantial
through the rescissions. We have lost about $100 million.
We can't simply erase that, but with forward funding we are
already committed to two more years--fiscal year 1998 and
fiscal year 1999--of sharply-restricted funding from the
Congress.
Finally, Mr. Chairman, I've notified the CPB board, as you
are aware, that I intend to resign my position as CEO of the
Corporation by June 30th of this year. When I was recruited for
this job from the paradisiacal archipelago of the Seychelles,
1,000 miles off the coast of Africa, in the Southwest Indian
Ocean in the spring of 1992, I said I'd stay for three years.
That has now extended to five years.
It has been an extremely interesting, a satisfying, and
gratifying experience. You and your colleagues on this
committee have had a great deal to do with that.
It has been a genuine privilege for me to work with this
subcommittee and with your committee, and to appear so many
times before you. I want to thank you all for your support.
You, Mr. Chairman, have been particularly helpful. You've been
a strong supporter of public broadcasting and, at the same
time, you have been a very constructive critic. I am grateful
for that.
For one thing, you have always acknowledged the intrinsic
value of public broadcasting publicly, while you've been very
tough about seeing that we do it in the most efficient and the
most economical way and that the taxpayers derive every bit of
value that they deserve for the investment that they've made. I
thank you for that, Mr. Porter, and I'd be happy to respond to
questions.
Mr. Porter. Well, Mr. Ambassador, as you know, I am very
sorry that you're leaving CPB. I think you've done an
absolutely wonderful job there in perhaps the toughest
circumstances that the Corporation has been through in its
history, and I think you've attempted to make the kinds of
changes that strengthen public broadcasting and make it even
more credible with the American people. They've been tough
decisions to have to make, but have been necessary ones. I
value very highly our working relationship and wish you well in
anything you undertake in the future. I think you've done an
absolutely marvelous job there.
Mr. Carlson. Thank you, Mr. Porter. That's very kind.
Thanks.

changes over five years

Mr. Porter. Let me open then by asking you--maybe this is
asking you to expand on your statement, but why don't you look
back over your tenure of five years and tell us where we were
and where we've gotten to today and what you see over the next
several years regarding public broadcasting that will make it
even stronger.
Mr. Carlson. I'd be glad to do that, sir.
Our buying power has reduced considerably, as I mentioned,
over the past five years.
On the negative side, I have to say that we have been
singled out for rescission in three years. In the 1995
rescission bill, we were the only one rescinded for two years.
I'm offering this up to you in defense of my request for $325
million. We were the only one rescinded for two years in one
bill. I don't know of any other program whose funds were
rescinded in 1995, 1996, and 1997, as we were followed by
another real cut in 1998, and then followed by a freeze in
1999.
I offer that to you because of the appearance of a rather
large single jump in the request that we're making for the year
2000. It is a large one, in a way, but it's important to look
to the history of the funding of all of this for context.
We're asking to be compared to where we were 10 years ago.
I don't think that request is inordinate.
We have made a concerted effort, by restructuring grant
programs, to address the problem of overlapping stations. We
are now about to phase in a one-grant-per-market base grant
program that will, in effect, simply give money to one station
within an overlap market and take the funds that were
previously spent and use them for other purposes with other
parts of public broadcasting.
We created, for instance, a Future Fund. You're aware of
this. We put $11 million into the television and radio future
fund, and the goal of that was to provide seed capital for
stations to use for projects that can reduce their cost; that
can do things to increase their fund-raising effectiveness.
We're using that money to fund proposals that will explore
how stations can make their operations more efficient. How they
can streamline themselves. How they can work collaboratively
with other television stations and radio stations, and stop
being duplicative.
We also are in the process of funding entrepreneurial
initiatives that we think will go towards generating new
sources of non-Federal income, something that we think is
pretty important.

one base grant per market

Mr. Porter. The first question I would have is: is the one
grant per market going to obtain after you leave, or is
somebody likely to reverse it and go back to the old ten grants
per market?
Mr. Carlson. No. One grant per market is not leaving with
me. We're going to phase out, over three years, the practice
that we have engaged in for many years of providing these
individual base grants to television stations. These stations
have signals which, in some considerable measure, depending on
where they are and what they are, serve the same populations.
This policy does not in any way affect the incentive that
stations receive for raising outside revenues. The money that's
freed up by the one market base grant idea will continue to be
distributed to television stations.
It's a three-year phase-out. We're working with thestations
to make it as smooth as possible. Ultimately we are hoping for some
sort of support language in legislation which will go further even in
encouraging, in a reasonably disciplined way, stations to assist each
other in this cooperative effort.
It's not always easy. The stations are all local. They're
all locally controlled by individual boards of directors or
trustees. The human condition is such they tend to not want to
give up their own turf.
Mr. Porter. Let me see if I understand this correctly: one
grant per market?
Mr. Carlson. Yes.
Mr. Porter. To be divided----
Mr. Carlson. One base grant per market.
Mr. Porter. To be divided how among the--if there's more
than one station?
Mr. Carlson. What we're doing is we're encouraging these
stations to work out the specifics of that themselves.
Ultimately we'll make a judgment and give one base grant to one
station in a market area.
Mr. Porter. So you would ultimately have, under this
phased-in plan, one outlet per market?
Mr. Carlson. No. Not necessarily.
Mr. Porter. No?
Mr. Carlson. The stations, of course, are not wholly-
dependent on these base grants.
Mr. Porter. Not necessarily, but you'd have only one
station supported with a grant?
Mr. Carlson. That's correct, yes, with a base grant.

policies to encourage efficiencies and new revenue

Mr. Porter. And that would encourage merging and the like
to determine the final station to be given the grant?
Mr. Carlson. That's correct.
Mr. Porter. And you've also said that you're engaging in a
great deal more on the entrepreneurial side, or making money
off of your resources and assets?
Mr. Carlson. Yes. Off of the CPB's resources and assets,
themselves?
Mr. Porter. Yes.
Mr. Carlson. Yes. The CPB board has paid very close
attention to its investment policy. It's conservative, but they
are seeing that these funds which we derive some considerable
income from, are very carefully and intelligently invested.
Mr. Porter. And you're encouraging the member stations to
engage in entrepreneurial activities to raise their other
revenues so they're not so dependent on the grants?
Mr. Carlson. We are, indeed. In fact, we make available to
stations a task force that goes and sits with a station and
works on business development for the station, itself.
Mr. Porter. And what about the larger market stations that
are very, very well-established, such as Washington and Chicago
and others who are not really so dependent? What have you done
about the graduation concept, if anything?
Mr. Carlson. The larger stations tend to be more
sophisticated and on their face they appear to be financially
more viable, but they're not necessarily so. We work fairly
closely with the large stations, if only because most of them
are large producers of television programming for national
distribution.
Our fear generally, is for more rural stations. They tend
to be fragile and they tend to need us sometimes more often
than do the larger stations.
Mr. Porter. And is there movement to allow a little--a
greater commercial participation without commercializing
stations?
Mr. Carlson. Well, there is. The Corporation for Public
Broadcasting board supports enhanced underwriting. It does not
support advertising.
Mr. Porter. Yes. Enhanced underwriting.
Mr. Carlson. That's right. And that underwriting is
restricted to at the end of programs, as opposed to the middle
of it. It doesn't call for action. It doesn't allow someone to
point to the specific sale of a product. It's in keeping with
the generally accepted tone of public broadcasting, and is
also, I think, concurrent with the idea that public
broadcasting would no longer be public broadcasting if it were
allowed to become too commercial.

the need for additional federal funds

Mr. Porter. So, in respect to stations, we are providing
one grant per market, greater encouragement to entrepreneurial
activities, a better investment of assets and resources, some
degree of greater commercial activity.
Why do we need, in that context, a 30 percent increase?
Mr. Carlson. The Federal support of this, of course, is
enormously----
Mr. Porter. Which makes the stations more dependent, if I
understand correctly, rather than less dependent on the Federal
money.
Mr. Carlson. Well, one could argue that. But without it,
even though the amount of money seems to be a reasonably small
portion of the amount that those stations bring in, it is money
that is essential to the continuation of the system, itself.
Federal support is basically the foundation upon which
these stations grew. It generates State support, local support
and university support. Federal dollars are not the icing on
the cake; they are really the eggs and the flour that bind it
all together successfully.
Mr. Porter. Haven't stations done a much better job in the
last two or three years of raising funds outside? In other
words, subscriptions and memberships and the like?
Mr. Carlson. I think they've done as good a job as they
can. Of course, it depends on the station.
Mr. Porter. Haven't they done a better job, though,
overall?
Mr. Carlson. They have risen to the occasion, I think, as
best they can, particularly in crisis fund-raising. But it's
clear from studies that have been commissioned by CPB that this
makes up for the total revenue loss only to a certain extent.
It does not make up in any significant way for the loss of
Federal revenue.
Mr. Porter. Can you provide for us, for the record, an
indication of financial change for a representative group of
stations as to how they raised their money in the past and how
they have done it more recently in the present so that we can
see why additional grant money may be needed?
Mr. Carlson. I can, Mr. Porter.
[The information follows:]

[Pages 545 - 551--The official Committee record contains additional material here.]

Mr. Carlson. I'm aware of a number of studies that have
been conducted either under CPB auspices of that of APTS or PBS
that offer up specifics, both anecdotally and statistically for
the entire industry as to how they have reacted to financial
fund-raising in these tight times.
Mr. Porter. I have to say that I am a strong supporter of
public broadcasting and certainly believe that the money would
be well spent, but a 30 percent increase for any agency at a
time when we're trying to balance the budget obviously stands
out hugely.
Mr. Carlson. Yes, sir.
Mr. Porter. And one has to ask how that can be justified,
particularly in view of the fact that great progress has been
made on non-Federal sources of funding for many of the
stations. And I realize it doesn't apply to all and that the
rural stations are particularly dependent, but it seems to me a
lot of progress has been made in a lot of different areas--
under your leadership, I might add--so that stations generally
are less dependent on Federal funds than they were previously.
Mr. Carlson. I take issue with that directly. I don't think
that's necessarily so. There is a dependency, and one could
argue it's fostered by a continuation of the appropriation, but
I don't think there is any reasonable intellectually viable
alternative to the Federal appropriation.
I must say that after five years of making arguments, of
spending time with public broadcasters, and being well aware of
the disparities that sometimes exist between public
explanations and private realities, I am thoroughly convinced
that the Federal appropriation is necessary. There is no--no
one has yet presented to us for really believable analysis any
alternative in a substantive way to a continuing Federal
appropriation.

reauthorization

Mr. Porter. Well, let me agree with you. In the absence of
new authorizing legislation, clearly that's true. Let me ask
next, though, what do you see happening on the authorizing
side? I know you've met with Chairman Tauzin and have talked
about this. Why don't you fill us in on what your perspective
is on the chances of some changes that make public broadcasting
independent of a Federal subsidy.
Mr. Carlson. We have had a couple of meetings with Mr.
Tauzin, who has taken Mr. Fields' place, and the question
arises of what should a reauthorization bill contain. We've
been making the case with the Congress for some time that there
have been too many mandates. You have heard us argue that
before.
We presented a chart last year. It looked like the wiring
of an old television set. It outlined a lot of the mandates in
a flow chart. We would like to do a simple reauthorization of
our unauthorized years in appropriated levels and carry a new
authorization out well into the future.
We need to sit at a drafting table specifically to do some
of that. Mr. Tauzin has a lot of ideas. He's a very
sophisticated political figure, in my view.
None of the Members of the House that I've talked to, or
Senators, either, that I've talked to about reauthorization
this year advocate picking up where we left off last year with
Mr. Fields' bill. I think most of the public broadcasting
organizations--and I hope we find common cause with the other
major acronyms in this industry--feel the same way.
But Federal funding is important, as I said, to this
industry. We can't seem to find an obvious alternative to the
process that the Congress set up.
Mr. Porter. Has your authorization expired already?
Mr. Carlson. Yes.
Mr. Porter. It has?
Mr. Carlson. Yes.
Mr. Porter. When did it expire?
Mr. Carlson. In 1996. We're not authorized for 1997.
Mr. Porter. We're going to have to stand in recess because
Mr. Miller has not been able to return. I'm going to have to go
vote, so we will briefly stand in recess.
Mr. Carlson. Okay. Yes, sir.
[Recess.]
Mr. Miller [assuming chair]. The subcommittee will come to
order.
We'll go ahead and begin. I apologize for the voting
schedule. Just to give everybody kind of an update on the
voting schedule, at the end of this vote when the lights go off
we'll have 10 minutes of debate on another amendment on this
bill, a 15-minute vote, another 10-minute debate on another
amendment, a vote, and then we'll have an hour. So we do have
that hour coming up.
You know, 10 minutes stretches a little longer than 10
minutes by the time you have walking time and everything else.
At any rate, let me begin, and then when somebody else we
can--it doesn't look like many people may be here, so the
hearing may not go too long.

Funding in light of the federal budget deficit

I was a little surprised by the 30 percent increase in
spending. I know--I used to teach statistics, and my first
lecture in statistics in college was based on a little book
called, ``How to Lie with Statistics,'' and you just kind of
tell me the point you want to prove and I'll prove it with
statistics.
Certainly you do a very good job of describing the 30
percent increase as a very nominal increase, and that's what
you should do with statistics. But the bottom line is a 30
percent increase when we're trying to hold everything else to a
freeze, and that's very difficult.
In this committee, where we're given one size of a piece of
pie and we have to divide the slices, it makes it very
difficult.
One thing I was very disappointed in was the way the
President submitted his budget. For example, a major area of
spending in this committee is biomedical research, the National
Institute for Health, an area that has widespread support by
both republicans and democrats, and the President requested a
2.6 percent increase.
If I have to weigh cancer research, AIDS research, heart
discuss disease research, arthritis research, Parkinson's
Disease, as we were talking about yesterday, and we're having
these hearings that we don't have near enough money right now,
and you have a bigger increase than the National Cancer
Institute--and Cancer Institute starts off with $2 billion, but
even in total dollars or percentage--and ``The Washington
Post'' did an article a few weeks back about how the President,
knowing that this committee supports biomedical research, will
find the money. It makes a problem. We're going to have to talk
about such as Corporation for Public Broadcasting.
This is the most apple pie and motherhood type issue that
everybody supports and there's no question aboutdesirability.
Let me start off getting a better understanding why this is
a Federal responsibility. I can understand it 30 years ago. I
can understand the need for it. We have talked in the past, as
Mr. Fields introduced legislation, to basically move away from
Federal funding and set up a truly independent, nonprofit
corporation.
Why there has to be a continuing need for a Federal
responsibility when we're trying to balance the budget, and
recognizing balancing the budget is not just for arithmetic,
it's for our children's and grandchildren's future, because
we're burdening them with this debt. A $75 million increase is
just going to the bottom-line debt.
So give me the justification on why it continues to be a
Federal issue and why we shouldn't be trying to move away from
that.
Mr. Carlson. Mr. Miller, forgive me. I'll be repeating a
few things.
Mr. Miller. I apologize.
Mr. Carlson. No, no. Not in the slightest. It's a perfectly
apt question.
I mentioned to Mr. Porter that I had been at this job for
five years. Over that period of time I have been able to
reconcile some of the public statements that are made on behalf
of this cause. As many causes have the rhetoric that associates
with them, I became thoroughly convinced, over a period of
years, that the Federal dollar investment in public
broadcasting, radio and television is crucial. Our universal
access to people is a widely democratic aspect, in the best
sense of that term, would not exist without the Federal
investment which has been made over the last 30 years.
There has been hundreds of millions of dollars--probably
billions--invested in this. But removing the Federal
appropriation or believing that there is a viable substitute
for it in any substantial way, will cause this system, or many
parts of it, anyway, to be unrecognizable in the future.
Anecdotes aside, every study that we've made at CPB on this
subject and done by PBS and others demonstrates that there is
the broadest possible public support for the public
broadcasting system. It is, of course, simply not over-the-air
broadcasting, and it is, in the best sense of this term,
locally controlled throughout the United States.
Of Americans, 99 percent can see it; 92 percent of
Americans can listen to it. They range from democrats to
republicans to every other political stripe. They care about
it, and the investment in it. $325 million is justified by a
simple fact, and that is that public broadcasting will not
remain viable if it does not have continued Federal support.
Obviously, one could argue--and I would expect argument--
over the amount of money. It is a figure that's arrived at by
us and, in this case, by the Administration, but I think it's
justified in many ways.
One makes the comparison with other useful, important
expenditures that the Federal Government is involved in, and
those comparisons are fair.
But what appears to be a large hike--and it is a
substantial hike, a substantial increase for the year 2000--has
to be put in the context of the fact that we would be $40
million behind where we were if we continued an upward curve
over those years rather than take the rescission--the cuts that
we've had in three years of rescissions.
So we do think it's a reasonable figure. Without the 15 to
18 percent of the roughly $2 billion spent on public
broadcasting in this country coming from the Federal
Government, we would lose what is levered by those funds within
the other entities which supply money to the system--private
business underwriting, etc.
We have tried every possible combination of ways to make up
for the Federal dollar. We have had some luck in some of our
efforts. But we cannot seem to find a way to totally substitute
a series of actions for the Federal appropriation.
Sorry for the windy answer.

Last year's reauthorization efforts

Mr. Miller. Well, Jack Fields had a bill last year. Did
they--I don't know if they even had hearings on it.
Mr. Carlson. Yes, there were some hearings. The bill didn't
go anywhere. No.
Mr. Miller. But the idea was to free you of a lot of
Federal regulations.
Mr. Carlson. Yes.
Mr. Miller. The idea was to create a trust fund, give you
the flexibility to raise money.
Mr. Carlson. Yes.
Mr. Miller. I mean, right now just doing the television
fund-raising is--you know, there may be a limit on that money.
Isn't there some----
Mr. Carlson. There is a limit on it. It's crisis oriented,
as you know.
Mr. Miller. But he was talking about other ways to raise
money.
Mr. Carlson. He was.
Mr. Miller. I mean other than the fund-raising on
television. So I think it's great having community support that
you raise money, but is there--do you know if there is any
merit to explore what Mr. Fields was looking at any more? Do
you just feel that we have to live off the Government?
Mr. Carlson. No, sir, and I didn't mean to suggest that I
would abandon the idea of finding other ways to make up for
what is, in effect, a reduced amount.
If we receive the $325 million, it is still less in real
dollars than one would have anticipated if we had continued in
the upward course that we were firmly on just a few years ago.
The trust fund idea is an example. It was one explored by
Mr. Fields and others. It was in the forefront of some of the
arguments made by some of the groups within public
broadcasting, some stations. This is not a particularly unified
industry--and not designed to be, either, for that matter,
because it is, as I said, locally controlled.
But CPB, itself, supported the goals that were behind last
year's draft reauthorization legislation because it moved us in
the right direction--that is, toward self-sufficiency. Those
had to do with efficiencies. They had to do with the trust fund
idea, and so on, and there are, as I understand it now, no such
proposals for a trust fund in the works.
Mr. Miller. You were supportive of the idea of self-
sufficiency last year----
Mr. Carlson. Yes, sir.
Mr. Miller [continuing]. But you've dropped the idea now.
Mr. Carlson. No. We have not. But we've dropped it as a
reasonable alternative to the total loss of Federal
appropriation. Yes. That is not----
Mr. Miller. I guess I--I mean, this is a hard one to talk
about because I support public television.
Mr. Carlson. Yes.
Mr. Miller. My wife and I do write some small checks to
them and support them. But the idea is, you know, if you're
going to balance the budget, is this a continuing Federal
responsibility, and I'm not sure you've given me a good answer
to why it continues to be a Federal responsibility, that there
isn't some other alternative to self-sufficiency.
Mr. Carlson. Well, we need a certain amount of transition
time to----
Mr. Miller. Yes. I agree.
Mr. Carlson [continuing]. Move any new funding sources.
Mr. Miller. I would agree.
Mr. Carlson. Secondly, we need the assurance of a continued
adequate Federal fund to operate a streamlined and more
efficient public broadcasting system.

noncommercial versus commercial programming

Mr. Miller. How are shows like the Discovery Channel and
some of these other shows able to make it?
Mr. Carlson. They sell advertising. But, of course, that
changes the nature of what's offered. I think well of
Discovery. Of course, it is quite limited by the fact that it's
on cable, plus money--that cable system is not available in any
way to the preponderance of Americans. The majority of
Americans now do have cable, but there are many millions of
people who do not, and there will always be a significant
number who don't, and they won't have Discovery because there
is often an extra cost involved.
Secondly, one would have to gear one's programs to a broad
common audience to sufficiently attract advertisers. By doing
that in public broadcasting one would change the basic nature
of the sort of niche programming that's offered.
Mr. Miller. Well, let me pursue that. Maybe after you leave
you can take on this as a task to help figure out a way to help
develop self-sufficiency. I have a history of being very
involved in a large number of nonprofits in the arts areas in
our community, and we were always self-sufficient, going to the
community raising the funding. I would wish we could move in
that direction.
Mr. Carlson. Yes, sir.
Mr. Miller. Ms. Pelosi?
Ms. Pelosi. Thank you very much, Mr. Chairman.
Do I call you Mr. Ambassador, Mr. President? Well, soon it
will be Mr. Ambassador, but for now President Carlson, thank
you very much for your great service to the Corporation for
Public Broadcasting.
Mr. Carlson. Thank you, Ms. Pelosi. It has been great
working with you. Thanks.
Ms. Pelosi. You have the knowledge and the ideas that you
have brought to the Corporation and the ability to deal with
the last few tumultuous years. I think you have served the
Corporation for Public Broadcasting well and the public well.
Mr. Carlson. Thank you.
Ms. Pelosi. I'm very disappointed that you're leaving.
Mr. Carlson. Thank you. Those tumultuous years have been
good for public broadcasting in some ways, too.

last year's reauthorization efforts

Ms. Pelosi. That's true. I think that we should question
all the things that we're doing, and my colleague, Mr. Miller,
has mentioned Mr. Fields' proposal of last year, which was to
sell off a piece of the Spectrum and have income from that be
in a trust fund--have that be a trust fund for the Corporation
for Public Broadcasting.
That Spectrum has been sold so many times over. In
everybody's proposal to Congress for everything, they're
selling a piece of the Spectrum, and in any event the bill
would not have provided for nearly enough of a trust fund whose
income would be able to sustain the Corporation for Public
Broadcasting.
And, Mr. Miller, also it's an opportunity cost. In other
words, if the Spectrum is an asset to the Federal Government
and it's a source of income and it could be a trust fund, well
then it still isn't self-sufficiency. By its nature, I don't
think the Corporation for Public Broadcasting can be self-
sufficient and maintain its character.
That doesn't mean we always shouldn't be looking for other
private sources. I agree with what both of you said in that
regard. But the very idea that public broadcasting exists and
that it is available and that everybody in our country has
access to it, so therefore, the full diversity of our
population has access to it, not just people who can afford to
buy cable. Cable is not an answer, in my view, to the
Corporation for Public Broadcasting.
Mr. Carlson. They do avail themselves of it in the broadest
possible way. Anybody who rides in cabs knows that the cab
drivers--who are a disparate lot, if there is one--like public
radio.
Ms. Pelosi. They do, indeed, thank heaven for the rest of
us. Some of the alternatives are not pleasant.
Mr. Carlson. The easy part of my job is making invidious
comparisons to what's going on in commercial radio and
television.

cpb's funding request

Ms. Pelosi. For a wide range of reasons.
Mr. President, the appropriation request before us would
provide the CPB with roughly the same amount of funding it
received 10 years ago, factoring in inflation. You made that
point in your statement.
In light of this significantly eroding funding, despite
what looks like an increase, how can CPB effectively serve
communities and pursue the new initiatives you have described?
And how great an impact has this had on furthering the core
goals of CPB?
Mr. Carlson. Well, it is----
Ms. Pelosi. And forgive me if you've answered these
questions for Chairman Porter when I was not here.
Mr. Carlson. I didn't exactly. Ms. Pelosi, about 90 percent
of our funds are distributed through mandates and various
regulations and so on. The money goes out to stations. It goes
out to producers.
Congress provided us with some specific goals, and we
cleave to them and we are affected by the rescission cuts, of
course, that have taken place. But we have been told to do and
we have done--and it has been the right thing to do--increase
funding to independent producers over the years, minority
producers. We have succeeded in increasing the number of
minorities in public television, for instance, and we've been
tracking those numbers, and we continue to look pretty good.

minority and independent producers

Ms. Pelosi. If I might, Mr. Carlson, could you elaborate on
the importance of the funding for the minority consortia and
the independent----
Mr. Carlson. Yes. We have awarded, since 1980--long before
my ascension to this job--about $65 million that has gone out
for programming by minorities or to minorities. We have
supported the minority consortia--there are five of them, and
they're broken down ethnically. We've supported them for a
number of years. I think it has been eight or ten years. We are
now giving each of them about $1 million a year in programming
costs, and another somewhat less amount in administrative
costs.
Our relationship with the minority consortia has been
excellent. We, for instance, have had a great effect on Native
American broadcasting, particularly in Alaska and the western
States. They didn't have any substantive broadcasting outlets
before the Corporation and the Congress got involved. The total
number of Native American stations has increased now, since
1992, by almost 20 percent.
In 1994, minority programming took about 12--I'm rounding
these out--$12 million. These are by minorities or of very
specific interest to minorities. In many cases these are
programs made by minorities. In 1995 it was about $9.5
million--a little bit less, $9.3 million. In 1996 it was $8.5
million.
We have, as I said, been funding the consortia for some
time.
We imposed A 5 percent reduction on them at a time when
funding cuts and rescissions reduced our appropriation by 17
percent. We were still funding the minority consortia at $3.3
million for programming and about $1.4 million for
administration.
In 1996, when we were having particularly tough times, we
took an 11 percent rescission, but we kept the consortia at the
1995 level of $5 million.
CPB has made a very strong commitment over the years with
the minority consortia and minority-oriented programming. It is
something, I think, that the Congress should be proud of and
that CPB is proud of, too.
We have been involved in minority training programs to
better equip public broadcasting with people who have skills
and the kinds of talents that are useful to television and
radio. I can give you a lot of specifics. I'll give it to you
in writing rather than read all of it to you.
Ms. Pelosi. Okay.
Mr. Carlson. Please refer to my written testimony and the
answers to the questions for the record where I provide this
information in detail.
Overall, it has been a fulfilled promise. There have been
some problems in the last year or two because of the problems
we have with reduced funding. Nonetheless, our relationship
with the minority consortia continues to be good. We met with
them yesterday, as a matter of fact. They were here in town for
our annual board meeting.
Ms. Pelosi. As you were talking about training minority--
what was the word you used? Minority producers?
Mr. Carlson. Minority producers. Also editors, and radio
producers and so on--station management of different kinds, not
just talent.

the next generation program

Ms. Pelosi. It brings to mind the ``Next Generation''
mentoring program. Can you describe the intent and results of
CPB's initiative here?
Mr. Carlson. Yes, ma'am. ``Next Generation'' is a public
radio leadership development program. It's self-explanatory in
that sense. It matches seasoned public radio people who are in
a leadership role with much younger, less-experienced radio
employees of very diverse backgrounds.
The point of it all is to help provide tools and
intellectual skills and important contacts that will help young
producers and so on to advance in their careers.
We've had 10 participants so far. Each of those persons has
had a mentor. That's 1994 through 1996. The success of the
``Next Generation'' program has led us to begin a second round
of it. It is another two-year process. We're doing it jointly
with national public radio and the cost is not very much,
really--about $20,000 for the effort.
Ms. Pelosi. Thank you very much. I have to go vote now, and
I believe my time is up.
Once again, I want to thank you for your leadership. I wish
you much success in your future endeavors. I hope they will be
in the public sector.
Mr. Carlson. Thanks, Ms. Pelosi.
Ms. Pelosi. Thank you, Mr. President.
Mr. Porter [resuming chair]. Thank you, Ms. Pelosi.
Ms. Pelosi. Thank you, Mr. Chairman.
Mr. Porter. Mr. Ambassador, there is this vote and then 10
more minutes and then another vote. And we're sorry there has
been so much interruption.
Mr. Carlson. Okay.
Mr. Porter. After that there will be an hour, at least.
I would like to ask you a few more questions and would ask
that you indulge us for 10 or 15 more minutes, and then I think
perhaps, unless other Members come that haven't been here,
we'll be finished.
Mr. Carlson. Great.
Mr. Porter. So we're going to stand in recess briefly to
vote, and then have a short additional period.
We stand in recess briefly.
[Recess.]
Mr. Miller [resuming chair]. Mr. Ambassador, let me get
back to the original question I had, which is the Federal
responsibility and whether we can move to self-sufficiency.

the need for federal funds

Can you envision the possibility of moving to self-
sufficiency? If you can, what would it take to do that?
Mr. Carlson. Well, I do not believe, Mr. Miller, that we,
in the public broadcasting arena, can give up the Federal
appropriations. I think there has to be a sustained Federal
flow of funds to maintain a system that has been built over the
years with such an enormous investment of public money that it
will not be maintained as what it was designed to do--offer
universal service, which it presently does, and to offer
educative aspects, not all of which are over-the-air
broadcasting, without some regular flow of Federal funds.
Mr. Miller. So you're saying in your opinion it's
impossible without some Federal--be on the Federal dole
forever?
Mr. Carlson. Well, I don't look at it as the Federal dole.
I think that this investment is an important one. I liken it to
support for public libraries. They are a useful component of
society, even if they are not used necessarily by every
taxpayer. I don't use them but I support them because I think
they contribute positively to the commonweal.
Think of all of the things that are done by public
broadcasting in the United States. There is a remarkable litany
of programs having to do with the education of youngsters,
programs that are often offered in conjunction with over-the-
air broadcasting. They touch the lives of tens of millions of
Americans.
That is not to say that we've given up in the slightest on
ways to make it work more effectively for less money. We have
instituted and are in the process of instituting, at the
direction of the CPB board, many changes. Many of those are the
positive result of the attention that Congress has paid to this
over the last couple of years and the desire by the Congress to
balance the budget.
Mr. Miller. I understand that part of the idea is
universal, and I understand there's a rural issue there, and
then you have the other big areas--this funding for specialized
programming and such. And I can understand the rural issue,
that maybe we need to have a way to specially fund that area.
If we could take care of the rural problem, would it be
possible for the rest of it to be self-sufficient?
Mr. Carlson. I made allusion to studies that have been
performed by CPB in the past and by other entities within
public broadcasting when we were talking a little earlier.
We commissioned a study by Lehman Brothers a couple of
years ago to take a look at what the alternatives to Federal
Funding are, and how sufficiently we could make up for a
zeroed-out appropriation.
Lehman Brothers were smart and they were creative and they
were very analytical. They could not come up with a way to
replace the Federal appropriation--and I'll make a point of
sending you their report.
[The information follows:]

[Pages 562 - 574--The official Committee record contains additional material here.]

Mr. Carlson. They could not come up with a way to replace
the Federal appropriation. There were ways to pare it back, and
contribute to making up for reductions, but there was no way to
bring it down sufficiently or even substantively. It just was
not possible.
Mr. Miller. Is that the only study that has been made of
that issue?
Mr. Carlson. No. I think there are some others, but I'm a
little uncertain as to the specifics of them, and they may
touch on it as opposed to directly addressing it.
The Lehman Brothers' study, which was motivated by a desire
for us to find a way to make up for what was promising at that
time to be a zero budget, was not successful in any way to
accommodating the largest of the cuts.
Mr. Miller. Mr. Wicker, did you have any questions?
Mr. Wicker. Yes.
Mr. Miller. I'm sorry. Mr. Wicker?
Mr. Wicker. Like so many members of this subcommittee, we
have competing obligations, and so I am sorry that I was not
here for the ambassador's statement.
Mr. Carlson. Thanks, Mr. Wicker.

new fundraising opportunities

Mr. Wicker. Have we discussed what sort of additional
revenue raisers we might have in a reauthorization bill? Has
the subcommittee gotten into that yet?
Mr. Carlson. No, sir, they have not.
Mr. Wicker. I wonder if you could comment on that? I know
you've expressed disappointment in your testimony that the
Congress was not able to pass a reauthorization bill last year.
Mr. Carlson. Yes. What was done, in polite criticism, was
simply disappointing. We wanted to be reauthorized. We have had
meetings with Mr. Tauzin, who, as you know, is the subcommittee
replacement for Mr. Fields. We have not sat down in any
sufficient way with staff or with the principals to work on how
this might--what the specifics of this might be.
So I don't have, at this time, an answer to your question
as to how it should be restructured. Any decision on this would
not simply originate with me or with CPB but is done in
conjunction with the other elements of public broadcasting that
play a significant role in public broadcasting--and that is the
stations, themselves, and the major acronyms like NPR and PBS.
So we do not have the specifics of how we would address a
reauthorization.
Mr. Wicker. And you're not willing to give us some of your
ideas at this point about additional revenue raisers other than
an appropriation from this Congress?
Mr. Carlson. As I said, we are very much in favor of a
continued appropriation. And one might expect that on the
surface, but that's after considerable reflection over the last
couple of years.
There are also many actions that have been taken by CPB, at
the risk of being redundant in talking about them, that have to
do with addressing waste and inefficiency. Some of them relate
to overlapping stations in some markets. And there are, as you
know, overlapping signals in a number of--usually major markets
in the United States, both in radio and television. And we have
restructured our grant programs of basic grants to radio and
television stations so they are directed towards one grant per
market.
This is a phased-in situation not popular with some of the
stations, as one can imagine, but there are a number of
instances where we have been giving base grants to multiple
stations in one market. We're going to take the funds that have
gone to stations in the past and distribute them in some
equitable fashion to the industry to make up for the reduced
Federal appropriation.
That effort and other ways of creating business
opportunities for stations, of encouraging stations not just
encouraging them, but pushing them rather strongly towards
consolidation of services wherever it's possible and feasible.
All of those efforts are directed towards bringing in new
sources of revenue or economizing and freeing up funds.

ancillary income

Mr. Wicker. Where are we in terms of making sure the
Corporation has marketing rights to certain characters created
for public television?
Mr. Carlson. That's a good question. We define ancillary
income as the product spin-offs from the occasionally
successful television show. Sometimes--well, actually there is
no track record for radio, but it's potentially possible in
radio to have a program that would create some sort of
ancillary income for the sales of products.
There was a period when the Corporation for Public
Broadcasting was not receiving much from Barney, which was the
focus of the public's attention. Subsequently, one or two other
programs that have had success in selling products.
We have a board-directed ancillary income policy that
returns funds to the Corporation, that brings money back to
television stations and producers, and one that's reasonable,
and very useful to public broadcasting.
It is something that's not applied in most cases because
most cases the shows in public broadcasting don't make money.
Unlike commercial broadcasting, they're not originally chosen
for their ability to generate income, or even to be widely
popular. They just occasionally end up being widely popular.
Mr. Wicker. Do you have any figures on that type of
ancillary income?
Mr. Carlson. I do. I don't have any specific figures on the
amount of money that has come in off of Barney. I can send you
some specifics.
The new policy, and it went into effect in January of 1997,
revised what was really a cumbersome reporting requirement it
allowed producers to pay off their production debts before they
shared the income with CPB.
The new policy establishes different methods of sharing
what, in effect, are windfall revenues. They're spread over a
15-year period.
One has to consider that CPB cannot afford generally to buy
out all of the rights that are in a program, so to acquire
total rights to ancillary products is something that would be
prohibited because we don't make an investment in a program
generally that's expansive enough. We don't own the whole
program. We invest a percentage of funds in it. It's often 10
percent, 20 percent, whatever it is, but it is not something
where we're in a bargaining position because there are other
investors--often the producer, himself or herself. So we're not
really in a very good position to demand a return that's going
to be one that gets your attention.
In the case of Elmo, if I can give that to you as an
example: Elmo was a very successful doll. CTW is the company
that owns Sesame Street and, within that program, Elmo is a
character of remarkable popularity. CTW received a royalty of 7
percent of the wholesale cost of sales of the doll.
I think 5 to 7 or 8 percent of the wholesale cost is fairly
standard return.
The sales on Elmo, itself, were fantastic, and the rest of
the product line, however--the particulars I'm not sure of--
that may have had to do with lunch boxes or slippers or
something like that, was not popular and no additional profits
came from that. There were no windfall profits from that.
CTW, the company that owns Elmo, made $15 million on all of
its royalties this past year. That included Elmo and others.
And $14 million of the $15 million that came in in ancillary
product revenue went into production cost of Sesame Street,
which is two-thirds of the total production cost.
That's a typical situation wherein CTW, a nonprofit
organization, and the money that comes into it, absent what's
spent on administration costs--salaries and so on--goes back
into the production.
So $1 million of the $15 million went into new program
development, $14 million of it went into Sesame Street and $1
million went into program development.
Sesame Street, itself, if you're interested in this, Mr.
Wicker, the Sesame Street characters, some of which are quite
popular, was not developed using public broadcasting program
development funds, and the creators of the characters can't
consequently have a claim to the profits that are generated by
the appearance of those characters, by the popularity of those
characters, and by the involvement in public broadcasting of
those characters.
We have measured the success of Sesame Street by the number
of kids who are taught by it, and that has been a substantial
number of now-adult Americans, too, who were watchers of,
devotees of, Sesame Street and who benefitted from it.
That's why our funding agreement at the time required that
a portion of all potential profits realized from--this was
contractually agreed--that profits that were realized from
ancillary revenue be devoted to children's programming, and
that additional programming--that has been done.
The CTW royalties from Sesame Street, as one might expect,
have been in decline over the last few years, with a
significant exception, apparently, of this Elmo doll.
Otherwise, there is a tiresome quality I guess that comes to
these things.
I might also mention to you that Barney was heavily flogged
as this remarkably rich entertainer, second only to Oprah
Winfrey, You may remember that description. And yet a lot of
the Barney sales were poor the people who owned Barney told me,
when I called them in an effort to better understand exactly
what this was all about in detail, they were stuck with a
warehouse full of Barney products that didn't sell. They
admittedly made quite a bit of money on what did sell, but they
also lost on some other backpacks, or items.
Anyway, they didn't universally do as well as one might
have thought from reading the press accounts.
Mr. Porter [resuming chair]. Thank you, Mr. Wicker.
Mr. Dickey?
Mr. Dickey. No questions.
Mr. Porter. Mrs. Northup tells me she doesn't have
questions either.
Mr. Ambassador, I have several remaining questions.

federal funding as a percent of industry income

Mr. Ambassador, my staff has done a back-of-the-envelope
calculation that indicates that the Federal appropriation would
decline from about 15 percent of total revenues in 1995, the
high water mark for appropriations at $296 million, to about 14
percent by 1998, which is at $250 million. Is that about right
in your estimation? And, if so, does that suggest to you that
the decline in appropriated funds is perhaps less significant
than it might first seem?
Mr. Carlson. I think that probably is accurate, Mr. Porter.
One can't although I've done it, overly stress the importance
of those funds, even though the percentage has historically
been low and not seemingly of any great consequence when one
looks at it. But I think your back-of-the-envelope staff
jotting is----
Mr. Porter. So about 1 percent difference?
Mr. Carlson. Yes. I think that's probably correct.

employment in public broadcasting

Mr. Porter. Overall. Mr. Ambassador, last year you
testified that CPB had made dramatic changes reducing FTE by 25
percent. However, neither NPR, PBS, or public stations,
generally, had attempted the same kind of streamlining.
The budget justification reports total industry employment
of over 10,000. Can you tell us generally what the trends are
in industry-wide employment, whether the industry is achieving
the same efficiencies as CPB, and provide actual FTE for CPB,
NPR, PBS, and local stations for the years 1994 to the present?
Mr. Carlson. Yes, sir. I don't have them here for 1994, but
I will give them to you.
Mr. Porter. That's for the record. Yes.
[The information follows:]

[Pages 579 - 582--The official Committee record contains additional material here.]

Mr. Carlson. I am familiar with 1995 and 1996, and the
general trend has been downward in terms of FTE for the
stations, radio and television stations, and CPB. As I said, we
had cut back 25 percent of our staff over that period of 1995-
1996. National Public Radio and PBS saw increases in total
employment between 1995 and 1996.
Our figures are this: we reduced in 1995 from, at CPB, from
86 to 77 people, and there's a decrease from 1994, as well, but
I don't have it here exactly. When I came to the company in
1992 we were about 100-something, 110, 115, something like
that.
National Public Radio had 403 employees in 1995 and they
have 424 in 1996.
PBS went from 369 in 1995 to 412 in 1996.
Absent that, however, the figures, as they relate to in
toto radio and television stations, are somewhat different than
they are for membership organizations like NPR and PBS.
Radio stations, 3,854 in 1995, a reduction to 3,754, so
it's 100 less; and TV stations, 11,004 down to 10,827 in 1996,
so somewhat of a different proportion there.
Mr. Porter. One would have hoped that NPR and PBS would
have gotten the message a little more clearly that we're trying
to do things throughout public institutions with greater
efficiency, as you have done at CPB.
Mr. Carlson. Thank you, sir. We have done----
Mr. Porter. And at the stations, evidently.
Mr. Carlson. We have not been shy about bragging about it.
We try to set a little bit of an example. But we do not have
administrative control, as you know, over the organizations.
Mr. Porter. I realize that. I just wished they'd gotten the
message a little better.

FEDERAL FUNDING SOURCES

Mr. Ambassador, information provided by CPB to my staff
indicates that other sources--and we've talked about this, but
let me make it a little more particular--other sources of
Federal funding aside from the subcommittee's appropriation
provide substantial funding to the public broadcasting
community. These alternative sources of Federal funding
increased from roughly $50 million in 1993 and 1994 to about
$90 million in 1995, a $40 million increase. Why did other
Federal funds increase so rapidly in 1995, and what is the
figure for 1996?
Mr. Carlson. We have an inventory of Federal funds, and you
are correct that there was an increase. I don't think it was
quite as significant as it sounds. I think total funding was
almost $60 million, increased to $74 million. Those are the
figures I have. I'll check to see whether they're correct or
not.
But I can tell you that $20 million of that went to the
public telecommunications facilities program in 1994. That was
increased by about $7 million in 1995. It was roughly a $1
million increase in funds that went to the Star Schools
program. That has to do with long-distance distance learning,
the laying of fiber optic lines, and things like that. And
almost $25 million came from that program.
The Department of Education provides about $4 million for
closed-captioning, which is done at Boston at WGBH.
Those are numbers that I'm aware of. If I have missed
anything in the recitation, I'm not sure. I'll find out for you
and put it in writing. Also, I'll find out what the numbers are
presently.
[The information follows:]

[Pages 585 - 598--The official Committee record contains additional material here.]

Mr. Porter. Has the Administration sent up a
reauthorization proposal to the Congress yet?
Mr. Carlson. No.
Mr. Porter. And are we expecting one, or is that simply
expected to be initiated in Mr. Tauzin's subcommittee?
Mr. Carlson. I believe it's expected to be initiated by Mr.
Tauzin.
Mr. Porter. Mr. Ambassador, it has been a real pleasure to
work with you and I think you've done an excellent job of
attempting to make the kinds of changes that bring public
broadcasting into a much more efficient and well-run
enterprise.
I have to say, unfortunately, it hasn't necessarily gotten
through to everyone, but you certainly have done yeoman's work
in trying to make that happen and to be responsive to the
concerns to make it a more efficient enterprise that have been
raised here in the Congress, and we appreciate your service
greatly. I think you've done a wonderful job there and we wish
you well, as I said, in whatever you undertake in the future.
Mr. Carlson. Thanks for the kind words, Chairman Porter.
And thank you, again, for your consideration of this $325
million request for 2000. I'm grateful. And I'll be grateful
after I leave the job as well.
Thank you, sir.
Mr. Porter. Thank you, Mr. Ambassador.
The subcommittee will stand in recess until we vote, and
then we will proceed with the National Labor Relations Board.
[The following questions were submitted to be answered for
the record:]

[Pages 600 - 654--The official Committee record contains additional material here.]

Wednesday, March 19, 1997.

NATIONAL LABOR RELATIONS BOARD

WITNESSES

WILLIAM B. GOULD IV, CHAIRMAN, NLRB
FRED FEINSTEIN, GENERAL COUNSEL
WILLIAM STEWART, CHIEF COUNSEL TO THE CHAIRMAN
HARDING DARDEN, BUDGET OFFICER
Mr. Porter. The subcommittee will come to order.
Our hearings continue with the National Labor Relations
Board. We're happy to welcome William Gould, the Chairman of
the Board. Mr. Chairman, why don't you introduce the people you
have with you and then proceed with your statement, please.

Introduction of Witnesses

Mr. Gould. Thank you, Mr. Chairman. To my right, I have
with me Fred Feinstein, who is our General Counsel, and to his
right, Harding Darden, our Budget Officer, and to my left,
William Stewart, who is my Chief Counsel. Mr. Stewart is
retiring at the end of this week. I just want to say, Mr.
Chairman, how fortunate I've been to have his good advice and
counsel over these past three years. President Clinton wrote
him yesterday and stated that his contribution to the agency
was unparalleled in the agency's history. And so I'm very
pleased to have him with me, albeit just for this one last
time, here today.
I'll proceed with my statement. I am not going to read the
statement, simply ask that it along with the three year report
which I believe that we sent along with it, be accepted as part
of the record, and I will just briefly make a few remarks, if
that's acceptable to you, Mr. Chairman.
Mr. Porter. Please proceed.

Opening Statement

Mr. Gould. There are three themes I would say that we have
pursued which are all designed I think to make us a more
efficient agency. One is to simplify our procedures, to
demystify, if you will, both our procedural and substantive
rules so that the average individual, whether it be a worker or
a small businessman or a union official, can under some
circumstances without the use of outside counsel avail
themselves of our procedures.
The second, and related to this, is through a variety of
measures we have sought to diminish the potential through
litigation in a wide variety of areas that, again, are
described in more detail. We have tried to eliminate the burden
that would otherwise be thrust upon the taxpayer and private
parties and on the public generally. We have tried to promote
the voluntary initiatives, voluntary procedures both in the
organized and unorganized sector between employees and
employers.
And thirdly, we have tried to foster a greater environment
of cooperation. Our advisory panels, which we have spoken with
you about on previous occasions, I think have gone some way
towards doing this. They've looked at a wide variety of
procedural problems which we are confronted with, one of which
was one that we discussed with you last year in a fair amount
of detail, the business of Section 14(c)(1), and our point in
our colloquy last year with you, Mr. Chairman, was that we are
really mandated under Section 14 not to go below the
jurisdictional yardsticks as they were established in September
1, 1959. But the important thing that the advisory panel did,
in our view, was that, with near unanimity on both the union
and employer's side, they accepted the view that it was not as
a matter of policy desirable for us to change our
jurisdictional yardsticks--the unions, because they wanted to
use the so-called Section 8(a) provisions which are employer
unfair labor practices, Section 9, representation petitions;
the employers, because they were concerned about losing our
jurisdiction over secondary boycott charges that they file with
our agency and the injunctive relief that we're mandated to
obtain on their behalf, both in that arena as well as in the
arena of organizational and recognitional picketing.

CREDIBILITY IN COURT

I want to conclude by saying that I believe that, as we've
tried to outline for you, our credibility with the Court of
Appeals is very good as manifested by our win rate at that
level, and also in the arena of Section 10(j), injunctive
relief. The Supreme Court in the last term had three cases
before them involving us. In each case, our position prevailed,
in two instances with unanimity on the part of the Court. But
the important thing, as we've tried to stress, is not the
result, but rather the language employed by the Court which has
deferred to our expertise in very ringing language.

AGENCY REQUEST

We are here today supporting the President's request for a
6.7 increase. We believe that this is justified by a number of
factors, not the least of which is our projection about case
intake, a greater percentage of unfair labor practice
litigation that we confront which is more time consuming and
which is more labor intensive and which also, as you will note
from the material that we have given you about hearings before
the Administrative Law Judges, consumes at that level greater
numbers of pages in terms of transcript and greater resources
on our part, and finally, of course, we are concerned with
funding the automated CAT system.
Last year I was asked by Congressman Miller about the
relationship between the number of cases that we had and union
activity. I pointed out to Congressman Miller that many of the
cases that come before us don't involve unions at all, but
rather involve individual employees who find themselves before
our agency because they've filed charges in protest against
employer retaliatory conduct against them, they having
protested what they regard as improper employment conditions.
And so these cases come before us. I am not able today to tell
you, as I was last year, precisely what the percentage of these
cases is. I believe, and hope, I have my Special Assistant
Ralph Deeds participating in this process, that at the end of
the day our CAT automated system, when it's developed, will be
able to give us more preciseinformation about where our cases
are. And then, finally, some of the increase is attributable to
mandated increases that flow from legislation by this Congress.
Mr. Chairman, I thank you very much for your patience in
hearing from me. I'm delighted to respond to any questions that
you and others on the panel may have.
I'm going to turn to Mr. Feinstein for what he would like
to say.

statement of the general counsel

Mr. Feinstein. Thank you. Mr. Chairman and members of the
subcommittee, thank you for this opportunity to appear before
the subcommittee in support of our funding request. The request
is a product of an analysis of the Board's best current
estimate of the agency's caseload needs and will allow the
agency to stop the growth in our backlog of cases. The backlog,
unfortunately, has steadily increased in recent years.
A unique and widely commended characteristic of our agency
is its division into a General Counsel side and a Board side.
The General Counsel is appointed by the President to act as an
independent prosecutor, exercising that authority through the
33 regional offices and the General Counsel's headquarters
staff, which together comprise about 90 percent of the agency's
staff. For this reason, one of my principal responsibilities is
to address the very important budget and funding issues which
face the agency.
Last year our regional offices received approximately
40,000 charges and petitions filed by employees, employers, and
unions. More than 90 percent of these cases were processed from
beginning to end without any involvement by Washington. Of the
more than 30,000 unfair labor practice charges filed, about
two-thirds were dismissed following an initial investigation by
our regional offices, most within 60 days of having been filed.
More than half of the election petitions that were filed led to
the holding of secret ballot elections within 44 days of the
filing of the petition. This is a record and a tradition of
efficiency that has served the public well and one that we are
striving hard to maintain.
In recognition of the need to cut costs and operate as
efficiently as possible, we have worked hard and have taken a
number of steps to stay on top of a caseload with a staff that
has been reduced in size from nearly 3,000 in 1980 to our
current level of about 1,950. Despite these efforts, our
backlog has been steadily rising.
The NLRB, as you know, is required to process all of the
cases filed with the agency. Although intake did decline
somewhat in the early 1980s, it has leveled off thereafter. The
effect of the staff reductions, unaccompanied by a commensurate
decline in the case intake, has been that the case-handling
burden per FTE has risen over this period. The intake per FTE
for 1996, based on preliminary figures, was about 32 percent
above the figure for 1985, and about 54 percent above the
figure for 1962.

CASE BACKLOG

Despite numerous efforts to improve our efficiency, as I
have indicated--and we describe some of these in far more
detail in our submission--backlogs at several stages of the
case-handling pipeline have grown in recent years and are now
reaching an unfortunate critical mass. At the end of January
1997, there were more than 70,000 (Clerk's note.--Later
corrected to ``7,000'' unfair labor practice charges) pending
investigation, nearly double the number of just three years
ago. Despite the Government shut-down last year, preliminary
figures indicate that our case intake in 1996 was almost
virtually the same as that of the previous year. In addition,
our case intake for the first three months of fiscal year 1997
is running about 15 percent (Clerk's note.--later corrected to
``16'') higher than the same period last year.
These backlogs appear in the more advanced stages of our
pipeline as well. For example, the shortage of trial attorneys
in regional offices has meant that our trial calendars in some
regions have stretched out as much as nine or ten months.
Similarly, the Board's recent success in reducing its backlog
at the Board level has led to a bulge of cases pending in our
enforcement division. Staffing reductions in the enforcement
litigation division have limited the agency's capacity to cope
with this rise of our appellate work.
Backlogs, of course, are a significant internal concern,
but they are more than an internal operational concern as well.
The costs to employers and employees are perhaps the most
significant concern regarding our backlog. Delayed cases are
indeed harder to investigate, and, as investigations become
more difficult, the costs of legal representation grow. The
positions of the parties often hardens with the passage of
time, making settlement more difficult. Back pay also builds
up, and it may build to a point where it becomes a stumbling
block to settlement. Individuals wait longer and longer to have
important rights vindicated. In sum, festering workplace
disputes are indeed costly to all concerned and are of great
concern to the agency.

COST SAVING INITIATIVES

Since taking office just over three years ago, I have
devoted a major portion of my time to finding ways to improve
the agency's efficiencies in all the areas within the purview
of the General Counsel. Again, these are described in more
detail in our submission. I would just mention a few of the
cost initiatives that we have undertaken.
We have undergone a significant reduction in our rental
space. Last year alone the agency reduced space in field
locations and headquarters, as well as parking spaces for
official cars. This space reduction amounted to about a 10
percent reduction in our overall space.
We've also reduced spending in our case-handling travel,
through the use of telephone affidavits, questionnaires, and
summary statements of charging parties in lower priority cases.
Our travel expenses for on-site interviews and witnesses has
been reduced significantly. We've also turned back about 70 of
the Government vehicles that we have been utilizing as well as
their parking spaces. The regional travel expenses during
fiscal year 1996 were approximately 44 percent lower than the
previous year.
Of course, as I say, there are several other areas which we
would be happy to discuss in greater detail and which are part
of our submission.

INITIATIVES TO IMPROVE SERVICE

We have also attempted to initiate improvements in our
service to the public. These have included the implementation
of what we call ``Impact Analysis'' for managing our caseload
so that cases receive resources at a time and in an amount
appropriate to their level of impact on the public. This
program has enabled us to maintain service for the most
pressing cases in our environment of limited resources.
There has also been a renewed emphasis on the handling of
representation cases, those cases in which we conduct elections
to see if employees desire representation. We have emphasized
this because it is certainly true that there isa cost to both
employees and employers alike when the time to get to an election is
delayed. Experience has also shown that when we hold elections
expeditiously, this reduces the unfair labor practices that might
ensue. Accordingly, our time targets for holding elections now are six
weeks from the filing of a petition, which is a reduction from what it
had been in the past.
We have also engaged in so-called reinvention efforts in a
number of our other offices. One I would mention is our Appeals
office that considers appeals from the decisions of our
regional directors. We have seen a significant reduction in
case processing time in that office as well.
Just over this past year, the three initiatives that I have
mentioned have been recognized by the National Performance
Review and have been recipients of Hammer Awards as we continue
to try to streamline our case-handling and administrative
operations. We certainly pledge to continue to do so in every
way we can.
The agency plans to reinvest all present and future cost-
savings in attacking our backlog, to improving our automation,
which of course is related to attacking our backlog, and to
training efforts which we believe are critical to maintaining
high quality case-handling within the agency. If the agency
were to be funded at the requested level and all of the
projected savings derived from the current and planned efforts
to save costs were reinvested in direct case-handling, the
agency would be able to limit further growth in our case
backlog.
Again, I want to thank you for this opportunity to testify
today. We would be very happy to answer any questions.
[The prepared statements follow:]

[Pages 660 - 701--The official Committee record contains additional material here.]

Mr. Porter. Thank you, Chairman Gould and Mr. Feinstein.
Let me make a few comments before we get to the questions. My
greatest concern as Chairman of the Subcommittee is to change
the culture of Government and to make Government work for
people. I want to focus on outcomes, results, and performance.
I believe that the Government Performance and Results Act is a
very important tool to make that transition. I will have
questions, but I want to send you a strong message that I hope
you will implement the law, to do so on time, to do it with
consultation with the subcommittee, as the law requires.
Mr. Chairman, I want to tell you that during our recent
meeting, I agreed to look at the material you sent me and
reconsider my position on single site. I have done that. I
believe the subcommittee made the right decision in the last
two years to include a prohibition on that rulemaking and I
believe it should be included in our bill again this year.
I'm also concerned about an issue that's recently come to
my attention regarding graduate students, in this case at Yale
University, and the possibility that NLRB could rule that they
are considered employees for the purposes of the NLRA. Case law
on this matter seems to me to be entirely clear and settled for
over 20 years by the Cedars Sinai case which established a
standard for such cases, the standard being whether an
individual is, or is not, primarily a student.
Mr. Feinstein, I understand you've already advised or
directed your staff to rule against Yale University on this
matter. I believe that that is a terrible undermining of
established case law with very many serious consequences for
labor relations in this country. I am very, very concerned
about that.

GOVERNMENT PERFORMANCE AND RESULTS ACT

I've got some questions. Mr. Feinstein, will you tell us
generally how you're complying with the Government Performance
and Results Act, what measures and indicators you're proposing?
When will you make a formal GPRA submission to OMB? Will that
be in time to integrate GPRA fully into the fiscal year 1999
budget process which begins for you in about two months?
Mr. Feinstein. Yes, Mr. Chairman. We are hard at work in
meeting our responsibilities under GPRA. We have been engaged
in a process of consultation within the agency, with various
parties and entities, to contribute to coming up with a sound
plan to meet the responsibilities under the act. We also, of
course, would be most happy and anticipate consultations with
the Congress in that process as well, and would look forward to
that consultative process.
We do expect to be submitting a draft sometime later in the
spring to OMB for their consideration. We would be happy to
proceed in consultations with the Congress as well.
Mr. Porter. I would like you to submit a comprehensive
written response at this point in the transcript to that
question.
Mr. Feinstein. Sure.
[The information follows:]

For more than thirty-five years the NLRB has measured
performance in the accomplishment of its mission. As stated in
the December 1980 issue of Performance, The National Labor
Relations Board had developed a measurement system which
integrates staffing requirements, budget justification, and
performance appraisal systems.''. Implementation of the
Government Performance and Results Act has provided the NLRB
with an opportunity to reexamine that system and to validate
performance goals.
In June 1996 the NLRB's Acting Inspector General issued an
audit report (OIG-AMR-16) which in part reviewed the NLRB's
progress in implementing GPRA. It concluded: ``It is our view
that the Agency is approaching the GPRA and its future
requirements in an appropriate manner. The NLRB has coordinated
with recognized experts in the field and with employees at all
levels.'' A draft Strategic Plan was developed under the
auspices of the NLRB's Labor-Management Partnership Council
with mission, goals, objectives and performance measures. It
will be timely submitted to the Office of Management and Budget
(OMB). Once the Strategic Plan has been reviewed by OMB, it
will be provided to the Committee for consultation.

Mr. Porter. If you haven't even made a formal submission to
OMB at this point, how is it possible to have GPRA integrated
into the fiscal year 1999 budget process? And since the GPRA
law was enacted in 1993 by President Clinton and the Congress,
why hasn't the NLRB acted more quickly to meet the statutory
deadline?
Mr. Feinstein. My understanding, Mr. Chairman, is that we
are required by the statute to submit a plan by the end of this
fiscal year, and we certainly intend to meet that deadline. In
fact, we have already a preliminary draft which is under
serious consideration and deliberation, and it shouldn't be
more than a matter of weeks before that plan would be ready for
further consultation.
Mr. Porter. Am I not correct though that you are just two
months away from the fiscal year 1999 budget process? In other
words, you really only have two months to do this.
Mr. Feinstein. To do----
Mr. Porter. To submit to OMB and get a plan approved.
Mr. Feinstein. Yes. And we certainly intend to be able to
meet that.
Mr. Porter. And to have your submission to OMB integrated
for the next fiscal year?
Mr. Feinstein. I would certainly hope so, yes.

FULL-TIME EQUIVALENTS

Mr. Porter. Mr. Feinstein, in order for GPRA to be
meaningful to us, the performance measures and the data you
report to us have to be credible. We have to have hard numbers.
One of the complaints that I often hear is that people have a
sense that facts are manipulated to fit the political message
of the NLRB leadership. As one example, you and the Chairman
have been trying to make the point that your FTE levels are at
all time low levels, so low in fact that you must now have
substantial increases in FTE. The narrative in the
justification and your opening statement indicate that the
agency's FTEs are today at the lowest levels since 1962.
But the table on page 2 of the justification indicates that
FTE increased in 1997 from 1996 from 1,925 to 1,950, about 25
people. So it would appear that you are already increasing FTE
and that the NLRB is not at the lowest level since 1962. I
would like you to answer the specific question for the record,
but please comment briefly on the general perception that I
mentioned.
[The information follows:]

[Pages 704--The official Committee record contains additional material here.]

Mr. Feinstein. We are very much concerned that the data and
the information provided by the agency be as accurate and as
timely as it possibly can be. That's why we have undertaken an
effort to computerize our operations, which we call the CATS
project. We are in the midst of that undertaking; it is a two
or three year project. We've made significant progress on it.
When we will be able to fully implement the CATS project is
dependent on our funding--but we do hope at that time to be
able to provide on a very timely basis the most accurate, up-
to-date information. That is one of the central objectives of
the implementation of our computerization efforts. In the
meantime, we are continuing to deal with our data processing
under a system that was developed many years ago. It is not an
ideal system but we do believe it provides accurate
information.
In terms of current FTE, I believe the 1,925 figure in 1996
was the figure that we were referring to as being the lowest
and roughly equivalent to what the FTE figure was in 1962. If,
indeed, our FTE does, as we have projected, reach 1,950 for
this year, that would be a small increase over the FTE for
1996. I might add that between 1995 and 1996 our FTE came down
about 100, and the previous year it came down about 34 or 35.
The 25 increase which we project for this year would get us
back perhaps a quarter of the way to where we were in 1995.

case backlog

Mr. Porter. Going to your increased backlog. How do you
explain why there's a tremendous proliferation of cases? Why is
this occurring? There isn't that many more employees or
employers. What do you see out there that is causing this?
Mr. Feinstein. I think the most direct answer, as far as we
can determine, is that we simply have. If you look at the level
of staff per cases we receive--it has increased consistently
over the last 10 or 11 years so that we now have, as we've
indicated in our testimony, the highest number of cases per
FTE. We believe we have become more efficient, that we have
figured out ways to get to the cases more effectively, that we
have implemented certain----
Mr. Porter. Can I interrupt. Do you have a greatly
expanding number of cases being filed?
Mr. Feinstein. Charges being filed?
Mr. Porter. Yes, charges being filed. That's really what I
wanted to get at, not so much the backlog, but is this a result
of a huge increase in the number of charges being filed.
Mr. Feinstein. No. The charges have leveled off essentially
since about 1988 or 1989. It has come up a little bit perhaps
and gone down a little bit, but the case intake since about
1988 or 1989 has remained essentially level.
There have been two things that have changed since that
period which we think accounts for the backlog. The primary one
is that the staffing level has gone down. The second, and
equally significant reason we believe, is the nature of the
cases themselves. Because of various factors, which we've
attempted to analyze and better understand, largely relating to
changes in the economy--to the more fluid nature of corporate
organization, to the fact that there is a lot of corporate
reorganizing going on, the fluidity of employment--it is now
increasingly difficult in many instances to determine exactly
who an employee works for. For these kinds of reasons, the
kinds of cases we are seeing have become more complex. They
involve things like, as I said, successor employers, corporate
reorganizations that get into fairly technical and difficult
issues to decipher.
During this same period of time, we have also been paying
attention to our Information Officer program in which we are
seeking to filter the cases. Before a charge is filed, we are
providing the kind of information that would result in cases
that might otherwise have been filed and been fairly simple, to
not be getting filed as much. So that while the number of cases
have stayed about the same, we think for these various reasons,
the complexity has increased and, of course, the number of
staff we have to process these cases has decreased.
Mr. Gould. In other words, one manifestation of that, Mr.
Chairman, is what I alluded to in my opening statement, and
that is you will notice that the percentage of cases as unfair
labor practice cases as opposed to representation cases is
going up. This requires both in terms of region investigation
and all in terms of their processing before Administrative Law
Judges much more in the way of resources. That may be, in part,
a mirror image of the kinds of things that Mr. Feinstein was
referring to. There have been certain very big disputes which
have generated a large number of unfair labor practices in
highly visible disputes where there are either corporate
reorganizations, corporate relocations taking place which have
proved to be divisive and which have generated litigation.
Mr. Porter. Thank you, Mr. Chairman, Mr. Feinstein.
Mr. Bonilla.
Mr. Bonilla. Thank you, Mr. Chairman. I'm most concerned,
Mr. Chairman, with the highly questionable nature of most of
the NLRB's decisions. Since the crux of the work defining this
Board is done by General Counsel and the 628 attorneys he
supervises, today I am going to address my questions to him.
Mr. Feinstein, in the 60 year existence of the NLRB, you
are viewed by many in the business community as the most biased
General Counsel in history. The diminished credibility you have
cost this Board will not easily be recovered in my eyes or in
the eyes of many members of this subcommittee. You are viewed
as a union advocate rather than a public steward charged with
maintaining the highest degree of impartiality in your work.
There is no wonder why my colleagues in the Senate have such
grave reservations about your desire to be renominated as
General Counsel when your term expires next year.

policy on field staff commenting to media

To start off, Mr. Feinstein, I would like you to comment on
your policy regarding field staff commenting to the media about
the Board's pending cases. What is your policy?
Mr. Feinstein. I have not discouraged field staff from
commenting when appropriate to inform the public as to the
status of cases and to the resolution of cases. I believe that
we have a responsibility as an agency to keep the public
informed, to let the public know what the agency's
determinations are. I have sought to emphasize that it be done
in an appropriate manner and that it be done in a professional
manner, and I believe our field career staff has largely
carried that out.
Mr. Bonilla. There's a case I'm going to refer to that is
cited in an article that I'll point out in just a second. Two
years ago when you were testifying before the House Economic
and Educational Opportunities Committee you would not comment
on a case because it was ongoing. I wonder if thatcontradicts
what you're telling me now, that you're apparently saying it is
appropriate that comments are allowed.
Let me continue before you respond to that question,
because I do have an article dated January 23rd of this year
from the Chicago Tribune quoting Mr. James Fox, an NLRB
supervising attorney, discussing the overnight transportation
case as follow: ``This is a watershed case in terms of what a
company willing to spend huge amounts of money to defeat a
union can get away with. This company has done things that are
unprecedented.'' Mr. Feinstein, do you think commenting like
this in this particular case in the middle of a trial when the
record is open is appropriate for your subordinate? And if not,
what policies do you have in place to assure that this behavior
does not happen again?
Mr. Feinstein. I am not aware of that particular comment. I
think it is prudent not to comment on ongoing litigation. I
will certainly look into this particular instance. For myself,
I try to follow that policy. When I talk about, as I tried to
explain previously, the kind of comments which I think are
appropriate, and the kind of contact with the public, is that
which informs the public about agency dispositions, about the
resolution of cases, the resolution of issues. I do believe
that it serves the public well to understand what the agency
does and what the agency's responsibilities are. Those are the
kinds of communications which I believe are appropriate and
have attempted to communicate to all personnel with the agency
are the kinds of appropriate communications with the public.
Mr. Bonilla. Is this something that you would call ``spin
control?'' It sounds like a public relations effort, I mean
just based on what you're telling me.
Mr. Feinstein. Again, I would characterize it as simply
trying to make the public aware of what the agency has done,
certainly not spin control or attempting to influence the
outcome of cases. I don't think that's appropriate. But I do
think it is appropriate for all Government agencies to keep the
public aware and apprised of the activities of the agency.
Mr. Bonilla. Even though it may not be intended to
influence a case, we all understand reality here and that
sometimes comments can sway someone's opinion if opinions are
in some cases mischaracterized.
Are you aware, Mr. Feinstein, that my colleagues on the
authorizing committee intend to subpoena former and current
field officers and regional directors regarding the biases
shown towards unions?
Mr. Feinstein. No, I'm not aware of that.
Mr. Bonilla. I'm told that is going to happen, and you
should be aware of that.

deputy general counsels

Another question now, Mr. Feinstein. Do you or your
advisors in the room remember a time when the Deputy General
Counsel was someone other than a career NLRB employee?
Mr. Feinstein. When the Deputy General Counsel was someone
other--I'd have to get back to you on that, sir. I'm not
familiar with the background of previous Deputy General
Counsels. I would be happy to submit that, Congressman.
[The information follows:]

While all of the previous Deputy General Counsels were NLRB
employees just prior to holding that office, two previous
Deputy General Counsels, John Irving and John Higgins, Jr.,
held the position as non-career assignments. Mr. Irving was a
career NLRB employee who transferred to a non-career Labor
Department position and then returned to the NLRB in the then
Non-Career Executive Assignment (NEA) position of Associate
General Counsel for Operations.
Mr. Higgins was a career NLRB attorney who became Deputy
General Counsel under a Non-Career Executive Assignment in
1976. When the SES was established in 1979, Mr. Higgins
qualified as a career Senior Executive and held the position in
that capacity until 1989.

Mr. Bonilla. The reason I ask that is because, whether you
remember or not, your current Deputy Counsel formerly worked
for the Teamsters. I just wanted to point that out.

consultations with union general counsels

I also want to ask, Mr. Feinstein, how often do you consult
with Judy Scott, who is formerly the General Counsel of the
Teamsters and more recently the General Counsel of the Services
Employees International Union, and also Jonathan Hyatt, General
Counsel for the AFL-CIO?
Mr. Feinstein. I certainly know who both of those
individuals are. I do from time to time meet with them or have
discussions with them, as I do with prominent management
attorneys on a regular basis as well. Part of my job as
prosecutor is to from time to time hear the arguments for
parties, whether they be management or labor, on cases that
come before the agency. Those two individuals certainly are in
that category of people.
Mr. Bonilla. Would you say that consultations with Ms.
Scott or Mr. Hyatt are every day, every week, every month, what
would you guess would be the average number of consultations
that you have?
Mr. Feinstein. They're certainly not every day, they're
certainly not every week, I would suspect they're not every
month. But, frankly, I can't give you a definitive answer
beyond that.

management training corporation decision

Mr. Bonilla. Mr. Feinstein, on page three of your testimony
you state that ``the backlogs at several stages of the case-
handling pipeline have grown in recent years and are now
reaching a critical mass.'' You are asking for a 6.7 percent
increase in your budget to handle a higher caseload. But it is
hard for me to agree with your assessment when you're expanding
NLRB's jurisdiction to areas that historically you have not
covered before. I'm referring to the Management Training
Corporation and the Teamster's case involving Job Corps
Centers. At a time when the Board's resources are severely
limited, why is the Board expanding its jurisdiction?
Mr. Feinstein. Congressman, that was a decision of the
Board, an issue which the Board decided. My job is to carry out
that decision.
Mr. Gould. I would be glad to respond to your question,
Congressman Bonilla. The basic reason, because the opinion
speaks for itself, but the basic reason, as Judge Wilkinson
said on behalf of the Court of Appeals for the 4th Circuit in
the Teledyne decision issued last week affirming our ruling in
Management Training, is that section 2, subsection 2 only
excludes public employers from our jurisdiction. For a number
of years, the Board was proceeding upon the assumption that
somehow impliedly Government contractors come within that
exception. That is simply, as Judge Wilkinson said, wrong as a
matter of looking at the English language inSection 2,
Subsection 2.
Secondly, we believe that it is a wise use of resources
because what we had until Management Training, as we indicated
in the opinion, was case-by-case litigation over the question
whether or not the Government contractor could meaningfully
control the conditions of employment. And so in each instance
when a representation petition would be filed, we would have a
long record, a great hearing, filing of briefs on this kind of
minutia which is not required by the statute itself, because
the statute does not exclude, as Judge Wilkinson noted,
Government contractors. It includes Government contractors, it
excludes public employers. So that is the reason we came to
this decision.

yale university case

I just want to say in response to the Chairman as well on
the Yale University case. That while that has not come to us,
and we will decide it on the basis of all the facts and the
evidence, the fact of the matter is that the General Counsel,
in his responsibility as a prosector, has to determine whether
there is, in the words of the rules and regulations, ``cause''
to believe that a violation of the statute exists. And when
that General Counsel makes that determination, not a full-
scale, whole-scale review of the merits itself, then it is his
obligation under our rules to bring the matter before an
Administrative Law Judge to give the parties an opportunity to
be heard in a hearing, and then if necessary to have it
reviewed by us in Washington.
Mr. Porter. If the gentleman would yield.
Mr. Bonilla. I'd be happy to yield.
Mr. Porter. I simply am questioning the judgment of the
General Counsel, looking at the long precedents in this area,
to entertain that charge at all.
Mr. Feinstein. Mr. Chairman, if I may respond. As I
explained to the parties in that case, our judgment was, our
prosecutorial decision was, that we were not departing from
precedent in bringing a complaint in that case. There are Board
decisions which indicate that under certain kinds of
circumstances, where certain conditions prevail, university
teaching assistants are not to be deemed employees. It was our
judgment that the particular facts, the particular
responsibilities of the teaching assistants at Yale University,
consistent with past precedent, consistent with past Board
decisions, suggested that these particular teaching assistants
were indeed employees and not students.
It was a fact-based determination. It was not a
determination based on a new reading of the law or suggesting
that the Board move in a new direction. I know there were some
press accounts to the contrary and, going back to Congressman
Bonilla's question, we did attempt to clarify the basis of the
issuance of a complaint in that situation. Again, it was a
fact-based decision based on the particular circumstances of
that case.

allegations of extravagance

Mr. Bonilla. Just to close with a final observation, and
please correct me if I'm wrong. The NLRB in these times when
we're trying to fund Job Corps Centers and community health
care centers in this country and trying to pay for everything
from health care for veterans, and retirees, tell me is NLRB
paying $21 million a year annually in rent? Do all five Board
Members have their own shower, kitchen, and library, a linen
service provides fresh towels weekly, a car and driver at the
disposal of the Board Members and the General Counsel? It seems
to me that when we're trying to tighten the belt in other areas
of Government, the belt seems to be getting wider all the time
at the NLRB.
Mr. Gould. I would respectfully disagree with you,
Congressman Bonilla. I think through a wide variety of
initiatives, which we have described in our statements and
which I have not repeated here today--the use of Management
Training itself which has the effect of diminishing litigation,
the use of settlement judges, the use of new procedures which
we put into place both in Washington and at the Administrative
Law Judge level--what we have done is to make this agency more
effective and lean and efficient and achieve the basic
objectives of the statute, which is, as you know, in the
preamble, about the business of preserving the practice and
procedure of collective bargaining as a matter of public policy
and promoting the idea of freedom of association for all
employees in our country. This is what this Congress has
instructed us to do, and we are trying to do this in the most
efficient way possible.
No one, obviously, can accomplish everything that one would
like to do in a given period of time, but I've tried to put my
shoulder to the wheel in the given period of time that I've had
in Washington to make this agency more effective. I think that
Mr. Feinstein, in connection with some of the initiatives that
he's described, has done so also. I would take great exception
to your characterization of our agency in that regard,
Congressman Bonilla.
Mr. Bonilla. Just in closing, Mr. Gould and Mr. Feinstein,
if you're showing us that this is lean, then maybe you don't
recognize what fat is. Again, with some of these statistics,
and I have only touched on a couple of them, I'm suggesting
that we just have so many other cases and agencies in this
Government that affect poor people, affect those who are truly
in need, and to have these kind of abuses, and in my view they
are abuses, is just unconscionable. With that, I thank you for
your testimony and your answers.
I yield back.
Mr. Porter. Thank you, Mr. Bonilla.
The Chair has Mr. Wicker, Mr. Istook, Mr. Miller, Mr.
Dickey, and Mrs. Northup, in that order.
Mr. Wicker.

proposed regulations on federal contractors

Mr. Wicker. Chairman Gould, on February 18, Vice President
Gore announced a series of new proposals at the AFL-CIO
convention. One of these proposals deals with Federal
contractors and their having a satisfactory record in adhering
to labor laws. Because the NLRB would have an active role in
ensuring that companies receiving Federal contracts adhere to
these proposed regulations, I was wondering if you could expand
on the details of the Administration's plans?
Mr. Gould. I cannot expand on the details of the
Administration's plans, Congressman, because I have not been
supplied any information from the Vice President's office with
regard to what the actual content of his proposals will be and
how they will be implemented.
So I am not in a position to say anything. There's been no
communication between the Vice President's office or any member
of the Administration and myself or at the Board about this.
Mr. Wicker. Okay. I'm very glad to hear that, as a matter
of fact. And I just wondered if you agree with me that it would
be inappropriate entirely for any employee of your agency to
work with the Vice President or with the Administration in
promulgating these types of regulations,since you will be
called upon to be more or less a neutral mediator should they be placed
into effect.
Mr. Gould. Well, I'm called upon to be a neutral
adjudicator involving the questions that arise under the
statute and the interpretation of the statute and the policies
of the statute. I would not want to give you an undertaking
that I would not communicate with the Executive Branch about a
proposed Executive Order any more than I would give you an
undertaking that I would not communicate with the Congress
about proposed legislation or proposed Executive Order.
The one thing that I will not communicate about with other
parties, be they the Executive, Legislative, or Judicial
Branch, or private parties, is cases and facts and evidence and
arguments relating to law that come before this agency or that
might come before this agency, issues that involve
adjudication. In this respect, again, there has never been one
bit of communication between the Executive Branch and my
agency, my office about any matter which has come before us, is
before us, or is likely to come before us, and there never will
be. But beyond that, I would not want to give you any
undertaking, Congressman.
Mr. Wicker. All right. So if the Administration were to ask
you for assistance in these new proposals that the Vice
President announced, what would be your position about working
with the Administration and assisting them in finalizing such
proposals?
Mr. Gould. I frankly don't know at this point, Congressman.
No one from the Administration has extended such an invitation
to me. I think it's premature on my part to speculate about
what my response would be. I think it might well depend upon a
variety of factors. I would want to make a judgement if and
when that situation arose.
Mr. Wicker. But you're certainly not ruling it out at this
time?
Mr. Gould. I'm not ruling it out at this time. I said I
would not would not give you an undertaking that I would not
engage in such a communication.
Mr. Wicker. I understand. Let me ask you about some
statistics that I have about the caseload at NLRB. I understand
that between the years 1980 and 1995 the number of charges
filed with the NLRB fell by 23 percent, the number of
complaints dropped 42 percent, the number of representation
elections declined by 60 percent, and the number of NLRB
decisions declined by 61 percent.

changes in caseload

Mr. Gould. That's between what years, Congressman?
Mr. Wicker. Between 1980 and 1995, a fifteen year period.
Yet, during that time, the NLRB has continued to receive an
increased appropriation, $112 million in 1980 compared to $175
million in 1995. For the next fiscal year, I understand NLRB is
requesting a 6.3 percent increase in funding and 67 additional
FTEs.
Given the declining caseload, how can you justify the
amount of appropriation increase that you've already received,
much less the amount being requested for next fiscal year?
Mr. Gould. There are two factors here, Congressman, and I
want to get a year-by-year caseload in front of us. But just
responding to your point, we have lost more than one-third of
our employees in that period of time. I think that the loss of
employees that has existed for the agency more than exceeds the
loss of the number of charges and complaints that have been
filed in that period of time.
During the past decade, the case intake has stabilized, in
fact, it's gone up a little bit, but it's remained roughly
constant certainly in the period that we've been here and
certainly from the late 1980s and early 1990s onward. I've
tried to describe for you the question of why it is that we've
had problems in the field--the change in ratio, the change in
mix of cases and the difficulties in them.
By the way, in 1980 we had 44,000 charges and we began to
experience a decline until about, as I've indicated, 1988. It
appears as though we bottomed out at 1988 at about 32,000
charges. Since then, what has happened is that we've gradually
moved up the scale and gone up to now almost 37,000 charges. So
over the past decade we've had an increase. At the same time,
we've continued consistently until this past year to have a
decrease in the staff that we've had. That's what accounts for
in substantial part the enhanced productivity that the General
Counsel has described that this agency has experienced.

board members' staff attorneys

Mr. Wicker. Thank you. One final question. In 1995 the NLRB
completed 1,216 decisions. This is an average of about 243
decisions per Board Member.
Mr. Gould. I'm sorry, I didn't catch the year, Congressman.
Mr. Wicker. In 1995. To assist in issuing these decisions,
each Board Member maintains a staff of approximately 20
attorneys. In comparison, Federal Judges, who issue an average
of 122 decisions per year, are typically staffed by only 2 law
clerks. Could you explain to me why each of your Board members
needs 20 attorneys and a Federal Judge would only need 2?
Mr. Gould. I think, by the way, Congressman, that both
figures are in error. I believe that the Federal Judges have
more than two clerks. But I know what we have, and we do not
have 20 lawyers supporting each Board Member. We have, on
average, I believe between 13 and 14 lawyers supporting each
Board Member. About 800-900 cases are coming in to Washington
each year. They're disposed of either under the unfair labor
practice or representation rubric in one form or another.
Mr. Wicker. Okay. You don't dispute the disparity there
even though you quarrel with perhaps the 20, you say 13 or 14.
Mr. Gould. Yes.
Mr. Wicker. Will you concede that that's far more than a
Federal Judge has?
Mr. Gould. It is more than a Federal Judge has. But we're
dealing with something that the District Court Judges are not
dealing with, and that is detailed records which in some
instances consume hundreds and thousands of pages and exhibits,
and Administrative Law Judge decisions which we're reviewing in
Washington. In most instances, unless the District Court Judge
refers this to a Master, they don't have anything comparable,
and the Circuit Court Judges, if they're reviewing the case,
are going to be dealing with it in a more managed form because
they're going to have both the decision of an Administrative
Law Judge and the Board itself which will provide for
efficiencies in examining the record.
Mr. Wicker. Thank you, Mr. Chairman.
Mr. Porter. Thank you, Mr. Wicker.
Mr. Istook.
Mr. Istook. Thank you, Mr. Chairman.
Let me just kind of pick up where Mr. Wicker left off.
Ireally think any Federal Judge worth his salt ought to be very
offended at your statement that you work with detailed records and they
don't. I've been around the courthouse plenty, Mr. Gould, and for you
to claim that your people need that many attorneys working for them
because there's a lot of paperwork is ludicrous. Maybe you have some
better explanation, but I haven't heard it. And if it's a matter of
handling paperwork, you don't need to hire an attorney to do that, you
might have a clerk that does it. I know there's a great difference in
the pay scale.

furnishing of board members offices

I also noticed, even though Mr. Bonilla asked you some
specific questions, you gave a very long and rambling answer,
taking umbrage but never addressing the substance. Let me ask,
he asked whether all five of the NLRB's Board Members have
their own shower, do they or don't they?
Mr. Gould. I believe they do.
Mr. Istook. Do they have their own kitchen?
Mr. Gould. There is one kitchen for the entire Board, for
five members of the Board and for staff, and there is a kitchen
for the General Counsel and his staff on their floor.
Mr. Istook. When we say kitchen here, there's different
aspects. Are you talking about a full refrigerator, stove and
oven, as opposed to a hot plate and a microwave. Are we talking
about a full kitchen?
Mr. Gould. There is a stove, yes.
Mr. Istook. Is there a person whose principal job is taking
care of the kitchen or cooking?
Mr. Gould. No. No, there is not.
Mr. Istook. Does each Board Member have their own library?
Mr. Gould. Well, a very, very limited library. This is a
source of concern to me. We do not have U.S. Reports, we do not
have Fed. Second, we do not have Fed. Supp. We do have most of
the NLRB reports and we have some portion of the unofficial
Reporter, the Labor Relations Reporter published by BNA. By the
way, Congressman, I----
Mr. Istook. Excuse me. Let me ask you, Mr. Gould, the five
Board Members, where are their offices?
Mr. Gould. They're on the 11th floor of our offices at
1099-14th Street.
Mr. Istook. Okay. And these five offices are all on the
same floor. In just general round figures, about how many
square feet is that floor? No need to be exact, I just want to
get a general idea.
Mr. Gould. I'm going to have to turn to somebody else.
Mr. Istook. How far apart are the offices, maybe that's a
better way to ask it.
Mr. Gould. Well, I would say a stone's throw. They're
fairly near one another.
Mr. Istook. But they each have their private shower. And
how many libraries are on that floor?
Mr. Gould. I assume the other Board Members, I've never
really looked at this and examined this carefully, but I assume
the other Board Members have roughly the kind of library that I
described that exists in my office.
Mr. Istook. The one you described was basically a
description of what you have in your office, what you do and
what you don't, and you believe that each of the five Board
Members would have essentially a comparable personal library?
Mr. Gould. That's correct. That's correct. I think for all
of the essential volumes that I've described that I regard as
part of a normal library would go to our regular library which
is in the Board building.
Mr. Istook. Certainly, which I'm sure would be far more
expansive because there's a lot more people that would use the
regular library.
Mr. Gould. The entire Board would use it, also my staff
from time to time uses my library, and I think that is the case
with other Board Members.
Mr. Istook. I'm trying to get down to the things that Mr.
Bonilla had asked that you didn't answer. For example, I'm
familiar with the concept of shared law libraries which is
common for Federal Judges even when they may be on a different
floor, as opposed to five people on the same floor having
private showers and private libraries and so forth.

car and driver

The mention of the car and driver at the disposal of the
Board Members and General Counsel was interesting because I
asked about this last year. You mentioned there is a single car
and a single driver. The way you stated it then, you said the
agency has a car which is used for a variety of purposes. I
ask, you're talking about a single car and a single driver, not
multiple. And you said there's one driver who normally drives,
but there is one car and so forth. And today we're being told
that you're eliminating 70 cars.
Mr. Gould. Seventy cars?
Mr. Istook. That's in written testimony.
Mr. Gould. That must be a typographical error.
Mr. Feinstein. If I could explain. That is in the field.
Mr. Gould. Oh, you're talking about the regions.
Mr. Istook. But that's the thing, last year you're telling
us that the whole agency has a single car.
Mr. Gould. No, no, I did not tell you the whole agency
had----
Mr. Istook. I'm sorry, I'm looking at page 1299 of your
testimony and you state: ``The agency has a car which is used
for a variety of purposes.'' I said ``You're talking about a
single car and a single driver?'' You said there's one driver
and then you said there was one car.
Mr. Gould. Well, I was referring, Congressman, to questions
that had been put to me both before and since then about the
Board here in Washington. I think you know that and I know
that.
Mr. Istook. See, the problem we have is we can't even get
simple basic information answered straightforwardly, and Mr.
Bonilla asked these questions and you gave a long rambling
answer that wasn't an answer. It's difficult to even get that
much less more technical stuff. You see the difficulty in
having any level of trust or credibility in what you have to
say.
Mr. Gould. No, I don't whatsoever, Congressman. I think
that I'm always forthcoming, I try to answer, and I will
answer, every question that's put to me, including yourself,
and your characterization of me is completely incorrect and
erroneous.
Mr. Istook. I think you're wrong, sir, because you can read
back in the record how you answered Mr. Bonilla's question by
dodging it.
Mr. Gould. Congressman, I don't dodge any question. I'm not
dodging any question today.
Mr. Istook. You've already dodged it and you can't go back
and make up for it, sir.
Mr. Gould. Well, you know, we're getting to you said, I
said.

bodenstein case

Mr. Istook. We have a big concern with the course of the
decision-making, I know with the budget increase that wasgiven
last year and the budget increase that's sought next year, and the
concern about NLRB's attitude toward the spending, and yet we find some
other things have interesting treatment. I know there was a case that
came out of the State of Oklahoma, the Bodenstein case, in which a
union employee, objecting to the use of his dues for what he felt were
political purposes, resigned, sought refunds, determination of the
amount expended for that, and because his monthly dues that were passed
along to the AFL-CIO, not talking about local dues or anything, the
monthly dues were .70 cents, 12 times a year, the General Counsel ruled
that was so de minimus that it didn't justify a complaint. It was all
over the news last year that this was being done with 15 million
workers. That's 15 million workers at .70 cents a month, 12 months a
year, I think that, someone else did the math for me, but that comes up
to about $126 million.
How can the NLRB ever be involved in looking at the major
issues of labor relations, with which you are charged, if you
don't recognize that if you take small amounts and multiply
them by millions of people it ends up a very large amount?
Mr. Gould. Congressman, on that particular case, I'm going
to turn to the General Counsel. But I simply want to bring to
your attention the fact that when we came to Washington none of
the so-called Beck cases had issued. In the six years that have
existed since the Supreme Court spoke in Communications Workers
v. Beck, we have handed down a series of rulings. We will be
issuing our 12th ruling within the next few days on these
issues. We have for the first time in the history of this
country obliged unions to provide full information about the
circumstances under which, where union security agreements
employees are required to become members, the procedures that
can be followed to obtain deductions of dues so that they're
not charged for political dues.
Mr. Istook. Mr. Gould, that has nothing to do with what I
asked you about. Again, you've gone off on a tangent that's
absolutely unrelated. My question was, how can we expect
responsive service from the NLRB if they cannot recognize that
if you take a small amount and take it from 15 million people,
you have a huge amount which is not de minimus?
Mr. Gould. We haven't ruled on that. You're referring to a
case that was before the General Counsel.
Mr. Istook. The General Counsel declined to pursue it.
Mr. Feinstein. Congressman, if I may explain that case.
That was a fairly technical ruling in our view.
Mr. Istook. I agree, it's a very technical ruling.
Mr. Feinstein. If I can explain. What was entailed in that
case was that an individual, who you named, had requested
certain information about how dues were being expended. That
information was provided by the local union. One of the items
was that this .76 cents was sent to the State counsel of that
union as well as the national and state AFL-CIO. And what that
individual then was saying is he wanted to know specifically
how that money that was sent was broken down, how that money
was spent.
What we said in that case, and it was indicated in the
letter to the individual, is that he was entitled to that
information when and if he challenged the expenditure of that
money. If the unions sought to charge him for that money, the
proper procedure for getting that information would be to take
issue with that allocation. We were not saying that he was not
entitled to that breakdown. We were saying the proper
procedure, the proper undertaking, consistent with past
precedent and how those cases had been handled, would be to
challenge the allocation if the union did seek to charge that
individual for that money. We were not saying that that
individual was not entitled to the information.
That's why I say it was a procedural ruling, not that the
individual would not be entitled to it. And, as I said, we
specifically indicated in the letter to that individual, which
I went back and looked at after there was some publicity about
this case, specifically said that this in no way suggests that
this individual does not have an ability, a means of obtaining
this information.

class action remedies

Mr. Istook. Do you think it would be useful if individuals
who have a complaint of this type if they could pursue a remedy
that, in essence, became a class action rather than having to
be split up into, in this case, $8 a year? Do you think it
would be consistent, in fact, help the NLRB to dispose of a
volume of matters more expeditiously if they could just in
essence pursue a class action-type remedy through you rather
than having to break it up into individual cases which then
might be met with technical objections such as douay? Would
that be useful?
Mr. Feinstein. Well, we certainly believe that employees
should be informed and should have this information and we have
sought to enforce the law accordingly, consistent with how the
law has been enforced by previous Administrations, previous
General Counsels. Any kind of a procedure which would advance
that end, I would certainly want to take a look at. I'm not
exactly sure what a class action would mean in this context,
but the policy that has been in place is that employees should
have this kind of information.
Mr. Istook. Okay. Thank you. My time is up.

cars at regional offices

Mr. Gould. If I may, Mr. Chairman, on the very same page
where Congressman Istook asked me about the car, I see he said,
``So, I'm wrong. I've been mistaken. There's only one car?''
``That's correct.'' ``Okay.'' ``Mr. Feinstein. I might also
add, in the field we do utilize some GSA cars in different
regions for necessary case travel.'' Very next line in response
to what Congressman Istook had said, so there can be no mistake
about whether the information that we provided you at the
hearing last year, Congressman----
Mr. Istook. Mr. Gould, I was talking about the information
that you stated----
Mr. Gould. Well, Mr. Feinstein immediately brought this to
your attention as soon as I spoke, and you know it.
Mr. Porter. Thank you, Mr. Chairman. Thank you, Mr. Istook.
Mr. Miller.
Mr. Miller. Are we going to have a series of votes, or do
you want me to go ahead and start?
Mr. Porter. We're going to have one vote and then we're
going to have about 30 minutes. There's the second bell. I
think what we ought to do at this point is perhaps to recess
briefly. I have on my list Mr. Miller, Mr. Dickey, and Mrs.
Northup, in that order.
Let's stand in recess.
[Recess.]
Mr. Porter. The subcommittee will come to order.
The Chair recognizes Mr. Miller.

spentonbush v. nlrb

Mr. Miller. Good afternoon. I think I'm the only lawyer
sitting up with my colleagues here. Mr. Gould, you are the
advocate of labor, I know you're supposed to be neutral in this
position, but I've seen your book and board record. Let me read
a quote, this is a statement from the 2nd Circuit Court of
Appeals, this is the Spentonbush v. NLRB, it was February 13,
1997, about how tugboat captains are not supervisors. I'll just
read a quote from the 2nd Circuit Court of Appeals. ``The
deference owed by the judiciary to the decisions of the Board
has been stated on numerous occasions and need not be
reiterated here. However, the Board's biased mishandling of
cases involving supervisors increasingly has called into
question our obeyance to the Board's decision in this area. We
believe that the Board's pro-union bent so often displayed in
supervisory cases has led to an unconscionable result in the
instant case.''
Is that kind of embarrassing for you?
Mr. Gould. Well, no, it's not embarrassing for me.
Mr. Miller. This is a Circuit Court of Appeals.
Mr. Gould. Well, you know, the Circuit Courts of Appeals
from time to time, like other people, make mistakes.
[Laughter.]
Mr. Gould. I would say that this is a mistake. But I would
say take a look at the citations that are cited right after
that statement. I think there are four 2nd Circuit rulings that
are cited and all of them except one involve judicial review of
Board decisions prior to the time that we came to Washington in
1994. I don't have it right in front of me, as you do, but my
recollection is that the bulk of the citations provided for the
Court of Appeals do not relate to the work of the Board since
I've been Chairman, but rather the Board prior to the time that
I became Chairman.

alleged bias

Let me just say, Congressman, since you raised this, that I
believe that, to the extent that I'm an advocate, I'm an
advocate of the objectives and purposes of the National Labor
Relations Act. I think that's what my charge is here. I believe
very much in it. I believe that the law is imperfect in certain
respects, as many laws are, and I've proposed reforms. But from
the beginning I've undertaken to provide a balanced position in
taking into the account the competing interests of labor,
management, and individual employees. And I believe that the
record of this Board and the record of my opinions rendered
since this Board has come into existence bear that out.
Mr. Feinstein. Mr. Miller, if I may respond as well. That,
of course, was a citation involving a Board decision. But
Congressman Bonilla earlier made an assertion of bias on behalf
of the Office of General Counsel which I wanted to respond to
while he was here, and I just would like for the record to
respond. I have, since becoming General Counsel some three
years ago, taken the job very seriously and taken my obligation
to uphold the law as written and as interpreted by the Board as
faithfully as I possibly can.
I believe that all of the statistical records in terms of
the performance of the office since I've been General Counsel
reflect that it is very close and very consistent with prior
General Counsels, both Democrat and Republican. The main kinds
of decisions that I make are decisions on whether or not to go
on a case, what we call a merit factor. The merit factor of
cases since I've been General Counsel is very close to what the
merit factor was with previous General Counsels, within a few
percentage points.
Another kind of a decision that I make, which is
statistically verifiable, is instances in which I would reverse
the determination of a region as to whether or not to go on a
case when the region would dismiss a charge. That is an
appealable decision. The percentage of cases in which I've
overturned the region likewise is within a percentage point or
two of prior General Counsels, both Democrat and Republican.
I make the point simply to suggest that the way we have
attempted to undertake the responsibility, the important
responsibility of the General Counsel has been to do so in a
manner that is consistent with the law and with the principles
of the law, and, as it turns out, consistent with the conduct
of prior General Counsels, both Democrat and Republican.

relationship with unions and employers

Mr. Miller. Obviously, this one 2nd Circuit Court of
Appeals doesn't agree with you on that statement. But let me
proceed, Mr. Feinstein. Do you work with unions to help advise
them how to organize and give them advice? Since your new job
here with the NLRB, what is your relationship with the unions?
Do you have regular contacts with them?
Mr. Feinstein. Well, my job brings me in contact with both
unions and employers.
Mr. Miller. Okay. Do you advise employers, too? Do you
advise either employers or employees?
Mr. Feinstein. I'm not sure exactly what you mean by
advise. I certainly engage in conversations with both
management representatives and union representatives about
cases. When we are prosecuting a case, that kind of a
communication is proper. My contact with both unions and
management representatives is in that context.
Mr. Miller. You're not supposed to be involved in colluding
with unions or business as far as NLRB. But you give them
advice, both business or unions, is that right?
Mr. Feinstein. I don't give advice. I discuss cases, as to
what is the status of a case, what are the issues in a case,
and what are the developments in a case. Again, I do that with
both representatives of management and representatives of
unions. I don't certainly advise either side outside of the
context of proceedings before the agency.
Mr. Miller. But you're naturally more involved I guess with
the union side because of your past experiences withthem rather
than the business side, is that right? Do you feel you advise
businesses equally with union?
Mr. Feinstein. Again, I'm not sure I would use the word
``advise.'' I would use the word discuss in an appropriate
manner pending issues. That is the nature of the contact and,
again, it is in conjunction with issues before the agency.

catepillar case

Mr. Miller. Caterpillar is a case that's been in the news
all the time. Have you been involved in advising union or
Caterpillar how to resolve that issue? Do you talk to the union
specifically on the campaign.
Mr. Feinstein. I have met with both the unions in that case
and I've met with management in that case, probably on an equal
basis. I'm not sure exactly how many times, but I certainly
have discussed that case with representatives of both the
management side and the union side, yes.
Mr. Miller. But you feel it is more equal than unbalanced.
Do you give them advice as to, you know, here's how to unionize
this company, or something like that? You don't do that, do
you?
Mr. Feinstein. No, I do not.
Mr. Miller. We're finding out as we go through the last
analysis of the 1996 campaign about how people lobby--the
Comptroller of the Currency I believe was invited to a White
House coffee. Would you consider yourself in a similar category
as the banking regulator or something like that?
Mr. Gould. I don't know that much about the job of the
banking Comptroller. But I'm in an adjudicative position and it
would be inappropriate for me to discuss issues or facts or
legal arguments in an ex parte way with the union or employer
side or anybody where they would be likely to come before me,
where they are before me.

political fund raising

Mr. Miller. How about raising money for a Party or
candidate, have either of you done that this past election?
Mr. Gould. I have not done it, and I believe that I'm
prohibited from doing that. I think that's the advice that I've
received. But in any event, I have not done it.
Mr. Miller. Have you?
Mr. Feinstein. No, I have not.
Mr. Miller. Have you attended any functions that would be
considered to be fundraising, such as coffees at the White
House or fundraisers, or with organized labor where they're
trying to raise money for a campaign?
Mr. Gould. I have not been at anything at the White House
that I'm aware was a fundraiser. I have been to the White House
on a number of occasions, both with others from California and
people, some of whom are involved in this field. But I'm not
aware that I've ever been at anything at the White House that
was a fundraiser.
I have spoken before audiences where speakers took
positions with regard to the 1996 campaign. But I have not
given such speeches to audiences, be they labor or employer.
Mr. Miller. Have you been involved in anything to do with
fundraising, as far as just being present in the room with a
group of businesses that would want to have an opportunity to
mix with you?
Mr. Feinstein. I am not aware of being present in any such
situation, Congressman.
Mr. Miller. So you think, from all you're reading in the
paper, you think you have nothing to do with any of those types
of events?
Mr. Gould. Again, Congressman, I think that I'm prohibited
from doing that. In any event, I'm here to tell you that I
haven't been doing it.
Mr. Miller. Okay. The Comptroller of the Currency wasn't
supposed to be doing that either and he was present at a
coffee, as we know. That has nothing to do with you.

reappointment of general counsel

Mr. Feinstein, I guess you're up for renomination or
reappointment next year, is it?
Mr. Feinstein. My term expires about a year from now.
Mr. Miller. I've heard the comment that if you get
reappointed you're going to put companies out of business.
Profitable companies are going to go out of business and people
are going to lose jobs because of policies that you have been
acting on. It's kind of a strong set of words to cause people
to lose jobs because of your actions and policies. How do you
react to that, and how are you going to react to it next year
when you go through reappointment?
Mr. Feinstein. Well, that assumes I will go through that
process, which of course is a long way off in time. I am
surprised at such comments. I certainly have not been aware of
acting in that manner, certainly knowingly acting in that
manner. I conceive my job to be one of faithfully implementing
the law as enacted by Congress, to do so in a manner that is
consistent with Board precedent and with the traditions of the
General Counsel's office. I certainly have a perspective and
bring views to it, that is what the nature of the agency is,
but I certainly have tried faithfully to be consistent with the
principles of the act, with the Board decisions, with the
decisions of the courts, and with the traditions of the agency.
As I suggested earlier, I believe that all of the measures of
General Counsel activity in terms of decision-making reflect
that.
Mr. Porter. Thank you, Mr. Miller.
Mr. Dickey.
Mr. Dickey. Thank you for finally recognizing me, Mr.
Chairman. [Laughter.]
Mr. Gould and Mr. Feinstein, my name is Jay Dickey. I don't
know if we've met. [Laughter.]

association with management and labor officials

Do either one of you gentlemen know who the president of
the U.S. Chamber of Commerce is?
Mr. Gould. Is it Bokat? I don't know. I know a Mr. Bokat
who is in a responsible position over there----
Mr. Feinstein. He's the head of the litigation unit.
Mr. Gould [continuing]. But I don't know what his title is.
Mr. Dickey. Okay. Do you know of any president of any year
of the U.S. Chamber of Commerce?
Mr. Gould. You're really testing me here, Congressman.
Mr. Dickey. That's part of our relationship, isn't it?
[Laughter.]
Mr. Gould. It seems to me that there is a Mr. Lesher who
was there.
Mr. Feinstein. I believe we have met and had conversations.
Mr. Dickey. From years back?
Mr. Feinstein. No, he's the current chairman of----
Mr. Gould. I think I've met with him, not alone, not one-
on-one.
Mr. Dickey. Would you have any difficulty naming who is the
president of the AFL-CIO?
Mr. Gould. No, I wouldn't. It's Mr. Sweeney. Nor would I
have any difficulty naming the president of the National
Association of Manufacturers, a Mr. Jasinowski.
Mr. Dickey. And when is the last time you met with
Mr.Sweeney?
Mr. Gould. I know I met with Mr. Sweeney in the spring of
1996. I had lunch with him and someone else in the spring of
1996. I'm sure that I've run into him at public gatherings
since then where there have been a lot of other people present.
Mr. Dickey. When is the last time you talked to him on the
phone?
Mr. Gould. I would say I talked to him on the phone once at
some point in this year, 1997, I would say January or February.
I'm not sure precisely.
Mr. Dickey. Mr. Feinstein?
Mr. Feinstein. I believe the last time I met with Mr.
Sweeney, I couldn't be sure of this, but I would suspect it was
a year, a year and a half ago, maybe longer than that. I don't
believe I've talked to him on the phone since then. I do
believe I ran into him once at a social occasion since then,
just said ``hello''.
Mr. Dickey. The last of my preliminary questions. We
discussed what kind of car you drove, Mr. Feinstein. Have you
changed your car yet?
Mr. Feinstein. No.
Mr. Dickey. What is it?
Mr. Feinstein. It's a Ford Escort.
Mr. Dickey. That's what I wanted to know. Okay.

single location bargaining unit rule

Mr. Chairman, I would like to ask you about a proposed
regulation on the appropriateness of the single location
bargaining unit.
Mr. Gould. Yes, sir.
Mr. Dickey. I understand it is your intention to promulgate
a regulation that would do away with nearly 40 years of labor
law, law that has been followed since President Kennedy's
Administration. This proposed ruling would establish a three-
pronged test to determine whether the single facility or the
multiple facility is the appropriate bargaining and thereby
deny a hearing to the employer to examine other factors. Mr.
Chairman, why have you proposed such a ruling?
Mr. Gould. Congressman, I don't agree with the underlying
assumptions behind your question.
Mr. Dickey. You're not allowed to question my----
[Laughter.]
Mr. Gould. Well, I'm just trying to do the best I can. I
would just say to you, Congressman, with all respect that in my
view our proposed rule mirrors the case law that's evolved over
these past 35 years. Regrettably, I go back to the time that
these cases were decided under Chairman McCulloch in the early
1960s. What they did was establish the proposition that a
single unit facility was presumptively valid in most sectors of
the economy that are within our jurisdiction.
They did provide that an employer could rebut that
presumption. And the Board has over the years referred to a
number of criteria which would be the basis for rebuttal. The
overwhelming number of cases, when all is said and done, are
always decided in favor of single facilities. And in that sense
again, our proposed rule mirrors what has been done over these
past years.
What has happened is that about three criteria have been
used as a practical matter in the overwhelming number of cases
that have come before our agency to resolve this particular
issue. The difficulty with the current situation is that no
one, the most learned of counsel cannot speak with precision in
advising individuals what it takes to overcome the presumption.
The idea of the proposed rule was not to, and would not,
involve the abandonment of any hearing or deprive anyone of a
hearing--we're obliged to provide that under the statute, we've
said so explicitly--it would be simply to speak with precision
with regard to what would overcome the presumption in favor of
the single facility unit.
I happen to think, and Senator Ervin, who was Chairman of
the Separation of Powers Subcommittee of the Senate, urged us
for years, and many, many representatives of Congress have
urged us for years to engage in rulemaking, to substitute
rulemaking for wasteful ad hoc litigation which really just
invites a crapshoot and which is a drain upon the resources of
both the taxpayer and private parties. Let me just give you an
example, Congressman.

benefits of proposed single location unit rule

Mr. Dickey. Wait a minute. Are you going to get around to
saying that we in industry are going to be looking forward to
this type of rule because it will save in litigation?
Mr. Gould. Yes, I am, sir.
Mr. Dickey. We've already been down that road, and I don't
agree with you.
Mr. Gould. Of course, this is what makes horse races. We
can disagree with one another, Congressman, but I think that
this rule is in the interest of the little person, whether they
be businessman or----
Mr. Dickey. I am one of those little people, Mr. Gould.
Mr. Gould. So am I. What we need to do, and this has been a
problem with regard to law in our society generally, and
especially our labor law, is to make our system more accessible
to the average person, to speak clearly and understandably, and
let people rather than to engage in a convoluted system of hide
the ball where we engage in lots of litigation, at the end of
the day find a single unit, and the overwhelming instances do,
is to create a situation where the little person, be they
businessman or worker, knows really where they stand in the
first instance.
In the situation we have now, an employer comes in and says
I have a facility in New York and I have a facility in Indiana,
you ought to find a multi-facility unit. Now they can still do
that under our system, but the lawyer who is advising them can
advise them and say, look, this is what it's going to be at the
end of the day. We have that obligation to the public as a
matter of conserving our resources and conserving the resources
of private parties, Congressman, and that is in the interest in
which that proposal is being put forward.
I know that there are people who are enemies of any desire
on the part of us to eliminate delay. The theory is that if
there's less delay, workers will be more likely to choose
unions and representation. It seems to me that it is
intolerable to accept the view that because workers will be
able to operate, be able to choose collective bargaining or
reject it in a prompt fashion, that we ought to reject such a
procedure. And no empirical basis exists for concluding that
workers will be more likely to choose representation if we do
our job more efficiently and eliminate delay.

determination criteria of proposed rule

Mr. Dickey. Let me ask you this. Your three-prong test
would leave out many other criteria that should be considered
when determining the appropriate bargaining unit, factors such
as whether facilities are functionally integrated, whether they
work closely together in producing goods and services, whether
there is centralized control, and whetherlabor relations are
controlled centrally and apply uniformly to all facilities. It is these
factors that have decided the outcome in favor of the employer and the
multi-facility determination in several cases that I have been told
about.
If the Gould Rule were implemented, aren't you denying the
employer a right to a hearing, a fundamental right that has
been under labor law for nearly 40 years?
Mr. Gould. No, I don't think so, Congressman. First of all,
you refer to this as the Gould Rule. This was a proposed rule
that was adopted by the majority of the Board, and I was one of
the people that voted for it. But I think that functional
integration has really been, if you look at the cases
carefully, a surrogate for geographical separation which
remains a part of our approach.
You mentioned centralization and differences in
decentralized labor relations handling. Again, we look for
autonomy in terms of supervisory authority. There are three
criteria that we look to and that the Board has looked to even
when it from time to time speaks the language that you're
speaking here. What I'm suggesting to you, Congressman,
respectfully, is that when it speaks that language, it is
really harking back and acting as a surrogate for the criteria
that we're using.
We are really mirroring the way in which the Board has been
deciding these cases for 35 years. This is really in the
interest, Congressman, of all people who want to, as I know you
want to, cut out waste and inefficiency in Government.
Mr. Dickey. But the NLRB Notice of Proposed Rulemaking
itself states, ``Our intent is to construe the extraordinary
circumstances exception narrowly so that it does not provide an
excuse, opportunity, or loop-hole for redundant or unnecessary
litigation and the concomitant delay that would ensue.'' The
``extraordinary circumstance'' exception certainly does not
seem to be meant to give the ``opportunity'' for a hearing to
the employer.
Mr. Gould. Well, I think if you look at the rule,
Congressman, you will see, and if you look at our decisions and
our statute, you will see that there is an obligation for us to
have a hearing. The employer always faced the very substantial
burden in rebutting this strong presumption in favor of a
single facility. This has been the law for 35 years. This has
been lost, I have to say, in the drum beat of discussion about
this----
Mr. Dickey. I wondered how you were going to say that.
[Laughter.]
Mr. Gould. I knew you were; I could just read the
expression.
Mr. Dickey. I could see it on your face.
Mr. Gould. We read each other very well.
Mr. Dickey. Maybe that's going to be something we've got to
get over. [Laughter.]
Mr. Gould. No, we're just getting to know each other.
Mr. Dickey. Is that all the time I have?
Mr. Porter. I'm afraid so.
Mr. Dickey. All right. Thank you, sir.
Mr. Porter. Mrs. Northup?

directing a regional director to change a decision

Mrs. Northup. Mr. Gould, I have a couple of questions.
Before I begin, I have to tell you that I'm new here but
overwhelmingly I hear from the people in my district how
different the NLRB is now than it has ever been in the past.
It's hard for me to believe that I would hear it from so many
independent sources, including lawyers that represent both
sides, that tell me that it is different and emphatically
tilted against business and on behalf of labor.
So I am going to ask you to maybe go back and take that.
You cannot be oblivious, just as I cannot be oblivious, to what
I hear repeatedly. It is not the first person that tells me, it
is not the people that are all on one side, one association, it
is when it comes from so many diverse people, businesses,
lawyers on both sides that you have to cock an ear and wonder
if another evaluation is warranted.
Specifically, I would like to ask you a couple of questions
that have come to my attention. First, has the Office of the
General Counsel for the NLRB ever directed a regional director
to change a ruling in favor of a company to support a union?
Mr. Gould. Well, Congresswoman, let me say two things. One
is that the General Counsel can speak to that. He has a
prosecutorial authority which is independent.
Mrs. Northup. I'm aware of that. I'll be glad to direct
that to the General Counsel.
Mr. Feinstein. If I understand the question, have I ever
directed a region to change a decision that was----
Mrs. Northup. A regional director to change a decision that
came down in favor of the company and to reverse it in favor of
the union position?
Mr. Feinstein. No, I have never done that, that I am aware
of.
Mrs. Northup. Mr. Gould, let me ask you again about this.

reversing regional determination

Mr. Feinstein. Perhaps I answered that too hastily. Our
process is such that when cases are filed before a region, the
region makes a determination as to whether or not to issue a
complaint. My answer went to that point in the process before
the region made a decision, have I ever directed them to make a
decision contrary to the decision that they would have made on
that complaint issue.
However, the decision of a region not to prosecute a
complaint is appealable to me in Washington. That, of course,
is a process that has been in effect for as long as I'm aware
of. Historically, the General Counsel reverses the regional
determination not to issue a complaint in approximately 3 to 5
percent of the cases. That is a percentage which, as I
indicated earlier, has remained consistent.
So I, in effect, overturn the regional determination not to
issue a complaint in approximately 3 to 5 percent of the cases,
as was true of my predecessors. So, again, perhaps I answered
too hastily.
Mrs. Northup. But once a decision has been rendered, you do
not? You have never?
Mr. Feinstein. No, it's the reverse----
Mrs. Northup. First of all, the decision is whether or not
to hear the case or to take it on.
Mr. Feinstein. A charge is filed with the regional office.
That charge is investigated. The region then makes a
determination whether that charge has merit and whether a
complaint is warranted. I hastily answered that in that stage
of the process I've never directed a region to say do X, not Y.
However, once the region has made a determination not to issue
a complaint, in other words has dismissed that charge, that
determination is appealable to Washington to our Appeals
Office. And, again, in about 3 to 5 percent of the cases, the
regional determination not to proceed on a case isoverturned
and the case is proceeded upon. But, again, I suggest the percentage of
times in which the General Counsel in Washington, my office in
Washington, overturns the regional determination is consistent with
past practices. It's the historical norm.
Mrs. Northup. Do you just arbitrarily make that decision?
Mr. Feinstein. No, of course not. What happens at that
point is a party has filed a charge, the region has said
there's no merit to this charge and issues a dismissal letter.
The party then appeals the case to Washington.
Mrs. Northup. In a formal appeals process?
Mr. Feinstein. Exactly. In a formal appeals process in
which both the party as well as the respondent, whether it be
union or employer, is given an opportunity to respond. And that
is, as you say, a formal appeals process. Again, our record
there has been consistent with past General Counsels.
Mrs. Northup. And you provide reasons for your decision?
Mr. Feinstein. Yes, we do.

casehandling process

Mrs. Northup. Let me ask you, just because I'm new to this
process. Let's say they decide that a complaint is warranted.
Then there's a hearing, is that right?
Mr. Feinstein. Right. Actually, what happens most often at
that point is that we try hard to settle that case and we have
a very high settlement rate. But a complaint sets out the
formal charge and sets the case for a hearing. If the case is
not settled, then that issue goes before an Administrative Law
Judge, which is a full trial under the Federal Rules of
Evidence, it is like any kind of court proceeding, and the
Administrative Law Judge then issues a decision. That decision
is then appealable to the five-member Board in Washington.
Mrs. Northup. Of course a settlement, you would never
overrule a settlement, I suppose. If they settle out of court,
do you ever change that settlement?
Mr. Feinstein. There is a procedure whereby if a party
challenges a settlement for example, a charging party feels
that a settlement is not adequate, it can appeal that
settlement to me and then ultimately to the Board. If it is an
informal settlement between the parties, that typically is
finally resolved in the region.

single location bargaining unit rule

Mrs. Northup. I would just like to comment on the single
site question. I know that you feel very strongly, Mr. Gould,
that that's something that will benefit businesses, especially
small businesses. It seems to me, considering that you have an
ongoing conversation with the unions and the people
representing the working union members, that you would think to
maybe pick up the phone and have an ongoing conversation with
the people that represent businesses. It's so odd to me that I
haven't had one business come to me and tell me that that rule
would be something that they would favor, that their members
would favor. I would think that would make you reevaluate
whether you really know what's in the best interest of the
businessman.
Mr. Gould. Congresswoman Northup, let me just say a few
things in response to that. One is that we have had I think
about three periods in all now for public commentary where
really everyone, employers and unions, has been invited to
provide their input and to give their views on this. Our
examination of this record has been stopped by virtue of the
appropriations rider which was enacted in 1995. The matter has
not gone forward.
Mrs. Northup. I realize there's not a final determination.
But I'm just saying that for you to informally conclude that
this is in the best interest of the businesses, I think it
might come as a surprise to you--Surely, you're out in the
community, there are people, you pass them, you talk to them,
why not take them aside and ask how do you like this ruling,
and educate yourself on whether or not it is something that
they are for.
Mr. Gould. I'm always trying to do that, Congresswoman. You
mentioned parties in your district who are concerned about us.
I think I sent you and all the members of this committee our
three year report describing what we've been doing. I would be
glad to both respond to any aspect of that and talk to you
about it, talk, within the boundaries of what's appropriate, to
anyone that has concerns in your district that would like to
talk about this. I genuinely believe that the rule, as I've
described, makes a good deal of sense. I think that there are
some employers who fear that because our procedures would
become more expeditious and efficient that unions would win
more elections, and they view that as against their interest.
Mrs. Northup. I think that's a presumption that you can't
make. My feeling, from listening to your comments, is that
you're almost oblivious to the very strongly held fears and
feelings held by people that are affected by this.

salting

Let me go on and ask you another question about the
question of salting. I just wonder how much the NLRB spends in
prosecuting salting cases.
Mr. Gould. I don't know that we have any figures. Again,
when you talk about prosecuting, this would be within the
responsibility of the General Counsel. We have some figures for
you on the number of salting cases that----
Mrs. Northup. Could you just briefly give me those numbers?
Mr. Gould. We have now 16 cases that are pending cases that
are salting cases before the Board. We have, according to the
data--I'm going to have to give you a more complete answer to
this question, because the data I have here is seven cases but
I know that we've had more than seven in Washington. I can't
put a precise tag on that in terms of money.
Mrs. Northup. Are we including workers who claim that they
called a company and because they were a union member they were
not hired? Are we including those numbers in there?
Mr. Gould. This issue arises out of a situation which, as
you know, has been before the United States Supreme Court where
paid union organizers are applying for positions with companies
and it is alleged are either being turned away from those
companies, their application being denied, or being
discriminated against once hired because they are paid union
organizers. The issue before the United States Supreme Court
was are these people employees within the meaning of the Act
and thus entitled to the Act's protections. The Supreme Court
said 9-0 ``Yes, they are employees within the meaning of the
Act.'' So these are those kinds of cases.
Mrs. Northup. All right.
Mr. Feinstein. Congresswoman, if I could just clarify one
point to complete the answer about cases pending. What the
Chairman was referring to is cases pending before the five-
person Board, the Board here in Washington. We do have many
more cases than that that are in the pipeline where charges
have been filed, where investigations are proceeding,where
perhaps there have been dismissals, or complaints have been issued. So
we don't have a specific figure on that. That is one of the things, if
I could put in a brief plug for it, that we hope, when we go to our
more automated case processing, to be the kind of information which we
will be better able to generate.

clarification of salting issues

Mrs. Northup. I have another suggestion that might even
help. Since trying to handle cases expeditiously and clearly is
so important to you, you probably know that there is pending
legislation, I think Representative Harris Fawell and Senator
Tim Hutchinson have proposed a bill that would clarify salting
issues. If that passed, I just would like to know how many
cases that would dispose of, and wouldn't that save you a great
deal of money and a great deal of the litigation time?
Mr. Gould. I'm not familiar with the legislation. Of
course, if legislation were enacted depriving us of
jurisdiction over anything, that would save us a great deal of
time but, of course, deny people throughout the country their
rights under the statute. I don't know----
Mrs. Northup. Then I guess I would ask you, in one case
you're talking about the single site rule and about just
issuing a rule so that it's much harder to bring the case
before you, and you don't seem to worry about losing those
rights, or those people losing their rights, but now you're
talking about your concern that this legislation regarding
salting that would clarify and establish a rule once and for
all so that all these cases wouldn't be pending, then you raise
a question about people losing rights. It seems like a
conflict.
Mr. Porter. If the Chair can interrupt. The gentlelady is
into her sixteenth minute now. I'm happy to allow it to
continue, but I think we have to wind up the hearing. So if you
want to answer and you want to respond, Mrs. Northup, feel
free.
Mrs. Northup. Mr. Chairman, I will submit these questions
in writing for the record.
Mr. Gould. The only thing I would say to the Congresswoman
is that I don't want to see any party's, union or employer,
rights denied. I was simply referring to the fact that the
Supreme Court had clarified this area of the law in large
measure. And although I haven't seen the legislation proposed,
it didn't seem to me to be an answer to the problem to simply
eliminate the rights which the Supreme Court said existed.
Mr. Porter. I thank the gentlelady.
Mr. Gould and Mr. Feinstein, you certainly bring out the
members at least on our side of the aisle. [Laughter.]
Mr. Porter. Only you and the secretaries of the departments
ever get the whole compliment, and everyone of them were here.
Mr. Feinstein. Thank you, Mr. Chairman, I think.
Mr. Porter. We do thank you for your good statements and
your answers to our questions. Thank you for your appearance
today.
Mr. Gould. Thank you very much, Mr. Chairman.
Mr. Feinstein. Thank you, Mr. Chairman.
Mr. Porter. The subcommittee will stand in recess until
10:00 a.m. tomorrow.
[The following questions were submitted to be answered for
the record:]

[Pages 730 - 988--The official Committee record contains additional material here.]

Thursday, March 20, 1997.

NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SCIENCE

WITNESSES

JEANNE HURLEY SIMON, CHAIRPERSON
PETER R. YOUNG, EXECUTIVE DIRECTOR

Introduction of Witnesses

Mr. Wicker [assuming chair]. The subcommittee will come to
order.
It may very well be that Chairman Porter will arrive in
just a moment. But we are here this afternoon to hear from the
National Commission on Libraries and Information Science. We
have with us today Jeanne Hurley Simon, Chairperson, and she's
accompanied by Peter R. Young, the Executive Director.
Ms. Simon, I note that you have your juris doctor. Do you
prefer to be called Doctor Simon or Mrs. Simon?
Ms. Simon. No, I certainly don't want to be called Doctor
Simon.
Mr. Wicker. I've got my juris doctor, too, and I feel the
same way. So, Ms. Simon, if you would proceed in your manner.
We're delighted to have you.
Ms. Simon. Thank you, Doctor Wicker. [Laughter.]

Opening Statement

Ms. Simon. I am pleased to be here this afternoon. As you
pointed out, Peter Young, our Executive Director, is here.
Another person here, a valuable member of our staff, is Jane
Williams, who is the Research Associate. Jane is sitting back
of me.
We appreciate your taking over, Mr. Chairman. I am Jeanne
Simon. I have been the Chairperson since November of 1993 of
the U.S. National Commission on Libraries and Information
Science. I am pleased to note that the President's budget for
1998 fiscal year is $1,123,000 for our agency.
Today, briefly, I'd like to bring you up to date on our
accomplishments in 1996, our programs and activities that we're
engaged in this year of 1997, and our plans for 1998. I ask
that my written testimony, which is in greater detail, be
included in the record, Mr. Chairman.
Mr. Wicker. Certainly. Without objection, it will be
included.

federal grant programs for libraries

Ms. Simon. Thank you. In a report of the exchange that we
had with Chairman Porter two years ago, he inquired about
multiple Federal library grant programs, of which there were
quite a few. In his words, he said, ``How can we better
organize ourselves to deliver services more effectively and
efficiently.'' A very good question. Finally, I think we have
an answer to that.
Federal grant programs for libraries now have new
legislation and a new legislative home. Public Law 104-208 gave
us the Library Services and Technology Act, or LSTA. It's first
purpose is to consolidate federal library service programs.
This was done by repealing all eight titles of the Library
Services and Construction Act, or LSCA, plus library provisions
of the Higher Education Act and Improving America's Schools
Act.
Two other purposes of the new act update the focus on
technology; ``to promote library services that provide all
users access to information through State, regional, national,
and international electronic networks'' and ``to provide
linkages among and between libraries.''
Another LSTA purpose which stays close to the roots of
LSCA, Title I, is ``to promote targeted library services to
people of diverse geographic, cultural, and socioeconomic
backgrounds, to individuals with disabilities, and to people
with limited functional literacy or information skills.''
The final purpose of the new LST Act is to open up the act
to all libraries, ``to stimulate excellence and promote access
to learning and information resources in all types of libraries
for individuals of all ages.'' The LSTA meets important
criteria for its Federal funders and for its administrators.
These criteria are consolidation, simplification,
inclusiveness, and concentration on State-based programs.
Of course, with any program we have to consider
accountability, evaluation, and measures of achievement. The
Commission regards attention to these factors as part of its
newly specified responsibility to advise on ``general policies
. . . relating to library services.'' A second and distinct
aspect of our duty is to advise on ``measures to ensure that
the policies and activities of the Institute of Museum and
Library Services, or IMLS, are coordinated with other
activities of the Federal Government.''

achievements in 1996

Fiscal Year 1996 was challenging in many ways; fiscally,
certainly, but otherwise very active. It was also event-filled.
In addition to work on changing the Federal library grant
programs, our Commission sponsored research to compare public
libraries' connections to the Internet from 1994 to 1996. We
published that report last August.
Good afternoon, Chairman Porter.
Mr. Porter [assuming chair]. Good afternoon.
Ms. Simon. I'm talking about what is happening in 1996,
what we're doing in 1997, and our hopes for 1998.
The research that the NCLIS sponsored last year was to
compare public libraries' connections to the Internet from 1994
to 1996. We published that report last August both in paper and
on the Internet. Some of the important findings I'll list: (1)
There's been a 113 percent overall increase in public
libraries' Internet connectivity since 1994; (2) There are
differences in connectivity based on the size of the population
served, as well as significant regional differences; (3) 39.6
percent of the 55 percent of public libraries without Internet
connections do not plan to connect to the Internet in the next
12 months, and with those serving smaller populations less
likely to be planning connections in 1997; (4) 60 percent of
all public libraries could have Internet connections by 1997;
and (5) Public librariesserving populations of 25,000 or less
may offer the only public Internet access in their communities.
Issues for further investigation include the disparities
(such as those created by geography or size), connectivity
versus services, the goal of universal service, quality of
network services, and the life cycle of public library Internet
development. This year the Commission is working with the
American Library Association and others to sponsor the next
survey so we can continue collecting data and have the up-to-
date information to provide other agencies and policymakers at
all levels.
We did use the results of our 1996 Internet study to advise
the FCC on universal service. On May 7, we expect the FCC to
come out with regulations, and we are waiting for that. To date
our Commission has filed three sets of comments with the FCC.
We also expect to advise on the methods of determining discount
telecommunication rates for libraries.
In addition to all of these special studies, our Commission
continues, and this will be the tenth consecutive year, its
work with the NCES, the National Center for Education
Statistics, to collect data from libraries. As you know,
information is collected by type of library: public, academic,
and State libraries. In fiscal year 1996 a national survey of
library cooperatives, networks, systems, and consortia was also
prepared.

projects in 1997

But beyond the current and ongoing cycles of activity for
NCLIS, there are recurring cycles. One of them that we note is
the use of the term ``fair use.'' When the copyright law was
enacted in the 1970s, we weighed in on the ``fair use'' balance
of interests. Twenty years later, another cycle of work is
coming along and we are also looking into ``fair use''
practices. I testified at hearings last April in the 104th
Congress on the copyright bill. That bill did not go anywhere
as I recall, but it may well be presented again in this
Congress. Our Commission will continue to be involved as
legislation or other proposals come forward on copyright and
intellectual property.
The technological changes that come along so quickly make
intellectual property a major issue for producers and users
alike. Fast advances in information technology create
challenges in other areas as well. The most notable at the
Federal level are the efforts to envision, plan for, and carry
out a future of electronic production, dissemination, and
preservation of Government information. Last year, for example,
the GPO, the Government Printing Office, reported to the
Congress on measures necessary for a successful transition to a
more electronically based Federal Depository Library Program.
This year we're working with the Government Printing Office
to assess standards for that digital information, looking at
the following areas: usefulness of Government information to
people; future publishing plans of agencies; the cost-
effectiveness of various formats; standards for formats used by
the public and private sectors; and training for users of
Government information.

plans for 1998

For 1998 the Commission will strengthen and expand the
major programs it has underway right now. We will advise on
Federal grant programs to libraries and on coordination of
policies and activities of the Institute of Museum and Library
Services with other activities of the Federal Government.
We're going to continue to maintain and strengthen working
relationships with the Departments of Education, Labor and
Commerce, OMB, Office of Information and Regulatory Affairs,
the FCC, and other agencies to give timely input on national
and international policies affecting library and information
services.
We will continue also a multi-year initiative on the
transition of Federal Government information to electronic
form. We're going to be following up on the findings of the
1997 study for the Government Printing Office on Government
information. We're going to cooperate with the Office of
Management and Budget and others who are studying this problem.
Related questions of Federal information policy and
intellectual property will be explored as well. The economics
of information are also going to be an important area in 1998,
where we intend to investigate matters such as performance
measures for libraries, contributions of libraries to
organizations, the economics of digital information, public-
private sector partnerships in library and information
services, and implications for national information policy of
the global information infrastructure.
The Commission also plans a major new program in human
resources to identify the public's need for training and to
identify skills, roles, education, and training of librarians
and other knowledge navigators for the 21st century.
Our Commission has demanding new responsibilities and plans
in connection with the new legislation passed by the last
Congress. With a budget of a little over a million dollars, we
can maintain current operations. We would keep regular staff at
current level but temporarily employ experts for policy
analysis and research in information policy, in human
resources, and the economics of information. With a budget at
the requested level, we could resume orderly quarterly
meetings. In fiscal year 1996, we had two meetings. We have a
full agenda, Mr. Chairman, and we're eager to continue working
on it.
I do appreciate the opportunity to present this statement
to you, as I have now in three successive years I think. I will
be glad to take any questions. Thank you, Chairman Porter.
[The prepared statement follows:]

[Pages 993 - 998--The official Committee record contains additional material here.]

commission's size and impact

Mr. Porter. Jeanne, what's the rationale for the proposal
to triple printing costs and increase travel by one third?
Ms. Simon. We would like to continue the quarterly meetings
that we had to cut back on. We would also like to see our
members of the Commission go to different organizations
throughout the country, the Public Library Association, the
American Association of School Librarians, the Association for
Research Libraries. There are numerous organizations where the
Commission cannot go. I try and go to some of them, but of our
members, we have 16, can go to these meetings, they can
represent the Commission. We do feel they're entitled to travel
expenses for that. It gives Commissioners an opportunity to
listen to these groups, bring back information. I think it's
valuable.
Mr. Porter. What about the printing costs?
Ms. Simon. Printing costs, are they going up this year?
Mr. Porter. Tripled, according to my staff.
Ms. Simon. If they've tripled, it is because we didn't
publish enough probably the last time.
Mr. Porter. Catching up.
Ms. Simon. We had kind of an impoverished year in fiscal
year 1996 where a lot of things were not adequately taken care
of.
Is there something else that I have forgotten, Peter?
Mr. Young. We're planning to publish a series of reports
about the Government Printing Office from the research that we
invested in this year. The expectation is that those reports
won't be available really until next fiscal year; consequently,
the increase in our request for printing services.
Mr. Porter. I see. Jeanne, it seems to me that you're right
at the center of all that's going on in information
technologies in a certain sense, that's where libraries are,
that are changing by the moment. The question that would come
to one's mind if you thought about an agency your size would
be, how can you be relevant in this big Federal bureaucracy.
You've more or less answered that by telling me all the
outreaches you're doing to other organizations and all the
coordination of your activities. But do you want to expound on
that just a little bit?
Ms. Simon. You're right, we are a small organization,
limited assets, and it is a difficult job to keep up with ever-
changing technological advances. But it's important, and that's
our mission as justified in the original Public Law 91-345.
Our Commission members, who are not on salary of course,
have a great variety of interests. When we get together,
whether it's telephone conferences or meetings throughout the
country, we learn a lot from each other and we manage to export
that information to anybody. We are on the Internet, have a Web
site. I don't know how many people have contacted us on the Web
site recently. Peter, do you have the figures?
Mr. Young. Our figures show that we averaging about 6,000
to 8,000 hits a month on the Web site. So it's an important
presence both for the community as well as for the Federal
agencies.
Ms. Simon. This helps expand our information.
Mr. Porter. Sure. I think you've presented a very thorough
budget justification. I think we've gotten everything that we
need.
Mr. Wicker, do you have questions?
Mr. Wicker. I think probably the subcommittee will be
sending some questions in for the record. But I agree with the
Chairman that it's a very fine statement, and I appreciate the
work of the agency.
Ms. Simon. Thank you, Mr. Wicker.
Mr. Porter. Jeanne, thanks for the wonderful job you do
there. I think it's absolutely the best appointment the
President ever made. Obviously, if we have the--you alluded to
fiscal year 1996--if we have the resources that we need to
provide funding for the departments and agencies under our
jurisdiction, we'll do our best to help you because I think
your work is very, very important in this time of change.
Ms. Simon. You've always helped us, Mr. Porter. Thank you
again.
Mr. Porter. Thank you, Jeanne.
[The following questions were submitted to be answered for
the record:]

[Pages 1001 - 1039--The official Committee record contains additional material here.]

Thursday, March 20, 1997.

NATIONAL COUNCIL ON DISABILITY

WITNESSES

MARCA BRISTO, CHAIRPERSON
ETHEL D. BRIGGS, EXECUTIVE DIRECTOR

Mr. Porter. Next, we are pleased to welcome Marca Bristo,
the Chairperson of the National Council on Disability. Nice to
see you again. You can introduce Ms. Briggs if you'd like and
then proceed with your statement.

Introduction of Witnesses

Ms. Bristo. Thank you, Mr. Chairman. I am Marca Bristo, the
Chairperson of the National Council on Disability. With me
today is our Executive Director Ethel Briggs. I, too, have
prepared written testimony which I would like to submit for the
record.
Mr. Porter. Yes, it will be received.

Opening Statement

Ms. Bristo. I would also like to share with you, although
I'm certain that your staff has received this, a copy of the
Council's recent report ``Achieving Independence.'' I will be
referencing this as we proceed today.
In the interest of time, I thought I would depart from the
printed testimony and highlight a few areas, then take your
questions. I would like to cover some of our accomplishments
over the last year, year-and-a-half. I would like to speak a
little bit about the summit and the report and some of our
follow-up activities to the summit, our efforts in GPRA
implementation around strategic planning, and take any
questions you have on our specific budget request and any other
questions that you may have.
First off, I would like to say that this has been a really
important year for the National Council on Disability. We set
out as a 15 person body appointed by the President and
confirmed by the Senate with a very small budget and a very
great mandate to accomplish a lot. I believe that we have done
that.

public policy

The first area I would like to speak to is public policy.
During the last year or so, the Council has focused its
attentions in two or three primary areas. One is in generating
some important information for the reauthorization of the
Individuals with Disabilities Education Act. We printed both a
report regarding the reauthorization in advance of it,
testified at a joint congressional hearing, and provided an
800-page supplement which captured some of the best research
thinking around areas that emerged during the reauthorization
process.

reauthorization of the rehabilitation act

We have also been active this year with the Rehabilitation
Services Administration, in seeking public comment through a
series of field hearings in preparation for the reauthorization
of the Rehabilitation Act. The Council has deliberated on its
recommendations in a collaborative way with the Department of
Education and we will be bringing forward recommendations
shortly.

social security reform

We have also begun a series of field hearings, actually, I
think they're starting later this week, on the issue of return
to work. We are looking at issues related to social security,
health care, and how we can remove disincentives and create
incentives so that people with disabilities can take part in
not only the welfare reform activities, but in other areas of
mainstream America. Those hearings are being conducted over the
next couple of months, and we plan to have some guidance for
you and for the Administration by the end of this year.

housing

Finally, we've also worked with HUD over the last couple of
years to elevate the importance of disability issues to the
cabinet level. The Secretary has appointed a new Assistant to
the Secretary for Disability Policy, bringing issues of
disability to the highest level of that particular cabinet-
level agency which is long over-due.

civil rights

In the area of civil rights, we reported last year on our
work with MicroSoft. I recall the Chairman asked what we had
learned from our lessons in dealing with MicroSoft on the
issues of accessibility for people who are blind and visually
impaired. We somewhat took your advice and captured those
lessons in a report which we issued this year and circulated
amongst the community.
Through NCD's Tech Watch, which is a disability technical
assistance advisory body, we issued comments on both the
Telecommunications Act regulations and most recently on the
telecaptioning regulations that were proposed.
We played a vigilant role in monitoring existing civil
rights laws, most notably through our testimony and activity
around the ACIR report which, at its outset, attempted to make
civil rights laws part of the unfunded mandate. We were
successful in assuring that civil rights laws are not to be
considered part of the unfunded mandate legislation. This was
extremely important to people with disabilities and children
with disabilities all around the country.
We've also been working with the Treasury Department in its
efforts to make the currency more accessible to people who are
blind and visually impaired. And although there are no final
outcomes yet, we believe that our efforts over the long-haul
will result in a major step in that direction.
We will be releasing a report on the history of the
Americans with Disabilities Act this July. We believe that it
is extremely important for us to pass on to future generations
how important that event was to our community, not just in a
statutory sense, but from a historical perspective.
We are also launching a civil rights monitoring effort this
year that will take a look at the implementation and technical
assistance activities around four major bills--the Individuals
with Disabilities Act, the Air Carriers Access Act, the
Americans with Disabilities Act, and the Fair Housing
Amendments Act. This will be a two-year project.

international

Finally, we have been actively involved with the
Organization of American States as they work on a convention on
non-discrimination on the basis of disability, and providing
the United States disability perspective to our Ambassador as
he deliberates with OAS.
We have been active in the international area, we have been
active, as we were previously, serving as the primary point of
contact with the Commission on Social Development within the
United Nations. In that regard, we have supported the
activities of the special rapporteur who has just concluded his
first three-year monitoring project and testified before the
U.N. Social Commission last month on the status of equalization
of opportunity of people with disabilities worldwide. The
Council was responsible for providing the United States report
on this monitoring effort. We, along with many other Federal
agencies, continue to get significant requests for technical
assistance in this area. Over the long term, we believe that
this is something that our country should be taking great pride
in and looking for a more efficient way to help export the
important lessons that we have learned.
We also participated last year in the final of the world
summits, Habitat II, which looked at the issues of human
settlements and housing. We are continuing right now to bring a
disability perspective into the United States' follow-up
efforts to Habitat II that have just this last month become
active.
And finally, we issued a report on the status of the
implementation of civil rights laws in our overseas activities.
We found that a great number of the embassies overseas are not
following the practices of our existing domestic policies, and
we have begun a dialogue with the Access Board to begin to look
at how we can make more of these facilities more accessible.
It's interesting, as we sit here, that our President is off
overseas and, although I can't be sure of this, the study would
indicate that if he needed to pay a visit to the embassy, he
may find some barriers that he would not find as frequently
here in this country.

national summit on disability findings

Finally, the area I want to highlight most has to do with
our summit. We reported to you in prior years that this was
really a culmination of the Council's efforts to pull together
our first really substantive report to you, which we are
obliged to give on an annual basis about the status of
disability policy. In April of last year we convened 300 people
with disabilities representing all different disability types,
and all different ages. We had a delegation of children at the
summit. We started the very challenging task of looking at the
accomplishments NCD had made over the last decade and where we
needed to go in the future.
The findings from the study, for those of us who live with
disabilities, were not that startling. However, I think that
the recommendations the participants made were really bold and
called for some major revisiting of existing public policy.
The major findings that we found during the process was
that although progress has been made, there are still great
misunderstandings that many public policy officials have that
threaten the forward progress. There is a very strong need to
help build a solid information base about what it means to live
with a disability. Second, we found that while the values of
the Americans with Disabilities Act--empowerment, inclusion,
and independence--are strongly embraced by the disability
community as proper national goals for public policy, most
public policies throughout Government do not reflect those
values. And finally, that in spite of the progress, people with
disabilities still are largely outside the economic and social
mainstream.
I will not go through the recommendations in the report in
great detail. They call for heightened enforcement of existing
laws, increased participation of people with disabilities in
public policy decisionmaking, broadening our public education
role, creating and expanding incentives to promote inclusion,
furthering universal design principals not only in the
architectural environment, but also in the communications
environment, and strengthening our systems for data collection.
A very illuminating moment occurred during the summit when a
fairly dry speaker came up to give a presentation on data
collection and most of us expected the room to fall asleep.
Quite the opposite happened. People with disabilities were
really interested in the fact that we are not even tracked in
most of the data studies that are used for making public policy
decisions.
The Council has been hard at work since the summit, along
with our Federal partners in other agencies, in trying to
pursue some of these recommendations. And though we fully
understand that it is not our job alone to implement these
recommendations, it really takes the will of the Congress, the
Administration, and the American public to work along side of
us. We are committed to furthering these goals to the best of
our limited ability.
We have started a series of meetings with cabinet members.
So far we have met with the Attorney General and with the
Secretary of HHS, Ms. Shalala. We have begun a dialogue with
the White House on some of the priorities in this report to
further an understanding of some of these issues. We have also
begun a process of pulling together in a more coordinated
manner the other appointees with disabilities who are sprinkled
throughout Government so that we in our own roles can learn
from this document and collaborate more closely as we go
forward over the next four years.

closing statement

All of what I've just described to you has been very
exciting. We have received very significant favorable response
to a majority of what's in the document. We've just concluded,
as a part of our strategic planning effort, a survey of both
Federal agencies and outside organizations on what we ought to
be doing. The response to that environmental scan has been
really favorable.
I say this to you because our fiscal year 1998 budget
request, which is basically a maintenance budget, a level of
effort budget, is coming to you a time where the demand for our
activity is increasing and the real buying power of our budget
is decreasing. We believe that we've been able to accomplish
these things efficiently by utilizing all of the talents of our
board members, our small staff, and the many partners with
which we work in the community.
Most of our resources will be going into maintenance of our
staffing. Our contractual services line item is cut back by
$64,000 in the coming year. And although we have committed to
some priorities that we thought we would be working on during
this 1998 year, we are also in the process of strategic
planning under GPRA right now, and I would predict, to the
extent that the soft dollars that we have come under that
scrutiny, there could be some changes in our priorities as they
were delivered to you.
I would say that this has been a real honor for me to serve
in this role as Chair. I serve with some of the most capable
people I know in this country. We have gotten tremendous
support for the kind of thinking and work that we're trying to
promote. We look forward to working with you not only here but
in your role elsewhere in the Congress to move this agenda
forward.
Thank you, Mr. Chairman.
[The prepared statement follows:]

[Pages 1046 - 1058--The official Committee record contains additional material here.]

Mr. Porter. Thank you for that excellent statement Ms.
Bristo.
Where was the Habitat II conference held?
Ms. Bristo. In Istanbul, Turkey.
Mr. Porter. In Istanbul. And when was that?
Ms. Bristo. June.
Mr. Porter. Last June?
Ms. Bristo. Yes.
Mr. Porter. I've attended a number of U.N. conferences from
the Earth Summit to the one on population in Egypt and others.
I have found them to be very, very helpful. You really get an
understanding of what is going on around the world and where
people are on things that affect their societies and their
daily lives. I think they're very worthwhile.
You're on the Web site now on the Internet?
Ms. Bristo. We are on the Web site. Yes, we are.
Mr. Porter. How long?
Ms. Bristo. We went up during the last fiscal year and
we're in the process of converting our system at this moment.
So we haven't even had a full year of operation yet.
Mr. Porter. Are you getting as many hits as Jean?
Ms. Bristo. Well, we weren't as forward thinking as Jean
was. As we're replugging into the system, we've requested a
clicker or whatever it is that monitors the hits. I will be
able to report that to you better next time.
Mr. Porter. All right. Are you required to submit a GPRA
plan to OMB?
Ms. Bristo. Yes.
Mr. Porter. And have you done that?
Ms. Bristo. We're in the process of developing ours. It is
slightly ahead of our due date. They are due in finally by
September. We've had our first board meeting looking at this
last month and we will be taking it up at our board meeting
again later this month.
Mr. Porter. So you expect then to submit the plan on time
and to be able to implement it for fiscal year 1999?
Ms. Bristo. Yes.
Mr. Porter. Okay. Last year you testified that the Federal
Government operates 200 disability programs. You indicated that
the large number of programs would be an important topic of
your summit. Did any of your 120 recommendations resulting from
the summit deal with this proliferation of programs and the
possibility for consolidation or better coordination?
Ms. Bristo. Absolutely. The summit was structured around 11
different areas. There was one area that we felt cut across all
areas called Policy Coordination. There was a cross-disability
group that met on that particular issue and made several
specific recommendations, such as assuring that the various
governmental programs conduct a review of their many
disabilities programs to assure that they're not contradicting
other agencies' programs, and that they are driven by the
values in the ADA rather than the old values that many of these
programs were built around in the first place. There is a whole
section in the report on this area.
Mr. Porter. Did the summit conclude that all 200 are
necessary?
Ms. Bristo. The summit did not have as its goal to go in
and assess each specific program. It called in large measure
for heightened collaboration and coordination between programs.
There was not a recommendation to have a single disabilities
super agency, because I think there was a feeling that would
work against the inclusion that we would like to see throughout
Government. However, there was a clear sense from the group
that there needed to be more done to make it easier for the
consumer who is often directed from one agency to another.
Mr. Porter. Are you coordinating your efforts with private
nonprofit organizations like the Recording for the Blind and
public institutions like the American Printing House for the
Blind, both of which are funded in our bill and both of which
are engaging private sector firms to make available products
which are accessible to individuals with disabilities? In other
words, working with private sector firms like MicroSoft?
Ms. Bristo. Not in any specific way on those specific
examples. Of course we have a great deal of interaction with
the nonprofit community around the multiplicity of issues that
we work with. That is reflected in nearly everything that we
do. We have a very significant public hearing process. We reach
out a great deal, because we believe it is that perspective
that is sorely needed in Government on the part of people with
disability.
Mr. Porter. You might consider those two organizations that
we know are doing something similar to what we're doing.
Mrs. Northup.
Mrs. Northup. I have a couple of questions. First of all, I
notice that your recommendation says that there is an increased
participation with the disabled community in public policy
discussions. I understand that you're recommending that all the
rehabilitation money that goes to States require them to
combine their departments for the blind, their services to the
blind under the general rehabilitation efforts.
Ms. Bristo. Yes.
Mrs. Northup. Did you consult the American Federation of
the Blind or the American Council on the Blind before you made
that recommendation?
Ms. Bristo. Let me say that the Council does not have a
history of bringing each and every of its recommendations out
to specific groups. We did, however, have public hearings, we
did publish in our newsletter that we were doing this, and we
have subsequently received information from those groups and
others. At our last board meeting, the Council adopted certain
concepts that we wanted to see in the bill. And in keeping with
some of our recommendations that came out of Achieving
Independence, there was a recommendation that would cause
greater flexibility at the State level but which would
consolidate the blind agencies and the non-blind agencies.
We have heard, as I'm sure you know, from significant
members of the blindness community, and the Council, while it
has a very strong commitment to equity and cross-disability
representation particularly in the makeup of the Council, felt
that the issues that they were raising warranted further
discussion. The item has been placed on the agenda of our board
meeting next week. We have sought input and made time on the
agenda for representatives from those groups.
Mrs. Northup. I have a letter here from the American
Council for the Blind that says they were informed, after seven
weeks of delay and sidestepping, they were informed this past
Tuesday at 4:30 p.m., that you intended to make
thisrecommendation.
Ms. Bristo. I'm sorry that they feel that there has been
sidestepping and evasion. That certainly has not been our
intent. I don't think it is probably appropriate for me to go
into all of the details of the correspondence coming from the
other direction. I can only say that the Council has in all of
our efforts sought the input of people with disabilities, and
our efforts are an attempt to look at every person with a
disability's issues and concerns, to do it thoughtfully and
with information and data before it. That is why we will be
revisiting the issue after they brought us their concern.
Mrs. Northup. We in Kentucky have just gone through quite a
relooking at this and decided to keep separate the department
of the blind and the cabinet for the other rehabilitation. I
guess, one, I'm surprised you would take away that flexibility.
If the State believes that the best way to implement programs.
I thought we were going in the direction of allowing
flexibility to States in programs so that could be determined
by the local community what is most needed.
Ms. Bristo. We don't believe that the draft recommendation
that we've put forward, and I would like to underscore that
since the issue has been brought back to our attention, we have
taken the proactive steps of putting it back on the agenda,
therefore it is premature for us to sit here and reach the
conclusion that this will be the final Council recommendation.
However, we do believe that the recommendation that we have put
forward allows States that option and allows and encourages
States to develop that kind of specialized service-thinking for
people with all different disability issues.
Mrs. Northup. Wait a minute. You said it does allow States
that flexibility. Have I misunderstood, do you require the
blind services to be under rehabilitation?
Ms. Bristo. Yes, but within the State's jurisdiction they
can segment those services once the dollars have come into the
State.
Mrs. Northup. But the dollars all come in in one lump sum?
Ms. Bristo. Yes, they would.
Mrs. Northup. And one agency would be required to allocate
that money?
Ms. Bristo. Yes.
Mrs. Northup. Again, I guess when you talk about increasing
participation of the disabled community in public policy
discussions, you said you have had open meetings discussing
putting this all together. Was there any major organization
that represents the blind community that supported that move of
combining the services?
Ms. Bristo. No. But I do think it's important to note that
there are multiple disability constituencies that the Council
is responsive to.
Mrs. Northup. So are there people that have different
disabilities other than blindness that do not want the blind to
have a separate program?
Ms. Bristo. No. I really have put most of my career into
building bridges and to not creating divisions where they don't
exist. However, the Congress has charged the Council with
looking for ways to make programs and policies reflective of a
wide diversity of people with disabilities. This draft
recommendation was in the spirit of the voices that we heard at
Achieving Independence and the deliberation of the Council
which, I might add, does have representation from people who
are blind.
Mrs. Northup. Would you supply my office with two things.
One, the names and testimony at any public meetings of who the
organizations or individuals were that supported combining and
the position you took. I guess there are minutes of those
meetings or transcripts.
[The information follows:]

[Pages 1063 - 1069--The official Committee record contains additional material here.]

Ms. Bristo. Yes.
Mrs. Northup. And the second thing, would you let me know
after the next Council meeting--when is that going to take
place?
Ms. Bristo. March 23 and 24.
Mrs. Northup. Would you let me know what the decision is?
Ms. Bristo. I absolutely will.
Mrs. Northup. Okay. Is that all of my time, Mr. Chairman?
Mr. Porter. You can have a few more minutes.
Mrs. Northup. I'd like to ask you a little bit about the
question of braille. Do you have any position--there's a
portion of the blind community that actually can benefit from
computers and actually communicate through computers. But it's
my understanding those who are totally blind, can only read
through braille and through learning braille. There's
increasing concern from that community that there's less
support, fewer children, and fewer teachers learning to read
braille.
Ms. Bristo. I understand that concern and I believe it was
one that was raised pretty strongly during our dialogues at the
summit. I think it has always been the Council's position in a
general sense that people need accommodations to suit their
individual disabilities. Therefore, though we have not formally
taken a position on this, I would venture to guess that were
this put before us there would be strong support for this.
Mrs. Northup. Okay. And finally, I understand that 50
percent of all children that are diagnosed as being disabled
are learning disabled. Do you provide services for those
children? Do those services come under your jurisdiction or
concern?
Ms. Bristo. We do not in a traditional sense provide direct
services other than information and the policy guidance that we
think is a public service for all. And, yes, we do incorporate
in our thinking and in our public hearing process, et cetera,
the perspectives of people who have learning disabilities. In
fact, there are two people who represent or who are reflective
of those disabilities themselves currently on the Council .
Mrs. Northup. Do you have a specific position that children
with learning disabilities should be mainstreamed in their
early years of school, grade school?
Ms. Bristo. The Council has supported statutory language in
IDEA that requires for education in the least restrictive
environment. We also support the child, the parents, and the
school's need to decide that collectively in the IEP process.
Having said that, we also believe that there is all too much
segregation of children with disabilities in the United States.
We believe that there needs to be structural funding and
program changes that would create more integrated schooling
opportunities for those children who want them, which, by the
way, is a majority.
Mrs. Northup. How would you answer the large number of
parents that complain to me that their children are
learningdisabled, are mainstreamed, do not get the direct remediation
that makes such a tremendous difference in a child's life who can
afford to go to one of the schools designated purely as remediation of
learning disabilities and that their children in a sense never get
remediated because of the refusal of the schools to recognize that
intensive remediation may be a better way?
Ms. Bristo. I think it's unfortunate that sometimes this
discussion gets painted into either/or or as if there's two
sides. I think that most people with disabilities have the
interest of the individual and specific child at heart. We
concur that the funding has not been sufficient to fully
implement the intent of the law. We're hopeful that we will see
increased funding that would go a long way toward dealing with
some of those issues. I live in Chicago. I know of the
difficulties that schools are facing from a fiscal perspective.
But I also know that the law was set up the way it was for a
particular reason and we need to see heightened resources in
this area.
Mrs. Northup. I have finished my questions, but I would
like to ask you to look at what the National Institute of
Health has found, that children with learning disabilities, if
they aren't remediated by the end of third grade, it takes four
times as long, and the best approach is this intensive,
phonetic-based remediation. So failure to deliver that because
we think something else might be better has caused a lot of
children a lot of loss of opportunities.
Mr. Porter. Thank you, Mrs. Northup.
Ms. Bristo, thank you for your good statement and your
answers to our questions. We appreciate the work that you do on
the National Council on Disability. Good to see a fellow
Chicagoan.
Ms. Bristo. Thank you very much.
Mr. Porter. Thank you.
[The following questions were submitted to be answered for
the record.]

[Pages 1072 - 1124--The official Committee record contains additional material here.]

Thursday, March 20, 1997.

PHYSICIAN PAYMENT REVIEW COMMISSION

WITNESSES

GAIL R. WILENSKY, CHAIR
LAUREN B. LeROY, EXECUTIVE DIRECTOR

Mr. Porter. Next, we have the Physician Payment Review
Commission. We're very pleased to welcome Doctor Gail Wilensky.
Gail, it's nice to see you. Why don't you introduce the guest
that you've brought with you and then proceed with your
statement.

Introduction of Witnesses

Dr. Wilensky. Thank you. I have with me Doctor Lauren
LeRoy; she is the Executive Director of the Physician Payment
Review Commission. I would be pleased to summarize the
statement and I would ask to have our entire submission
included in the record, please.
Mr. Porter. It will be received.

Opening Statement

Dr. Wilensky. As you know, the Physician Payment Review
Commission was initially established to look only at narrow
issues of physician payment under Medicare. But over time,
particularly through a couple of the Budget Reconciliation
Acts, this mandate has been broadened considerably so that now,
because of the congressional mandates, PPRC, unlike its name
suggests, looks at much broader issues of trying to constrain
employer-based health care costs, looking at access to care
under Medicare and Medicaid, and is heavily involved in many of
the most contentious issues today with regard to Medicare
restructuring, including payments to managed care plans, risk
adjustment, and issues relating to graduate medical education.

COMMISSION REPORTS

We have just been going through a very busy period and are
continuing to go through a very busy period. We have four
reports that were submitted during this last year. We have our
annual report which will come out next week. There are also a
number of other reports that we traditionally do, and I'll
mention briefly one other report that we added this year. We
had a report on the Volume Performance Standard, one that we
did on access to care, with the usual access to care measures,
and we look at the liability that seniors have under Medicare.

ADVICE TO CONGRESS

During this period that we are just going through, which,
as I've mentioned, is a very busy period, we will have done
seven hearings and seven different briefings before
congressional committees or their staff during the year. That's
actually been quite a lot. We have had six public meetings
including one at which we had 23 groups that were able to
provide testimony to the PPRC, and we think that's very
important. And as a result of speaking to congressional staff,
which we try to do with great regularity, this year we
introduced two short, we hope readable, products with this red
dot logo. One is an Update series that talks about, in a very
brief and readable form, work that is going on--the one that I
have in my hand is Evidence of Risk Selection in Medicare HMOs,
which has been a very controversial and hot topic. We also
started a series called the PPRC Basics, which is put together
to help, particularly, congressional staff and members who are
not primarily concerned with Medicare understand the basic
elements of Medicare.
We will be continuing in fiscal year 1998 to look at issues
that affect both traditional fee for service and also Medicare
managed care. These are issues that are part of the budgets
that are of concern both to the Administration and to the
Congress as they try to restructure Medicare.

APPROPRIATIONS REQUEST

The Commission is requesting a budget of approximately $3.5
million for fiscal year 1998. This is a request for an increase
of approximately $315,000 over our 1997 appropriation. And
while it's about a 9.5 percent increase, we would like for you
to be aware, Mr. Chairman, that it is 19 percent below what the
Commission actually was appropriated in 1993. As you are well
aware, last year the Commission's budget was reduced by 30
percent in anticipation that the two Commissions, PPRC and
ProPAC, would be merged. That didn't occur. It has led us to
streamline our efforts and we had already reduced our
appropriation requests by 8 percent for the 3 years prior to
last year.
We're concerned that, if we continue to face reductions,
the kinds of analyses that we do for the congressional staffs
and the members will not be possible in the future. Let me just
close with one example where we hope it willindicate the kind
of work that PPRC has been able to do and would like to do in the
future.
In November I testified before the Senate Appropriations
Health Subcommittee when we were releasing a report on access
to care for Medicare seniors in managed care. Right now,
neither HCFA nor PPRC is required to report to Congress on
access to care for the 12 percent of the seniors who are in
Medicare managed care. It is a very rapidly growing area and we
think it is very important that this go on. But PPRC, using its
own funding, had supported and sponsored this survey of access
and it is the only baseline information that is available to
the Administration or to the Congress on access to care for
Medicare managed care enrollees. It is the kind of work that we
think is critical that we be able to do in the future.
We are most vulnerable in terms of the policy analysis
component of our budget and the computer component of our
budget. So we hope that we will have this regarded in a
favorable way so that we can continue doing these kinds of
analyses.
Thank you. I would be glad to answer any questions.
[The prepared statement follows:]

[Pages 1128 - 1138--The official Committee record contains additional material here.]

Introduction of Guest

Mr. Porter. Doctor Wilensky, we would beg your indulgence
for a moment. We have a very special guest with us this
afternoon and I would call on Mrs. Northup to introduce her.
Mrs. Northup. Thank you, Mr. Chairman. I have visiting with
me my daughter. She is home on spring break. This has been her
visit to Washington by herself, and I appreciate you giving me
a chance to introduce her.
Mr. Porter. You didn't tell us her name.
Mrs. Northup. Her name is Erin Northup.
Mr. Porter. Erin, it is wonderful to welcome you here. You
are listening to a very special lady who is very well known in
Washington.
I was going to ask you, Gail, how many times do you think
you've testified before a congressional committee?
Dr. Wilensky. Something in excess of 80.
Mr. Porter. Oh, my goodness.
Well, we're delighted to have you, Erin. Thank you for
joining us this afternoon.
Gail, you just referred a minute ago to managed care and
the 20 percent----

commission merger

Dr. Wilensky. It's 12 percent but it has been growing at 35
percent in the last year, 25 percent per year in the previous
year.
Mr. Porter. My mother who died three years ago was, during
all the time it was possible to be, in a managed care program
under Medicare. I think you're exactly right in what you said,
especially with the growing population.
Now, as with the Library Commission, you've submitted such
a detailed statement and budget request that I'm not really
sure we need to ask you a lot of questions. You referred to the
attempt to consolidate in the budget reconciliation bill your
Commission and the Prospective Payment Assessment Commission.
It is likely that Congress is going to go through the same
exercise this year producing another budget reconciliation
bill. As far as you know, is the idea of a merger still on the
table for serious consideration or is that gone?
Dr. Wilensky. I have not heard very much about it. I don't
know that it is officially dead but it has not at least been
raised to my attention. So I regard it as somewhat in limbo.
Mr. Porter. The Administration isn't pushing it?
Dr. Wilensky. No, the Administration is definitely not.
This is an issue that was being raised primarily by the House
last year. I don't want to say that the Members who expressed
interest don't think it's a good idea any longer, but I just
have not heard it regarded as a high likelihood or even a high
area of interest.

joint work by pprc and propac

Mr. Porter. Regardless of whether a merger eventually does
take place, you've indicated that a certain amount of joint
work between the two agencies makes sense as we begin to think
of Medicare as an integrated health insurance program rather
than two separate programs, Part A and B.
Dr. Wilensky. Right.
Mr. Porter. Your agencies have already collaborated on a
few projects and now you have exchanged at least one board
member. You mentioned last year future possible areas for joint
work including capitation payments to private providers,
graduate medical education, risk adjustment, and payment for
outpatient services. Do you have any ongoing collaborative
work? And are you planning more collaborative work for the next
two fiscal years, for this one and next?
Dr. Wilensky. We had this year something that I don't
believe occurred previously, which is a joint committee meeting
of all of the Commissioners. It was very useful. We had
presentations by both of the staff of the two Commissions on
work that we are doing collaboratively, including work on
graduate medical education, where, by tradition, PPRC has done
direct medical education payments and ProPAC has looked at
indirect medical education payments. We're now working on these
together. We are continuing doing some work with regard to
capitation issues. We issued a joint report last year.
I think it is important that we continue to work together.
As you indicated, somewhat to my chagrin, one of our
Commissioners, Doctor Joe Newhouse moved over on the other side
to be the Chairman of ProPAC. He is now here. It probably made
it even easier to continue this collaborative working
relationship, although there has been for some time an effort
for the two Commissions to work together.
We do tend to have areas where our staffs have separate
analytical expertise and that, therefore, means there are areas
that we clearly work on independently. Risk adjustment and the
whole risk selection issue has been a very big topic, along
with capitation payments, for PPRC, as well as some of the very
specific physician issues. Right now, it is probably not an
issue that's come to your attention, but issues about practice
expense under the Medicare relative value scale are causing a
lot of comment among the physician community, particularly
among specialists. So some of the traditional work of PPRC
narrowly defined is ongoing, as is true for ProPAC. We just
left a hearing together where some of their traditional issues
of update factors for hospitals were clearly once again
contentious.
Dr. LeRoy. Also on the staff level, we've been making a
concerted effort to plan more collaboratively and to share
materials. Before each of our planning retreats this year, we
shared the plans that we would be bringing to the Commissioners
so that we could actually integrate the work that one
Commission was doing with the other. We send eachother all the
materials for each Commission meeting in advance of those meetings so
that the staff for each Commission can take a look and make sure to
follow up where there might be some overlap or opportunity for
collaboration. And we've had staff from one Commission presenting to
the other Commission so that both Commissions could benefit from the
staff work that's done.

restraining growth of medicare

Mr. Porter. Now, Doctor Wilensky, can I ask you to put on
your economist's mantel and talk for a minute about the need to
restrain the rate of increase in entitlement programs. As you
know, the President in his health care reform package
specifically said one of his purposes was doing exactly that,
to bring down the rate of increase in the programs that's
historically been above 10 percent down to the 6 to 7 percent
range. That was not adopted by the Democratic Congress. The
Republicans came in and proposed changes in Medicare and
Medicaid in a reform package in the Balanced Budget Act of 1995
that had the same purpose and that was vetoed. Here we are
almost five years later and the problem that we both started
out to solve in different ways five years ago is still with us.
I sat there, very frankly, I sat there at the State of the
Union Address waiting for the President to lay this out for the
American people that we had to do this and we needed to work
together in a bipartisan way to do it. I never heard the words.
I look for some real proposals in the President's budget that
might--and I have to say that perhaps he's done it with respect
to Medicaid, but on Medicare it seems to me it's the same old
thing that has really been a bankrupt policy for a long time,
and that is say, okay, we're going to just cut payments to
providers and shift the burden.
I want you, if you will, to tell me how important is this
to the budget process, how important is it to balancing the
budget and getting back on solid economic ground? And then
putting on your political visionary's hat, do you think there's
any real chance of getting this done this year?

medicare's short-term problem

Dr. Wilensky. Those are very good questions. Let me try to
answer them briefly. I look at Medicare and see a short term
and an intermediate term and a long term problem. In the short
term, there is an issue with regard to the budget, more from
Part B than from Part A because of how they're financed. As you
know, Part A is the trust fund financed by contributions that
come 1.45 percent from the wage tax. Part B, on the other hand,
although it technically has a trust fund, is funded annually
and three-quarters of it comes right out of general revenues.
And Part B has been growing faster than Part A.
What that means is that in any year it is difficult to
balance the budget in part because you have this rapidly
growing expenditure in Part B, three-quarters of which comes
right out of general revenues. So it is a clear problem for the
budget in each and every year.

medicare's intermediate-term problem

In the intermediate term, as people have heard, we have a
problem with regard to the trust fund. We are spending more
money out of the trust fund than comes in. Under current
projections, including the long-awaited CBO 1997 baseline
estimates, it is still projected to run out of money in 2001.
Within a decade, under current law, it is estimated that we
would be more than a half a trillion dollars, more than $500
billion in the red as we are now going. That is clearly a very
large number and before the baby-boomers start to retire.

medicare's long-term problem

And that really gets to the long-term problem, which is
that between 2010 and 2030 some 75 million people who were born
between the years 1945 and 1965 hit retirement and will place
enormous pressures on the tax transfer system that finances
benefits for people who are seniors.
The real concern that I have had is that the incentives
associated with Medicare as we now have don't encourage cost-
effective behavior either on the part of seniors or on the part
of the people who are honestly trying to provide services to
them--physicians, hospitals, home care, skilled nursing
facilities. And that is fundamentally going to require a
redesign of the system to correct the problem.
But putting my political hat on, I personally find it very
unlikely that we will see much change in the short term. I am
not impressed that there is much of a redesign that's being
proposed. Congress doesn't have to do something this year. I
have heard in a number of hearings that I have participated in,
not as PPRC Chair but as a Medicare expert, what a lot of
feeling is, as a result of the very partisan atmosphere of the
last year to 18 months, there are jaundiced views probably on
both sides, but certainly on the majority congressional side.
And probably as importantly, there is not this sense of need to
act on the part of the baby-boomers and the people like myself
who are between the boomers and the retirees. That makes it
very difficult to force change to occur.

effect of proposed changes

It is my personal view that a Medicare stand alone bill
isn't going to occur, and that it is only the possibility of a
Balanced Budget Act which forces some Medicare savings that
will produce any action. But, frankly, I'm not impressed that
the Medicare savings that are being discussed will do anything
but buy a little time. It really doesn't go to the issue of
fundamentally redesigning the incentives.
I have a very jaundiced view of the transfer of home care
money, not because I think there isn't some policy
justification that is being raised, but half of the savings
that come out of keeping the trust fund going for the next
decade come from the $80 billion transfer that's being proposed
from home care while not subjecting it to the normal
constraints associated with Part B spending, which is that
seniors pay 25 percent of the premium and the payment is
subjected to the $100 deductible and the 20 percent copay. Now
those aren't wonderful constraining devices but they're all we
have right now. And to make that kind of transfer without
continuing to follow the constraints we have under Part B I
think is a terrible precedent to put in place.
So I am not impressed that either at the financial level or
in terms of the fundamental redesign that we are seeing a real
willingness to take on these very serious issues.
Mr. Porter. Doctor Wilensky, I really appreciate the
opportunity to hear your views on matters like this. I have to
say, after hearing you, I'm not very sanguine that anything
good is going to happen here, which is kind of a downer, but
you always tell things exactly as you see them. We very much
appreciate the fine job you're doing. You're calling it PPRC.
Dr. Wilensky. Physician Payment Review Commission.
Mr. Porter. We call it PhysPRC. You've changed the acronym
here.
Dr. Wilensky. We tried.
Mr. Porter. Don't like that one, huh?
It is really nice to see you. Thank you so much.
Dr. Wilensky. Thank you.
Mr. Porter. The subcommittee will stand in recess for
fifteen minutes while we have a vote.
[The following questions were submitted to be answered for
the record:]

[Pages 1144 - 1197--The official Committee record contains additional material here.]

Thursday, March 20, 1997.

PROSPECTIVE PAYMENT ASSESSMENT COMMISSION

WITNESS

JOSEPH P. NEWHOUSE, CHAIRMAN

Introduction of Witnesses

Mr. Porter. The subcommittee will come back to order.
There will be two more votes in about 10 minutes. So I
wanted to give you an opportunity so we didn't have to keep you
here. Let me say welcome to Doctor Joseph P. Newhouse, the
Chairman of the Prospective Payment Assessment Commission. We
appreciate your testimony. Would you please proceed and then
I'll ask some questions.

Opening Statement

Mr. Newhouse. Thank you very much, Mr. Chairman. It's a
pleasure to be here. Much of what Doctor Wilensky said in her
beginning could also be said of us. Our mandate has broadened.
We actually will have participated in nine hearings in the past
few months.
I'm here with Doctor Donald Young, who is the Executive
Director of the Commission and whom I would like to speak on
the appropriations request. And to try to keep this on the
brief side, let me just talk about one of the substantive
recommendations that we've made this year that has generated
quite a bit of attention, which is the so-called freeze on
hospital update payments.
The Commission got to that in part by looking at some of
the data that's shown to you in charts 1 and 2 in the
testimony. If you look at chart 1, you will notice that there's
a remarkable thing that's happened to hospital costs. They were
chugging along at about 9 percent a year and they have actually
gone negative in the past few years. Corresponding to that the
profit margins, that are shown in chart 2, have gone up. We
project the margins are going to go up to about 10 percent in
1996. We think the Government, with hospital costs going down
and margins going up, can afford to not update the hospital
payment. Let me note in passing that total revenues going to
hospitals from Medicare would still go up because they go up in
proportion to the complexity of cases hospitals treat and those
will continue to go up.
Let me just also note in passing, chart 4, although we have
costs in the hospital falling, they're falling in part because
so-called post-acute care, skilled nursing facilities and home
health, has been going up at very rapid rates, you will see
that over the last five years 20-some percent a year, and we
have made some recommendations for the Congress on what to do
about those payments.
The remaining parts of my testimony deals with the at-risk
program. We, like PPRC, have recommendations on the at-risk
program.
Let me stop and see if Doctor Young wants to say anything
about the appropriations request which in absolute dollars is
an increase very similar to PPRC's. And then I'd be happy to
take your questions.
Dr. Young. I don't have anything.
Mr. Newhouse. You don't have anything to add? Okay.
[The prepared statement follows:]

[Pages 1201 - 1210--The official Committee record contains additional material here.]

Merger of Commissions

Mr. Porter. All right. Thank you for your statement, Doctor
Newhouse. Again, you've submitted a very helpful budget
justification. Your statement is excellent. I'll only need to
ask a few questions.
As with Doctor Wilensky, I would like to ask you your view
of the possibility of a merger. Is this being seriously
considered by either Budget Committee or Ways and Means
Committee, do you know?
Mr. Newhouse. I don't have any knowledge of how seriously
it's being considered.
Mr. Porter. What about collaborative work between your
commission and PhyPRC?
Mr. Newhouse. The area where the two really overlap, as
Doctor Wilensky said, is the at-risk program. She described the
degree of collaboration; joint meetings, discussions back and
forth between Doctor Young and Doctor LeRoy about where the two
Commissions were coming out. Gail and I had some discussions in
an effort to reach common language which we didn't fully get to
because of the timing, but the general thrust and substance of
the recommendations are consistent.
I might add in terms of the merger, first, I think other
than Gail and myself, the knowledge of the Commissioners and I
think to a fair degree the staff of the jurisdiction of the
other Commission is very limited. I think my Commissioners know
very little about Part B, and I think the PPRC Commissioners
know very little about Part A. I think that would be certainly
a----
Mr. Porter. But you know about both?
Mr. Newhouse. Well, I certainly know more about Part A
since being on ProPac than I did before I became Chairman of
ProPac, I can assure you of that. The one question that I would
have, if the two Commissions are merged, the number I've heard
for the number of Commissioners was 15, and in my view that
would be too few to adequately cover the program. What I hear
is that you'd have one Commissioner who was appointed from a
particular part of Medicare, say the home health industry, and
that person would dominate the Commission with respect to the
home health industry because the rest of the Commissioners
wouldn't know as much about it.
Traditionally, on ProPac there have been a lot of
representatives from the hospital industry, and on PPRC a lot
of physicians as well as a lot of academics. That has made for
a very helpful debate that would be diminished if the number of
Commissioners were reduced. We have I think between the two
Commissions now--we're authorized for 17 and have actually 16,
and PPRC I believe has 12. So you can see that we would be
cutting the total number almost in half if we merged them.

Medicare Trust Fund

Mr. Porter. When will the Medicare trust become insolvent?
Mr. Newhouse. The CBO numbers are 2001 and I have no reason
to argue with them.
Mr. Porter. Would the entitlement reforms passed by the
last Congress and vetoed by the President have extended the
solvency of the Medicare trust funds? If so, by how long in
your opinion?
Mr. Newhouse. They certainly would have. I haven't gotten
into enough detail to know just how many years they would have.
Let me give you my general view of this. The kinds of changes
that were made both in the Balanced Budget Act and that the
President is now proposing will buy some modest number of years
in the trust fund, that obviously depends on the scope of the
measure, but they would not in my view solve the problem once
we get to the baby-boomers becoming eligible for Medicare. That
is going to require not only I think some substantial
rethinking of the program, but a question of what level of care
will be paid for for elderly beneficiaries.
I'm very sympathetic to the comments that Doctor Wilensky
made to you. The only thing I would really add is to give you
some historical perspective. If you go back to 1940 and decade-
by-decade you look at medical care costs net of inflation and
population growth, those have grown 4 percent a year in every
decade except the 1960s when theygrew 6 percent, that was of
course when we had Medicare and Medicaid put in. The bulk of that
represents the capabilities of medicine and the increase in those
capabilities which my colleagues at Harvard Medical School are busily
churning out. Those innovations have been increasing and cost
increasing. You get a Nobel Prize for figuring out the cure to some
disease not for figuring out how to reduce the cost of something you
already do.
Maybe with a more price competitive market we'll get a
different mix of innovation than we've had. But the image that
comes to my mind is turning around the aircraft carrier. If
you've gone at 4 percent a year for five decades, it doesn't
seem likely to me that you'll come down to about zero, which is
where you would have to come to to accommodate the baby-boomers
at the historical rates of increase in Medicare.
So we indeed face some very difficult issues out there. I
might note that I probably will be on Medicare at that point,
at least I hope I will be, so I have some real interest in
these questions. But it's going to be a very difficult time for
people who actually have to make decisions on taxes and
spending cuts.
Mr. Porter. Doctor Newhouse, it's going to be a very
difficult time on both Social Security and Medicare. If we
don't do something very, very soon and we keep putting these
decisions off, it's going to be a disaster. It will be
impossible. We'll have to cut the programs down in such a way
that intergenerational equity will be totally gone and the
worst fears of the young people of this country will be
realized. There won't be anything left.
Mr. Newhouse. My children remind me of that many times.

Hospitals and Competition

Mr. Porter. It's amazing to me that we have the opportunity
to do things and we don't seem to be able to grasp it. Gail
said this year it won't happen. Well, if it doesn't happen this
year, it ain't going to happen next year which is an election
year. Is it going to happen the following year? Unlikely. This
year is the time when we ought to be doing it. There isn't
anybody that doesn't understand after all this time that these
are serious problems. They're not going to go away, they are
going to get worse if we don't do something soon. And yet our
political process has ended up and they're being demagogued to
death and the special interests in our country seem committed
to hanging on regardless of what is needed.
Eventually, we're going to end up unfortunately in some
kind of crisis situation. It is really sad that in an
intelligent country like this it takes a crisis for us to do
what we knew years before we had to do. I think the people
involved with this, including all of us and certainly
yourselves, ought to be out there banging on the tables and
trying to get the President's ear and the Congress' ear and say
get this thing done. It is just appalling to me.
That's my sermonette for this afternoon. But I really think
that this is a problem that has to be solved. The proposals
that the President has made I think are bankrupt proposals,
very frankly. Sure, they make for good politics, but they make
for bad Government. I don't know how he could do it, very
frankly. He doesn't have to run for reelection. It's time he
sit down and provide some leadership to our country instead of
putting his finger in the wind. It's gone on long enough. But
I've been very disappointed in that.
In your written statement, you indicate that the hospital
industry is adapting rapidly to a more competitive environment.
Has that adaptation been uniform throughout the industry? And
has the disproportionate share hospital program adequately
assisted heavily impacted hospitals in adapting to the new
environment?
Mr. Newhouse. The answer is it has been by at least a large
subgroup of hospitals recently uniform though not fully so.
Urban hospitals have done better, for example, or have done
more at least at reducing costs than rural hospitals.
On the disproportionate share program, the Congress asked
the Commission to look at the disproportionate share program in
a serious way and that was really the first time it had been
done since it had been put in. And I'm particularly pleased
with the recommendations we made on disproportionate share this
year. We didn't address the issue of how big the pot should be
for disproportionate share--we thought that was ultimately the
Congress' important decision--but we did have recommendations
on how the money should be targeted to hospitals.
One of the things we did was instead of, as is now done,
basing the allocation on a hospital's share of Medicaid
patients, broadened that to include all low income patients.
The disproportionate share was intended to help hospitals with
uncompensated care. Medicaid, of course, is not uncompensated
care and it's not that well correlated with uncompensated care.
The correlation was actually getting worse as you had States
like Oregon that had broadened eligibility for Medicaid
substantially and thereby reducing uncompensated care but
claiming a bigger portion of the disproportionate share pool.
That was one recommendation.
Another recommendation was that it turns out that there's a
threshold over which a hospital has to jump before it gets
disproportionate share payments. For most urban hospitals that
threshold was 15 percent Medicaid. And for rural hospitals it
was much higher, for most rurals it was 45 percent Medicaid. We
thought the bar should be at the same level for both urban and
rural hospitals irrespective of size. We're recommending that
to the Congress as well.
The net effect of these recommendations, one can obviously
titrate them in different ways depending on where one sets
thresholds and so on, but the kind of plain vanilla run we did
to try to figure out who would gain and who would lose was that
large urban public and rural hospitals would tend to gain some
and all other hospital groups would slightly lose some. Of
course, if you didn't get disproportionate share payments you
couldn't lose. But I think the recommendations we're making
should make for better policy in this area.

Teaching Hospitals

Mr. Porter. What about teaching hospitals or academic
medical centers that seem to be under great siege due to the
changes in the private marketplace. Have you looked into their
situation?
Mr. Newhouse. Yes, we have. Of all the groups or large
subgroups where we track, their Medicare margins are the
greatest, reflecting the extra payments they get under
Medicare, both the teaching payments and the disproportionate
share payments. But their total margin is the lowest. Now it's
not dramatically lower, it's a couple of percentage points
lower than the highest, but as I recall it is 3-something
versus 5-something on total margin. That reflects the problem
you're pointing to, which is the vulnerability of teaching
hospitals to a price competitive market.
We have several recommendations on the teaching front.One
of them, however, that I think will help the problem you're addressing
is that we would take the teaching payments as well as the
disproportionate share payments out of the payments that go to at-risk
plans and those could be, if desired, set up as a separate trust fund
or other arrangement to funnel to the teaching hospitals. In the
Commission's view, those payments were designed to go to teaching
hospitals to support their more complex case mix, their more
technologically sophisticated treatment and so forth. There is no
necessary link between payments to the at-risk plan, the so-called
AAPCC, and these payments intended for teaching hospitals. So that we
would do that.
Another important recommendation we make is that we would
cut the link between the number of residents a hospital has and
the amount of money it gets. Right now this functions in effect
as a subsidy for residents. The number of residents has gone up
for 10-plus years. We think that that is not good policy and we
suggest that you stop subsidizing hiring another resident. You
would keep the teaching monies, again, the size of the pot is
open and one would have to confront the issue of how to
allocate those monies among teaching hospitals, which is not an
easy question, but at least if a hospital hired another
resident it wouldn't get more money.
Mr. Porter. Doctor Newhouse, are you here in Washington,
are you physically located here?
Mr. Newhouse. No. I'm a professor at Harvard.
Mr. Porter. At Harvard. And where are the meetings of the
Commission held?
Mr. Newhouse. Here.
Mr. Porter. And how often are they?
Mr. Newhouse. There are five Commission meetings a year. In
addition, I'm down here from time to time meeting with the
staff.
Mr. Porter. The reason I asked is that I would like to have
an opportunity sometime when you're down here to spend some
time and talk with you informally about some of these issues.
Mr. Newhouse. I would welcome that. Maybe we could set that
up between Doctor Young and your staff in the next few months.

medicare capitation savings

Mr. Porter. Thank you very much.
Your statement indicates that while the Medicare capitation
program has grown dramatically since 1993, Medicare has not
achieved the savings for managed care that were originally
contemplated and that the private sector experience suggests is
possible. Does this suggest to you that capitation cannot work,
or that it will work with some changes?
Mr. Newhouse. No. It's not that capitation won't work. It
is really the formula by which Medicare pays capitated plans,
the so-called AAPCC, Adjusted Average Per Capita Cost. Medicare
essentially pays the average of the fee for service system
payment in each county adjusted for the age and sex and a few
other characteristics of the beneficiary. There are several
problems with this. Probably the biggest one and why Medicare
overpays or has not achieved the savings is that these so-
called risk adjusters--age, sex and the like--don't do a very
good job of adjusting for the medical needs of those actually
enrolled in HMOs.
So it turns out that if you go back and you look six months
before the people who enrolled in HMOs enrolled, this is
actually some PPRC analysis, they spent on average 63 percent
of what fee for service people spent in the fee for service
program. In other words, it was the low spenders that were
going in. People coming out of HMOs actually were high
spenders; they spent about 160 percent of the average. So you
have low spenders going in, high spenders coming out, we don't
know what's going on in the middle because it's a big black box
and we don't have similar kinds of claims data.
But let me just take the people coming in. Medicare was
paying actually 95 percent of the average. But the people
coming in were spending in the six months before they came in
63 percent of the average. The estimates from CBO and HCFA are
roughly that Medicare was losing about 5 to 7 percent for
everybody that was enrolling in an at-risk plan.
Mr. Porter. When you say coming out, I'm not sure what
you're----
Mr. Newhouse. Disenrolling.
Mr. Porter. Disenrolling?
Mr. Newhouse. Yes.
Mr. Porter. Why would they be disenrolling if costs are
getting paid at a--are they being encouraged to leave the
program by the providers?
Mr. Newhouse. That, we don't know. It's conceivable. It's
conceivable they were just unhappy for whatever reason with the
care they were getting. One of the things I would point to is
on the post-acute care. If you want home health care, the
anecdotes on the street at least that I hear is it's hard to
get that in managed care. But if you opt back for traditional
Medicare, you can get home health care in many areas with
fairly few restrictions. So those would tend to be probably
people who were above average users.
Mr. Porter. It would also though be in the interest of the
HMO to get out the high risk, high cost people and to retain
only those that are low.
Mr. Newhouse. Absolutely.
Mr. Porter. So maybe they were being encouraged to
disenroll, too.
Mr. Newhouse. That's certainly possible.
Mr. Porter. If a mechanism could be found that would
provide both a reasonable return to the HMO and would hold down
the cost to the program--we're simply overpaying is what you're
saying?
Mr. Newhouse. Yes. Though it is more complicated than that.
The President actually proposes going from 95 percent to 90
percent of the payment. But in my view, that still leaves the
incentives in place to get----
Mr. Porter. I was just going to say I don't see how that
helps.
Mr. Newhouse. It kinds of moves the line for whose
profitable.
Mr. Porter. It's just something to make his numbers look
better it sounds like to me.
Mr. Newhouse. What you really need is you need what in the
trade is called better risk-adjustment. You need better ways of
matching what Medicare pays to the costs of the particular
person who is enrolling in the at-risk plan.
Mr. Porter. Doctor Newhouse, thank you very much for your
statement, for your answers to the questions. As I said, I
would like to spend some time talking with you informally
because I think I would have a lot to learn. We will certainly
take the request under advisement for the Commission. Thank you
for your appearance here today.
Mr. Newhouse. I will look forward to getting to know you
better.
Mr. Porter. We'll set that up. Thank you very much.
The subcommittee will stand in recess until 2:00 p.m.,
Tuesday, April 8, 1997.
[The following questions were submitted to be answered for
the record:]

[Pages 1217 - 1244--The official Committee record contains additional material here.]

Tuesday, April 8, 1997.

INSTITUTE OF MUSEUM AND LIBRARY SERVICES

WITNESSES

DIANE B. FRANKEL, DIRECTOR
LINDA BELL
ROBERT KLASSEN

Mr. Wicker [assuming chair]. Our hearing will come to
order. Today we have the Institute of Museum and Library
Services, and our principal witness is Ms. Diane B. Frankel,
the Director of the Institute.
Ms. Frankel, I want to welcome you before this
subcommittee, I believe, for the first time. You have testified
before the Interior Subcommittee many times, and this hearing
shouldn't be much different from the hearings you have
participated in.
Chairman Porter, as you know, is unable to be here today,
but asked me to give you a short message on his behalf. He has
focused our subcommittee hearings this year on changing the
culture of Government to make Government work for people; that
means we are focusing very strongly on results and outcomes.
The subcommittee believes that the Government Performance
and Results Act, GPRA, is a very important tool to help get
results for people, and we hope your agency will aggressively
implement the law.
As part of that process, when you request evaluations from
States and other grantees, we hope you will require information
to be reported in a standard fashion so that we can evaluate
comparable data for all grantees. We cannot use information
that is not comparable. It may be of use to you, but it will
not be of use to the subcommittee.
And with that opening statement, let me once again welcome
you and tell you how delighted we are to have you with us
today.

opening statement

Ms. Frankel. Thank you very much. I have an opening
statement that I would like to read.
As you said, I am Diane Frankel, and I am the Director of
the Institute of Museum and Library Services, and I am very
pleased to be here to testify today on behalf of the
President's budget for the Office of Library Services for
fiscal year 1998, which is $136,369,000.
I have been serving as the Director of the Institute of
Museum Services for the past three and a half years, and before
that I was the Director of the Children's Museum in the San
Francisco Bay area. The reason I bring that up is because I had
the opportunity of working with libraries in that capacity for
summer reading programs, and also with a number of latchkey
programs.
When the President appointed me to become the head of the
Institute of Museum Services I found an agency that had been
serving the museum community for 20 years as a very accessible,
well-run with low administrative costs, that had a goal to help
museums of all types and all sizes across the country to
improve service to the public. And this was through a
competitive grant program, through a peer review process, and
we have funded a number of general operating support grants, as
well as museum/school partnerships.
I look forward to achieving similar success with the
Institute of Museum and Library Services, and I want to tell
you, Congressman, that since the legislation has passed,
everybody has worked together to ensure a very smooth
transition. That includes the Department of Education, OMB, and
the National Commission for Library and Information Sciences.
I have been incredibly impressed over these past six months
by the generosity and the welcoming spirit of the library
field. This includes the American Library Association and chief
offices of the State library agencies, and in mid-December
these groups joined with the National Commission on Library and
Information Sciences to organize a very important meeting,
which was a briefing session for me, which helped me understand
the issues that the field was facing. To prepare for the
discretionary grant program, which is a collaboration between
museums and libraries, in early March, under the auspices of
the Institute of Museum and Library Services, I hosted a forum
to hear from both the museum field, from the library field,
from other public and private funders, and also from
appropriate members of the Administration. The goal of the
forum was to help the agency think about the discretionary
grant program under this new legislation.
The Museum and Library Services Act is a very interesting
piece of legislation which does a lot of very good things, I
feel. It streamlines the library programs. It is more inclusive
of all libraries, and it reduces the number of library titles
and accounts. Briefly, 91.5 percent of the budget goes to the
States directly; 1.5 goes to Indian services; 4 percent to the
National Leadership activities, and 3 percent goes to
administration.
I am pleased and--you can imagine--very enthusiastic about
administering this legislation for a number of important
reasons. This merger created the opportunity to link two
community institutions that are anchors for learning for
everyone's lifetime. They share common goals, to engage the
public in a process of discovery. They provide a sense of
important place in the community; and, as emphasized in this
legislation, they share technology goals to make information
much more accessible. Both of these institutions provide
enriched content for the Internet.
I have taken the opportunity during these past six months
to see libraries in action. I have been from Queens, to see the
branch libraries, to the new library in New York City, the
Science and Information Business Library, which is incredibly
high-tech. I have been to the Chicago MainLibrary to see what
they are doing as far as technology, and also to Dade County in Miami
to see what they are doing in their branches, and also in the main
library. I have visited the NYU Research Library to get a sense of what
they are doing, and my education continues, as you can imagine, as I
visit more and more of the institutions.
This year----
Mr. Wicker. You probably need to get out into the rural
areas.
Ms. Frankel. I do, indeed. You are absolutely right, and I
am looking forward to doing that.
This is a transition year, and we are in the midst of this
transition, and this means getting to know the library staff
and learning about their jobs and goals; building out a space
in our building so that we can move them over to the Old Post
Office Building; working on the administrative functions that
have been handled by the Department of Education; working with
States on their State plans; defining the National Leadership
initiatives; and holding our first joint Board and Commission
meeting in the middle of May, and then, again, submitting our
conforming amendments.
Things have been moving along smoothly, I am happy to
report that the State preliminary plans, which were due in on
April 1st, and final plans, have come in on time. And I had a
chance this morning to look at the Mississippi plan, and I want
to quote: ``A new day is being heralded for the Mississippi
Library Commission and its relationship with Federal library
program funding. In MLC's effort to define its role within the
Mississippi library community, the new LSTA legislation has
coincided with an effort to refocus and reiterate MLC's
dedication to service,'' and I'm seeing a lot of that in terms
of many of the different plans that are coming in, a
rededication to service.
This is an important program because it leverages so much
other public money, and increasingly private money, in all of
the States. So I am really here to testify and to ask for your
support for the President's request for this $136,369,000 for
the Office of Library Services.
[The prepared statement follows:]

[Pages 1248 - 1252--The official Committee record contains additional material here.]

Mr. Wicker. Well, thank you very much for that statement,
Ms. Frankel.

government performance and results act

Let's talk about GPRA.
Ms. Frankel. Yes.
Mr. Wicker. Can you us when the Institute of Museum and
Library Services will make a formal GPRA submission to OMB,
what performance goals you have set, and what indicators you
are proposing to measure?
Ms. Frankel. Well, at the moment, as you can imagine, we
are in a beginning phase, undertaking this new responsibility.
And so, as you can imagine, we need to look out five years and
determine where we want to be within those five years, and move
back to find and identify the indicators. So we are in the
process right now of doing that, both in the museum side and
the library side, and we will be making our submission within
the next few weeks to OMB.
I can't give you specific indicators at this time, but I
would be happy to respond in writing.
[The information follows:]

The Committee's consultation on the Institute's GPRA plan
will be sought in accordance with the statute. IMLS is
currently working with potential grantees and the library
community to develop performance indicators that are results
oriented and measurable.

Mr. Wicker. All right.
Do you think you will be able to fully integrate GPRA into
the fiscal year 1999 budget process, as required by law?
Ms. Frankel. Absolutely, yes.
Mr. Wicker. All right. Then I hope you will respond for
Chairman Porter and the subcommittee about specific examples of
the kind of measures you might incorporation in the IMLS
proposal for GPRA.
Ms. Frankel. You know, it's interesting, because in the
legislation, with the States, it says that prior to the five
years, there is an evaluation. But I have been talking to the
chief officers of the State library agencies about evaluation
and how important it is, and I am receiving a very positive
response. I think everybody understands the need to deal with
service and to deal with indicators.

technology focus

Mr. Wicker. All right.
Now, Chairman Porter had several questions that he wanted
me to ask on his behalf. As your statement indicates, five
existing library programs have been consolidated into two new
programs, with over 90 percent of the appropriation earmarked
for State grants, and 4 percent earmarked for a national
program in which IMLS will make small grants directly to
individual libraries or library systems. One of the main
purposes of the old library programs, construction, has been
eliminated. Nevertheless, the President is requesting level
funding.
Since construction has been eliminated as a purpose of the
new library program, why don't we see a reduction of $16.3
million in the 1998 request?
Ms. Frankel. Because, as you suggest, the emphasis has
moved off of construction and onto technology. I think when you
talk with the States, the need for bringing the State library
agencies' ability to help their other institutions provide
technological infrastructure and additional technology--that's
really what the emphasis is going to be. So there isn't a
reduction because we're just shifting the focus, as the
legislation shifted the focus.
Mr. Wicker. Okay.
I have to say that the Chairman anticipated your answer,
and he suggested that I go on to say that according to the
budget justifications from 1996 and 1997, library technology
was a major focus of the Department of Education library
programs in the past two years. It is not a new responsibility.
So that being the case, why is there not a reduction in the
request comparable to the 1997 funding of $16.3 million for
construction?
Ms. Frankel. I would like to have the opportunity to
respond in writing to that.
[The information follows:]

The reauthorization of library programs eliminated the
Library Services and Construction Act and enacted the Library
Services and Technology Act. Developed with strong support of
the library community and with bipartisan action in Congress,
LSTA responds to a shift in the needs of library users
throughout the country. It is clear that the Congress heard
from the library community that new priorities surfacing and
there is great support for shifting funding from construction
to technology. This transition is reflected in the
justification. The new program focuses on information access
through technology and information empowerment through special
services. Using technology to provide access to information
presents an essential challenge to libraries as they enter the
21st century, federal funding will help to begin to address
this priority need. While technology makes information
accessible, libraries challenge is to make technology
accessible.

Ms. Frankel. As I said, I think the emphasis has completely
switched in terms of the legislation. The Congress, in fact,
took construction out of the legislation and really
reemphasized it to be a technological emphasis. So I think that
has a lot to do with it.
We are carrying forward $24 million in construction funds
that we will be responsible for overseeing, as well.
Mr. Wicker. Okay. Well, I think it would be very helpful,
quite frankly, to the Chairman and to the subcommittee if you
would respond in a more thorough written way to that question.
Ms. Frankel. I will.

appropriation transfer

Mr. Wicker. Let me move on, then, to section 214(a)(2) of
the authorizing law. It appears to indicate that appropriations
for library programs will be made to the Secretary of
Education, who will then transfer the funding to the Institute.
In your written statement, you asked the subcommittee to
appropriate the funding directly to the IMLS.
As you know, the President's budget does not include a
proposal to appropriate directly to IMLS. Please place in the
record at this point the language that would be necessary to
make the appropriation directly to the IMLS, and tell us
whether the President will send up a budget amendment to
formally request this language.
[The information follows:]

The President's budget does contain this request, and the
language submitted (see Appendix, page 1083) is sufficient to
make the appropriation directly to IMLS.
However, if the Committee prefers to make the appropriation
directly to the Secretary of Education during this transition
period of one year, the Administration does not object.

Mr. Wicker. Can you comment on that?
Ms. Frankel. I didn't realize that we had asked that. I
thought we were going to continue to have it through the
Department of Education for this year, and then for next year,
move it. So I didn't realize that.
Mr. Wicker. Okay.
Just a moment.
Ms. Frankel, the Chairman has several questions concerning
the GPRA proposals, so I think at this point we will submit
those questions to you in writing and give you ample time to
respond in your own fashion.
Ms. Frankel. Good.
Mr. Wicker. And we thank you so much for being with us
today.
Ms. Frankel. Thank you very much.
Mr. Wicker. If there is nothing further, we stand adjourned
until 10:00 o'clock tomorrow.
[The following questions were submitted to be answered for
the record:]

[Pages 1257 - 1287--The official Committee record contains additional material here.]

Thursday, May 1, 1997

SOCIAL SECURITY ADMINISTRATION

WITNESSES

JOHN J. CALLAHAN, ACTING COMMISSIONER
JOHN R. DYER, ACTING PRINCIPAL DEPUTY COMMISSIONER
DALE W. SOPPER, ACTING DEPUTY COMMISSIONER FOR FINANCE, ASSESSMENT AND
MANAGEMENT
DAVID WILLIAMS, INSPECTOR GENERAL

Mr. Dickey [assuming chair]. The subcommittee will come to
order.
As I said, the subcommittee will not be in order.
[Laughter.]
[Recess.]

Introduction of Witnesses

Mr. Dickey. The subcommittee will again come to order.
The first witness is Dr. John Callahan, Acting Commissioner
of the Social Security Administration. You have five minutes,
Dr. Callahan, and welcome.

Opening Statement

Dr. Callahan. Thank you, Mr. Chairman.
I'm also accompanied today by John Dyer, the Acting
Principal Deputy Commissioner and Dale Sopper, who's the Acting
Deputy Commissioner for Finance, Assessment and Management.
We've submitted a lengthy statement for the record, and
we'll have a brief oral statement, if that's the will of the
subcommittee.
Today, the Social Security Administration begins a new
initiative called payment cycling. You all have brochures about
that. This helps the Social Security Administration deal with
the baby boom generation. We send out 50 million checks every
month. By 2025, we're going to send out more than 76 million
checks.
So today we are beginning the payment cycling of some of
our Social Security benefits. We're going to make payments to
new beneficiaries on the 2nd, 3rd and 4th Wednesday, depending
on a worker's birth date. That's new beneficiaries only. All
current beneficiaries will continue to receive their benefits
on the 3rd day of each month.
Addressing the needs of our current beneficiaries while
preparing for the future, as we have with payment cycling, we
believe is the hallmark of Social Security--being prepared for
the future. And it is within this framework that I would like
to just briefly present our budget for fiscal year (FY) 1998.
Our budget for FY 1998 calls for $414 billion in outlays,
and 98 percent of this budget will be paid to our
beneficiaries. We expect that $333 billion will be paid to our
Old-Age and Survivors Insurance (OASI) beneficiaries, $52
billion to our Disability Insurance (DI) beneficiaries and $29
billion to our Supplemental Security Income (SSI) recipients.
Our administrative budget includes $6.6 billion for
expenses, such as processing 17 million requests for Social
Security number cards, 6 million new benefit claims and posting
244 million annual earnings items for covered workers, and for
meeting our performance commitments, a number of which have
been worked out through this subcommittee.
The budget also includes $290 million to allow us to
conduct additional continuing disability reviews and implement
the changes required by welfare reform. In FY 1996, we
processed roughly 500,000 such continuing disability reviews.
That's almost double the number in FY 1995. In FY 1997, we
expect to complete over 600,000 continuing disability reviews,
and that will rise to 1.1 million in FY 1998.
We are also addressing the needs of the welfare reform law
that was recently passed and enacted into law this past August.
We will complete the redeterminations of 260,000 children
affected by the new disability regulations, as well as the
900,000 non-citizens who we've sent notices to vis-a-vis
changes to the SSI program.
As this committee knows, the Administration's budget does
propose restoration of SSI benefits to certain legal
immigrants, especially those who are disabled, all disabled
children, those who are disabled after entry into the United
States, and for refugees and asylees, extending their benefit
period for another two years.
We expect, as a result of welfare reform, that the backlog
in the State Disability Determination Services will grow in FY
1997, and will still remain somewhat high in FY 1998. Despite
our real successes in continuing disability reviews and the 800
number, we have not fully met all our commitments in this area.
However, to deal with the structural weakness in the area, we
are designing a full scale disability redesign process, which
I'm sure we'll touch on in our discussion.
We will continue to improve our 800 number service and we
are projecting 95 percent access within five minutes.Indeed,
this past March, 98 percent of all people calling received access
within five minutes.
Our budget request also seeks $200 million for needed
investments in automation. We are now moving forward with this
effort at a rapid pace, and we estimate that we will install
over 55,000 intelligent workstations and 1,700 local area
networks (LANs), saving over 1,100 workyears by FY 1999.
We also call for increasing user fees for the
administration of State SSI supplementation payments. We would
like to see that fee request increased from $5 per claim to
$6.40 per claim. That's the first increase in over two years.
Our budget also includes $44 million to cover the operating
expenses of the Inspector General. And that's a $7.4 million
increase over last year's appropriation.
And we are also meeting our performance commitments with
regard to sending out our personal earnings and benefit
estimate statements to Americans. By FY 1998, we will send out
approximately 20 million such statements, which means that
every American over the age of 50 will have received such a
statement.
[Clerk's note.--``every American'' later clarified to
``most non-beneficiaries.'']
In conclusion, our programs protect 95 percent of the
American work force. We pay 50 million beneficiaries a month.
We handle 66 million callers to our 800 number. We send out 17
million Social Security cards and we issue them within five
days.
At the same time, our overall administrative budget is
approximately 2 percent of our total budget. We feel that by
continuing to strengthen the program along the lines that I've
suggested in my oral testimony and written testimony that we
will continue to serve and protect the American people with the
Social Security program.
Obviously, we urge your support for our administrative
budget request, which is $6.6 billion.
With that, Mr. Chairman, I'd like to end my statement.
We're prepared to answer any questions the subcommittee may
have.
[The prepared statement follows:]

[Pages 1292 - 1316--The official Committee record contains additional material here.]

performance goals and measures

Mr. Dickey. Thank you, Dr. Callahan.
Chairman Porter has asked me to make a few comments on his
behalf and to ask several questions of you, so get ready.
Dr. Callahan. Yes, sir.
Mr. Dickey. First, the Chairman wanted me to tell you that
he appreciates the fact that the Social Security Administration
is setting performance goals and measuring its progress in
achieving those goals. In some areas, the agency's performance
has improved greatly. And we certainly appreciate that.
In other areas, relatively little progress is being made,
and in some areas, no progress has been made. Given the amount
of money that this subcommittee appropriates to SSA, money that
could otherwise be used for student aid, health programs or job
training, we are extremely concerned that it be well spent, and
that the agency is providing the best service possible to its
customers.
For the record, Mr. Porter wanted me to indicate that
performance on percentage of callers served within five
minutes, issuance of Personal Earnings and Benefit Estimate
Statements (PEBES) and percentage of work force in supervisory
positions has been very good. You are meeting or nearly meeting
the goals for these activities which Commissioner Chater set in
1995.
Having said that, the purpose of oversight and budget
hearings is primarily to determine where things are not working
well, as well as they might, to help determine how performance
can be improved. The Chairman has several questions he would
like to put to you.

government performance and results act

Number one, Dr. Callahan, the Government Performance and
Results Act requires Federal agencies to establish performance
goals and report on progress in meeting those goals, a process
that SSA has been engaged in for some time. How will you
implement the performance goals set by this subcommittee into
GPRA process, and will you be able to fully integrate GPRA into
your fiscal year 1999 budget process?
Dr. Callahan. Chairman Dickey, the answer to that question
is that we are on track in terms of meeting the Government
Performance and Results Act (GPRA) commitments for the FY 1999
budget. As this subcommittee knows, at the urging of Chairman
Porter, we have developed these commitments in cooperation with
the subcommittee. And as he knows, we put out a business plan
every year with a lot of these commitments.
Chairman Porter is correct that we have made progress in
some areas, and in some other areas we haven't. We are in the
final stages of finishing internally our strategic plan. We
will share that, obviously, with the Office of Management and
Budget and the subcommittee, as soon as we finish. And we will
make the commitment to Chairman Porter that we will integrate
those performance goals into our GPRA budget.
Mr. Dickey. Thank you.
Question two. Has SSA made a formal GPRA submission to OMB,
and if not, when will such a submission be made?
Dr. Callahan. No, we have not made a formal submission at
this time, Mr. Chairman. We expect, hopefully within the next
six to eight weeks, to make that submission, and then shortly
thereafter, we will obviously share it with the subcommittee
and others as we go forward.

processing disability cases

Mr. Dickey. The Chairman has some specific questions
regarding performance goals. The first question is about
processing disability cases. In 1996, on average, an individual
who filed a disability claim waited three months for an initial
determination and waited over a year for a final decision, if
he required a hearing. That is a very long time.
Back in 1995, former Commissioner Chater indicated that in
1997, SSA would process 2.4 million initial disability cases,
down from more than 2.8 million cases estimated for 1995. Your
current estimate is that you will process less than 2.2 million
initial disability cases in 1997, more than 200,000 less than
the initial prediction.
At the same time, the number of cases received has remained
level, slightly less in 1997 than in 1995, and 1 million less
than anticipated for the three year period. If case load is
much less than anticipated, given this subcommittee's large
investment in the disability program, one would assume that at
least the initial claim processing time would be decreasing.
However, your current estimate is that your initial case
processing time will increase from three months to four and a
half months in 1997. Why isn't the agency doing better in this
area?
Dr. Callahan. Chairman Porter correctly notes that we've
had some concerns in those areas. And we are trying to move to
correct a number of those concerns.
I would suggest that there is some context here that is
useful to the committee. A good deal of our work, as you know,
in this area, is handled by Disability Determination Services
(DDS) at the State level. They will have to hire and train
2,000 new disability examiners. There's an average, I think,
overall attrition rate of about 8 percent. So we're always in
the process of trying to train these individuals. It's a very
difficult and complex area.
We've also had increased workloads in this area because of
welfare reform and the drug addict and alcoholic (DA&A) work
which we will finish this year. So there have been some other
factors that have affected our workloads. But we are, Chairman
Dickey, in the process of engaging in a full scale disability
redesign process.
We had, for example, if I might just mention this, several
weeks ago, 15,000 individuals, DDS individuals, Office of
Hearings and Appeals (OHA) individuals, and administrative law
judges (ALJs) study from a common format the disability
determination process, so that we can give fair and efficient
service to the person that comes in and files a claim. And
obviously, appropriate service. Not everyone who comes in and
makes a claim should receive it.
So this is an area of concern. The Chairman is right on the
mark. But I think we're moving to make some changes here.
Mr. Dickey. All right, my time is up. The gentleman from
Ohio, Mr. Stokes.

security of on-line pebes

Mr. Stokes. Thank you very much, Mr. Chairman.
Dr. Callahan, the use of Social Security numbers for record
keeping and other identification and tracking purposes, along
with the increased amount of personal information available on-
line has reached the point where we must carefully examine the
issues of privacy, security and the unlawful use of such
information.
Recent actions by the agency in this regard caused a
firestorm all across the country. All of our offices were just
littered with telephone calls and mailgrams and letters. And
subsequently, you took some action, I think, to change this.
Let's talk about it a little bit, tell us what's going on
with reference to this.
Dr. Callahan. Representative Stokes, you're correct, there
was a firestorm. We did feel the heat, and I think we took
appropriate action at the time. We've suspended the use of on-
line services to get your Personal Earnings and Benefit
Estimate Statement (PEBES). We've suspended it and we're
holding forums throughout the country to get the views of
computer experts, privacy experts, and individual citizens
before we conduct any further actions in this area.
I think one of the things that should be borne in mind
here, and there are a lot of considerations here, there's a lot
of people that use the internet that like it who want to have
quick access to their records. And that is an important part of
the privacy debate. People want to have access to their records
so that they can understand them and they can change them, or
they can indicate to us whether they need to be corrected or
what have you.
There's a lot of people that don't want any access
whatsoever, either for themselves or what have you. And then
there's probably a great deal of people in the middle that
would like to have the service, but want the privacy, the
maximum amount of privacy that can be provided.
So we're going to look into that. And we will report back
to the subcommittee probably within about 60 to 75 days on our
findings. I can assure you that we will make sure not only that
we have efficient service but the highest practicable level of
privacy in this regard.

social security numbers on checks

Mr. Stokes. Dr. Callahan, there's another area of concern
to many constituents, it is the fact that on the envelope in
which the check comes, the recipient's Social Security number
is visible through that envelope. That's caused a great deal of
concern. Have you looked at that problem at all?
Dr. Callahan. That hasn't been brought to my immediate
attention. But I can tell you, as soon as we walk out of this
room, we'll look at that very closely. I might defer to our
Deputy Commissioner, Mr. Sopper.
Mr. Stokes. Mr. Sopper, do you care to comment on that?
Mr. Sopper. The issue here, Mr. Stokes, has to do with the
printing of the check by the Department of Treasury's financial
management service. Where the number appears on the check is in
a place that, when this is placed into the envelope, it is
visible.
We are not aware, and this question has been raised before,
but we would be glad to look into it again, we were not aware
of any violations that have occurred because of the fact that
the number appears as part of the address visor in the mailing
envelope. But we'd be pleased to look into that again for you.
[The information follows:]

Social Security Numbers on Checks

Mr. Stokes, in response to your concern about the visibility of the
Social Security number through the Department of Treasury's check
envelope windows, I am providing the following discussion:
Current Process: At present, the Social Security number appearing
on Social Security benefit checks is visible through the window of the
Treasury check envelope. This is an intentional feature so that checks
can be retrieved after printing but before delivery to beneficiaries
when the Social Security Administration (SSA) makes the Treasury aware
that payment is not due (for example, if the beneficiary dies). This
process allows Treasury to pull thousands of checks that otherwise
would not be retrieved before delivery. The only people that handle
these checks from the time they are printed until they are delivered
are Treasury and Postal Service employees.
SSA Perspective: The concern of the appearance of the Social
Security number through the window of the check envelope will diminish
as more and more payments are delivered by direct deposit. By January
1, 1999, when nearly all Federal payments will be delivered
electronically, this concern will basically be eliminated. SSA
encourages check beneficiaries to switch to direct deposit as early as
possible because this is generally a safer, more reliable way to
receive payments.
Treasury Plans: Treasury has informed us that they plan to replace
the Social Security number with the check number on Internal Revenue
Service (IRS) checks. IRS payments are not covered by the mandatory
direct deposit provisions. However, in light of the rapid changeover to
electronic payments, there is a question of the cost-effectiveness of
making this change for Social Security payments during the short time
between now and 1999. Treasury does have long-range plans to modernize
their printing process with equipment that would eliminate the window
problem for the small number of Social Security checks that may remain
in the future.

impact of welfare reform

Mr. Stokes. I'd appreciate it if you would. We've had a
number of complaints relative to it.
Let me move to another area right quick before my five
minutes is up. What impact, Dr. Callahan, is the implementation
of the welfare reform measure having on the agency in general
and on its work load in particular?
Dr. Callahan. Mr. Stokes, as a result of the welfare reform
bill that was enacted into law last August, we had to send out
900,000 notices nationwide asking people to clarify their
citizenship status with the Social Security Administration as
to whether they would continue to be eligible. It's our best
estimate that perhaps as many as 435,000 to 500,000 individuals
under current law would be at risk. But to determine that, they
have to come in and work with us.
I visited a number of Social Security field offices, both
here and New York, and we're traveling to other places. It is a
very traumatic situation. Obviously not only for the
individuals in question, but for the Social Security field
staff that's dealing with these individuals. These are old
people, 70 percent of them are over 65, a lot of them are over
85, infirm, disabled individuals with severe disabilities.
So it's creating a lot of stress within our workforce as we
go through this process. And as you know, that's why the
President has proposed some changes in the law. And I know
there are others as well. So it is a difficult time, both for
the people affected and the workforce.
Mr. Stokes. Thank you, Dr. Callahan.
Thank you, Mr. Chairman.
Mr. Dickey. Thank you, Mr. Stokes.
The gentlewoman from Kentucky.

black lung benefits

Mrs. Northup. Dr. Callahan, I'd like to ask you about the
black lung benefits that you pay. The Department, I understand
that you all have a reducing case load, in fact, it's down to
116,000 cases, down 11,000 for this coming year. Do you know
that, you talk about actually those cases and the
determinations that were made back in the 1970s.
Are you aware of the fact that the Department of Labor has
decided to, has rewritten the regulation changing the
definition of black lung, so that 80,000 cases that date back
to 1978 would be able to be reopened?
Dr. Callahan. New cases?
Mrs. Northup. Past cases that were turned down.
Dr. Callahan. No.
Mrs. Northup. Or new cases.
Dr. Callahan. That has not been brought to my immediate
attention. But as soon as we finish up here, we'll immediately
counsel with the Department of Labor in that regard.
Mrs. Northup. Dr. Callahan, just to give you some
background, I am from Kentucky. You know that the law was
changed, the Federal law was changed in about 1976 because of
the fear that truly, everybody in Kentucky, any past coal miner
would qualify. Our State of Kentucky did not change our State
laws.
And those definitions of black lung almost sunk our entire
economy. Not only that, they have placed the entire population
of eastern Kentucky that has ever been involved in coal mining
in basically a welfare system that has kept them out of the
work force.
In December, we changed that law. It was changed, by the
way, by a Democrat Governor----
Dr. Callahan. This is at the State level?
Mrs. Northup. State level. This December, by a Democrat
Governor, from the coal mining areas, with basically a
realization that it would bankrupt the system if we didn't do
it.
Now, the Department of Labor is basically undoing that
definition of black lung, going back to a definition that was
discarded 20 years ago. No evidence of any medical science that
has changed in that time.
I'd like to know, one of the things that I understand is
that truly, they don't have any new cases, and that for the
first time, they basically have a couple hundred employees that
have nothing to do over there. Of course, the other concern is
whether there might be 80,000 people that now would have
benefits that didn't have them in the past.
So my question to you is, number one, were you aware of it?
Number two, do you plan to budget for it? And what sort of
relationship do you have as that regulation moves through the
process? What sort of relationship do you have with the
Department of Labor?
Dr. Callahan. Let me answer the part of the question that I
can answer, and I'll turn to Mr. Dyer and Mr. Sopper for
further things. That has not been brought, as I said, to my
direct attention. Certainly Representative Northup, as soon as
we leave this room, I will get a full briefing and
understanding of that situation.
Obviously, I think you raised some legitimate concerns here
that should be dealt with as we move through this process. I
will take a close personal look at that and report back to you.
Mrs. Northup. That would be great. We'll look forward to
hearing from you.
[The information follows:]

The Role of SSA in Paying Black Lung Benefits

The Social Security Administration (SSA) has contacted the
Department of Labor (DOL) about the regulations change in question and
has been given the following information: The DOL regulation in
question would impact only those claims under the jurisdiction of DOL
(``Part C'' claims). It would have no impact on those claims that SSA
maintains (``Part B'' claims). Therefore, we would defer to the DOL to
answer any additional questions on this issue.
SSA is responsible for processing and paying only those claims for
miners' benefits that were filed between December 30, 1969, when the
program originated, and June 30, 1973, when administration of the
program was transferred to DOL. Under arrangements made for the
transition of program administration responsibilities, the beneficiary
roll maintained by SSA also includes those claims for dependent
benefits filed by December 31, 1973, or within 6 months of the death of
a miner or widow on the SSA roll (whichever is later).
Since that time, SSA has continued to take miners' claims as an
agent of DOL, and forward them to DOL for adjudication and payment.
Costs incurred by SSA in taking these claims are reimbursed by DOL and
are not included in SSA's appropriation request.
As indicated at the hearing, a response on this issue will be
provided directly to Congresswoman Northup, with a copy to the
Subcommittee.

Dr. Callahan. I apologize for not being on top of it.
Mrs. Northup. No, that's fine. That's great.
Mr. Dickey. Thank you, Ms. Northup.
The gentlewoman from New York, Mrs. Lowey.

vocational rehabilitation

Mrs. Lowey. Thank you, Mr. Chairman. I appreciate it, and
thank you, Dr. Callahan and colleagues.
In looking at your report, you make mention of vocational
rehabilitation. And I know I've had concern, and there's been
general concern that the people who receive disability benefits
are not properly aided in returning to work.
Could you discuss with us further what the agency is doing
to assist those on disability to return to work? Could you
discuss the vocational rehabilitation programs, time frames? In
other words, what really is happening with people who perhaps
could return to work if they had some appropriate guidance,
education, etc.?
Dr. Callahan. Two things. One is, you're right about the
statistics. Less than 1 percent of our disability beneficiaries
at the moment return to work. The Administration in this year's
budget has proposed a return to work effort with the
cooperation of the disability community. The people that we
talked to, our disability beneficiaries, would like to return
to work. It is a very, as I think you know better probably than
myself, it's a very difficult and complex process to do that.
It's a very labor intensive process.
We have research and demonstration projects in the FY 1998
request of about $16.7 million that will help us look at new
ways of dealing with this problem, working with beneficiaries
to get them back into the workforce. But clearly, we have to do
better than that. A 1 percent success rate of returning people
back to work is not good for the individual who wants to work,
and it's certainly not good for us from a fiscal point of view.
Our Office of Disability Associate Commissioner, Susan
Daniels, has been working very hard in this area. And we're
hoping that we can test some new ways of getting assistance,
perhaps in the area of vouchers and working with private sector
firms that are active in promoting more return to work than we
have right now. But our track record in terms of doing this,
particularly with State vocational rehabilitation agencies, is
not good.
I think it's fair to say, a lot of these agencies at the
State level don't get a lot of money, and they get somewhat
overwhelmed with voc-rehab cases as well. They may be taking,
quite frankly, some of the easier cases and getting them back
to work. I'm not criticizing them, but it's a growing problem.
More and more people are on the disability rolls, and we have
to make that effort.
Mrs. Lowey. This has been a problem for so long.
Dr. Callahan. Right.

demonstration projects

Mrs. Lowey. And we've been talking about it for so long.
And I've seen personal, not personal, I've seen individual
cases in my district where instead of trying to assist them, I
felt like saying, well, instead of climbing up and pruning
trees, why don't you try and find another kind of job, because
it could take 10 years before you're capable of doing that if
ever.
Are there some successful demonstration programs? It seems
to me, and this is the frustration of the public, that we want
to be sure that those who really need help are getting help and
continuing to receive disability assistance. But it gets so
frustrating.
Dr. Callahan. Right.
Mrs. Lowey. And I'm not sure if it's inadequate oversight,
overworked personnel, lack of creativity, a combination of all.
Are there some successful demonstration programs in the past
that the agency has administered that have worked? Do you have
examples of success?
Dr. Callahan. I think we probably have some examples, but
I'm sure they're very limited. I'd like to provide that to the
subcommittee, not only for the record, but we would provide you
personally with a more detailed package of information.
[The information follows:]

[Pages 1324 - 1328--The official Committee record contains additional material here.]

return to work pilots

Mrs. Lowey. I would appreciate that, because I was
particularly pleased that you are going to focus on it in a
pilot test. I just wanted to express the frustration of so many
of us who feel that at a time of establishing priorities and
budget cuts, this is an area where we really have just not done
a good enough job.
So I'm delighted that you are going to focus on it as one
of your priorities.
Dr. Callahan. Could I ask John Dyer to say a few more words
on it? He's been here a little bit longer than I have.
Mr. Dyer. Mrs. Lowey, let me give you two areas where we
see possible success. One, we've found that if you involve the
employer and actually get the person into a job and you give
them the training that goes along with it, that tends to lead
to much more success. That's why in a lot of our programs now,
we're moving more into the area of trying to work with the
employers and target those areas.
The second thing is we have a major demonstration project
going on working through our field offices and our outside
contractors to test the pilot to see what happens if we manage
the case. After the person comes on our rolls we approach them
and say are you interested in working. If they say yes, we then
start to work with them and keep track of what's happening. We
expect results on that project in about a year or so, but we
willprovide for the record far more examples.
Mr. Dickey. Time's up.
Mrs. Lowey. Thank you very much, Mr. Chairman.
Mr. Dickey. You're welcome.
The gentleperson from Maryland.
Mr. Hoyer. Thank you, Mr. Chairman. I'll pass at this
point.
Mr. Dickey. That's a record. [Laughter.]

hearings workloads

Mr. Dickey. Dr. Callahan, I want to ask about disability
hearing processes. For FY 1995, SSA estimated it would process
608,000 hearings, but the actual number was 527,000. For FY
1996, SSA originally estimated it would process 609,000
hearings. Midway through the fiscal year in April, after the
shutdown and the snowstorm, SSA revised its estimates upward to
630,000 hearings. The actual figure was only 581,000 cases.
For FY 1997, SSA originally told us 515,000 hearings, then
revised upwards to 650,000 hearings. And the current estimate
is for 605,000. Why isn't the agency processing more hearings
and why do these estimates change so dramatically during the
mid-year estimates, which should be quite accurate?
Dr. Callahan. Chairman Dickey, this is, I think again, a
problem that we're trying to tackle here. We find oftentimes
that there is sometimes a disconnect between our State
Disability Determination Services and our Office of Hearings
and Appeals. We are working to have more process unification in
that regard. Again, there's common training that I mentioned
earlier.
Also, there is the situation wherein the administrative law
judges, when they begin to hear these cases, have a certain
degree of independence in terms of dealing with these cases.
This sometimes can get to be sort of a contentious issue, and I
think you know the background of that.
That's why we're trying to create a situation where
everyone in the process understands how we make the initial
determination so we can get an accurate determination in the
first place, and then there will be less overturning or less
confusion about the cases as they move through the process.
Everyone has a right, obviously, if they don't get the
right determination in the first instance, to appeal it, and to
go to the hearing. And I've had a chance, I'm not an expert in
this area, but I've had a chance to look at some of our
workload processes.
And some of our workload processes are relatively quick and
streamlined. When you get into a disability case, I think as
you might expect, the record that oftentimes gets brought to
bear on these cases is rather voluminous, there's legal
questions, medical questions, etc.
So the Chairman is correct, we have to make more progress
on this. And we do think that the disability redesign will help
out in that regard.
Mr. Dickey. Thank you, sir.

hearings processing time

Dr. Callahan, the estimates for average hearing processing
time seems to jump around just as much. In FY 1995, the agency
projected an average time of 304 days, and the actual was 357
days. For FY 1996, the agency originally predicted 292 days,
which was revised upwards after the shutdown and snowstorm to
307 days. But the actual figure was 392 days.
Why did the Social Security Administration miss the mark so
significantly in FY 1996?
Dr. Callahan. Again, I think it probably relates, and I
will defer to John Dyer on some more detailed explanation, but
I think it relates to a good deal of the complexity of the
cases. It's not quite that easy, I suppose, to project
disability cases as a whole, or some of the cases that move
into the hearing process.
We believe we moved a lot of the cases out through what we
call a direct mailer process, and then had the more difficult
cases go through the process. The more difficult cases take
more time and I think that's contributed somewhat to that
situation.
Mr. Dyer. Mr. Chairman, I can give you some more ins and
outs. Part of it is that both in FY 1996 and FY 1997 we came up
with some ideas and initiatives to try to process the cases
through screening units, adjudication officers, and other types
of personnel to see if we couldn't get an earlier decision made
so we could keep the workload down that was getting to the
judges. For a lot of those initiatives, we had delays getting
them started up. So that's part of the reason why we were
adjusting the projection.
The second thing is, when you look at FY 1996 for instance,
we had noticed that we were piling up. We had a lot of
decisions that were ready to go, but no one was writing them.
So we were able to, at the end of FY 1996, move people over,
shift work and get the decisions written up and got them out.
So there are some ways that we try to manage the workload
and make adjustments, and some things that, to be very candid,
we thought we could pull off and move 50,000 to 100,000 extra
cases more quickly. It all didn't come to fruition.
Mr. Dickey. Thank you, Johns. [Laughter.]

hearings processing time for fy 1997

Mr. Dickey. For the same measure, for 1997, SSA originally
predicted an average hearing processing time of 300 days. In
April last year--oh, is my time up? You have to answer this one
quickly. In April of last year, Dr. Chater revised the original
estimate to 272. Now you're telling us that the figure will be
360 days, three months longer than what Dr. Chater told us last
year.
If the current estimate is correct, we would have no
progress on processing time since FY 1995 during a period of
which case intake declined and was less than expected. Why
hasn't hearing processing time improved, and is the one month
decline projected for FY 1998 sufficient in your view?
Dr. Callahan. Again, I think the generic answer to this
question is the complexity of the cases that are brought to
bear. Mr. Dyer did suggest we are engaged in some new
initiatives in terms of an adjudication officer, a single claim
manager, other things that we can provide the subcommittee with
details on. We believe that those initiatives and pilots, if we
can sustain those over a long enough period of time, which
would be a year to 18 months, may help in this regard. But we
clearly will have to do better in that regard, and that's what
we're going to have to do.
[The information follows:]

[Pages 1332 - 1334--The official Committee record contains additional material here.]

Mr. Dickey. Thank you, sir.
My time is up. We start again in the next round with the
distinguished gentleman from Ohio, Mr. Louis Stokes.

automation efforts

Mr. Stokes. Thank you very much, Mr. Chairman.
Dr. Callahan, this subcommittee has been concerned in the
past with your efforts at automation. And we'd like to know if
you've completed the purchase and installation of yourcomputers
and related equipment associated with the agency's automation effort.
Dr. Callahan. We will complete that by FY 1999. There was a
delay, as I understand it, and this was obviously before I came
here, because, I think, there was an Office of U.S. Technology
Assessment. We are now at the maximum installation rate for
these intelligent workstations and local area networks (LANs).
As you know, we put these in over the weekends. We never
close an office and say, we're going to be closed for five or
ten days. We basically install these machines and systems over
the weekend. We're at, I think, approximately 25----
Mr. Sopper. We're putting in 75 a month, 19 or 20 every
weekend now are installed.
Dr. Callahan. And we feel that we have the ability to meet
that full commitment by FY 1999. We would like to have achieved
it earlier, but we are on track and we are putting them in as
fast as is feasible.
Mr. Stokes. With reference to your field offices, how many,
what percent would you say has now been computerized?
Dr. Callahan. Let me defer to Mr. Sopper.
Mr. Sopper. In terms of the roll-out of the intelligent
workstations/local area networks (IWS/LAN), we're just now
starting the installation of this new client server
architecture, Mr. Stokes. However, the field office share of
the LANs will be about 74 percent, and the workstations are
about 71 percent. So basically between 70 and 75 percent of
this equipment is going into the field offices.
Dr. Callahan. So they're getting first priority, and again,
we'll make substantial progress in FY 1997 and finish it up in
FY 1999.

solvency of the social security trust funds

Mr. Stokes. Dr. Callahan, according to the budget
submission of your agency, Social Security trust fund balance
continues to grow and is expected to reach $1.1 trillion by the
year 2002. The Social Security Advisory Council and the
agency's own actuary have reported that Social Security's
revenues and trust fund reserves will permit the payment of
full benefits for more than 30 years.
In your professional judgment, what is the condition of the
Nation's Social Security system and what should we be doing to
strengthen it?
Dr. Callahan. Congressman Stokes, as you know, the trustees
met, I think it was a week ago, and we issued a report on the
various trust funds, including the Social Security and the
Hospital Insurance (HI) trust funds. You are correct, we can
pay full Social Security benefits through the year 2029 under
the current benefit structure. After that point, if there were
no changes in the law, we would continue to be able to pay 75
percent of all benefits just with the revenues that would be
coming into the system on a day-to-day basis.
But clearly, I think it's a situation, the trustees agree,
the first order of business was the HI trust fund, the Part A
Medicare trust fund. There are proposals before the Congress to
give us a ten-year solvency path for that, and then to do more
long range fixes to the Medicare trust fund.
The trustees said basically there is not a crisis in the
Social Security trust funds, and there is not. However, that
doesn't mean we shouldn't take action at some appropriate point
in time. I think the first order of business is the HI trust
fund, and then within a relatively short period of time, maybe
over the next several years, we ought to join the public debate
to look at providing 75-year solvency for the Social Security
trust funds. So we shouldn't delay, but we shouldn't act
prematurely, either, on Social Security trust fund matters.

ssi user fee proposal

Mr. Stokes. Okay. Your budget request includes a
legislative proposal to increase the $5 user fee that the
agency charges the States for administering supplementation
payments. I understand that by the year 1999 the fee would
reach $7.25. This is an increase of about $2.25, or 45 percent.
Specifically, why is the increase justified, and how would it
be used?
Dr. Callahan. It's our judgment that the fee increase is
needed because as best we can determine, the actual cost of
performing these services for the State supplementary income
program may range anywhere from at least $7 to $25, as best we
could determine. We don't have an actual precise estimate. So
therefore, in essence, there is a subsidy, if you will, for
providing this service.
Office of Management and Budget (OMB) Director Raines, in
the submission of the budget, has a wide variety of fee
proposals, I think, which are an admirable effort to put some
of these things on an appropriate fiscal footing. So we feel
that it is a justified fee increase. And clearly, if we don't
do that and we are unable to process those things in a timely
fashion, we run the risk also of processing incorrect
Supplemental Security Income (SSI) benefits. So we do think it
is justified.
Mr. Stokes. Thank you, Dr. Callahan. And thank you, Madam
Chair.

inspector general's role

Mrs. Northup [assuming chair]. You're welcome.
Thank you, Dr. Callahan. I've moved over, but I think we've
rotated to me now.
Dr. Callahan. There's nothing like a promotion.
Mrs. Northup. That's right.
Dr. Callahan, this question is for both you and Mr.
Williams. The Inspector General, I'd like for both of you to
tell us what role you believe the Inspector General should play
to ensure the integrity of this performance data that SSA
submits to this subcommittee.
Dr. Callahan. I'd like to make a few general comments
first, if I may, to again put this in context. Clearly, the
Inspector General, by law and custom and convention obviously
is an independent portion of the Social Security
Administration. We value, as does the Acting Commissioner, as
did, I think, the Commissioner before me, the independence of
the Office of Inspector General.
We right now, for example, have a joint task force which is
chaired by the Inspector General and Mr. Dyer looking at
overall fraud, waste and abuse problems inside the agency.
Clearly, my intention as Acting Commissioner, as
recommendations are brought to me that I believe are in the
best interests of the management of the agency, whether it be
the Inspector General or our internal management, I will act on
them as promptly and as effectively as I can.
So we do want a strong Inspector General.
At the same time, and I must make this point, the
accountability for management in the Social Security
Administration rests with the Commissioner. The Commissioner is
ultimately accountable for that. So whatever the
recommendations are, whether they come from the Inspector
General or our own internal processes for improvement and
management or curbing fraud, waste, and abuse, my
responsibility is to act on those recommendations in a timely
and effective fashion.
Mr. Williams. My name is David Williams, the Inspector
General of the Social Security Administration. We're presently
looking at the measures that exist. In September there will be
new and additional measures that will also be examined, as Dr.
Callahan said, with a view toward making recommendations to him
and reports that will also be available to Congress.
The approach that we're taking to the measures is the same
for the present ones and the ones that are being formulated
now. We'll look at their validity in terms of whether they're
realistic, or are they too high or too low, in our opinion. Or
whether they're appropriate, whether they adequately measure
the health and vitality of the program. Accuracy--we'll check
the agency's math and give our independent opinion with regard
to whether the performance measure is being computed
accurately.
And with regard to the new measures, we'll be looking at
the auditability question as to whether the measure can be
counted, and whether we're capable of looking over the agency's
shoulder to provide an independent assessment of the new
measures. That's an important question for any new measure
that's being formulated.

inspector general audits

Dr. Callahan. Let me make a point here, and this relates to
our discussions. I'm a chief financial officer in my other hat,
when I go back to the Department of Health and Human Services
(HHS). There are differences between financial audits and
program audits, as I'm sure you fully understand.
Mrs. Northup. Yes.
Dr. Callahan. And clearly, financial audits are a much more
settled area, to some degree more settled, nothing is ever
settled with accountants, but a somewhat more settled area than
the area of program audits. Every time the Inspector General
issues a finding, he gives it to me. I assess it, and I provide
for the record the views of the Commissioner.
And in probably a great deal of the cases, I will agree
with the Inspector General on his recommendation. There will be
times when I will not agree. And clearly I think, just so this
committee is aware, when we get into the issue of program
evaluations, not financial audits----
Mrs. Northup. Right.
Dr. Callahan [continuing]. That will be an area that, there
will be areas at times that there will be differences of
opinion. So I don't want the committee to think that because
the Inspector General issues one particular set of
recommendations that they will be automatically agreed to by
the Commissioner. That's not a criticism of the Inspector
General, but just the nature of the business.
Mr. Williams. What I would like to add is that that is the
case and I agree with that in its entirety. The Inspector
General (IG) Act, though, requires than when such an instance
occurs, where there's disagreement between our recommendations
and the actions that the agency wants to take, I'm required to
make you aware of those in our semi-annual report.

consultant review

Mrs. Northup. Let me just follow up, because my time is
just about over. I understand that Commissioner Chater declined
to comment on the Inspector General report and instead hired a
consultant. I just wondered if you could tell me who the
contractor is for that study.
Dr. Callahan. Yes, it's----
Mrs. Northup. And how much it will cost and when it will be
completed.
Dr. Callahan. The study will cost $68,000, it's under
budget, and it will be completed by the end of June. It's being
conducted by Mr. Gerald Riso, who was the First Chief Financial
Officer in the Reagan Administration.
Mrs. Northup. Okay, thank you.
Let's see, Mrs. Lowey left.
Ms. Pelosi.

year 2000 systems fix

Ms. Pelosi. Thank you very much, Madam Chair. It certainly
is great to have Madam Chair presiding today.
Mrs. Northup. Actually, I think we've taken over today.
[Laughter.]
Ms. Pelosi. Wonderful. Thank you.
Welcome, gentlemen. Thank you for your testimony. I'm sorry
I wasn't here the whole time. That's the life we lead, with two
committees at once.
I had a couple of questions, a little housekeeping first.
Could you just tell me, will the SSA meet the deadline for
fixing its computer systems to recognize the year 2000?
Dr. Callahan. Let me ask John Dyer to respond.
Mr. Dyer. Yes, we will.
Ms. Pelosi. And what level of resources are being----
Mr. Dyer. About $42 million, 400 workyears, and we plan to
have it all completed by the end of calendar year 1998. One of
the reasons we want to be ahead is that we expect State and
local governments and other groups that we have to interact
with will be running behind us and we'll probably have to help
them out, too.
We started planning this 12 years ago, and we're ahead of
everybody.
Ms. Pelosi. Wonderful. Great. Good for you, I commend you
for that.
Dr. Callahan. I might add, I'm sure there will be some
sweaty palms on December 31st, 1999, however.

block grants for ssi

Ms. Pelosi. Well, if it's all done by 1998, we won't have
to worry then.
I have a question that sprang from the Senate action
yesterday, adding $120 million to the Social Service block
grants to give the Governors funds to address the problems with
SSI for the legal immigrant problem for one month. I have
serious concerns about that from a public policy standpoint,
but I would like to hear your observations.
[Clerks note.--Later corrected to ``$125 million''.]
Dr. Callahan. We would share your concerns in that regard.
We just do not believe first of all, that the money that was
appropriated is adequate to meet the level of Supplemental
Security Income (SSI) benefits that are at issue here for the
period that we're talking about. And also we're trying to
create a brand new system, if you will, a new program
administered by, in many cases, the State government, to handle
the needs and the concerns of this population.
I will just tell you, I have visited now several field
offices, in the District of Columbia, in the Bronx, in Queens,
in Jersey City, and I'm going out to San Francisco in a fairly
short period of time. And the individuals that we're dealing
with here are incredibly infirm, old, and confused. I just
don't see how they could make a transition to a new
administrative system when just the mere act of figuring out
where to go, who to talk with is a problem for them.
So I know the Administration has sent up a statement, an
Administration position opposing the block grant. And that
would be our position.
Ms. Pelosi. Separate and apart from the fact that it's not
enough, and I agree with you, I think that, well, I agree that
it's not enough. But my complaint is more fundamental than
that. Now we are reducing this, the SSI, now taking itout of
discretionary. It's an opportunity cost for us with all the other
projects, or initiatives, that we are responsible for here. So I
consider it most----
Dr. Callahan. I believe I am correct in stating, also, I
believe that the National Conference of State Legislatures has
come out in opposition to the block grant.

ssi and immigration policies

Ms. Pelosi. Interesting. I wonder what the Governors are,
since they have the discretion over the funds, where they are
on this.
On that subject, because your description of the condition
of these people is quite true. They are in many cases
completely unaware of the fact that they are not going to be
receiving the Supplement Security Income (SSI) benefit. Of
course, I wish that people had thought that through at the time
of the welfare so-called reform bill. But that was then and
this is now.
I have written, as you I'm certain are aware, to the Social
Security Administration (SSA) with a number of my colleagues to
get a definitive answer about what your discretion is to allow
people who are on, now. This doesn't cover many of these same
poor, sick and elderly infirm people that we were talking
about. But for some of the people that have their citizenship
papers in the works, but because of backlogs at the Immigration
and Naturalization Service (INS), they haven't made it there
yet, my understanding and response from the SSA is that you
have no discretion to do that. Is that correct?
Dr. Callahan. That is correct. We cannot. That is a matter
of immigration law and policy that's not our jurisdiction and
we cannot change that.
I will tell you this, though, if I could offer these
suggestions. In going around, a number of these non-citizens,
these legal immigrants, have either applied for citizenship or
are applying or in some cases have actually passed the process
and are waiting to be sworn in and are still not being sworn
in.
Ms. Pelosi. Yes.
Dr. Callahan. We will communicate these concerns on an
agency to agency basis to the Immigration and Naturalization
Service (INS). We, in our travels, obviously have encouraged
people to continue to apply for citizenship. Obviously, if they
apply for citizenship, that does help out.
But it is a growing problem, a lot of people are mobilizing
to try to get the legal non-citizens to go through the
citizenship process. But I think this is one that you not only
have to urge us to be proactive in terms of encouraging the
process, but you have to work directly with the INS to help
them deal with the situation.

legislative proposals for noncitizens

Ms. Pelosi. I had the impression that there might be a
legislative initiative on the part of the Administration to
that end.
Dr. Callahan. I know there are a lot of things kicking
around, for example, in the budget negotiations, about the
situation concerning non-citizens and Supplemental Security
Income. I don't have any precise information to suggest what
you're aiming towards. But there may well be.
Ms. Pelosi. Well, I had hoped that the Social Security
Administration would have, in fact, on the basis of the
information that you have about, first of all, the condition of
any of these people, and second of all, the fact that many of
them are in process as far as the Immigration and
Naturalization Service (INS), and some very far down the road,
due to backlogs more than late start on the part of the
individuals, that there would be a recommendation from SSA to
the Administration for a legislative remedy.
Dr. Callahan. I think your point is well taken, and we'll
certainly consider that.

legislative proposals for ssi

Ms. Pelosi. Then in terms of the other people, if there's
any refinement as far as the Supplemental Security Income (SSI)
is concerned, those who are not going to become citizens,
they're at a place now in their lives where they're not going
to be initiating a process like that, because they are even
unaware that they are going off of SSI. Would there be any
suggestion to the Administration of a legislative remedy to
talk about the welfare reform bill, from date of enactment if
they're here and legal, that their benefits would not be cut
off?
Dr. Callahan. I don't want to leave the impression here
that the Social Security Administration has been inactive on
this issue. Obviously, we worked with the President on the
proposal he put in the budget, which was to qualify all
disabled adults that have become disabled since entry, all
disabled children, and to qualify all refugees and asylees for
another two years of benefits beyond the five years that they
currently can receive.
Again, in my visits and some of the numbers that we see,
that particular policy will resolve a great deal of the problem
that we're looking at.
Ms. Pelosi. If it in fact is implemented.
Dr. Callahan. That's right, if it is passed. What I'm
saying is, the President has put that forward in his budget. I
know it's a factor in the discussions that are going on in the
budget talks. I know you and others have suggested additional
policies, so we would certainly welcome a collective resolution
to this process. Because as you've said correctly, if it
doesn't get corrected, we are going to have some very, very
harrowing situations on our hands.
Ms. Pelosi. I thank you very much. My time has expired.
There are many more questions I would like to have answered
from you.
Thank you, Madam Chair.

year 2000 systems fix cost

Mrs. Northup. Dr. Callahan, before I ask you a couple of
other questions that the Chair would like me to ask in his
behalf, I wondered, since you have implemented the year 2000
for $40 million for all of Social Security, if you would mind
going to the Department of Labor, where for workers comp
they've asked for $200 million to make the same transition. I
thought maybe you could save us a little money. [Laughter.]

expenses for union activities

I'd like to ask, I've been asked by the Chair to ask a
couple of questions about the cost of the union organizing that
goes on and is paid for by your Department. I think in
particular, I am aware of the fact that many of the companies
in my district that are unionized also pay for union stewards
and organizers that are there to provide those services.
But I think it's the level that is the question here. It
was $6 million in 1993, $12.6 million in 1995. This year it's
up to $14.7 million. I guess first of all, I know that Dr.
Chater did promise that it would be lowered. Instead, we're
going in the other direction. Can you comment on that?
Dr. Callahan. Yes, but let me also say if I could, I really
do have to put this in overall context. As you've already
suggested, and I think it's understood, payment of official
time is obviously produced from a variety of sources, from our
contract, from basic labor management law, and from various
sets of statutes. Indeed, the first time that official time was
recognized by the agency was in 1982, under Commissioner John
Svahn.
We only use the official time for labor management issues.
It cannot be used for internal union activities, andI think
that should be borne in mind.
You are correct about the figures. They have increased. I
would also say, though, you have to look at those in the
overall context of what's happened to Social Security in the
past several years. We have downsized from 80,000 employees to
65,000 employees. We have changed our processes. For example,
on the 800 number, we now move people from their current job to
answer the 800 number when there's increased activity. We call
them spike employees.
So we are asking people not just to have a basic job
description, but to be able to move around from place to place.
That obviously is a matter that relates to labor management
relations.
We are doing the same thing in the area of disability
redesign. There will be a lot of issues that will be dealt with
on the labor management front.
As a result, if you look at the record, we have one of the
best equal employment opportunity (EEO) complaint rates of any
Federal agency, 8.6 per 1,000 employees. That's roughly half
the Government-wide average. We have reduced our unfair labor
practice complaints. We have reduced our arbitrations, which
GAO has indicated in the past is a cost savings. And indeed, I
have committed to our union partners and our management
partners to hold a seminar or a day long session fairly shortly
to look at our overall union-management partnership activities.
I understand the concerns that may have been raised by the
subcommittee, but I guess I would say this should be borne in
mind. We're having an increased workload. We're not having an
increased workforce. We're asking people to do a lot of
different things. They have the right to union representation.
They have the right to deal with the terms and conditions of
their employment.
I think this is a reasonable cost of doing business. But
certainly I will communicate your concerns to our people on the
union side. But I will just say to you, I don't regard this as
a crushing problem.

paying for union activities from trust funds

Mrs. Northup. I think the two concerns that I have about
it, and like I said, I think you make a good case for the
importance of it, is that number one, you say your complaints
are down, the filings are down. So why is the cost up? That's
what raises the man hours used to negotiate or discuss these.
And more importantly, do you think it's right to use trust
funds for this? That's an entirely different issue than using
the administrative costs of the agency. The trust funds are
like what the American people deposit in your bank.
Dr. Callahan. Well, the trust funds, with regard to
administrative expenses, as you know, they are paid from a
combination of trust fund and general fund.
Mrs. Northup. Half and half, yes, that's right.
Dr. Callahan. So I don't think there's any reason to
differentiate union time, payment of official time, from other
administrative expenses. So I would not necessarily agree with
that.

increase in union expenses

Mrs. Northup. Now, wait a minute. Let me understand this.
So other administrative----
Dr. Callahan. Are paid both from trust funds and general
funds. So I don't think we should have separate treatment for
official time in that regard.
Now, you make a point about, we've had a reduction in
arbitration so why don't costs go down. We also, though, in the
process of dealing with our contract and these other
partnership activities, have what we call impact bargaining as
well. You have a contract, you have to execute that contract.
So we end up oftentimes processing a lot of memorandums of
understanding that will help us execute the contract.
I would just say in general, and this is a personal
statement, my own personal philosophy, I want to see as
harmonious labor-management relations as possible in the Social
Security Administration. Because we have to depend on our
workforce to get the work done. It's the front line employees,
that have to get the work done. We want to create as good a
work environment and as good a work policy as we can for them.
Let me leave you with one story. We have, and this is in
large measure a tribute to Dale Sopper's and John Dyer's
efforts, we have made an effort, for example, as to refurbish
our field offices. We have gone into some of our toughest field
offices, in areas that whether they are urban or rural, and
where there are distressed individuals that have to come in, to
refurbish and enhance the security of the workforce and field
offices.
That's been a partnership with the union, it's worked out
very, very well. I've visited some of those offices and I think
we're getting improved productivity as a result.
Mrs. Northup. Ms. Pelosi.

official time for union activities

Ms. Pelosi. Thank you, Madam Chair.
I'll follow up on some of the questions that you had asked
about official time, just to see clarification. You said it had
been around since 1982, Dr. Callahan?
Dr. Callahan. Yes, that was the first time it was
recognized in a contract signed by Commissioner John Svahn.
Ms. Pelosi. And official time is used by private firms,
also?
Dr. Callahan. Yes.
Ms. Pelosi. And you talked about some of the activities
that, is it true that SSA would have to spend a comparable
amount of money to communicate policy and personnel concerns to
the agency's work force even if there were neither unions nor
official time involved?
Dr. Callahan. Yes, as a general proposition, that would be
correct.

labor-management relations

Ms. Pelosi. And is it true that labor-management relations
at SSA have been less than ideal in recent years?
Dr. Callahan. Well, no, I don't necessarily believe that's
the case. I think obviously there's always room for progress. I
think all of us here know that with labor-management relations
you don't just come in; it's not easy to solve in the first
instance. But you have to develop, quite frankly, a level of
trust and openness between both management and labor.
Obviously, I've told our managers, and we've met with a lot
of them, their job is to manage, manage well and manage
strongly. That doesn't mean giving up management prerogatives.
But at the same time, it should not necessarily be an us versus
them syndrome.
Ms. Pelosi. My question was, in recent years, but it has
improved significantly as a result of the leadership?
Dr. Callahan. I think it's improved. But with all due
respect, Congresswoman Pelosi, I don't want to go back and----
Ms. Pelosi. I was just trying to relate it to use of
official time, that use of official time to diffuse grievances
in advance, etc., can be in furtherance of savingmoney by
improving relationships?
Dr. Callahan. Yes, that's correct.

unfair labor practices

Ms. Pelosi. Would you have any idea of how much money has
been saved because of the decrease in unfair labor disputes and
practices?
Dr. Callahan. There has been a Government Accounting Office
(GAO) report on that. I think maybe, do you want to comment on
that, John?
Mr. Dyer. I think it comes out to be about $8 million a
year, is our estimate. We'll get you the exact figure.
[The information follows:]

Unfair Labor Practices

The partnership has also helped us reduce the high costs associated
with protracted litigation. For example, we have seen a reduction in
unfair labor practice charges, from 467 charges in FY 1990 to 168
charges in FY 1996. The Social Security Administration estimates the
cost to fully process one unfair labor practice to be in excess of
$28,000, based on an earlier Government Accounting Office estimate.
Therefore, the reduction in unfair labor practices represents savings
of $8.4 million when comparing FY 1996 to FY 1990.

Ms. Pelosi. So you think it's about $8 million? I thought
the figure was more like $14 million in savings from the
decreased unfair labor practices and arbitration.
Mr. Sopper. The estimate that we have, Congresswoman, is
that it's about $7 million from that.
Ms. Pelosi. Okay. And the----
Mr. Sopper. Per year.
Ms. Pelosi. And that offsets the $6 million increase in
official time, one might conclude?
Dr. Callahan. Yes.

use of official time

Ms. Pelosi. Thank you. I want to just be sure that the
record is clear that employees, those who are engaged in the
use of official time may do certain things, they may not do
other things. They may not engage in political activity, they
may not engage in union organizing, they are there to speak for
the employees, but not to engage in any activities that are
internal to their union?
Dr. Callahan. Yes. And also, there are obviously cases
where sometimes you will have a worker who may want to do
something on official time, but they're conducting essential
business of the Social Security Administration at the moment,
whether it's a claims representative or what have you. They
have an obligation to finish that business and not just walk
away in midstream. We have to provide them with official time,
but not to the disruption of agency processes.

partnership council

Ms. Pelosi. And those activities that are allowed, though,
including negotiating collective bargaining agreements,
handling employee grievances, conducting and receiving training
and participating in partnership workshops, in which employees
and managers try to improve the delivery of service to the
American people?
Dr. Callahan. Yes.
I might, if I could, ask Mr. Dyer to respond, he's the vice
chair of our National Partnership Council.
Mr. Dyer. I have the honor of co-chairing our National
Partnership Council with the union. Our partnership consists
of, the deputy commissioners who have most of the operational
systems activity and responsibilities. Over the past few years,
I think we have gotten a lot done through this partnership.
Besides setting up the national, we now have them down at the
council levels. And the kinds of issues we've had to address
deserve this level of attention.
[Clerk's note.--Later clarified to indicate that
``council'' refers to ``local and regional'' levels.]
For instance, as we've gone to re-engineer our whole
disability processing, and that will impact on a large part of
our work force. We brought the union in up-front to involve
them in the partnership council so they could see what we're
planning. And we've received a lot of useful suggestions from
them and directions that we could move. We think that's a lot
more efficient than trying to fight it out within each office.
The second area, when we tried to move workloads through
quicker, we've been able to sit down with them and reach
agreement when we're going to shift the workforce around,
rather than getting into the local time consuming very
expensive bargaining. We've moved to train everybody that's
involved in this, in interest based bargaining, where you can
get to the point quicker as to what both parties are after and
reach common objectives.
So overall, it's been a slow learning process for us, but
we are moving forward and we're addressing the major issues
that need to be addressed with our union partners.
Thank you.

official time in the private sector

Ms. Pelosi. I appreciate that. Just one last question. We
talked about, our Chair mentioned that, recognized that this
official time was used in business in the private sector. I
just wanted to ask you about State and local government.
Dr. Callahan. It's my understanding that that is the case
as well. I think the subcommittee knows, former Commissioner
Chater provided to the Ways and Means Subcommittee a detailed--
I think it was a detailed statement on the overall philosophy
of this just last year, and we'd be happy to make it available
to this subcommittee again.
[The information follows:]

[Pages 1347 - 1356--The official Committee record contains additional material here.]

Ms. Pelosi. I appreciate that. Thank you very much.
Thank you, Madam Chair.
Mrs. Northup. Thank you, and this hearing is adjourned.
[The following questions were submitted to be answered for
the record:]

[Pages 1358 - 1544--The official Committee record contains additional material here.]

Thursday, May 1, 1997.

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

WITNESSES

HARRIS WOFFORD, CEO, CORPORATION FOR NATIONAL SERVICE
DONNA CUNNINGHAME, CHIEF FINANCIAL OFFICER
TOM ENDRES, DIRECTOR, NATIONAL SENIOR SERVICE CORPS
DIANA LONDON, DIRECTOR, VISTA
GARY KOWALCZYK, DIRECTOR, PLANNING AND PROGRAM INTEGRATION

Mr. Miller [assuming chair]. The subcommittee will come to
order.
Good afternoon. As you know, Chairman Porter is unable to
be here physically because of a back problem right now and
sends his apologies. But we will begin the hearing.
Senator Wofford, if you would introduce the people with you
and then please proceed with your opening statement.

Introduction of Witnesses

Mr. Wofford. Yes. To my right is our chief financial
officer, Donna Cunninghame, and Gary Kowalczyk, who is heading
one of the key departments of coordination in the department,
Diana London is the head of VISTA, and Tom Endres is the head
of the senior programs. Those are the two key programs--our
three senior programs, Foster Grandparents, Senior Companions,
and the Retired Senior and Volunteer Program (RSVP); and VISTA,
three decades old of proving themselves--that are most
pertinently before you today.

presidents' summit for america's future

Mr. Chairman, I've been climbing, along with a lot of good
people, to the Summit in Philadelphia with Presidents Clinton
and Bush and Carter and Ford, with Nancy Reagan, General
Powell, Oprah, too, and 30 Governors, 100 Mayors, and 2,000
community delegations from 140 communities, grassroots people
on the front lines of services. It was a tremendous experience.
But I am very glad to be back on the other Hill, the Hill that
is crucial to all these programs.
There are three biblical injunctions that are ringing in my
ears from the Summit:
``Hold fast to that which is good.'' Find the programs that
really work and build on them. We're talking about three
programs that are very good, that have proved themselves, and
we should build on them.
And then ``Lift your eyes unto the hills.'' Seek the great
goals if you want to do great things. And we're dealing with
great national goals that came out of the Summit and these were
goals that were at the heart of the mission for VISTA and the
Senior Program even before the Summit. The great national goal
coming out of the Summit is to turn the tide for millions of
children and youth that are now heading toward disaster and to
do it in measurable, targetable ways. We would like to be able
to show now and in your considerations to come that these
programs are helping this country achieve those goals.
And lastly, ``Lose yourself to find yourself.'' Join in a
much larger campaign, now led by General Powell and with the
backing of the Presidents, toward some very great goals related
to children and youth in our country. And in committing
ourselves and dedicating ourselves to those goals, I think we
will find, and you will find, there are places for these
programs.
One of those great goals of the Summit, which is to see
that every young person has an effective education including
the ability to read. The goal proposed by the President, and
even before the President by Governor George Bush in Texas and
by many mayors and governors and educators, the goal is that we
commit ourselves to seeing that every young person learns to
read by grade three and then reads to learn, and that we seem
to need at least 1 million additional tutors for that. In that
effort, I think we will find the role for these programs.
The total budget request for these programs is some $260
million to support 4,740 members of AmeriCorps*VISTA and over
585,000 volunteers in the National Senior Service Corps.
[Clerk's note--Later changed to ``4,160'']
The service of these three programs is already playing a
vital part in implementing the Summit's goals. Those specific
goals are the things that every parent wants for their
children--a caring adult as mentor, tutor, or coach; safe and
structured activities in the non-school hours; a healthy start;
an effective education; and the opportunity to serve their
communities. VISTA and the Senior Corps already are playing
notable roles in those areas.
More than 500 VISTA projects with 2,200 AmeriCorps VISTAs
now serve children and youth, along with some 77,000 RSVP
volunteers and 23,000 Foster Grandparents who tutor, mentor,
immunize, run after-school programs, teach AIDS and drug
prevention, and lead young people in service. My written
testimony goes into some detail on just what kind of work is
being done.
Take one Summit goal--ensuring that children have a caring
mentor or tutor in their lives. Foster Grandparents is the
second largest mentoring program in the country. It is helping
more than 80,000 children and youth with some of their most
exceptional needs. VISTAs serve in Big Brothers/Big Sisters,
the country's largest mentoring program, One-to-One, and many
other mentoring programs recruiting and supervising volunteers
and increasing the reach, effectiveness, and sustainability of
these efforts. So national service has a track record in
tutoring and literacy as well.
The Summit in Philadelphia focused on the potential of
volunteering but also on its limits. Of the 20 billion hours of
reported volunteer work, only a small fraction--some estimate
less than 10 percent--involves contact with troubled youth or
disadvantaged communities. VISTAs and the Senior Corps
volunteers are different. The intensity, duration, and impact
of their service is much greater than that possible for an
occasional very part-time volunteer. VISTAs, thanks to a living
allowance, serve full-time for at least a year. Unlike most
volunteering which is very part-time and too often very
episodic, Foster Grandparents, Senior Companions and many RSVP
volunteers serve 20 hours a week, every week. The key to
successful mentoring and tutoring is establishing a consistent
long-term relationship with a child in need. Senior Corps
volunteers provide just that kind of day-in and day-out, year
after year consistency.
The Summit reinforced the importance of targeting resources
to the children and neighborhoods that are most in need. VISTA
members by law are required to serve in low-income communities,
and many come from the neighborhoods where they serve. Foster
Grandparents and Senior Companions are low-income individuals,
by law, who generally serve at-risk elderly and at-risk youth
in the neighborhoods where they live.
So service is a strategy for meeting our society's critical
needs, including the challenge of helping millions of Americans
move from welfare to work. VISTAs work in 173 projects that
provide training and education to welfare recipients, and
another 117 projects that focus on economic development and job
creation. Another national challenge is helping seniors live
independently in their homes. Senior Companions help clients
take their medication, get to doctors appointments, and do
household chores. For every senior they help remain at home
there is a savings of about $35,000, costs that otherwise would
fall on the family or the taxpayer through Medicaid.

national senior service corps

The aging of America gives us a tremendous opportunity.
There are 55 million people aged 55 and older, and thisnumber
is going to double again over the next 30 years. Seniors are our only
growing national resource, and they bring to service what no other age
group can--a lifetime of experience, skills, and talents as parents,
workers, and citizens.
The Corporation, to make the best use of that resource, is
implementing a full-scale reform of the Senior Corps programs
to enhance efficiency, to increase opportunities, and to make
all programs more outcome oriented. We've developed
``Programming for Impact'' to enhance the service side of
senior service. It is an approach that focuses on community
needs, accomplishments, and impact in planning and developing
senior volunteer placements. Following your guidance, and the
Chairman's great interest here in this committee, and the
objectives of the Government Performance and Results Act, the
Senior Corps is changing the way it does business.
The Senior Corps continues to expand the level of private
sector support. Almost 70 Senior Corps projects are funded
entirely with non-Federal dollars, and overall Senior Corps
projects receive more than $90 million in non-Federal support.

americorps*vista

VISTA, too, has a thirty year tradition of getting things
done. VISTAs expand the capacity of local programs by
recruiting, training, and coordinating local volunteers whose
efforts continue in communities long after the VISTA members
leave. This function is going to be even more critical in the
wake of the Summit and the likely great expansion of community
volunteers.
A 1996 Accomplishments study conducted by WESTAT Inc. shows
that VISTA is cost-effective. For every dollar spent, nearly
$3.00 is returned to the community in cash and in-kind
resources. In total, VISTAs raised nearly $70 million for their
local projects. VISTAs recruited, trained, and coordinated
volunteers who provided nearly 3.2 million hours of service. A
study you are receiving today found that nearly 73 percent of
AmeriCorps*VISTA supported programs continued to operate two
and five years after the VISTAs had completed their assignment.
Both of those reports, the WESTAT, Inc. report and this one,
are before you.
The cost-share program is another way VISTA leverages
Federal dollars to invest in communities. State and local
governments and non-profits provide local sources of funding to
expand the number of AmeriCorps*VISTA members with the
Corporation providing only education awards and recruitment and
training assistance. Currently, more than 170 local projects,
with combined agreements amounting to over $12 million, are
supporting more than 1,000 VISTAs. That's double where we were
a year ago and the number is still growing.

america reads challenge

And now there is the President's America Reads Challenge--
presented in legislation introduced this week--a national
campaign, locally run, to ensure that every American child can
read independently and well by the end of the third grade.
America Reads is in line with the Summit's goals and it calls
for 1 million volunteer tutors to provide in-school, after-
school and summer reading help to several million children in
need, and to help with teachers who desperately need this kind
of additional support. Failing to go forward without letting
millions of children get past third grade without learning to
read leads those children to disaster in life, and all of us to
national disaster.

Conclusion

In conclusion, Mr. Chairman, both sides of the aisle agree
that the era of big Government is over. If so, the era of big
citizens and effective citizen action better begin and grow.
National service in the program before you today reduces our
reliance on Government by mobilizing citizen action. It helps
people solve problems in their own ingenious ways. It
strengthens the building blocks of civil society, of families
and neighborhoods, and religious and voluntary groups. It is a
smart and necessary investment, one that should be continued,
not despite tight budget times, but because of them.
Thank you.
[The prepared statement follows:]

[Pages 1549 - 1562--The official Committee record contains additional material here.]

government performance and results act

Mr. Miller. Thank you, Senator Wofford. We appreciate your
testimony. And congratulations on your part in the events in
Philadelphia this past week. It makes you feel good to see
Republicans and Democrats working with common goals. It was a
huge undertaking that was an immense success. But that was only
a few days, so obviously the work must continue.
Chairman Porter asked me to make a few opening remarks on
his behalf and then ask a few questions. First, this
subcommittee asked you back in 1995 to begin focusing heavily
on the results your programs are getting for people. We feel
this ought to be the real focus of Government. Chairman Porter
wanted me to tell you that he feels you are one of the
administrators who really understands what we were getting at.
He believes you have made a real commitment to change the focus
of Government from agencies and programs to the people those
agencies and programs serve. He wanted me to thank you for your
efforts and your service.
We understand that you have a number of studies and
initiatives underway, and I think you've given us a couple
today, which would tell us what kind of results we get for our
investment in domestic volunteerism and ensure that each of
your programs and managers focus on real results for the people
you are serving. All year, Chairman Porter has been asking each
agency about the Government Performance andResults Act (GPRA)
which we feel is a very important tool for making the kind of cultural
change in Government that we have been discussing with you in the last
two years.
Senator Wofford, is the Corporation required to comply with
GPRA? If so, can you give us a few examples of the types of
performance measures you have proposed to OMB?
Mr. Wofford. Our proposal to OMB will be in by the deadline
set by OMB, which is August 15. We will be ready, and we expect
to be ready for the full submission by September 30th.
I appreciate very much Chairman Porter's remarks. I should
add that I think one of the good things about the launching of
the new Corporation for National Service was that from the very
beginning the mantra adopted, which is sung all over the
country, and it's a mantra that hasn't been necessarily so
common in either Government programs or in volunteer programs,
is getting things done. I think the record that is piling up
now of careful evaluations of not only the programs before you
now, but the programs in the National Service Act, other parts
of AmeriCorps, and of the service learning programs, make an
impressive record of a beginning.
I think that neither the Corporation, nor any other part of
the Government, nor plenty of parts of civil society have
focused on outcomes and results. I welcome the GPRA challenge.
We spent a lot of time in the last year and a half developing
our own strategic plan. We are now very actively adjusting that
plan, its timetable, and its specific measures for the GPRA
submission. I hope our submission will be one that will please
you and will show that we deserve the kind words that Chairman
Porter said.
I'll give you one example, which is the America Reads
Initiative. This is sort of a broad gauged example. But that
proposal is that there be a test in the fourth grade that shows
whether, according to agreed upon standards, the students
coming from third grade have indeed learned to read and on what
level. That is not the only baseline for the America Reads
Initiative but it will be a baseline that from year to year can
tell whether progress is being made.
In the Summit goals, and one of the key parts of planning
the Summit and each one of the five goals, there is a
commitment by General Powell, who will be chairing this, and
all of us who were part of planning it, that there be
measurable goals related to the outcomes. Not how many of us do
the tutoring, but how many of the kids learn to read, for
example.
Mr. Miller. Great. The domestic volunteer programs are not
authorized for fiscal year 1998. When will the Administration
send its reauthorization proposal to Congress? And, in your
opinion, will a new authorization be enacted by the time we
send our appropriations bill to the President?
Mr. Wofford. I hope we will be ready before very long. We
very much hope there will be reauthorization this year.
Mr. Miller. Your written testimony describes your
programming for impact activities which are designed to place a
greater emphasis on efficiency and outcomes. Would you tell us
generally how both VISTA and the Senior Volunteer Programs
program for impact?
Mr. Wofford. Would you permit me to have the head of VISTA
and the head of the Senior Corps both speak to this point?
Mr. Miller. Please.
Mr. Wofford. Diana London.
Ms. London. In the case of VISTA, Mr. Chairman, we have
been programming for outcomes for quite a long time. The
results of the accomplishments study that you have before you
very much mirror studies that we have done in the past. We are
definitely an outcome-based program.
What I think the new element that the programming for
impact challenge will create for VISTA is that we will pay more
attention to the measurement aspect of impact. We have a lot of
outcomes, we have a lot of results, but we need to carry it the
next step in terms of the impact on the low-income residents
that are being served by our projects. So we've got to make a
little bit of a leap but not a tremendous leap forward.
Mr. Endres. Mr. Chairman, as it relates to the National
Senior Service Corps, programming for impact takes on a little
different flavor. The National Senior Service Corps programs
are fairly large. They involve over half a million people
working in over 72,000 organizations across the country through
1,200 projects. The challenge that we have with implementing a
programming for impact approach is probably equivalent to
turning an ocean liner, if you would. We really need to have
people adjust and make changes in the way they do business, and
to make and implement those changes in such a way that it
allows the communities the time and opportunity to adjust.
So the way in which we're implementing programming for
impact is from a community-based, bottoms-up approach. We have
trained all the Corporation staff across the country in its
implementation. We've trained all the project directors at a
national conference last year. We're currently conducting State
impact conferences across the country which will be completed
by May. We're developing test sites where projects can self-
select to participate and become a leader of this change
effort. We currently have over 300 test sites across the
country. What we're doing is managing a continuous improvement,
continuous learning, continuous change effort so as progress is
made, as new information becomes available to us, we are then
sharing this across the country.
Our goal is to have State implementation plans defined and
completed by the end of July of this year. We hope after we
redesign some of the systems that we're working on, our
applications forms, for example, we will have full
implementation nationwide by October of 1998.
Mr. Wofford. And we put in a tremendous effort in a
training program last summer when we assembled the project
directors and they spent several days really learning some of
the state-of-the-art about moving toward impact planning.
I should also add that though we've reduced some of the
middle layer of management, intermediary management we've
reduced in streamlining the agency, a major investment we're
making in a new department is the Department of Evaluation and
Effective Practices, bringing together in one we trust coherent
and hard-hitting key department in the agency all the existing
programs going on in evaluation. They've been scattered in a
variety of ways without a common strategy that could add a lot
of improved focus. We've just appointed an outstanding
executive director of the Florida Commission, Bill Bentley, to
be head of that Department of Evaluation and Effective
Practices. Already it has been given the nickname, the acronym
DEEP, and we're deeply committed to that department playing a
vital role in the Corporation.
Mr. Miller. Let me ask one more question before I go to Mr.
Stokes.
When do you anticipate that all senior volunteer programs
will participate in programming for the impact process?
Mr. Endres. They are all currently engaged through the
State impact conferences and they're learning about it. There
is a conceptual framework that has been developed and the steps
outlined to make this change of moving to outcome-based
programming. So they're all currently engaged and learning
about it. We believe that October 1 of 1998 is when we will
officially require that it be implemented on all projects
through the application process.
Mr. Miller. Thank you.
Mr. Stokes.
Mr. Stokes. Thank you very much, Mr. Chairman.
Senator Wofford, nice to see you and your colleagues. By
virtue of the fact that the Senator appears before two
subcommittees on which I serve, I get a double shot at him.
Senator, according to your opening statement, the
Administration's America Reads Challenge will be a major focus
of the Senior Corps and AmeriCorps*VISTA program. Specifically,
what is the role of your agency in the Administration's America
Reads Initiative, and what portion of your fiscal year 1998
budget request would be invested in this effort?
Mr. Wofford. The America Reads Initiative you might say is
a joint venture of the Department of Education and the
Corporation. The Department of Education is the lead agency in
the sense that this is central to its whole mission. This is
critical and vital to our mission as a Corporation, but we
obviously do other things other than education. Our role in
this is related to the estimate that educators planning the
Reads initiative came to that school teachers need help and the
parents who don't know how to be first teachers need help, and
that help needs to come from a large-scale from citizen
volunteers, which is where we come in.
The estimate was that one million such tutors would be
needed to supplement what is done by the teachers. This
sometimes is help in school where there are some students that
hold the whole class back because they are unable to move
forward. One-on-one help with those students can have a vital
role in making the teaching possible for the teachers. The one
million tutors sounds grandiose when you think of it as sort of
a national program, but not when you divide it up, which is
where the estimates came from, to, for example, 20,000 tutors
in Houston or 1,000 in Waco, Texas. When you go, as I did just
a few weeks ago, to Houston to attend a working conference
where our Corporation programs, VISTA, the Senior Corps, and
AmeriCorps members were a key part of several hundred community
leaders in the field of literacy and education--the
superintendents and the principals, the corporate leaders,
college and university leaders, Barbara Bush opened it, I
closed it. It was a very hard working session figuring how to
get those 20,000 extra tutors needed in Houston.
Our role as proposed, is that AmeriCorps members, VISTA
members, and Senior Corps members play an organizing,
recruiting, supervising role for the volunteers. That is,
AmeriCorps, VISTA members would not generally be the tutors
themselves. They would have the assignment of helping the
school or the community program as it grows, as it multiplies
the use of volunteers to use them well. This is work that
AmeriCorps, VISTA people have done in place after place. Diana
London was giving me the facts on two or three of the top VISTA
programs, and she may have time to speak to you later on that,
Mr. Stokes.
The plan is that there will be a joint State program and
joint concerted programs in each community, such as Houston,
will put together its alliance on the goal to achieve reading
by grade three. There would be an application to the Secretary
of Education and his representatives and to the CEO of the
Corporation and my representatives for the State program on
literacy. That State program would be based on community
literacy programs in the State. The allocation, will be decided
mostly by formula, but partly by quality, as in the proposed
legislation. The two resources are the money from the
Department of Education for reading specialists and materials
and other key parts that the Education Department is well
prepared to contribute, with the support of Congress, and our
part is supplying the people power in teams of VISTAs and
Senior Corps members.
Mr. Stokes. Well, as to the latter part of my question,
what portion of your fiscal year 1998 budget request would be
invested in this effort?
Mr. Wofford. The America Reads Challenge funds for us
constitute almost the entire additional money except for some
cost-of-living increases and a few other items. Of the $46
million increase in the budget before you, $38 million of that
is for the America Reads Initiative.
Mr. Stokes. Okay. Ms. London, did you want to add anything
to what the Senator has said?
Ms. London. Just very briefly, Congressman Stokes. We have
a number of VISTA projects around the country where the VISTAs
are recruiting, training, and coordinating volunteer tutors.
Ohio Literacy Network, which you may be familiar with, is a
Statewide project that has mobilized literally thousands of
tutors for both adult and youth literacy programs. And that's
typical of what we are already doing around the country.
Mr. Stokes. Senator, as the agency positions itself to
improve its performance outcomes especially as they relate to
the Government Performance and Results Act of 1993, can you
tell the committee what factors and criteria will be used to
establish and to measure outcomes?
Mr. Wofford. If Gary Kowalczyk could speak to this for a
moment, I would be buttressed. We're working hard on this and
he has been at the center of that work.
Mr. Kowalczyk. Yes, Mr. Stokes. Mr. Wofford gave one
example on the America Reads Challenge, and that's the type of
example we are looking seriously between now and our submission
this September. Our goal is to set somewhere between three to
five outcomes for each of the programs before the subcommittee.
Another outcome that we are looking seriously at is the one
that Ms. London talked about, which is the community assessment
of the service that is given by our members and volunteers. So
we intend to look seriously on an on-going basis at what people
think about the results of our program to see that in fact it
is accomplishing what we intended to achieve. In the submission
in September, we expect to identify between three to five
outcomes for each of the individual programs before the
committee.
Mr. Stokes. Thank you. Recently, the President has
indicated that he wants the involvement of a number of his
agencies in the Welfare Reform Act. I would assume that
youragency has some role in it. If it does, would you tell us what that
role is.
Mr. Wofford. We've been active on two fronts with VISTA.
One is a significant number of VISTAs have been in a number of
very successful programs, and there may be some that I don't
know about for sure that are not so successful, but we're very
proud of the programs we know, seen and read about, in which
VISTAs are participating in welfare-to-work programs. They are
key parts of the organization for job training, vocational
placement, in child care provision, and a whole range of things
they do in helping people moving from welfare to work.
We also, by the statute, specifically ask to include low-
income neighborhood people as members of VISTA, not as public
work but as VISTA members doing national service under regular
VISTA demanding, challenging service programs. Many people feel
that some of the women particularly from welfare who have
become outstanding VISTAs in hard service have gotten on as
effective a road to jobs as any public work program does. The
civic sector, as Jeremy Rifkin has written a lot about, the
civil society part of it is one of the growth industries to
come in this country. There are an increasing number of jobs in
the whole world of the civic sector. An experience of a year or
two as a VISTA is a good step on the way to such jobs. We're
equally pleased with what VISTAs have done and we have a task
force working on how we can notch up and make a greater
contribution to welfare reform. I will be happy to report to
you when we're ready with our next steps.
Mr. Stokes. Can you give us some idea of what portion of
your budget is invested in this particular effort.
Ms. London. Congressman Stokes, at this point, about one-
third of our projects are involved in various aspects of
welfare-to-work. Some related to adult education activities,
some related to job development, others to micro enterprise
development. But it is roughly one-third of our projects.
Mr. Wofford. We have the Highbridge Community Life Center
project in the South Bronx, for example, which is one of the
star programs that has a job database of 200 local businesses
to be matched with employable community residents. This is an
area where 40 percent of the households are on public
assistance. Our VISTAs there have had some extraordinary
successes.
Mr. Stokes. My time has expired. I thank you very much.
Mr. Miller. Senator, let me ask a couple more questions for
Mr. Porter and then I'm going to submit additional questions
for the record.
How will you be integrating the programming for impact and
other outcome activities into the GPRA process?
Mr. Wofford. They're an integral part of it. That is in
some sense exactly what we're now doing. The impact programming
of the Senior Corps, an equivalent by whatever name other parts
of the department use, take that mission to have outcome
results measured and programs that are designed to achieve the
right outcomes. The very process we're doing now in preparing
for GPRA is to see which of our programs in fact directly meet
the test of GPRA, and secondly, what additional measures and
matrix need to be designed.
The GPRA road is going to be a good and a continuing long
road. We hope our first big response to GPRA this September
will put us well along the way on that road.
Mr. Miller. You made the statement that essentially all the
new money that has been requested is going for the America
Reads program aside from certain cost-of-living increases.
There are some programs right now that are under that America
Reads basic definition. Can you tell us how many projects, how
many volunteers, or how much funding is now dedicated to the
same activities that would be funded under the America Reads
program?
Mr. Wofford. Let me see if my colleagues can help me on the
figures while I look to see what I have in my record on that.
Ms. London. In VISTA, Mr. Chairman, about 19 percent of our
projects are devoted to children's literacy activities, some of
which fall within that America Reads zero to third grade level,
others of which deal with older children.
Mr. Miller. That was how much?
Ms. London. About 19 percent of ours.
Mr. Endres. We have all of the Foster Grandparents, a large
portion of them work in America Reads type activities. Over 50
percent of the Foster Grandparents are working in Head Start
centers and schools today. So at least half of the Foster
Grandparent effort is already directed at some America Reads
type activity.
There is a large portion of our Retired and Senior
Volunteer Program which also focuses its effort on children and
youth and their education and literacy.
Mr. Wofford. The only one of the programs before you that
is not sort of immediately directly involved in some aspect of
America Reads is the Senior Companions. But as I was saying
that, one of my colleagues said, no, you're wrong, because
Senior Companions enables a number of grandparents and seniors
to remain independent and functioning, and the role of
grandparents in fact in mentoring and tutoring is one of the
potentials still to be tapped. So it may be that all of our
programs will have some creative role in the America Reads
effort.
Mr. Miller. There is no intent to change the emphasis that
you currently have on these literacy type programs within your
current budgets, is that correct?
Mr. Wofford. Congressman Miller, I think our board and all
of us will be looking at these five goals related to children
and youth that the Summit set, one of which is directly in line
with America Reads, the effective education, ability to read,
and marketable skills. I would expect that in a few months, in
honing our priorities for the future, that there will be
adjustments related both to the America Reads goal and to the
other goals of the Summit. But they are directly in line with
the commitment that our board made more than a year ago to have
the primary focus of our programs be on children and youth.
Mr. Miller. You're requesting $10 million to start a new
demonstration program which is exclusively for the America
Reads program. We have been concerned about the impact of
demonstrations. In the past, they were used to provide
flexibility not available under your regularly authorized
programs. But for such an approach to have value, the
demonstration results must inform the authorizing process so
that successfully demonstrated projects can be replicated on a
nationwide basis. The demonstrations you're proposing would not
be completed in time to inform the authorizing process on
America Reads. What is the purpose of the America Reads
demonstration request, the $10 million?
Mr. Wofford. Tom, would you start on that? I will then
supplement what you say.
Mr. Endres. Within the Senior Corps in the current
programs, being mindful that the Retired and Senior Volunteer
Program has existed now for 25 years, and the Foster
Grandparent program has existed for 30 years, within the
authorizing legislation for those programs, coming out of that
history, there are some limitations on each of those programs.
So the $10 million that we're requesting for demonstration
money is necessary at this time to help us develop new
approaches which meet and respond to some of the changing
practices that we have seen recently that we are unable to make
real through the existing legislation.
For example, in the Retired and Senior Volunteer Program
where there is currently a limitation that we may not provide
any incentive for intensive service, say 15 hours a week or
more, yet we're learning that intensive service is critical to
really getting the kinds of community impacts necessary in some
cases. So we would need a reauthorization change to overcome
that limitation in RSVP.
Similarly in Foster Grandparents, as you know, Foster
Grandparents is means tested and the volunteers to be eligible
have to be at 125 percent of poverty or below. That is an
example of a legislative limitation with the Foster Grandparent
program. Yet there are many seniors who would be willing to
serve, who would like to be Foster Grandparents S6602who are
just over those income guidelines.
The reason we need the demonstration money at this time is
because there are legal limitations on what we can do which
would have impacts on what we're able to accomplish until we
can get those authorization changes. We are in the process, as
Mr. Wofford has indicated, of developing a reauthorization
proposal. As part of that reauthorization proposal, we are
intending to make the necessary changes to modernize both the
Retired and Senior Volunteer Program and the Foster Grandparent
program which would obviate the need to do the demonstration.
I would like to make one other comment, and that is that
this demonstration authority that we have is being used I think
very judiciously. We are not intending to start a fourth
program with it. In fact, what we're trying to do is use it as
an incubator of new ideas, of innovations, to test new models
and new approaches, and then replicate those models back to the
Retired and Senior Volunteer Program and the Foster Grandparent
program. That's currently what we're doing. We have five
demonstration sites right now and we're taking the best
findings that are coming out of those sites and making
innovations within the constraints of the current law within
Foster Grandparents and the Retired and Senior Volunteer
Program. We're very actively engaged with the national
association boards of directors in making those changes and
they're fully engaged in this entire process.
So the short answer is that we're precluded from doing what
needs to be done within the current law. We're attempting to
make the changes necessary that would allow us to do that
within the reauthorizing legislation.
Mr. Wofford. Could I amplify that? There's tremendous
potential for millions seniors who are age 55 and older to play
a part among the 1 million extra tutors that are believed to be
needed for the goal of having all children reading by end of
grade three or for any other major service program. The reason
we need demonstrations, tests, and models is that no one has
yet come close to cracking the atom of that senior power,
particularly as related to children and youth.
The ship that's been sailing along with the RSVP program,
for example, is a very good ship, but has not had particular
goals like that. It has instead had the goal of getting seniors
into service. We think there are very good signs that the
challenge of a goal like seeing that every child in this
country reads by grade three will enlist people with talent
that do not get enlisted by just the message of will you now
serve.
There has been some emphasis on making seniors happier and
healthier by serving. Over the years that has been a concern of
the senior volunteer work; to play a role in helping the
quality of life of seniors by giving them opportunities to
serve. That's a very different challenge from saying to a
retired army officer, retired school teacher, retired
businessman, or a retired member of a union who has a lot of
experience and talent and saying Uncle Sam needs you. Not that
you need to do some volunteering to feel good or to play a good
role in your senior life, but that this country needs you to
help turn the tide for these children and youth. We want to try
to find the ways and means of enlisting and tapping much more
of the talent and experience of seniors. The experience of
seniors is there waiting to be tapped, and this effort for
demonstration is to find the ways and means to do so, and to
report to you what they are.
Mr. Miller. Thank you. We're working under the ten minute
rule and I've just had my second round.
Mr. Miller. We now have two more Members joining us.
Mrs. Northup.
Mrs. Northup. I'm sorry, Mr. Wofford, that I was late, so
you may have covered some of this. I think I should be honest
in saying that I'm very confused by this America Reads program.
First of all, I was on the board of the Louisville, Kentucky
Foster Grandparents program for many years and I am very
familiar with that program and worked quite closely with the
program. It is a very different program than what you're
talking about. I can't imagine such diverse programs as these
being incorporated together. There are so many things that make
them very hard to incorporate.
First of all, these seniors, this was an opportunity for
them to get out of their homes, they of course all had to be
financially indigent to even qualify for the program, many of
them had never been out of the city. We spent a great deal of
time giving them the opportunities to experience new
experiences in life. Many of them did not read or write. They
were very involved with children--actually, it was very
touching what they did for the children they worked with--but
teaching them to read wouldn't have been one of the skills that
they would have been involved in.
Can you tell me what you all plan to do when that's the
population that you are geared to serving, and actually serving
very well, would you tell me how this meets with the America
Reads program?
Mr. Wofford. I would like to begin the discussion with you,
because obviously you're speaking from experience, by saying
that I've seen many Foster Grandparents who would not because
of their own problems with literacy, be good tutors but who
give wonderful love and care to very distressed kids, and
sometimes help those kids stay in a class because they give
them that extra help. On the other hand, I have also seen
Foster Grandparents in a lot of States where they are very able
to read. In fact, their low income does not mean they cannot
read. They can be very good tutors. But that's a very small
part of the population we're talking about.
The Foster Grandparents are what, 23,000?
Mr. Endres. They are 26,000.
Mr. Wofford. Excuse me, Tom, 26,000. The RSVP, the Retired
and Senior Volunteer Program, has 450,000 participants. What
we're talking about is not primarily expanding programs for
low-income seniors who need that $2.45 an hour to be a Senior
Companion or a Foster Grandparent or for whom that is very
vitally important, but I'm thinking of the 50 million seniors
among whom there are millions of people with just exactly the
kinds of experience and ability to read and to teach. They're
not ready to be AmeriCorps members full-time or VISTA
AmeriCorps members full-time, but millions of seniors could
make a great difference. The plan for America Reads is to get a
million well----
Mrs. Northup. I guess I'm confused. As the program was
originally discussed, it was 30,000 AmeriCorps people that were
going to help coordinate the million volunteers.
Mr. Wofford. Not exactly. The 30,000 figure is the
Department of Education's estimate and is a proposal for 30,000
reading specialists. The Department of Education does not
provide the specialists but they would provide resources to
local literacy and school programs for 30,000 reading
specialists. The proposal for AmeriCorps was for 11,000
additional AmeriCorps members who would be organizers,
recruiters, and coordinators.
Mrs. Northup. And they're in addition to the 30,000 or are
they a part of the 30,000?
Mr. Wofford. No, the Education Department's appropriation
and its proposal in the legislation includes, as I think its
largest item, the 30,000 reading specialists. Our part of it
before you is limited to the 11,000 AmeriCorps members plus
support for senior programs to play a part in the America Reads
initiative.
Mrs. Northup. So now I'm still trying to get it straight.
We're short on time, so if we can sort of move through these
answers. The seniors that are part of this, would they also be
paid?
Mr. Wofford. Insofar as Foster Grandparents became part of
it, they would be paid $2.45 an hour.
Mrs. Northup. I'm confused about whether you said that this
would be like retired businessmen, retired service people,
retired teachers. Will there be the income limitations?
Mr. Wofford. The Foster Grandparent program has an income
limitation.
Mrs. Northup. Absolutely.
Mr. Wofford. Tom was just talking about that. We're not
proposing that be changed for Foster Grandparents. I've just
been corrected by Gary Kowalczyk, and this is a change from my
understanding of it, that the 30,000 figure is about 20,000
reading specialists and 11,000 AmeriCorps members.
Mrs. Northup. Okay. So back to this other. We understand
that they are paid and they are in a sense the reading
specialists. I'm trying to address the question of the million
volunteers that would be recruited in part from the seniors
you're talking about, retired businessmen, retired service
people, are they paid?
Mr. Wofford. No. Tom would like to comment on that.
Mr. Endres. I think I can clarify briefly here. We're not
intending to change the nature of the Foster Grandparent
program. We have many wonderful examples of Foster Grandparents
serving in schools, in teams, in groups supporting each other.
And where that is working we want to encourage that and nurture
that. So we're not intending to change the nature of the Foster
Grandparent program.
For the Retired and Senior Volunteer Program, of course
there are no limitations on how people serve. Individuals can
be recruited to serve whatever duration they want to. So
through the Retired and Senior Volunteer Program we have much
more flexibility.
Through the Senior Demonstration programs, what we're
hoping to do is reduce or eliminate some of the barriers that
prevent our senior population from being more involved in
senior service. We would hope to develop innovative approaches
and new ideas that we would take the best of and replicate back
into the Foster Grandparent and the Retired Senior and
Volunteer Program.
Mrs. Northup. There's millions of dollars we're talking
about here. It is very unclear who is paid, who is not. On the
one hand, you say we're not changing the Foster Grandparent
program, but here it shows America Reads $6 million goes to
that program. I don't know whether you have had a chance to
discuss with NIH, for example, they have just concluded a lot
of studies on how kids learn to read and they are talking about
intensive phonics instruction. They specifically say that the
teachers that are involved in this need very specific teaching.
This is not something that my mom and dad, who are very good
readers, could just learn to do tomorrow.
So it is a little confusing about whether we are just
saying we've got this program and this program and just putting
money into it.
Mr. Endres. Within the Foster Grandparent program, the
request would allow us to field an additional 1,500 volunteers
under the current Foster Grandparent regulations.
Mrs. Northup. But that is not your expertise. You have an
excellent program. It is matched--is it still 75 percent by a
local fund?
Mr. Endres. No.
Mr. Wofford. It is a very decentralized program. So that
what you're experiencing there in terms of the people that are
selected, we do not select any Foster Grandparents, the local
Foster Grandparents program selects them. In different places,
programs select different kinds of people for Foster
Grandparents.
Mrs. Northup. It is not still 70 percent local funding?
Mr. Endres. As a whole, I don't think that's the figure.
Mr. Wofford. No. That may be the figure in the program you
were with.
Mr. Endres. There's a 10 percent non-Federal requirement in
the Foster Grandparent program, 10 percent of the total budget.
Many of the local projects exceed that requirement.
Mrs. Northup. Oh, I see. So many of the States have made
the matching of 70 percent? It says ``Every Federal dollar
invested in Senior Corps programs is currently matched by 70
cents in non-Federal contributions.''
Mr. Endres. Right. For every Federal dollar we invest we
get an additional 70 cents committed by either a State, a
county or a corporate entity.
Mrs. Northup. Has any State thought that this was such a
good use of their money to teach kids to read in the schools
that they have actually created this program themselves or used
the program for this themselves?
Mr. Endres. I'm not familiar with any at the State level,
but I am familiar with various school districts who have made
an annual contribution to the local program for Foster
Grandparents to serve within that district. We can give you
many concrete examples of that. Portland, Maine is one that
stands out in my mind where there is a concentration of at
least eight Foster Grandparents serving within one school.
Those Foster Grandparents help each other, they perform a
multiple number of activities with children on a person-to-
person basis, and they've actually changed the whole culture
and climate within that school. When the principal makes
announcements in the morning and welcomes people, he welcomes
the Foster Grandparents to the school because of their
contribution.
Mrs. Northup. The Foster Grandparents in some of the
programs I'm familiar with have changed the culture of some of
the day care centers, some of the schools they are in. In fact,
they don't stay in the center if that doesn't happen. They do
not teach children to read.
Mr. Wofford. But some do in some places, and very notably.
You're talking about how many additional Foster Grandparents?
The total increase that might be possible with the $6 million,
Tom?
Mr. Endres. An additional 1,500 opportunities.
Mr. Wofford. I think in the first place there is no reason
for you not to be full of questions about it because the
legislation was sent up this week. You're just beginning to
hear the debate and the presentation on it. But it is not
proposed that the Corporation or the Senior Corps plan and
plant these extra people. The proposals under the America Reads
initiative are to come up from local communities and from
States. The local communities have to put together their own
initiative on the America Reads in their communities, and the
State needs to do so and send in an application.
I happen to have been in Houston where they were
assembling--I think you had not come in when I was talking
about this--to figure out how to get the 20,000 tutors they
estimate in Houston. The various educators and literacy
programs and school administrators of Houston estimate that
they need 20,000 additional tutors. They agree with you and
with the studies that you're referring to that we pay a lotof
attention to, too, that there is a whole set of criteria for what makes
an effective reading tutor and reading program--the structure, the
curriculum, the balance between phonics, all of the state-of-the-art
that is developing.
The Houston Reads meeting was the climax of weeks and weeks
of planning. Barbara Bush launched it, her foundation ran the
program all that morning. They had all the key literacy
programs of that area assembled and they are in the process of
shaping the strategy for Houston. Out of that, they will make a
proposal for the America Reads resources. They might or might
not choose to say we would like 10 Foster Grandparents because
we've had a good program. They will be entirely free to choose
whether to suggest Foster Grandparents, VISTAs or AmeriCorps
people. It will be a local choice.
Mrs. Northup. My time is up.
Mr. Miller. We will have time for a second round, if you
want to stay around. I've already had my second round.
Ms. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman.
Welcome, Harris Wofford. I came in in the middle of this
and so, unless it has already been done, I would love to hear
really more about it. There are many people who are saying why
do we need this. Perhaps you did respond before and I would
love to give you an opportunity again, since there are so few
of us here, to comment on why do we need this, and why aren't
the schools doing the job, and what is the justification for
this program.
Mr. Wofford. One reason that it is before us now is what
the Founding Fathers called ``the harsh logic of events.'' As
we've gotten clearer about the crisis of 15 million young
people in this country that are considered to be in danger of
disaster, as facts have piled up such as 40 percent in fourth
grade on a highly respected national test are shown to be so
far below reading levels that they are really not competent to
go on in school and read to learn, over the last several years
a remarkable consensus has grown that there is a crisis. An
entry point in dealing with this crisis is an all out effort to
see that by the end of grade three, beginning with parents as
the first teachers, beginning with everything the schools can
do to improve their efforts, and including whatever additional
after-school, weekends, summer, and in-school assistance that
can be given, that we reach that goal of reading.
The evidence also has mounted that you can reach that goal
if you really go out to do it and combine the resources. The
teachers have been in the forefront of those saying we need
help. Sometimes a terrible proportion of a class that without
some kind of extra help out of class, hold the teacher's whole
class back, let alone not make progress themselves.
So out of this, six months before President Clinton
proposed the national goal, the Governor of Texas--and this is
one reason Houston was in the forefront--George Bush in his
State of the State address said the clearest and most profound
goal for the State of Texas is to take action to see that every
child learns to read by grade three and then reads to learn.
I've been now in I guess a dozen cities where the mayors over
the last year or so have set this as a major target for those
cities--Baltimore Reads, Boston, a City that Reads, and
probably it would be true of Cleveland. The consensus that we
need to take action around this country on this problem is very
large.
Now, will the America Reads initiative work? The proposal
is that the Federal Government give some significant,
substantial new resources to States and communities to develop
local plans to achieve that goal. The Federal Government is not
going to mastermind what that plan is. But the two biggest
contributions proposed by the America Reads Initiative are to
make available the reading specialists resource money, because
the reading specialists have a state-of-the-art now to
contribute; and the full-time contribution of AmeriCorps
members, including AmeriCorps*VISTA members, in organizing this
army of volunteers, not organizing it nationally, but helping
to organize it locally. In Houston, in this planning session, I
cannot overstate how strongly the superintendents of schools,
the principals, the literacy people said we want more
AmeriCorps & AmeriCorps*VISTA people to help us do this.
It is the case for what is criticized as paid volunteering.
The case is that in order to use large numbers of occasional
volunteers or unpaid part-time volunteers, you have to have
either a full-time paid professional staff or you have to have
this other full-time service that comes through AmeriCorps on
leaner and, different terms in which you have people for a year
or two that give a lot of spirit and energy but are not there
in a life-long career agency staff position.
The point that I would like to restate is that you need
great goals nationally to get something done like this, but it
has to be carried out locally. But in setting our sights on
those goals, you look and say, well, are these AmeriCorps*VISTA
people the resources that can help? And you look at RSVP and
this huge pool of experience among seniors, is there another
way, not full-time, but as volunteers that they can play a
significant role? We think the answer to both of those
questions is yes.
Mrs. Lowey. I apologize. You said the legislation just came
up. I haven't really looked at it in detail. But if this is
locally determined, if a local community school board decided
they wanted to put this money into Head Start because that was
the best way to help youngsters get the best start and learn to
read, could they?
Mr. Wofford. I'll ask Mr. Kowalczyk, who has been in the
planning with the Department of Education more frequently than
I have, to respond.
Mrs. Lowey. And by the way, my reasoning for this, there
are those who will criticize--everyone I think agrees with the
goals--but there are those who will say we have Even Start, we
have Head Start, we have Early Start. Okay, it is fine to set
these goals, but we think Head Start works. Every youngster who
is eligible can't get into a Head Start program. We want to put
it into Head Start.
Mr. Wofford. Of course, as you probably recall, the
President's proposals have a very specific expansion of Head
Start funding.
Mrs. Lowey. Absolutely.
Mr. Wofford. And secondly, Even Start is part of the
America Reads initiative and has a certain proportion that is
called for, as I read in the legislation a night or two ago. I
was pleased to see that Even Start, where we have AmeriCorps
and VISTA people working in a number of places and it is a
very, very successful program, has a respected place in the
plans. Congressman Goodling had a lot to do with that program I
understand.
I know the negative of the answer to your question. No
local or State plan has to include AmeriCorps or VISTAs. They
would have to say this is part of our strategic plan. I don't
know whether a program that said we're going to put everything
in Head Start would fit the America Reads.
Mr. Kowalczyk. If a local community decides that early
childhood is its priority and the best way to accomplish this
goal, and it is going to use reading specialists and others to
engage in this activity, they will have that flexibility. The
only requirement is that the school be involved in some way,
not necessarily as the fiscal agent, but it has to be engaged
in the process within the local community. But there is
absolute flexibility in allocating resources within that
community and there is the assumption that a significant
portion of these resources would be devoted to children who are
not yet in school.
Mrs. Lowey. Thank you. Thank you, Mr. Chairman.
Mr. Miller. Mr. Stokes.

cost-effectiveness

Mr. Stokes. Thank you, Mr. Chairman.
Senator Wofford, let me ask a couple of questions of Ms.
London and Mr. Endres. In the current climate out here now,
we're talking about budget deficits and costs and cost-
effectiveness, how can you demonstrate to us that Senior Corps
and VISTA are cost-effective programs?
Mr. Endres. The Senior Corps, in a number of ways. First, I
think we've already indicated that for every Federal dollar
that we invest there is another investment of 77 cents, which I
think is a fair indication that the programs are highly valued,
they're effective, they're cost-effective, and a good
investment on the part of other investors than the Corporation.
In other ways, I think that when we look at the Senior
Companion program, for example, senior companions themselves
being income eligible adults, meeting poverty line standards in
order to qualify for the program, we've found that keeping them
active through meaningful contributions to community, engaged
and involved with their peers contributes to their physical and
mental well-being. We believe that through these programs those
activities have a cost-benefit. Each senior companion serves on
average five other adults who are at risk of
institutionalization. For every adult who is delayed from
placement in a nursing home or boarding home or dependent care
facilities there is the potential cost-savings of $38,000 for
that institutionalized person while a cost for a senior
companion is about $3,800.
For Foster Grandparents, the same is true. Again, low
income eligible adults serving a special needs child in ways
that benefit both and done in ways that would not be possible
for a school system or Head Start center or another child
service facility to provide the kind of person-to-person
individualized attention that allows children who have special
and exceptional needs to achieve the highest quality of life
possible for them.
In terms of the Retired and Senior Volunteer Program, I
don't want to lapse back into the input measures, the numbers
of volunteers, the numbers of hours, but the cost to us for
each RSVP volunteer today is currently less than $85 per year
per volunteer. For that we are getting immeasurable amounts of
service in all areas of education, public safety, the
environment, health and human needs.
So I believe that when you look at the cost-effectiveness
of the Senior Corps programs, they are yielding multiple
returns for every dollar that is invested. In addition to that,
I would argue, Mr. Stokes, that with the aging of America, it
seems to me that we need to be very smart and very strategic
right now. We have 80 percent of this population who have no
limitations on activities of daily living. It seems very
prudent to me to begin asking those people to give back.
They've done so much for this country over the years; I believe
they're willing to serve, and many have indicated that if asked
they will serve. I believe that by engaging them as a vital
resource for this country we can save immeasurable amounts of
money.
Mr. Wofford. Mr. Chairman, I think you have before you the
1996 AmeriCorps*VISTA Accomplishments study that was just
finished last month. On page 4, it summarizes quite a few of
the facts that this study by WESTAT, Inc. found in terms of
cost-effectiveness on one item after another.
Mr. Miller. Good.
Mr. Stokes. Let me move to another area. With respect to
the America Reads Initiative, what is the proposed relationship
between your agency and the Department of Education in carrying
out this effort?
Mr. Wofford. The Secretary of Education and the CEO of the
Corporation for National Service will be jointly chairing the
effort. The proposals from the States come to the two of us.
When the approval is made as to a State plan--and please, Mr.
Kowalczyk, correct me if I'm off track at any point on this--
when that allocation approval of a State plan is made, then the
procedures for the allocation of the AmeriCorps*VISTA or the
rest of AmeriCorps would be made through the State Commission
process. At the State level, the State education agency and the
State Commission on National Community Service would be jointly
putting together for the governor the State plan that would be
submitted.
Mr. Stokes. If by any reason the initiative is not fully
implemented across the various agencies, to what extent will it
remain a priority for your organization?
Mr. Wofford. It is certainly a priority. Literacy and the
problems of children and youth were a priority before this
clear-cut big goal was set. The Summit has now raised our
sights even more. So with whatever funds you give us, this will
be a major priority for us.
On the other hand, the proposal that has been made is
designed to get across a gap. One of the greatest dangers is to
try to go across a gap in two jumps. I can't set any one
precise figure at which point you haven't committed enough to
reach the goal. But I think that's the balance that you have to
strike. I know the times are very tight, but the crisis of what
happens to children that haven't learned to read by grade three
and the likelihood of their dropping out and heading into
personal and national disaster is very great. So that I think
you should look at this proposal which was put together with
the thought we had as to what would help this country get
across that gap.
Mr. Stokes. Senator, over the years I have discussed with
the agency its violence prevention activities, especially its
alternative dispute resolution and gang prevention activities.
To what extent will your fiscal year 1998 budget permit you to
strengthen your effort in domestic violence prevention?
Mr. Wofford. Since some of our programs in that field have
been so productive, we look with great favor on both our own
assignments of VISTAs to those programs and for State
Commissions assigning other AmeriCorps members to anti-gang,
violence prevention, alternative dispute resolution work.
Diana London might want to add to that.
Mr. Stokes. Ms. London.
Ms. London. Just looking at some of our evaluation results
now, we have somewhere between 50 and 100 projects currently
operating that focus on victims of domestic violence. A lot of
what the VISTAs do, again, are to recruit and train volunteers
to provide time with victims of abuse. They have also raised
considerable amounts of money. In one case, a project in
Arkansas, they developed a training manual and procedures for
recruiting over 4,000 volunteers. That program now continues on
with VISTAs having left the area, but the project is fully
sustained. So for us, it has always been a fairly major portion
of what we do.
Mr. Wofford. Some of those are listed on page 9 of this
study.
Mr. Stokes. This document? Okay. Good. I have time for one
more question I guess. One of the areas I'm concerned about is
that of empowerment zones. I would appreciate it if you would
bring the committee up to date on your most significant
activities that are underway in our empowerment zones across
the Nation.
Mr. Wofford. Are you able to speak to that, Diana?
Ms. London. I don't have precise numbers with me. We can
provide for the record how many VISTAs we have assigned
toempowerment zones. I would estimate somewhere between 20 to 30
projects around the country. The program that Mr. Wofford mentioned
earlier in the South Bronx is probably one of the prime examples of
where VISTAs have really generated jobs for a lot of people in the area
who have previously been unemployed. We have also done a number of
projects in enterprise communities where the VISTAs have brought
additional resources into the enterprise communities in addition to
those that have been provided by the Federal Government, and have set
up, in some cases, technology centers, day care programs, and a variety
of activities to promote economic development in those areas. But we'll
provide you with some numbers for the record.
[The information follows:]

[Pages 1580 - 1587--The official Committee record contains additional material here.]

Mr. Wofford. It is one of our priority areas. We have
worked in the past, and continue to work with Project Hope in
housing projects I know in Atlanta, the most recent place where
I visited an empowerment zone, and also I do know about
Philadelphia's. It has been an area where I think VISTA has a
proven track record.
Mr. Stokes. Thank you, Mr. Chairman.
Mr. Miller. Ms. Pelosi?
Ms. Pelosi. Thank you, Mr. Chairman.
Welcome, Mr. Wofford, all of you. Thank you for your
testimony. Congratulations on a very successful presentation of
what the possibilities are in terms of volunteerism in our
country over the weekend. It was a great success as I
understand. More importantly, congratulations and thank you for
your work. It is clear that you all love your work, and that's
wonderful to see. I think many of the people who come before us
do. Clearly, you savor the opportunity you have to make this
important difference. I've long been inspired by Senator
Wofford's commitment to AmeriCorps, to national service. He
knows that I have tried to quote him, unsuccessfully, about the
twin engine----
[Laughter.]
Why don't you inspire us again, Senator Wofford, about the
importance of combining volunteerism and this paid supervision.
Mr. Wofford. I may be showing that I have engaged in
plagiarism with the twin engines without saying that I think
the first time I heard it was from George Romney when he called
me to propose the idea of the Summit. He had been trying to
sell it to three presidents and he just learned of my
appointment to this job and could we see if we could get
President Clinton and President Bush jointly, our Corporation
and the Points of Light Foundation jointly to organize this
Summit, to find the common ground above politics and to take a
quantum leap. When he came to see me he made the case that for
the atom of civic power to be cracked and the energy to be
harnessed you needed the twin engines of far larger scale
volunteering, focused on clear, critical problems designed to
get results and outcomes, and the other engine of full-time
service by AmeriCorps, AmeriCorps*VISTA, or by Jesuit Volunteer
Corps, or Lutheran Volunteer Corps, or a new volunteer corps
that he heard that Tony Campollo was starting with the
Evangelical churches. But that you needed full-time service in
order to make use of part-time volunteering.
Millard Fuller, the founder of Habitat for Humanity, has
made the case to me eloquently. He has said he would like an
increasing number of VISTAs assigned to Habitat projects that
have no paid staff and no prospect of getting paid staff but
could multiply the number of houses built, the number of
volunteers used if they could get one, two, or three full-time
VISTAs who would be ready on the site to get it organized, who
could help recruit the volunteers, who would stay at the end,
and would see it through. By doing that you could jump start a
Habitat program from being a weekend program to a week-long
program. They've done it in many places. In North Philadelphia
that's exactly what happened.
With full-time people added to large numbers of part-time
people, you can get a lot more things done. Or to put it
another way, if you don't have the full-time people, you can't
use large numbers of unpaid occasional volunteers. This is
something the military learned a long time ago in American
history. They first had unpaid militias. Then George Washington
tried to get a little pay and a little living allowance for his
army. Military service, once it became a critical thing, knew
that you had to have at least living allowances. Likewise the
Peace Corps has had living allowances. So I've been very
puzzled by suddenly the idea that domestic national service
should have so many people asking why should anyone have a
living allowance. If you don't have a living allowance, you
don't get full-time service except for very religiously driven
people, God bless them, and secondly, very well-off people. You
need some kind of a living allowance.
The latest proposal that is being made, and which we
piloted this year is the education award which the President
proposed in Philadelphia, as the incentive and a good
investment. Like the GI Bill, it would say to the private
sector that if you provide the living allowance--to churches,
for example, if you want to organize a service corps and you
can do it on better terms than AmeriCorps does, you can put
people up in church basements or in parishioners' homes, go to
it--we will add the incentive of the Education Award.
With agreement of Senator Grassley, we tried that approach
last year. It works very well. The Boys and Girls Clubs now
have asked for nearly a thousand of these education awards
without the full program grants. The National Council of
Churches is proposing several thousand of them. It is a new
dimension for us. Also, the VISTA cost-shares that we were
talking about earlier are of the same nature. We give the
education award and some training and recruiting support, but
the communities or whatever institutions put up the support for
the cost-shares pay the rest of VISTA expenses. And that's
grown to how many now, Diana?
Ms. London. Close to 13 million.
Mr. Wofford. And in terms of VISTAs, about 1,100, is it? Or
more than 1,000?
Ms. London. For VISTAs, about 1,100 or 1,200.
Mr. Wofford. That are on those terms. But whether it is on
those terms or the traditional VISTA term of $8,000 plusthe
education award or a small cash stipend or this new way, if you need
full-time people to get a job done, you have to have some means of
having their living allowance paid.

program sustainability

Ms. Pelosi. You mentioned VISTA, and that was my next
question. You mentioned in your testimony that you have more
than 70 percent success rate in terms of sustainability of
programs. What factors do you think contribute to that success?
Mr. Wofford. The training for VISTAs, the ethos of VISTA
from the time that you begin is that you're there to build
capacity. You're not to do it for a community, and very often
you're a part of that community. You're to lay the groundwork,
start the process, get it going in such a way that this project
can go on without you. And VISTAs have been skilled and have
been selected for their skills often in helping a community or
a local project know how to raise the money to sustain itself.
We're delighted that this sustainability report, the draft
of which is before you today, it says ``Draft,'' shows that
both at the two year period and at the five year period a high
proportion of the projects that got expanded by the VISTAs are
continuing. And that's what the VISTAs know their duty is when
they go in.
Am I completing the point you would make, Diana?
Ms. London. I think the critical factors are early planning
for project sustainability, and that's something that is part
of our VISTA training, along with resource mobilization, and,
once again, recruiting and training local volunteers who will
carry it on after the VISTAs are gone. Those have been the main
ingredients in our ability to sustain programs.
Ms. Pelosi. And that of course includes the paid
supervision.
Ms. London. Actually, in VISTA's case, our projects are so
small, they average a little over four members per project.
Only about 30 percent of them get any kind of paid supervision
or transportation money from us. Most of the projects are
actually providing those things themselves.
Ms. Pelosi. So the early planning is critical to that then.
Ms. London. Yes.
Mr. Wofford. But also the point you may have been making,
is that a VISTA is full-time and it is locally selected.
Because VISTAs are locally selected, and therefore, they could
differ in who they are in the same way that Foster Grandparents
may differ in who gets selected. But having seen plenty of them
in 30 States now, I think they come with the same spirit of
Peace Corps volunteers, a certain dedication. They're not there
for a career; they're there for one or two years, and they're
able to put a tremendous amount of energy into getting
something done while they're there. Whereas, if you're taking a
job that may go on for 10, 20 or 30 years, you may not have
that kind of burst of energy that you have to achieve something
in a hurry. There is a certain kind of infusion of energy and
dedication that comes with the domestic peace corps approach of
VISTA.
Ms. Pelosi. Mr. Chairman, I have no other questions. I just
want to comment, Mr. Wofford, that I appreciate so much the
work that you do. Clearly, we're many times blessed by what you
do. The contribution is made by the volunteers to the benefit
of people in the community. The enhancement, it is for the
volunteers, and then of course under the scholarship program
they're able then to advance their own self-fulfillment and
contribute in a stronger way to our society. So we keep getting
blessed over and over again. And it also serves as a model for
public, private, nonprofit, for profit, all of the different
weighings in here. So young, old, diverse, I think you have so
much opportunity. I can appreciate why you enjoy your work so
much, but I also want you to know how much it is appreciated as
well. Thank you very much.
Thank you, Mr. Chairman.
Mr. Miller. Mr. Wofford, thank you, and thank you, ladies
and gentlemen, for being here today.
This will conclude our hearing. The subcommittee is
adjourned until 2:00 next Tuesday.
[The following questions were submitted to be answered for
the record:]

[Pages 1591 - 1691--The official Committee record contains additional material here.]

Thursday, June 5, 1997.

OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION

WITNESSES

STUART E. WEISBERG, CHAIRMAN
WILLIAM GAINER, EXECUTIVE DIRECTOR

Mr. Bonilla [assuming chair]. Good morning. The
subcommittee will come to order.

Introduction of Witnesses

This morning we're going to hear from three groups, three
commissions: the OSHA Review Commission, the Federal Mine
Safety and Health Review Commission, and the Federal Mediation
and Conciliation Service.
We'll begin with the OSHA Review Commission and we're going
to hear from Chairman Stuart Weisberg. We'd be happy to hear
from you at this time. It's nice to see you again.
Mr. Weisberg. It's nice to see you, Congressman.
Congressman Bonilla, members of the subcommittee, it is
again a pleasure to appear before you to discuss our budget
request. First, let me introduce our Executive Director,
William Gainer.

Opening Statement

Mr. Chairman, I have a prepared statement that I would
request be inserted into the record in its entirety.
Mr. Bonilla. We will be happy to submit it for the record.
Mr. Weisberg. Thanks.
Two years ago, when I appeared before this subcommittee, I
submitted a strategic plan for improving commission
performance. We set ambitious goals and this subcommittee
provided us with the funding we needed to pursue those goals.
Many of those goals have been reached, and others have seen
significant progress.
With respect to our public service goal, we've created an
E-Z trial program to assist parties, particularly small
employers in less complex cases, to allow them to appear before
the Review Commission with as few legal formalities as
possible.
E-Z trial is a real success. Since its inception in October
1995, more than 700 cases have been designated for E-Z trial.
E-Z trial cases that settle do so on the average of 86 days
from docketing, which is a 60 percent reduction from similar
cases.
Even more striking, when E-Z trial cases go to hearing, a
judge's decision is issued on average 146 days from docketing,
almost a two-thirds reduction in cycle time as compared to
similar cases in conventional proceedings.
[Clerk's note.--Later changed to ``141.'']
Let me point out that the yardstick we are using is not
regular or conventional cases. Because then you'd be comparing
small cases with big cases. What we did was went back a year
before the E-Z trial system was instituted and looked at the
cases that would otherwise have qualified for E-Z trial and saw
how long those cases took. So we're comparing the E-Z trial
cases to similar cases that would have been designated E-Z
trial, had such a system been in place a year earlier.
By emphasizing timeliness and re-engineering case
processing, we've reduced our cycle time by 60 days for ALJ
trial cases and 120 days for commission review cases. We've
reduced the number of old cases in our inventory by more than
50 percent.
We issued a decision in Pepperidge Farm, our oldest case,
one that predated my joining the commission in February 1994.
Pepperidge Farm involved 62 days of hearing before an
administrative law judge, more than 11,000 pages of transcript,
more than 400 exhibits, including 60 scientific studies and
articles. The Pepperidge Farm decision was signed by the three
commissioners on Saturday morning, April 26th, at 5:00 a.m.
More than a dozen people worked on that case through the night.
We have published guides to our procedures written in plain
English, which are sent free of charge to every employer that
contests an OSHA citation. This year, we will begin publishing
our decisions on CD-ROM and will establish a Web site early in
fiscal year 1998 to make our decisions and procedural rules
more readily available to the public.
With respect to our product quality goal, we have
completely replaced our antiquated printing and reproduction
facilities ahead of schedule. Documents are now produced to a
much higher quality standard at lower cost and more quickly.
With respect to our information technology goals, we have
completed our technology modernization efforts ahead of plan.
During the past 24 months, we obtained modern desktop computers
and software for every employee. We have installed a wide area
network and e-mail system. We have completed a comprehensive
case tracking/case management system. We have begun providing
laptop computers to our judges for use in conducting complex
trials.
Concerning our human resource goal, investing in our
people, we have provided much-needed computer training. Weare
providing advanced decision writing training to our judges and
attorneys. We have improved morale in the agency from casual dress
Fridays to flextime, to a compressed time pilot program, to a new
awards program.
We have even for the first time entered a team in the Nike
Three Mile Challenge Run. I should add that this was not part
of our plan, and was probably the most demanding initiative on
me personally. What happened was some employees came to me and
said, we'd like to enter a team in the race. And I said, fine,
where do I sign. They said, well, it's not that easy. One of
the rules is that the agency head has to be one of the five
runners.
When I was filling out the application form there was a
separate section for the agency head. And it said, best time
for three mile run, and I put first time. Then it said, goal,
and I wrote, to finish the race while you are still serving
breakfast. [Laughter.]
Mr. Bonilla. Did you finish?
Mr. Weisberg. I finished the race. I actually did, and I
was quite pleased with my time of 27 minutes, just nudging out
Congressman Moran at the finish line. I was wondering why all
the cameras were there when I got to the finish line. It was
because he was about 20 yards behind me.
And actually, it turns out, of all the actions we've taken,
and initiatives, we received the most positive press for that
race because of our catchy team name, the Dukes of Occupational
Hazards. [Laughter.]

operational savings

Mr. Weisberg. We have worked hard to find large operating
cost savings during the past two years. This allowed us to
return more than $300,000 of our fiscal year 1996 appropriation
to Treasury. We have reduced our annual operating costs by more
than half a million dollars. That's come about through lower
office rents, unneeded books and periodicals, mail, paper,
postage, you name it.
To give you two recent examples, we have renegotiated our
contract with the court reporting services for transcript
pages. Two years ago we were paying $2 to $3 a page. Now we're
paying $1.25 to $2 a page.
Also, our telephone credit card, we changed carriers on
that and have reduced our costs by 50 percent.

financial audit

We also had a financial audit done. That's something that
small agencies such as ourselves are not required to do. We did
it voluntarily. And we got a clean opinion the first time
around, which I understand doesn't happen often.

fiscal year 1998 budget request

We have reduced our FTEs from 77 in fiscal year 1994 to 72
for fiscal year 1998, as we said we would.
Our fiscal year 1998 budget request of $7.8 million
represents a less than 1 percent increase over fiscal year
1997. It's an extremely tight budget. And it's a challenge in
the face of an expected increase in case activity in fiscal
year 1997-1998. This stems from increased funding for OSHA,
more compliance officers, more inspections, more significant
cases.

osha case activity

If you picked up the trade press the other week, there was
a story, Colorado steel mill cited by OSHA for 61 safety
violations, proposed penalties of $1.115 million. According to
OSHA, when they appeared before this subcommittee, they define
a significant case as one involving a proposed penalty of more
than $100,000. In the first half of fiscal year 1997, there
were 83 such cases as compared to fiscal year 1996, with only
45 such cases.
In sum, Mr. Chairman, we have successfully reduced our
costs and re-engineered major processes. As we continue to make
innovations in the way we operate, it's appropriate to say, in
the words of the Carpenters, a group not affiliated with the
Carpenters Union, we've only just begun.
Thank you. Our Executive Director and I will be pleased to
answer any questions you may have.
[The prepared statement follows:]

[Pages 1697 - 1704--The official Committee record contains additional material here.]

Mr. Bonilla. Thank you, Mr. Weisberg. I remember the
Carpenters.
My compliments for the points you made about downsizing and
cutting costs. That's extremely significant in this day and
age. And the pie seems to be shrinking every year, not just for
the funding that we deal with on this subcommittee, but on
every subcommittee that we're dealing with in appropriations.
And congratulations on that good time. That is an excellent
time for three miles on your first time.

regional office closings

I want to start out, Mr. Weisberg, with a topic that we
left off with last year, the closing of the Dallas regional
office. Last year we discussed closing the Dallas Office as
opposed to the Boston office. It's my understanding the Dallas
office is now closed. My question is, are you planning to close
the Boston office this year?
Mr. Weisberg. Let me answer that first, with respect to the
Dallas office. Yes, we closed that. And it was challenged
before the Merit Systems Protection Board. And there's an
administrative law judge's ruling upholding the bona fides of
the agency action, that it was cost justified and necessary.
With respect to the Boston office, that is something that
we look at regularly, particularly at budget time. Yes, we
would save some money by closing Boston. But we have to weigh
that against the price of closing it and the impact on the
agency and the employees.
Our strongest asset are our employees. And you have some
long time employees. Looking at the experience we had with the
reorganization last year of the six positions that were
eliminated and all six people were offered transfers to other
places; yet only two of the six accepted the transfers, and one
of them, it appears, only on a temporary basis, and he is
trying to get a job with another agency in Dallas.
So it's something that we're looking at, that we look at
constantly. And depending on our budget needs and the impact on
the agency of possibly losing a fifth of our judges. So it's
something we're looking at, we're aware of. And again, it's a
constant balancing test to have to weigh those things.

relationship to osha

Mr. Bonilla. Mr. Weisberg, on page one of your testimony,
you state the mission of the commission is designed by Congress
to be completely independent of the Labor Department, in order
to provide a check on OSHA's enforcement power by assuring that
employers could appeal and receive relief from any
arbitrariness in the exercise of that power.
It strikes me as more than just a coincidence, however,
that three critical events regarding the issue of ergonomics
occurred almost simultaneously, including your decision in the
Pepperidge Farm case. The following events justhappened by
coincidence to occur on the same day, April 28th, which was Workers
Memorial Day.
Point one, at a news conference, AFL-CIO president John
Sweeney announced ergonomics regulations will be a major
priority for organized labor. The second thing that happened
that day, OSHA launches its ergonomics Web site, which also
indicates issuance of an ergonomic standard as a major priority
for the agency.
Third and finally on the same day, the commission issued a
long-awaited decision in the Pepperidge Farm case, stating that
OSHA now has the legal authority to issue ergonomics citations
under the general duty clause. What is most distressing since
OSHA issued that $1.4 million ergonomics citation at the
Downingtown, Pennsylvania plant, is that Pepperidge has now
closed that facility, eliminating 1,500 jobs.
What practices and policies do you have in place, Mr.
Weisberg, to ensure that the commission is acting independently
of the Department? You can see why there's that little
suspicion.
Mr. Weisberg. I can assure you, it was totally independent
of the Labor Department, or any other group. The crucial date
that is missing in the equation is Sunday April 27th, which
explains why our decision issued on Saturday April 26th. On
April 27th, one of our three commissioners' term ended by
statute. So if the decision had issued after that date, there
is a question as to whether her opinion would have been
included. And she dissented in that case.
We would have preferred to issue it a week or two later. We
did not enjoy staying in the office around the clock that
Friday evening. I have told this story, and it's true, we were
in that office that Thursday night until 11:00 o'clock. I was
driving home, and I gave my chief counsel a ride home, and we
went on Rock Creek Parkway, which I guess you're probably
familiar with. It was closed at 9:30 for construction. It said,
closed from 9:30 p.m. to 5:00 or 6:00 a.m. in the morning.
The following night, we're working, trying to get
Pepperidge Farm out, and about 9:30, I said to my chief
counsel, I guess we missed Rock Creek Parkway again. About a
quarter to 5:00 in the morning, I said to her, do you remember
what time Rock Creek Parkway opens?
So we were trying to get out that decision solely because
Commissioner Montoya's term ended the next day. That's why you
had three commissioners in the office until 5:00 in the
morning, when the decision was signed. The executive secretary
came in--he had stayed until about midnight and went home. He
came in, took possession of that decision, waited until a
commercial printer opened at 7:00 in the morning, had copies
made, went to the post office when that opened, and sent the
copies to the parties.
So that is why the decision issued on that day.
Mr. Bonilla. I guess you'll remember that for a while.
Mr. Weisberg. Yes. Yes.

appeals of decisions

Mr. Bonilla. What is the appeal rate of the Review
Commission decisions pertaining to general duty clause
violations?
Mr. Weisberg. The appeal rate, I don't know if we keep
those numbers by particular sections, particular standards,
5(a)(2) or 5(a)(1) general duty clause. Again, keeping in mind
that unlike some agencies, like the NLRB, there's no automatic
right of appeal to the Review Commission from a judge's
decision. One of the three commissioners has to direct the case
for review.
So on the question of number of appeals or percentage of
time in an appeal where a commissioner will direct review, we
do not keep statistics based on a particular standard, for
example, how many cases do we get even involving chemical
process safety standards, and how many times those cases get
appealed.
Generally, the larger the penalty, the more that's at
stake, the more likely it is that the parties will seek review
before the commission.
Mr. Bonilla. Do you know what the success rate is of the
commission's decisions in these appeals?
Mr. Weisberg. You mean the success rate of these commission
decisions going to courts of appeals, or how many times we
affirm an administrative law judge? I'm not sure which one.
Mr. Bonilla. Is the success rate of the commission's
decisions in these appeals, what we mean is, of the appeal that
you make, what is your success rate?
Mr. Weisberg. Of the appeals, are we talking about appeals
from administrative law judges----
Mr. Bonilla. Yes.
Mr. Weisberg [continuing]. To the commission, and so then
it's not really a success rate. Because we get the case from
the judges to review. And you're providing the parties again,
including small employers, they're getting two shots at it.
They get a hearing before an administrative law judge who will
issue a decision, and then they can get appellate review,
administrative review, by the agency. Then that case could be
appealed to an appropriate Federal court of appeals.

ergonomics appeals

Mr. Bonilla. Mr. Weisberg, do you know how many of these
appeals involve ergonomics issues? I know you may not keep that
statistic.
Mr. Weisberg. We don't keep that statistic, the only case
that we've had, the only decision we've issued to date
involving ergonomics was Pepperidge Farm. And keep in mind that
Pepperidge Farm was an extremely voluminous record. We spent a
lot of time on that case actually going through the scientific
articles and studies. And keep in mind also that the citations
in Pepperidge Farm issued in 1989. The case was tried in, I
believe it was 1991, 1992.
And so we were looking at a record, a record that was
created five years earlier. That is what the decision is based
on, not what's out there now in the way of scientific studies
or anything of that nature.
As an adjudicative agency, we have a record before us and
the decision is based solely on the evidence in the record.
Mr. Bonilla. The commission is seeming to set a new
precedent that any lifting of more than 50 pounds is recognized
as a lifting hazard. On what science is this based, Mr.
Weisberg? I know that's a lot of weight to lift. But in some
companies, in all good companies, they teach people how to
properly lift to prevent any injury to the worker.

general duty clause cases

Mr. Weisberg. In any general duty clause case, there are
four elements: existence of the hazard, recognition of the
hazard, serious physical harm that would result from that
hazard, and feasibility of abatement. Those are all four
elements that the Secretary has to show.
Again, with respect to recognition of a hazard, there are
two ways the Secretary can prove it: either recognized by the
particular employer or it's recognized as a hazard by the
industry.
In this particular case, it was recognition by the employer
that the Secretary relied on. And there was, as the decision
makes clear, there were documents by the company ergonomist
that it was a problem having these people lifting that amount
of weight. It was 100 pound bags. And the possibility of having
it done with two 50 pound bags instead of 100 pound bags.
So that was a fact specific case. The recognition was based
on what was in the record there, not by the industry, but that
a particular employer recognized the problem of 100 pound bags
of sugar that had to be lifted. It had received suggestions on
ways to deal with it. And indeed, subsequent to the citation,
the company did reduce, got new bags, 50 pound bags, and made
some other changes.
But there, you had recognition by the employer itself of a
hazard with lifting.
Mr. Bonilla. Even if it was suggested by the employer, let
me just point out some parallels that might seem to some that
it's not as heavy as it may seem. Is the commission suggesting,
even if the employer initiated the idea, that lifting a five or
six year old child is recognized as a hazard, or does that mean
that one should stop going to the gym and lifting weights? It's
not an unusually large amount of weight to lift, if you're a
mother or you just go work out in the evenings.
Mr. Weisberg. On the question of what constitutes heavy
lifting, that was not an issue that we had before us. What we
had is whether the employer recognized that there's a hazard.
If you're focusing on the question itself, as to whether
there's an existence of a hazard, which is the first element,
and that was one that this particular employer did not contest.
Pepperidge Farm did not contest that part of the violation,
either before the judge or at the commission level.
During the oral argument in the case, the United Parcel
Service made the arguments that there was not an existence of a
hazard, that it's not a hazard to lift. But we had to base our
decision on the record evidence. And where the party who was
charged with the violation did not contest this before either
the judge or the commission, that was not an issue in the case
before us.
We have some other cases in the pipeline where that will be
an issue. And it will be decided. But that particular issue,
existence of a hazard, wasn't decided in this case because the
company did not contest it.
Mr. Bonilla. All the facts in this case aside, I'm just
interested in hearing what your personal view would be in this
case. Does it seem a little silly to have a hazard referred to
in this category of 50 pounds, when we talk about mothers and
just people in their every day lift?
Mr. Weisberg. One of the problems, Congressman Bonilla,
when you're an adjudicative agency, you're neutral. And you
have to stay neutral. You don't want to go giving speeches on
substantive law, what should be. That's for Congress to decide.
Our job is a simple one. It's an important one, but to decide
cases objectively and based on the record before us in a
particular case. And that's what we do.

pepperidge farm case

I think anyone who has read the Pepperidge Farm decision,
the length of it and the detail that we went into the record
recognizes the amount of time and energies that we spent on
that case.
Mr. Bonilla. Does it trouble the commission that all these
jobs were lost as a result of this entire incident?
Mr. Weisberg. I know in the record there was some
indication that the plant had been closed. I don't know when
the plant was actually closed, how long after the OSHA citation
issued.
Mr. Bonilla. Fifteen hundred jobs, and the plant is closed.
Mr. Weisberg. The plant was closed. Again, what I
understand from the record, it was an old plant. And the
cookies made, were shifted elsewhere. I don't know if they set
up a new plant and you have the jobs going to a new plant. But
I know it was an older plant, and that was one of the reasons I
would assume, again, assume, that went into the decision to
close that plant.
But those cookies are still being made. They're being made
elsewhere.
Mr. Bonilla. The commission sides with Pepperidge Farm on
the finding that OSHA had not provided a more feasible means to
abate the alleged ergonomics hazard than Pepperidge Farm had
undertaken. In its draft ergonomics regulation, OSHA does not
call for specific steps to abate possible ergonomics hazards,
but calls for continuous monitoring and improvement of work
places.
If OSHA cannot tell one company with alleged ergonomics
hazards how to abate those hazards, how is it supposed to tell
the rest of American businesses how to abate hazards and how
are American businesses going to know when they have complied?
Mr. Weisberg. I think that's a question more appropriately
addressed to Greg Watchman, the Acting Assistant Secretary of
OSHA. As you pointed out earlier----
Mr. Bonilla. I've asked him a lot of questions on
ergonomics.
Mr. Weisberg. We are not part of the Labor Department,
we're totally independent from the Labor Department.
Mr. Bonilla. Well, I raise the question, because it's going
to come up for all of us in the future. It continues to come
up. And rest assured, I have asked Mr. Watchman extensive
questions about this subject.

admissible case evidence

Does the commission adhere to the Federal Rule of Evidence
702, which states that to be admissible, expert testimony must
be based upon scientifically valid principles when considering
testimony pertaining to ergonomics? Does the Review Commission
recognize rulings from the Second and Third Circuit Court of
Appeals that the principles and methods of ergonomics are not
sufficiently reliable under Rule 702?
Mr. Weisberg. I think what we relied on in our decision is
the Supreme Court decision that deals with admissibility of
expert testimony. I believe that the cases you're referring to
in the Second Circuit involved what happens when you have a
jury in a case, and the standard that you're applying when you
have a jury for expert testimony, not in a case where you have
a judge or in our case an administrative law judge.
Mr. Bonilla. What scientific basis does the Review
Commission use to determine whether OSHA has met its
``recognized hazard'' standard under the general duty clause in
ergonomics cases, and what is the commission's working
definition of a recognized hazard?
Mr. Weisberg. The question of, again, recognized hazard is
an element, part of a Section 5(a)(1) violation. It canbe shown
either, the Secretary can show it either by the fact that this
particular employer recognized this as a hazard, or it could show that
while this employer did not, it was generally recognized in the
industry.
So it depends on the case and what the Secretary is
alleging. If the Secretary's alleging that it was recognized by
this particular employer, you look again at the particular
evidence in the record to show that this employer recognized
it.
And for example, if there is a memo by the physician
working for this particular employer, saying that there's a
problem here, we have a problem, we need to do something about
it, that is evidence that this hazard is recognized by this
particular employer.
Mr. Bonilla. Specifically, though, about scientific basis,
is there any science at all used in any of this, or do you just
listen to what each side is saying and judge it?
Mr. Weisberg. No, we look. And again, in the Pepperidge
Farm decision, there were more than 400 exhibits, including I
believe it was 60 scientific studies and articles, which had
been admitted into evidence in that case, as well as the
testimony by the expert witnesses who relied on these
scientific studies. And we went through those scientific
studies.
So the decision in that case was based on the record in
that case. And one could say, well, there was a study done last
year, why didn't you consider that. And the answer is, because
that was not part of the record in this case. And I think you
could understand the difficulty when you have a case where the
citation issued in 1979, [Clerk's note.--Later changed to
``1989''] and where the plant is closed, to then remand it and
say, well, a couple of years have gone by, let's get in more
recent evidence.
Again, this was a decision based, as most of our decisions
are, on the particular facts of this case and the particular
record and the particular scientific studies that were
introduced into evidence in this case.

pepperidge farm case

Mr. Bonilla. Also in the Pepperidge Farm case, the Review
Commission seems to be charting new legal ground in its
interpretation of willfulness. In the decision, the commission
interprets willfulness as a heightened awareness and
indifferent attitude toward OSHA record keeping. It seems to
fall well short of recognized circuit court interpretation that
willfulness connotes defiance or such reckless disregard of
consequences as to be equivalent to a knowing conscience and
deliberate flaunting of the OSHA Act.
Willful means more than merely voluntary action or
omission. It involves an element of obstinate refusal to
comply. Is the commission attempting to loosen the definition
of willfulness?
Mr. Weisberg. The commission definition of willfulness has
not changed in 15 or 20 years. It was the same definition of
willfulness 10 years ago as it is today. Nothing has changed in
the definition of willfulness.
What happens is when you're applying that definition to
particular facts of a case, you can get some disagreement. But
there's no disagreement on the definition.
Mr. Bonilla. You can see how the verbiage here, though, is
very different, the one I refer to now and the one that the
circuit court interpreted earlier.
Mr. Weisberg. Well, most circuit courts agree with the
commission's definition of willfulness among the circuits.
Again, that's not something new. That's not something that's
been changed. That's been a definition that has existed almost
from the beginning of the commission, on what is willful. The
problem is, when you apply that definition to particular facts,
you have to judge whether that particular action was willful or
not.
I'll give you the classic case that we had on willfulness,
involved a situation where you had a car wash, it was somewhere
in the midwest, and the employer recognized there was a
problem, there was a part that was missing. And in order to
take the towels out, you couldn't stop the machine. And people
would be putting their hands in the machine to take out the
towels.
The employer knew about that problem. But the employer
didn't want to stop operations to have to put in the part. A 16
year old boy lost his arm in that. There was an OSHA citation
and the company contested willfulness. That is the classic
definition of willfulness.
Mr. Bonilla. I'm told Chairman Porter should be here
momentarily, and he'll have some questions. If he does not
arrive momentarily, I have some questions I'll ask that he has
left for the committee.
The commission opens its decision on the Pepperidge Farm
with the observation that the case is ``among the most lengthy
and complex to come before the commission.'' Given the broad
scope and non-existent compliance guidelines in OSHA's draft
ergonomics regulation, do you anticipate a surge in ergonomics
cases coming before the commission?

case trends

Mr. Weisberg. It's always hard to anticipate a surge in a
particular area. Our caseload, again, is solely dependent on
OSHA enforcement. For example, if OSHA decides to have a
special emphasis program, say, in the meat packing industry,
one could probably assume that we will see more meat packing
cases come before the commission.
So I think in determining where the caseload will come
from, what areas, what standards, that's entirely dependent on
OSHA enforcement. And where OSHA decides to use its resources
and what areas they put a special emphasis on.

ergonomics

Mr. Bonilla. I have one final question on the ergonomics
issue, which will be a little more philosophical, and just
asking your view as an expert on worker safety.
Is it your opinion that at this time, where we are right
now based on our research and all of the medical research and
scientific research that we have at our disposal, that it is an
appropriate time to promulgate and write a regulation via OSHA
that would apply in ergonomics cases to everyone from someone
who runs a restaurant to a dance studio to a shipping service
to an auto parts store to almost any business in America?
We know in the past how writing a one size fits all
regulation without proper background and science can get us in
a lot of trouble. What is your view on whether or not OSHA is
prepared at this time, should be allowed to write a rule on
this, based on the science and history that we have today?

general duty clause cases

Mr. Weisberg. Congressman, the preference, and this was set
by Congress itself as part of the OSHA Act, and the courts have
long recognized, the preference is to enforce the OSH Act
through a standard rather than through a general duty clause.
That was something that Congress set out when they passed the
OSH Act, but recognized that in certain situations OSHA might
not have standards, it might take a while to pass a standard,
and that's why they provided for the general duty clause.
But there is a preference for standards. And during the
oral argument in Pepperidge Farm, I asked the company and I
asked the amicus Chamber of Commerce during the oral argument,
would you prefer a standard than litigating it under the
general duty clause. And the answer that I received from them
was, yes, that would give us the opportunity to have input in
what the standard looks like and so on. We don't have that
opportunity in a general duty clause case, an enforcement
action.
And that was the answer by the Chamber of Commerce, the
attorney representing the Chamber of Commerce as amicus in the
Pepperidge Farm decision.
Mr. Bonilla. Well, I think you know where I'm coming from
on this issue. There are a lot of small businesses out there
that, based on their history with OSHA, are terrified at the
prospect of having a new rule show up on their doorstep that
could be 600 pages long. And some of these folks are already
working seven days a week to try to pursue their dream of
making a business more productive and expanding it.
The last thing they need is something that was written up
that in some cases may not have had anything to do with their
business at all in the first place. So that's my concern.

E-Z trial procedure

Mr. Weisberg. I think we have reacted, done more for small
business with our E-Z trial system than most other agencies. We
are keenly aware of the burden that a small business man or
woman faces when charged with an OSHA citation. The typical
case, there's a $2,000 penalty, the employer goes to an
attorney, who says, sure, I can handle it for you, with
discovery and so on, it will cost you about $5,000.
And what would happen previously was, the employer would go
and either just capitulate to OSHA and say, here's the $2,000,
even though I didn't do anything wrong, or would go before the
commission and try to argue the case himself. And because of
all the procedural rules that had to be followed, he would not
make it into the courtroom. He would be knocked out of the box
before getting there.
And that was why, that was the impetus why we set up the E-
Z trial system. And it was a pilot program that's been around
for 18 months. We just had focus groups. We looked for the
largest cluster of E-Z trial cases. And we went out to Ohio, to
Cleveland, met in the morning with people from the Solicitor's
office who had tried the E-Z trial cases, to get their input.
And in the afternoon, met with a group of small employers,
labor consultants, one or two attorneys.
And these are people who are interested in the system
enough to take a day off from work to come meet with us and
give us their input to try to improve this system further. One
of the comments we got from the small employers during this
focus group was some of them were surprised, even though it's
called E-Z trial, they didn't know it was going to be a real
trial. They thought you'd just go in and sit behind a desk and
talk about it like a settlement conference with OSHA.
And as a result, we're in the process now of putting
together an E-Z trial video, a dramatization of an E-Z trial.
The goal is that each time a case is designated for E-Z trial
to be able to send a copy to the employer, to the small
employer, so they can see exactly what it's like and know how
to better prepare for it.
Mr. Bonilla. One second.
I was just told that Mr. Porter is having to engage in
debate on the House Floor, so I'm going to read his opening
statement that he had prepared, and then some questions that
the Chairman had submitted.
Two years ago, the Chairman sat across from you for the
first time as Chairman of the subcommittee and asked you how
your agency could achieve efficiencies and increase
productivity with fewer resources. He had asked that question
of a lot of agency heads, same question.
He wanted you to know that he recognized you have made a
number of decisions that have been very difficult for you
personally, difficult for your managers, and difficult for the
agency. But they were necessary and they have made the agency a
better one, more efficient, more productive, more responsive
and more effective. And he wanted to express his appreciation
from the subcommittee and himself for your administrative
leadership.
Mr. Weisberg. Thank you.
Mr. Bonilla. At this time, I'm going to yield to Mrs.
Northup.
Mrs. Northup. I yield back to you.
Mr. Bonilla. All right, Mrs. Northup.

gpra

The Chairman's first question, Mr. Weisberg, we're asking
of all the witnesses this year about the Government Performance
and Results Act, GPRA, I want to send a message from this
subcommittee that we take GPRA very seriously, and we hope that
you will develop rigorous outcome measures for the agency.
Can you tell us when you expect to make a formal GPRA
submission to OMB? Will you integrate GPRA in the budget
process for fiscal year 1999 as required by law? And can you
give us some examples of the types of measures that you will
propose?
Mr. Weisberg. Congressman Bonilla, we were, as I pointed
out in my testimony, we were ahead of the curve. We had a
strategic plan in place more than two years ago. Other agencies
are not putting together strategic plans. We are revising our
strategic plan.
Yes, we will submit whatever is necessary in accordance
with GPRA, I believe it's due in September. And we're in the
process of working on those indicators. It's more difficult for
an adjudicative agency to come up with appropriate indicators
than a policy agency. I think it's clear that cycle time will
be one of those indicators.
Also, having a user friendly process is also important, as
an indicator. And we're trying to come up with some measurement
by survey or otherwise for participants after a hearing,
whether they were satisfied with the process, not whether they
won or lost.
Right now, our thinking is to stay away from using as an
indicator what your won-lost percentage was before the court of
appeals. I don't think that's really an appropriate indicator.
And to just give you brief examples, a case, Jacksonville
Shipyards, where I dissented and the circuit court reversed the
commission, agreeing totally with the rationale in my dissent,
that goes down in the record books as a loss. And is there
anything that I could have done to improve it? No.
Another case, the Third Circuit had a different test for
what's a repeat violation. One case before us was from a
company in the Third Circuit, and the Secretary wanted us to
find it was a repeat violation. We were bound to follow the law
in the Third Circuit. And we said that it was not a violation
of the Third Circuit test, pointing out the Third Circuit test
was different from other circuits and the commission. We
suggested that the Secretary go to the Third Circuit and argue
to them to change their test.
In fact they did. They found the repeat violation. And on
the record books, we were reversed. And that counts as a loss.
And also, I don't think it's a fair measurement because
most, a lot of the court of appeals cases you have pro se
employers bringing cases which should not have gone there in
the first place. And the agency will win 99 percent of those
cases, and that skews the numbers. I don't think it's a real
objective indicators of performance. That's why our thinking
right now is staying away from those indicators, focusing more
on cycle time, user friendly process and participant
satisfaction with the process.
Mr. Bonilla. Thank you, Mr. Weisberg.
At this time, I apologize to Mrs. Northup for yielding to
her so soon after she arrived. I've been in that boat before
and it's difficult sometimes to sit down and start. But I'm
told now that she's ready to proceed, and if you would, also
take over the Chair for just a few minutes, we would appreciate
it.
Mr. Weisberg, it's been a pleasure.
Mr. Weisberg. Thank you, Congressman. It's a pleasure to
see you.
Mrs. Northup [assuming chair]. Good morning, Mr. Weisberg.
Mr. Weisberg. Good morning.
Mrs. Northup. I'm sorry, I was changing channels fast
there.
Mr. Weisberg. That's fine.

reimbursement of legal fees

Mrs. Northup. I'd like to ask you what happens when an
employer has been charged mistakenly with an OSHA violation,
who pays for the legal fees?
Mr. Weisberg. I think it depends on the question of
mistakenly charged. Congress, about 10, 15 years ago, passed
the Equal Access To Justice Act, which says that if, and this
applies to OSHA, if the Secretary of Labor was not reasonable
in issuing that citation, then in that situation the company
would be able to recover its attorneys fees from the Secretary
of Labor.
And that applies not just to OSHA, but Government-wide, any
time an agency charges somebody who qualifies as a small
employer, and I think the test is less than 500 employees, net
worth of less than $1 million, or $2.5 million, somewhere up
there. [Clerk's note--Later changed to not more than ``7''
million.] In those situations, the person can file an
application under the Equal Access to Justice Act to recover
their attorneys fees.
Mrs. Northup. Well, they can, but it sounds like a very
subjective criteria for whether or not OSHA pays for the fees.
If I'm a small employer, somebody comes in and cites me, we go
through litigation, I win, or it gets dismissed outright, then
do you make the recommendation about whether or not they----
Mr. Weisberg. Essentially what would happen, the test is
whether the Secretary was substantially justified in bringing
the action, in issuing the citation against the company. If an
application is filed by an employer, let's say there's a
decision, a judge had issued a decision on the merits, found
for the employer. The employer then files an application under
the Equal Access To Justice Act.
Mrs. Northup. Let's talk about the facts. How many people
have filed for an application like in the last year, and how
many have been reimbursed?
Mr. Weisberg. We can provide that information to you for
the record. We don't keep numbers on that. I don't have an
idea, just the number of cases that come to the commission
level. We've had a few Equal Access to Justice Act cases come
to the commission level in those situations. It's usually been
a question of a novel issue relating to eligibility.
Mrs. Northup. And did you reimburse any of them?
Mr. Weisberg. Yes, there were a couple of cases where
attorneys fees were awarded against the Secretary, where the
Secretary was not substantially justified. There were others
where the Secretary was substantially justified, based on the
information that the Secretary had when he issued it.
Mrs. Northup. I understand all the discussion here. I'm
trying to get numbers. Is it one in ten, is it one in a
hundred, is it one in two? Surely you have some sense that very
rarely is it done, very often it's done, the reimbursement,
somebody files for that.
Mr. Weisberg. Well, again, we will be happy to provide you
that information for the record. But when you say, one in ten,
one in twenty, the question is, what are you talking about,
total number of citations OSHA issues?
Mrs. Northup. I'm talking about the number of people.
Mr. Weisberg. For example, OSHA issues, we'll have, say,
2,500 cases where employers contest the citation. That's when
it comes to us. There will be other citations which will settle
before the employer files a notice of contest. So we're not
involved in those cases.
Now, of those cases, what percentage does the company win
before the administrative law judge? So it's only those cases
you have to be the prevailing party to recover your fees.
Mrs. Northup. Exactly. And that's what I'm talking about.
And then you have to file to recover your fees, is that
correct?
Mr. Weisberg. And you have to be eligible. That's the other
factor that goes into it. A company wins before the commission,
are they eligible to apply. And if they're not eligible, if
they're too big, there's no application.
So it comes down to companies who have won cases and are
eligible to apply, how many of those apply, and of those who
apply, how many are given fees.
Mrs. Northup. And that was exactly my question.
Mr. Weisberg. Right.
Mrs. Northup. Of the people that apply, how many win? I
mean, I understand many can't, some win, some lose.
Mr. Weisberg. This is our Executive Director, Bill Gainer.

OSHA's appellate function

Mr. Gainer. We can certainly get the numbers. I think it's
important to mention one thing, though, that we look up these
things when we're asked. But we don't keep statistics generally
which get into how our judges find and who prevails in the
cases.
There's a good reason for it. Chairman Weisberg and the
commission serves basically as an appellate level of a court
system. Our judges are the initial level of the court system.
And the two are supposed to be at arms length. The Chairman is
the manager of the agency in administrative terms. But he does
not direct or supervise our judges or provide oversight to the
judges in terms of how they find. They are completely
independent.
So there is a certain reluctance on our part to keep
statistics that get into win and loss and those kinds of
things. We will answer the question, of course, for the record.
But the reason the Chairman can't come up with a number is
we're not sure it's appropriate to track those kinds of
numbers.
Mrs. Northup. I guess it just surprises me that somewhere
in a computer on a line item there isn't an amount of money
that's been spent to reimburse companies that have prevailed,
and how many cases that was.
Mr. Weisberg. The number, the amount that has been spent
would be there. It would be in the Labor Department. It would
be the Secretary. And the question would be to the Secretary,
how much have you paid out in Equal Access to Justice Act fees,
not just before the commission, but in cases where you've gone
to court as well.
[The information follows:]

Employers Fees Awarded Under Equal Access to Justice Act

In FY 96, three employers applied for attorney fees and
expenses under the Equal Access to Justice Act. Of those three,
one was awarded attorney fees, one withdrew the application,
and the third is pending before the full Commission on review.
In fiscal 1997 to date, five employers have applied for
attorney fees and expenses. Four of the cases are in the early
stages of adjudication, and the fifth was dismissed by the
administrative law judge to whom it was assigned.

Mrs. Northup. Okay. What is the reimbursable rate for legal
fees, and has this changed under your direction?
Mr. Weisberg. Actually, it has changed, is in the process
of change. We issued proposed rules in the Federal Register
last month, on increasing the fee from I think $75 to $125 per
hour in accordance with the new statute. So it has been raised.
Mrs. Northup. What new statute?
Mr. Weisberg. The amendments to the Equal Access to Justice
Act, I believe.
Mrs. Northup. Oh, okay. So you're talking about the
reimbursable rates.
Mr. Weisberg. Right.
Mrs. Northup. If OSHA asks for an extremely high penalty
and later, this is reduced, can an employer ask for any
reimbursable attorney fees in a case like that?
Mr. Weisberg. Yes, they can. And the reason they can, is
because under our statute, once an employer receives a citation
from OSHA, they can contest the entire citation or they can
just contest the merits of the citation. They can just contest
the amount of penalty, say yes, we violated the Act, but that
penalty is totally out of whack with what it should be, or they
can just contest the abatement.
So where you have the opportunity to just contest part of
it, if you prevail on that, you are the prevailing party and
would be entitled to attorneys fees.
Mrs. Northup. I don't mean to cut you off, there are some
other people right after you, so I'm trying to just get the
answer to my question.

commissioners' review of alj decisions

How many cases in the last three years have been decided by
an administrative law judge and accepted by the commission? I
guess we're talking about, in other words, an administrative
law judge hears it, makes a decision, how often is that
accepted by the commission?
Mr. Weisberg. Again, I just want to make sure I understand
what you mean. The word accepted, is that where the commission
takes the case and affirms the administrative law judge? You
don't have an automatic right of appeal to the commission. It's
discretionary review, so it takes one of the three
commissioners to direct the case for review.
Mrs. Northup. I guess I'm talking about affirming it.
Mr. Weisberg. Affirming, again, as our Executive Director
indicated, we don't keep those numbers specifically, because
the judges are independent in their decision making.
Mrs. Northup. Doesn't it seem, though, that if you found
that if you never affirmed it that maybe some training needed
to occur? I would think that if you found that it never was
affirmed, or only 10 percent of the time it was affirmed, there
would be some question about why there are such, it's one law.
So the lack of consistency would scare me.
Mr. Weisberg. I agree with you. And indeed, if we found
just from experience that we were consistently and continually
reversing our administrative law judge, I would agree with you.
But that is not the case.
Mrs. Northup. Well, it's not just reversing it, I guess.
It's also reopening it and hearing it. There's a cost factor
here. So I guess that's a statistic that I would like, the
frequency of affirming.
Mr. Weisberg. Okay.
[The information follows:]

Commission Affirmation of Administrative Law Judge Decisions

For the last three fiscal years, the rate at which the
Commission has affirmed the rulings of its administrative law
judges (ALJs) is shown in the following table. It should be
noted that the outcomes are primarily determined by the issues
in the individual cases.

----------------------------------------------------------------------------------------------------------------
Number of
Commission Percentage Percentage
final Percentage affirming in Percentage remanding
Fiscal year decisions affirming ALJ part/reversing reversing ALJ cases to an
decided on the decisions in part decisions ALJ
merits
----------------------------------------------------------------------------------------------------------------
1996............................ 46 35 11 32 22
1995............................ 47 64 9 19 8
1994............................ 40 57 13 17 13
----------------------------------------------------------------------------------------------------------------

federal health and safety compliance

Mrs. Northup. Let me ask you another question, and you may
have touched on this. I'm sorry I was a few minutes late.
I know that there is an executive order, some sort of
decree, that all Federal agencies will comply, should have
their own health and safety regulations, is that correct?
Mr. Weisberg. That is correct.
Mrs. Northup. Do they have to be the same as OSHA regs? For
example, postal employees, would they have to have the exact
same regs?
Mr. Weisberg. The difference between the Federal sector and
the private sector, the big difference has to do with
enforcement. Currently, OSHA has no enforcement authority in
the Federal sector, so to speak. They cannot propose a penalty
against an agency like the Postal Service. And the big problem
in the Federal sector is, there's no real enforcement.
Mrs. Northup. So you wonder how it's fair for a company,
for example, like United Parcel Service, that competes directly
with the Postal Service, they of course do have to comply with
OSHA regulations and they also have to pay penalties. And of
course, all the ergonomic issues and so forth would serve us
here.
You wonder about the fairness of that. And with that being
my question, I guess I would wonder, is it a matter of public
record how much, for example, a company like UPS has paid and
litigated in OSHA related problems? Is that a matter of public
record?
Mr. Weisberg. It would be. How much they have paid in
penalties would be a matter of public record. But the standards
are the same, Federal agencies on paper have to comply with the
same OSHA standards that companies in the private sector do.
The difference is in enforcement.
Mrs. Northup. It's huge. It's huge. I mean, that's--nobody
goes in, nobody watches, nobody observes. You don't have to
hire consultants to make sure that the employees comply.
There's no burden there.
Mr. Weisberg. I spent 10 years working as a staff director
for a House subcommittee. And we had a number of hearings on
the lack of OSHA enforcement in the Federal sector. And we had
the Assistant Secretary explain to us that they could not, it
was a matter of trying to exert some pressure on the Postal
Service to change their ways.
But they just had, there were no teeth in the statute in
the Federal sector, and I would recommend those hearings.
Mrs. Northup. What would be a really interesting evaluation
is whether we have any comparison of the injuries that occur in
the Postal Service in comparison with UPS. We could find one of
two things, that there's a tremendous difference. And that
would certainly require us to put some teeth in the Federal
law. Or we could find that there's no difference and decide
that enforcement for private companies really is unnecessary.
Mr. Weisberg. There was a bill before Congress three or
four years ago dealing specifically with putting teeth into the
OSHA Act in the Federal sector, and making it equivalent with
the private sector. And that bill actually would have given us
jurisdiction over those Federal sector cases, to do the same
thing that we do here with respect to private sector cases. And
that bill was not passed.
Mrs. Northup. I really suggest no enforcement facetiously.
But I mean, it's a concern of mine, that we have such disparity
between the public and private.

oshrc caseload

One last question. I have had some complaint that there's
been excessive litigation under your direction, and I wondered
if you could give me some comparison of the caseload since,
1994. So previous to 1994 and now.
Mr. Weisberg. When you talk about excessive litigation, I
think it's important to recognize that our caseload is
determined entirely by OSHA enforcement. We operate wholesale,
not retail. People do not come to us to file charges. An OSHA
compliance officer goes out and conducts an inspection. We are
totally independent of OSHA.
They'll issue a citation against the company. If the
company chooses to contest that citation, then the case comes
to us, and we have jurisdiction. Until the company decides to
contest that citation, we are not involved. So our caseload is
determined entirely by OSHA enforcement. More inspections, more
citations, more contested cases. But that's totally out of our
hands.
Mrs. Northup. My staff person has just reminded me that
actually, the complaints we received from people were about the
caseloads that you all do of discretionary review, the
comparison. So what I'd like is the difference in the number of
caseloads, a comparison from 1990 to current date, year by year
comparison.
Mr. Weisberg. Number of cases that we receive?
Mrs. Northup. No, cases that received a discretionary
review.

commissioners' directed review

Mr. Weisberg. Okay, that the commission directed review on.
We'll be happy to provide that information.
Generally, the number, I believe, hasn't changed much over
the years. Generally, I think it's about a third to 40 percent
of the cases where review is sought, review is directed. And
that's remained pretty constant, I believe, over the years.
Mrs. Northup. Could you give me a percentage and an actual
number?
Mr. Weisberg. Yes, we'd be happy to.
[The information follows:]

ALJ Cases Directed for Review

The caseload at the Commission level has varied over the
last seven yers, but generally within a fairly narrow range of
between 49 and 79 cases directed each year. When compared to
the number of petitions for review in each year we find that
one half to three quarters of all appeals are directed for
review by the Commission.

----------------------------------------------------------------------------------------------------------------
Ratio of cases
Number of Number of directed to
Fiscal year directions for petitions for petitions
review review received
----------------------------------------------------------------------------------------------------------------
1990................................................... 63 117 .54
1991................................................... 64 85 .75
1992................................................... 77 120 .64
1993................................................... 79 118 .67
1994................................................... 68 120 .57
1995................................................... 49 94 .52
1996................................................... 50 84 .60
----------------------------------------------------------------------------------------------------------------

Mrs. Northup. Thank you. And certainly, if there's been no
increase, that's a big help. Because I can respond to
constituents along those lines.

case tracking/case management

There are a couple of questions, too, I've been asked to
inquire. Is the Occupational Safety and Health Review
Commission now a fully automated agency? In particular, is your
case tracking system fully automated?
Mr. Weisberg. Yes, and yes. As I indicated in my earlier
statement, we have a case tracking, case management system in
place and operating.

staff training

Mrs. Northup. Okay. And also, last year Mr. Gainer
testified about your efforts to eliminate the agency's training
deficit. He suggested that the deficit could be eliminated in
1996 and that employees would need about one week of
maintenance training per year after that. What is the status of
that?
Mr. Weisberg. We've closed the gap significantly. When I
came on board in 1994, we averaged $5 per employee in training.
We're now averaging this past year about $500.
But it's not just the dollar numbers. For example, we had
sent some of our judges to a course at the National Judicial
College. It cost us $1,000 per person to send them. Now we've
arranged for the instructors to come here to Washington, and
for $200 a person, we're able to give that same training to a
lot more employees for a lot less cost.
Mrs. Northup. Okay, well, thank you. I do want to say that
you can imagine that constituents every day talk to me about
their problems with OSHA. I'm not an authority on it, and I
don't believe I could be an authority. I can just listen to
what I hear, sort of repeatedly. If there's a change in culture
at OSHA, it takes a while for people on the front line to
become aware of that. If things are getting more reasonable, it
takes a couple of years to realize that, if they're getting
less reasonable, it takes a couple of years for that.
So we're attuned to that. But it's very important for us to
have any sort of guidelines you can give us, so that we can
answer what our constituents are saying, and try to find some
fair balance.

relationship to osha

Mr. Weisberg. Right. But it's important to recognize,
Congresswoman, that we are not OSHA. We are totally independent
from OSHA. Unfortunately, all too often, there's confusion. And
we get almost weekly letters from members of Congress
complaining about OSHA, and we forward them to the Assistant
Secretary.
Mrs. Northup. But actually, when people complain about
OSHA, they're often talking about what your commission is
doing. In other words, their complaints are really directed to
you, they just call it OSHA.
Thank you very much.
[Additional information for the record follows;]

OSHRC wishes to note for the record that the state of
Kentucky is a State Plan State under the OSHA statute and
enforces its own health and safety standards, and adjudicates
employer appeals of citations. Federal OSHA does not conduct
workplace inspections in Kentucky and, consequently, our
Commission does not generally adjudicate health and safety
cases that arise in the state of Kentucky.

Mr. Weisberg. Thank you.
Mrs. Northup. And I understand our Chairman is here, and I
will give up the Chair.
Mr. Porter [assuming chair]. Let me apologize to you for
not being able to be here for most of this hearing. I'm sure
Mr. Bonilla and Mrs. Northup did an excellent job and will
bring me up to date.

increasing caseload

Let me ask just a single question, because many of the ones
we have have been asked, Mr. Weisberg. One of the challenges
you have identified for the coming year is the increase in the
number of cases your agency will be asked to review. How are
you preparing to handle the anticipated 50 percent increase in
cases? Why are you predicting such a large increase? And is
this due to a change in OSHA's enforcement or are you expecting
a particular type of case to increase your workload?
Mr. Weisberg. I think, Mr. Chairman, it stems in large part
again from OSHA enforcement activities. OSHA receives
significant increase in funding, there are more compliance
officers, there will be more inspections, hence more contested
cases, more cases coming to the commission.
Again, our caseload is entirely determined by OSHA
enforcement. We expect, last year we were down to 1,700 cases.
We expect the number to go up to approximately 2,500 in fiscal
year 1997 and 2,700 in fiscal year 1998, based on, and again
most of those cases we'll see more of those what OSHA calls
significant cases.
As I indicated earlier before you arrived, OSHA considers a
case significant with a penalty of more than $100,000. And in
the first half of fiscal year 1997, there were 83 such cases,
compared to 45 during the first half of fiscal year 1996. Those
are the cases that are less likely to settle and that take our
judges much longer. The hearings last longer and there are more
resources involved.
Mr. Porter. Will the increase from 1,700 to 2,700 mean that
there will be a greater backlog?
Mr. Weisberg. What we are planning to do, to answer the
first part of your question, how do we plan to cope with it, we
hope to get back to 14 judges by fiscal year 1998. We just had
one of our extremely productive judges, long time judges,
retire in the Atlanta office. And we hope to fill that
position.
If we can find additional savings, then we would go to
trying to bring in, hiring a fifteenth judge, if the cases
indeed go up to that level. But we would have to get that from
additional savings.
Mr. Porter. What happens to your proportion of settlements
in a time of rising caseloads? Does that vary? And what is the
proportion of settlement?
Mr. Weisberg. The settlement rate doesn't change
dramatically, as far as percentage. I think it's still 90 to 95
percent of cases settle, at some stage in the proceeding. It's
that when you have more of the larger complex cases, those are
less likely to settle. Some of the medium cases will settle.
And so your percentages will not change, and your actual raw
numbers might not change either. But the type of cases, that's
where you'll have the difference.
Mr. Porter. Well, thank you for the fine job you're doing
there. Obviously we want to give you the resources you need to
do it. It's an important way of resolving problems that arise
in the course of labor and management relations. And we
appreciate the work that you're doing.
Mr. Weisberg. Thank you very much, and thank you for your
support, Chairman Porter.
Mr. Porter. Thanks for your good testimony.
[The following questions were submitted to be answered for
the record:]

[Pages 1724 - 1771--The official Committee record contains additional material here.]

Thursday, June 5, 1997.

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

WITNESSES

MARY LU JORDAN, CHAIRMAN
RICHARD BAKER

Mr. Porter. Next we have the Federal Mine Safety and Health
Review Commission, and its Chairman, Mary Lu Jordan.
Ms. Jordan, nice to see you.

Opening Statement

Ms. Jordan. Good morning. Nice to see you, Mr. Chairman.
It's a pleasure to appear before this committee and to
discuss with you the Federal Mine Safety and Health Review
Commission's fiscal year 1998 budget request.
The Commission is an independent adjudicative agency that
provides administrative trial and appellate review of legal
disputes arising under the Federal Mine Safety and Health Act
of 1977. Most of the cases deal with civil penalties assessed
by the Department of Labor and address whether the alleged
violations occurred or whether the penalty is appropriate.
The Commission's administrative law judges decide cases at
the trial level. The five member Commission provides
administrative appellate review. The Commission reviews
decisions made by its ALJs, rules on petitions for
discretionary review, and may on its own initiative direct
cases for review.
An ALJ's decision that is not directed for review becomes a
final, non-precedential order of the Commission. The
Commission's decisions are precedential, and many involve
issues of first impression under the Mine Act. Appeals from the
Commission's decisions are to the U.S. Courts of Appeals.
Currently, the Commission has four members and one vacancy.
The budget request for fiscal year 1998 totals $6,060,000
and supports 57 FTE's. The request represents an increase of
$11,000 over our fiscal year 1997 appropriation and a reduction
in staff of two FTE's. Funding from this FTE reduction will
cover most of the added costs associated with Federal pay
increases.
Although we are unable to precisely determine at what level
appeals will be filed in the months ahead, we are aware of the
need to align Commission resources with the anticipated
workload. As a result, Commission vacancies will be carefully
evaluated to assure that staffing is consistent with the goals
and objectives of our strategic plan, our streamlining
initiatives, and workload projections.
While our workload and production statistics have somewhat
decreased from previous years, we expect to continue to reduce
the inventory of undecided cases in both fiscal year 1997 and
fiscal year 1998.
At the trial level, we initially anticipated receiving
2,800 new cases in fiscal year 1997, and disposing of 3,350
cases. To date, we have had a shortfall in our new case filing.
It appears that case intake for fiscal year 1997 will be less
than 2,000 cases, and dispositions will not exceed 3,100 for
the year. As a result, we expect to end the year with an
inventory of approximately 4,900 cases instead of the 5,400
originally projected.
For fiscal year 1998, we continue to project 2,800 new
incoming cases and dispositions of 3,350. We anticipate that
the 14 new regulations that are projected to be finalized by
the Mine Safety and Health Administration during fiscal years
1997 and 1998 will result in increased filings. These revised
workload estimates will result in reducing the inventory of
undecided cases from 6,783 at the beginning of fiscal year 1996
to 4,380 at the end of fiscal year 1998, a reduction of more
than 35 percent during the three years covered by the budget
submission.
At the review level, the commission anticipates receiving
75 cases for appellate review in both fiscal year 1997 and
1998. Dispositions are expected to total 85 in fiscal year 1997
and 90 in fiscal year 1998. As a result, the inventory of
undecided cases during the period covered by this budget
submission is expected to drop by 46 percent, from 70 undecided
cases at the beginning of fiscal year 1996 to 38 cases at the
end of fiscal year 1998.
Last December, we provided this committee with our
strategic plan which we developed to achieve the goals of
increasing productivity in case dispositions and appellate
review, while at the same time reducing personnel. I am pleased
to report that we are in the process of implementing the plan,
and that I am confident that by the end of this fiscal year,
almost all of our 1997 objectives will have been met.
I would like to briefly mention the status of the dust
cases currently pending in the Court of Appeals. When I
testified before the committee last year, the Secretary of
Labor had filed a protective appeal of the Commission's
decision in this case. Subsequently the Court, sua sponte,
ordered the case held in abeyance pending settlement
discussions.
Last November, the Court reactivated the case. Oral
argument is set for January 12, 1998.
The 3,700 dust cases currently on stay will continue to be
included in our inventory of undecided cases pending the Court
of Appeals' determination.
Thank you for the opportunity to present this budget
summary. I would be pleased to respond to any questions that
you may have.
[The prepared statement follows:]

[Pages 1775 - 1778--The official Committee record contains additional material here.]

omb budget request

Mr. Porter. You knew I was going to ask about that, so you
gave me the answer before I asked the question.
Thank you for your good statement. What was the figure that
you submitted to OMB?
Ms. Jordan. The figure for?
Mr. Porter. For your budget. What did you ask for?
Mr. Baker. Mr. Chairman, we submitted three budget levels
to OMB. One level was 5 percent below the 1997 appropriation. A
second level was below that. And then we requested a level that
was about $6.2 million.
The decision was that our agency would be straightlined
into fiscal year 1998.

settlement rate of cases

Mr. Porter. What is your settlement rate, historically, on
these kinds of cases?
Ms. Jordan. The vast majority of our cases get disposed of
through settlement.
Mr. Porter. Probably 90?
Ms. Jordan. Yes, I would think that the rate is around 90
percent of our cases get disposed of that way.
Mr. Porter. Let me ask you about GPRA.
Ms. Jordan. I'm sorry, I stand corrected that it may not be
as high as 90 percent.
Mr. Baker. Currently it's running about 50 percent.
Mr. Porter. Fifty percent?
Mr. Baker. Yes. Historically it's been around 60 percent of
the cases that we receive are decided through settlement.
Mr. Porter. So 40 percent are heard?
Mr. Baker. No, the heard cases are only between 10 and 15
percent go to the full evidentiary hearing. Other cases are
disposed of through default, or they are dismissed for reason
of failure to pursue and things like that.
Mr. Porter. Okay. I was using the settlement word as a
catch-all for non-tried, I guess.
Ms. Jordan. I think of the cases that get assigned to the
judges. The highest, it would be close to 90 percent that get
disposed of through settlement. But what Mr. Baker pointed out
is that some of them get disposed of along the line, through
the chief ALJ, through procedural defects.

government performance and results act

Mr. Porter. All right, let's talk about GPRA. I'm asking
everyone about it. I understand you will make a formal
submission this summer. We sent a message to all of the
agencies and departments that testify before our subcommittee
that we take GPRA very seriously, and we hope that you will
develop rigorous outcome measures for the agency.
As you mentioned in your testimony, you submitted a
strategic plan for the agency. How will you integrate the
strategic plan into the GPRA process, and would you give us a
few examples of the types of measures you will propose to OMB
for GPRA?
Ms. Jordan. Well, we've used the strategic plan that we
submitted to the committee last December as sort of our
springboard to work off of in developing the plan under GPRA.
And although it's a springboard, we've sort of gone back and
tried to rethink, as GPRA requires, what is it that we are
supposed to be doing and how do we figure out that we're doing
it.
We've talked about measuring ourselves in terms of the
quantity, the timeliness of our output and the quality. In
quantity, we just sort of measure the incoming cases and our
dispositions and our inventory, and make sure that we don't
develop a backlog. Regarding timeliness, we've focused on
various stages to look at as the case goes through the pipeline
of the commission.
One of those being when the case first gets in, how long
does it take to get it assigned to a judge? When the judge gets
the case, how long does he take to issue his opinion after he
has a hearing? How long does he take to issue his settlement
order once he gets a settlement proposal from the parties? How
long does he take to issue his opinion after the parties submit
their briefs to him?
We've targeted time frames and we've tried to see whether
we can have those time frames work. The chief judge has sent
reports to the judges under his supervision, targeting
undecided cases that are beyond a certain timeline, asking for
quarterly reports from them on the timeliness. We also keep
those figures.
And at the commission level, we've also tried to look at
timeliness, as the cases come through our process. We've tried
to look at how we can reduce the number of undecided cases that
are more than two years old, let's look at them, can we have
that. We actually have been successful in eliminating cases in
our inventory that are beyond two years old.
We next looked at cases between 18 months and two years,
and said let's try and reduce that level. As it turned out, we
have not met our target in that range. It seems that cases that
were in the lower age, more moved into that category than we
had anticipated.
We also looked at how fast can we get a case assigned once
it comes on our decks at the commission level, and the review
is granted, and the parties have submitted their briefs to us.
In other words, how long does it take us to get that case
assigned to staff and a person starts to work it up, so that
the commission can consider it? We've made progress in reducing
that. In other words, in reducing the number of cases that are
sitting there waiting to be assigned because the staff is too
booked up already on working on other cases.
We've taken the plan that we've submitted, we've looked at
what targets we've set for ourselves in that. We've looked at
how we're doing under that, and asked should we change some of
our measurements? We have come up with a draft for our GPRA
strategic plan. It's been circulated within the agency. People
know we're reviewing it.
We also have put a publication in the Federal Register,
asking for comments from the people who practice before us, as
to what sort of things we should be looking at. The deadline
for receiving those comments should close the middle of June.
We'll incorporate those comments and then of course, we will
take our obligation seriously to consult with members of
Congress. We hope to do that, once we get our document in more
substantial shape, and will be seeking consultation and input
from members of Congress this summer.
Mr. Porter. Well, you do such a fine job there, I knew you
were on top of this, but I just wanted to ask. It sounds like
you're doing a very good job of preparing for meeting the
requirements of GPRA.

dust cases

Let me ask what you do with something like 3,700 dust cases
on hold, which obviously, if you put them into the statistical
mix, would make things look very, very bad or could. Do you
footnote that and take it out of your other numbers?
Mr. Baker. We have a provision in our system to put cases
on stay, so that they're not counted. So basically----
Mr. Porter. So your performance measures wouldn't reflect
them?
Mr. Baker. Right. The data would not reflect a period of
time that a case was on stay. It would start counting only when
that case becomes active again.
Mr. Porter. I see.
Mrs. Northup.

workload trends

Mrs. Northup. Yes. I would just be interested in what the
direction of your caseload has gone the last couple of years. I
understand it's down.
Ms. Jordan. Yes, that's right.
Mrs. Northup. Do you have any reasons you give for why the
decrease?
Ms. Jordan. We try and speculate, we don't know exactly. We
try and get figures from the Department of Labor. We see that
the rate of contest of citations, in other words, what
proportion of citations issued by MSHA wind up getting
challenged. And that percentage has varied. It used to be as
much as in the double digit, 10 percent of the citations were
challenged, I think, in the early 1990s.
But it's changed and it's gone down, I think the latest is
6 percent.
Mrs. Northup. I guess, to be more focused, do you think
part of it is that the mine operators have created a safer and
friendlier environment in the mines, and that that's resolved
some of the differences?
Ms. Jordan. That could be. I guess that would relate more
to what are the number of citations that MSHA is issuing, and
whether MSHA is finding less violations when they inspect the
mine? We only see what they choose to challenge. And sometimes,
for instance, at the commission level, our numbers don't
necessarily go down. Even if the intake at the ALJ level
decreases, sometimes there can still be legal issues that arise
in some of those cases, which cause us to get the same amount
of cases coming up to us on review, just because there are
issues that need to be worked out.
Mrs. Northup. Okay. Thank you.
Mr. Porter. Ms. Jordan, thank you for the wonderful job
you're doing there. We have a lot of other questions for the
record that I know you will answer very well.
We appreciate your leadership and real attention to getting
the job done in a way that's a credit to our country. And thank
you for that.
Ms. Jordan. I appreciate it, and thank you very much, Mr.
Porter.
[The following questions were submitted to be answered for
the record:]

[Pages 1783 - 1838--The official Committee record contains additional material here.]

Thursday, June 5, 1997.

FEDERAL MEDIATION AND CONCILIATION SERVICE

WITNESSES

JOHN CALHOUN WELLS, DIRECTOR
C. RICHARD BARNES, DEPUTY DIRECTOR FOR FIELD OPERATIONS
WILMA B. LIEBMAN, DEPUTY DIRECTOR FOR NATIONAL OFFICE OPERATIONS
FRAN LEONARD, DIRECTOR OF BUDGET AND FINANCE

Mr. Porter. Next we have the Federal Mediation and
Conciliation Service. And we're very pleased to welcome our
colleague and fellow subcommittee chairman, Hal Rogers of
Kentucky, who will introduce the Director, John Calhoun Wells.
Hal, good to see you.

Introduction of Witness

Mr. Rogers. Thank you, Mr. Chairman. I appreciate the
opportunity to visit with you in these elaborate quarters. Some
of us have to toil in the labors of the small closets. And
others have massive canyons in which to preside. So we
congratulate you on these wonderful facilities.
And it's good to see my Kentucky colleague, Anne Northup, a
true star of the new Congress, and a new member of this august
committee.
Of course, Mr. Chairman, you are acquainted with John
Calhoun Wells. But I wanted to take the opportunity again to
present him to you. Because he's a close friend and he's a
fellow Kentuckian of whom we're very proud.
He's from my district, from Floyd County in the mountains.
But he feels at home here on Capitol Hill. He handled labor and
economic policy issues for Senator Ford from 1975 to 1978. So
he knows these halls.
He was Kentucky's first Secretary of Labor under Government
John Y. Brown and also Martha Layne Collins. He was extremely
successful in the private sector and union management
consulting. He represented many Fortune 500 firms and their
unions as clients.
He was a senior research fellow at the John F. Kennedy
School of Government at Harvard. He's written numerous articles
and publications on labor and management.
Thanks to your assistance last year on the subcommittee,
John has been able to make great strides as he had promised you
to improve the quality and productivity at FMCS. He made a
simple plea in those past years for money for computers and
upgrading of equipment. And I think he's going to tell you a
great success story today.
Through their efforts over there, both industry and
organized labor have benefitted from the changes that could not
have occurred without the support of the Chairman of this
subcommittee and this full staff and committee.
I am pleased, but not surprised, with John Calhoun Wells'
accomplishments. And I have every confidence in his ability to
continue to build upon the achievements already at the Service.
Thank you for the chance to introduce and present him to
you, again. And I do so with great pride.
Mr. Porter. Let me thank you for that very fine statement.
I have to say that I was a member of your subcommittee from
1983 to 1985, and I liked your hearing room a lot.
[Laughter.]
Mr. Porter. This one's larger, but that one is so much more
intimate.
Mr. Rogers. Cozy is the word.
Mr. Porter. Cozy, yes. And thank you for that fine
statement.
Dr. Wells, can I make an opening statement before you begin
your testimony? Because I want Hal to hear this as well.

Congressman Porter Opening Statement

I want to start by telling you how much we appreciate your
service to our country. We know that you took this job at great
personal sacrifice for you and your family. But you've done an
outstanding job at the agency, and you've provided innovative
leadership, and we want to publicly thank you for it.
I think all of us understand the frustration felt by anyone
who tries to change Government to make it work better for
people. But you've done a remarkable job in changing the
culture at your agency for the better, to make it work for
employers and employees across our entire country.
Dr. Wells, I believe, and I think you would agree that
individual leadership is perhaps the most important factor in
the success of any large program or institution. In the Federal
Government, we obviously experience a lot of turnover in top
leadership positions. We recognize that you have been extremely
successful, but we also realize that you're not going to be the
Director at FMCS in perpetuity.
On behalf of the subcommittee, I want to ask two things of
you. First, if you choose to leave before the end of this
Administration, I hope that you will take an active role in
choosing a successor who can effectively carry on your vision.
Second, before you move on, whenever that may be, I ask you
to make every effort to institutionalize the kind of
progressive leadership, customer and results orientation and
continual innovation and reinvention that you have provided
during your tenure.
At this point in the record, I would ask that you insert a
description of the actions you have already taken or are
planning to take to institutionalize your vision at the FMCS.
[The information follows:]

We have taken a number of steps to institutionalize the
changes we have made at FMCS during the last three and a half
years in the course of our reinvention initiatives which began
with the Mediator Task Force on the Future of FMCS. First, we
have imposed a new organizational structure and have struggled
to fine tune and make it work. We have redefined leadership
responsibilities and put in positions of responsibility people
who share the vision and goals that have been articulated. We
have made continuous improvement a part of each employee's job
and given employees opportunities for education, training and
professional development.
We have implemented changes as much as feasible by written
policy directive and are working now to codify these
directives. We have continuously kept both OMB and Congress
informed of what we were doing and why and have fortunately
received their approval and generous support. Another element
that would clearly help to keep these changes alive is the
continuing interest in and support by Congress in the future
for maintaining this vision. Our goal has been to create the
capacity within the organization to continually listen to our
customers, learn, adapt to the certain change that is occurring
around us, and improve the quality of our performance and of
the services we deliver.

Mr. Porter. And thank you for the service you are
providing.

Introductory Remarks

Mr. Wells. Well, Mr. Chairman, thank you for that very
unusual and very personal commendation. It's very moving. You
have my commitment on both counts to do as you have requested.
And I want to tell you, I want to look you square in the eye
and tell you that we could not have done what we have done had
it not been for your personal support and your personal
commitment and that of your able subcommittee members and staff
who have worked with us as colleagues in partnership through
this process.
Mr. Porter. The gentleman to your right convinced us early
on that you would do the kind of job you are doing.
Mr. Wells. Well, the gentleman to my right is in fact a
dear personal friend, and an ally who has distinguished himself
in the service to eastern Kentucky. And if I may be allowed a
personal note here that you may find of interest, and I hope my
friend Hal does as well, it was my good fortune to get involved
in this business of public affairs really through the
intervention of the late Congressman Carl D. Perkins when I was
a kid.
I went off and left eastern Kentucky and received an
education and came back home. He said, I don't know many boys
that got a Ph.D., Johnny, and you need to do something to help
east Kentucky. He got me involved in public service and
introduced me to then-Governor Wendell Ford. And I think he was
as distinguished as one could hope to be.
But I will tell you, there is another one here who has
followed and is filling those shoes. I knew Carl personally and
I know Hal personally. My native part of the world is an area
of great need. I am just honored to have my Congressman, Hal
Rogers, continuing in the great tradition of his predecessor
and also standing up for what he believes is right and fighting
for the people of eastern Kentucky. And I'm honored to have
your support, Hal. Thank you very much.
Mr. Rogers. Thank you, Mr. Chairman.
Mr. Wells. Mr. Chairman, members of the committee, I am
here to present the FMCS fiscal year 1998 budget request. And
Mr. Chairman, I note the considerable personal effort you have
made to hold these hearings, and to allow us to testify before
you. I am honored to have this opportunity.

Introduction of Witnesses

I have with me our two Deputy Directors. To my immediate
left, Ms. Wilma Liebman, whom you met last year. And to her
left, Mr. Richard Barnes, who is the Deputy Director for our
Field Operations. Ms. Liebman handles our National Office. And
to my right, Fran Leonard, who is our budget and finance
officer.

Opening Statement

With your permission, I would like to submit my testimony
for the record and not bore you and this committee by reading
it. But if I could ask your indulgence, I'd like to provide an
overview, if I could, of the points and then engage in any
dialogue or discussion you or the committee might have of me,
if that would be permissible.
To begin then with a broad overview of FMCS and what we
have done, Mr. Chairman, with your support and your assistance,
this year FMCS celebrates its 50th anniversary, since our
institution as part of the Taft-Hartley Act of 1947. We
approach this really with a sense of challenge, of attempting
to respond to the changing conditions in America's marketplace
. . . the extraordinary events of the last 20 to 25 years with
the evolving technology, the deregulation of major industries,
the changes of international competition and work force
diversity.

reinvention effort

I will tell you quite frankly, the world within which we
work at FMCS has dramatically changed during this time. We've
undertaken, with your support, a rather rigorous review of this
agency of the Government, of our mission, of its services, and,
importantly, of our performance and the quality of our customer
satisfaction. We've undertaken what we call a reinvention
effort. In the private sector, we would have called it re-
engineering.
But the whole notion, really, is that we ensure what we do
we do very well and we are entrepreneurial about it. We focus,
as you correctly noted in your opening remarks, on our
customers, our Nation's business and industry and the workers
and unions, and most importantly the American people. We have
tried to improve the quality of our service with the challenge
of being as good as the best in the private sector.
We've tried to strengthen our performance. We've gone
through a whole litany of changes--from organizational
restructuring, redefinition of leadership roles, modernizing
our technology, changing our evaluation criteria, our hiring
criteria, our performance assessment, institutionalizing the
customer focus, creating a learning environment--to really
create an environment where our people are excited.
And our challenge, frankly, is to be the very best we can
be. We're truly trying to be a full-service organization,
responding to the full range of needs that labor and management
have in these closing days of the 20th century--from
traditional adversarial and acrimonious, difficult, complex
disputes in the work place, to assisting management and labor
in searching for common ground and partnerships, win-win
outcomes, to alternative dispute resolution techniques, to
assisting in complex regulatory negotiations, and also to
providing assistance to emerging nations that are seeking to
create industrial relations as part of their nation building
process.
Our notion, at least my notion, I guess I should say, is
frankly this: I believe that the work place of America is the
fundamental unit of our economy. It's basically the platform
where products are produced or services are conceptualized and
delivered. That social relationship at the work place between
workers and those for whom they work has enormous economic
implications.
And if we at FMCS can help change that dynamic, from
adversarial to more collaborative, to cooperative and
partnering, then we can help industry and business strengthen
economic performance, which means profits. That, in, turn means
jobs and job opportunities for workers and membership for
unions.
But more important, frankly, than business and industry or
unions and workers, it means we strengthen the American economy
and we grow the economy and we have hopefully a rise in the
standard of living for our Nation and its people. It enables us
better to compete worldwide.
So although we work, Mr. Chairman, at the micro level, the
work place, we do it with a clear vision of the macro
environment within which we work. And that basically is what we
are attempting to do here at FMCS under my tenure.

accomplishments

Now, we have undertaken some rather significant
accomplishments which you have personally supported. I don't
want to go into a lot of detail, because I imagine in our
discussion we may get into it. But to support ourreinvention,
we've done a first ever customer survey, which you supported and that
MIT performed with us. We have the preliminary results. But we'll have
the final results in the very near future, which we'll share with you.
That provides a baseline for all that we are doing.
We've invested tremendously in the education and training
of our employees. You may remember we inherited a budget where
there really wasn't a dollar bill allocated for education and
training our people. We thought, that's not the way to compete
successfully. So we've gone through many, many changes and
innovations. And we're putting a lot of resources in place to
be sure that our mediators have the requisite skills to be the
best that they can be.
And technology modernization--you might recall that less
than 25 percent of our mediators had access to computers. Of
our 70 field offices, only 23 had fax machines. We had no e-
mail.
[Clerk's note.--Later changed to ``79.'']
So we really needed to do some significant modernization.
And today, every mediator has a computer. We have e-mail
throughout the system. There are fax machines in all of our
field offices. And we are using technology as a means by which
to improve our services. It's not driving us. We are using it
as a tool, if you will.
We have basically made an investment in people and
technology to improve our efficiency and our productivity.

mediation activity

The third point, basic facts about FMCS and our services,
you know that, I don't want to get into detail. But you might
have some interest in major cases in which we've been involved
this last year. In our dispute mediation, we were actively
involved in 5,200 cases across these United States.
Significantly, in 85 percent of the cases in which we were
involved, a resolution was reached. That's versus 69 percent
without active mediator involvement.
So there is a difference, especially in view of the fact
that we tend to get the most difficult cases.
Two notable cases: one was the machinists strike at
McDonnell Douglas of 99 days that went on with over 6,000
employees involved. We were actively involved both in St. Louis
and ultimately here in Washington. I was at the table for a
number of days, and we think we added some value there.
Also, not too far distant from your home, with UNO-VEN, the
old UnoCal refinery, that had a five month lockout. We weren't
successful in preventing it, but I think if you ask either UNO-
VEN or the Oil, Chemical and Atomic Workers Union, they will
suggest that we certainly hastened a resolution of that
dispute.
[Clerk's note.--Later changed to ``372.'']
Of the 409 strikes which began last year in America, we
were involved in 330, which is 81 percent. We're a voluntary
service, and that's not a bad record, and one we're quite proud
of.
[Clerk's note.--Later changed to ``304''.]
Preventive mediation, which is our second principal
service, which is a broad genre of education and training and
skill sets to enable people to compete more successfully in the
market place, we had approximately 2,500 of those cases last
year.
You might recall last year I shared with this committee
that in the last decade, while our dispute work is diminishing,
our preventive mediation work is up 140 percent as both
companies and unions are trying to redefine and improve their
relationships.
[Clerk's note.--Later changed to ``2,700.'']
One case involved an Amoco Refinery in Texas City, Texas,
which is their flagship facility, another company you may have
some familiarity with, with their headquarters in Chicago. I
think this is the largest single refinery in America,
processing some 460,000 barrels of oil a day. They've had a
traditional adversarial relationship for a very long time. Long
story short, I think if you ask Wayne Anderson, the Senior VP
of HR for them, they will tell you we added value. There has
been a significant turnaround there. And our mediators actually
did it.
Panama Canal Commission--something frankly that I have only
recently come to fully appreciate. Panama is going to take over
the canal in 1999 and we have been involved in helping them
with this transition, with their 8,000 unionized work force at
the Canal. The Canal Commission is reimbursing us for all of
our work.

arbitration and alternative dispute resolution

Arbitration, we have held focus groups to improve the
quality of our arbitration services. Our labor management
grants program goes on.
But I want to make note of our alternative dispute
resolution, because this was an interest you expressed last
year, as I recall, Mr. Chairman. We are significantly involved
in ADR, which basically is mediation as opposed to litigation.
Two of the big cases we did were, the largest one we ever did
was a regulatory negotiation with the Bureau of Indian Affairs
and the Department of Health, Education, Human Services and the
Department of Education and 86 different Native American tribal
councils. And there our two mediators were in the middle.
[Clerk's note.--Later changed to ``48.'']
This went on for a number of months. They successfully,
with our assistance, developed regulations implementing the
Indian Self-Determination Act, an extraordinary experience.
Another one not too far afield in the upper midwest is the
Boundary Waters Canoe Area Wilderness in northern Minnesota and
Voyageurs National Park. In fact, Voyageurs was the topic of a
television show last night on national public television. We
were involved in these multi-party--I'm talking about 75
different parties plus--environmental public policy dialogues,
to try to winnow out what had been a vexing, difficult,
contentious, political problem for both Republicans and
Democrats in that State. We were successful, at least in
winnowing out the differences there and have it more
manageable.
[Clerk's note.--Later changed to ``34.'']
And last, today, as I appear before you, we have a mediator
in Bosnia, returning for a second trip, invited by another
Federal agency. He is trying to bring some facilitation
expertise to an effort to improve the situation and bring their
infrastructure back on line.

appropriations request

Mr. Chairman, I'll very quickly conclude here. Our request
for appropriations is for $33,481,000 and 290 full-time
equivalents. This includes adequate funding for all of our
regular programs with normal inflationary costs and additional
funding for three new initiatives.

new initiatives

They are very quickly, what we call school yard mediation.
Congressman Stokes had been interested in this a couple of
years ago. OMB is now supporting us. We're asking $123,000.
This is to develop a pilot project to teach mediation skills to
teachers, so that they in turn can institutionalize that by
using the skill to provide to students. And we're going to try
to pilot this in a number of urban areas.
Secondly, a new program for conflict resolution and
cultural diversity issues. As our work force becomes
increasingly female and non-white, issues are arising in the
work place that did not arise before. We want to prepare for
that. We are asking $149,000 for this one.
And third and last, ``putting it back together,'' after a
strike or contentious negotiations, emotions are frayed, people
are angry, productivity is lost, quality goes down. We want to
have a program through which we can come right in at the end of
a strike and help the parties put it back together. We're
asking $100,000 on that.

Conclusion

Mr. Chairman, I will close by saying that we are trying to
run FMCS like a good business, like the peoples' business, to
be productive, to be competitive, to be efficient. All the
changes we have introduced and which you have been kind enough
to support have been for the purpose of improving our services
to both our Nation's business and industry, the unions and the
American people.
And for the data so far this year, I'm pleased to be able
to report to you that our dispute mediation case assignment is
up 18 percent. Our cases closed, productivity improvement, 3
percent. Our preventive mediation cases closed, up 3 percent.
Our customer outreach, which has been a continuing interest of
ours, 183 percent improvement. And our ADR cases closed this
year, 134 percent.
At the same time, we are shrinking our overhead personnel
from 1993 to 1997. The percentage of our mediators as a
percentage of the total work force at FMCS has gone from 67
percent to 72 percent. We are not filling an awful lot of
supervisory jobs in the national office. And I would suggest to
you, if it's not too immodest, that the change process that we
have jointly conceptualized and driven is working.
I am honored by the relationship that I have with you and
this subcommittee, and I would suggest to others that maybe
it's a model of an executive level independent agency and the
Congress on how to work together for the constituents that put
us all here.
Thank you, Mr. Chairman.
[The prepared statement follows:]

[Pages 1847 - 1854--The official Committee record contains additional material here.]

Remarks by Congressman Porter

Mr. Porter. Thank you, Dr. Wells.
Before I recognize Mrs. Northup, I just want to make two
comments. First, you spend the peoples' money better than
almost anyone. And the second comment is, we have to find a way
that others know about this. There's so much criticism of
Government today, the success stories ought to be out there.
And people should see how well their money is being spent. And
if we keep it among ourselves here, it won't tend to inspire
anybody.
And I would urge you to get this message out somehow
through the press, so people can understand that while there
are problems in some Government agencies, some are being run
exactly the way the people would want them to be run.
Mr. Wells. Thank you.
Mr. Porter. Now, Mrs. Northup has earned an opportunity,
why don't you proceed with any statement you'd like to make and
any questions you'd like to ask.

Statement by Congresswoman Northrup

Mrs. Northup. Just a statement, Mr. Chairman. I'm sorry, I
have a group from my district that is waiting for me in my
office and have been waiting, so I'm going to have to leave.
I want to thank you for what you do. I have heard such good
comments, and I can tell you, that's not universally true. I
wondered if, you said you're expanding the conflict resolution
areas. I believe so much that so many people believe human
nature is that we can't sort of turn down the rhetoric early.
But I think we can, with kids and with adults.
And in closing, I'd like to think if you've ever thought of
maybe helping with conflict resolution right here in Congress.
[Laughter.]
We could actually use some, too, between both ends of
Pennsylvania Avenue.
Mr. Wells. Well, Congresswoman, I've done reasonably well
so far. I'm not sure I want to assume that new responsibility.
[Laughter.]
But thank you for your support and your kind words.
Mrs. Northup. Thank you.

Historical Review

Mr. Porter. Thank you, Mrs. Northup, for chairing, also.
Dr. Wells, I'd just like to, and you've alluded to this in
your testimony, but can you give us kind of an overview of the
50 years, and when things began to become less contentious and
more cooperative, if you see that to be the case, and what you
believe is driving that and kind of give us an historical
review.
Mr. Wells. Yes, I would be pleased to do that. That's a
refreshing question. I would be pleased to do that. My personal
interpretation.
I think if we look historically, FMCS was created in 1947,
almost directly in reaction to an explosion of strikes that
happened in 1946, the year after the war was ended, soldiers
came home, workers had had a cap on wages, strikes weren't
allowed. Frankly, historians would suggest that some felt
aggrieved that employers had had high profitability but workers
had not been able to share in that during the war. So these
strikes took place.
That was a time of a very traditional adversarial, us
versus them, labor-management relations. We were on top of the
world, what I would call America's golden years, from about
1945-1946 until about 1965 or 1970. Our international
competitors, such as they were, had been ravaged by the war. We
made products of higher quality, at higher rates of
productivity, more rigorous cost efficiencies than our overseas
competitors.
But then we helped them, with the Marshall Plan, a
wonderful investment, we helped them in Japan. And they were
beginning to then marry technology as good as ours with new
infrastructure and new plants.
And then in the mid to late 1970s, we began to experience
pretty serious international competition and in your part of
the world, the Rust Belt, for example, where many of my fellow
Appalachians went, where the domestic foundation of auto
andsteel and machine tools and rubber, etc., then had to experience
this terrible competition, difficult competition. And we frankly
weren't ready for it.
I think somewhere, when labor was no longer able to take
wages out of competition, because then they were competing with
overseas competitors, the companies and unions struggled. First
they fought among themselves in the 1970s and early 1980s. And
some continue to do that, quite frankly.
But I would suggest to you, the transition began in the
late 1970s and early 1980s, in which people said, hey, this is
a different world. We have to compete to survive. And the old
ways of doing business, the adversarial, us-versus-them, won't
work any more. You don't make a world class, quality product
with rigorous cost efficiencies, a higher rate of productivity,
with a brawl. You do it by teamwork and working together.
I think that transition really has happened, Mr. Chairman,
in the last 20 years. Now, everyone hasn't made it yet. But
there are some wonderful innovations going on out there, as
people try to marry machines and technology with people, with a
proactive point of view.
And I will share something else I think you will find of
interest. I shared with you last time that I hadn't been
overseas, I stayed home. I had a full plate. I have just
returned from an overseas trip in which I met with counterparts
in Ireland, in England, in Brussels and Hungary. In three of
those countries, with the exception of Hungary, I was struck by
both corporate executives, by union leaders talking about
economic partnership.
I met with Brendan Barber, the number two official for the
English trade unions. He said, we have two strategies. Number
one is to organize. But number two is to form an economic
partnership with the employers of the United Kingdom.
With the coming EU, I know this is of interest to you, it's
extraordinary the discussion that's going on about using labor,
workers, but also unions as a competitive advantage. And I see
this going on, I'd heard about it, now I've seen it at the EU
level. And it seems to me it's the right strategy.
And so I guess in answering your question, I think it's
been the last two decades, as we've had to compete, and as we
have no longer been able to afford the adversarial
relationship, with all the acrimony that it provides. Since the
world's changed, we need to adapt.

international perspective

Mr. Porter. Well, I certainly see the kind of work you do.
And the kind of work done by other similar institutions
involved in conflict resolution, the Peace Institute is the
newest, I guess, in the Federal Government. But it seems to me
that might be a very, very strong base of eventually convincing
the entire world that somehow we have to resolve all of our
differences without violence and other unacceptable means.
It seems to me that the outreach you do overseas is very
important, and beyond simply meeting with your counterparts,
but bringing these ideas, the concepts of how you resolve
differences, without resource to weapons is really probably
where the future of life on this planet may really lie. And I
hope that there is a way of expanding these concepts beyond the
traditional bounds of the agencies or the institutes involved,
and bringing them to bear in a lot of parts of the world where
they need to be understood much better.
Mr. Wells. Yes. I frankly have come late to a full
appreciation of the importance of our overseas work. And I
think that's been my loss. We've been involved, especially in
emerging nations, Ecuador, Guatemala, Taiwan, not an emerging
nation, we've done a lot of work there, and in Hungary now.
People are trying to change. They've come to us asking what
are the skills and the concepts you can give us. They're trying
to find a better way. It seems to me we can in fact export some
of our concepts and processes here and make a difference.
You mentioned the Peace Institute. It seems to me that's a
natural ally for us. Frankly, I don't know them. I know the
name. I know they give grants. I know they're involved in
trying to reduce conflict worldwide. Our staff has had some
interaction with them.
But that may be something I should follow up on, and maybe
I could ask you or someone to help me.
Mr. Porter. I'm going to get you and Richard Solomon
together, absolutely. You're doing the same kind of work,
although yours is much more practical, and theirs is in some
cases more academic.
Mr. Wells. Richard Solomon is my counterpart?
Mr. Porter. Yes.
Mr. Wells. Okay. I would appreciate the opportunity to do
that. We're somewhat constrained, as you know, because we do
not use appropriated monies for our overseas work. We've made
some changes. In the past, we have just required reimbursement
of expenses. The State Department would often ask us to do work
or the USIA. I've perhaps been too rigorous on this. I required
that we have contract agreements before we provide overseas
work, project agreements that would not only recapture expenses
but also would recapture the salary and the benefit costs of
our employees.
Mr. Porter. Well, we appreciate that, but I'd like to see
you do more of this overseas effort. Because I think it can
make a great deal of difference to a lot of countries that are
just beginning a process where they ought to know how to do it.
Our expertise could help them a great deal.
Mr. Wells. I think your point's well taken that most of
these problems are conflicts that really don't need to occur,
if people could have the wisdom to try to look within
themselves and look to the other person and find mutual self-
interest, and deal with each other respectfully.
I will follow up with Mr. Solomon and see what can be done.
I will be very interested in doing this, Mr. Chairman.

race relations and conflict resolution

Mr. Porter. I have another question that I'm interested in
asking your viewpoint on. The President just yesterday
mentioned a new initiative that he's starting on the future of
race relations in our country. And I wonder, in your work, is
there a racial conflict component that you see? Is that a
component that is increasing or decreasing? And what should we
be doing to head that off, if it is getting worse, as the
President, or at least a serious problem, as the President
seems to think it is?
Mr. Wells. That's an extraordinary question. Our little
request here for an extra $149,000 to develop a conflict
resolution and cultural diversity mediation process, a
bureaucratic name, I guess. The notion there is that we
recognized a couple of years ago that a lot of the labor
disputes weren't labor-management, simply. They were
differences among female and male employees, non-whites and
whites, cultural issues, people didn't even speak English in
some work places. And these led to conflicts and disputesthat
then erupted into strikes or problems within the work site.
So we developed this little program to try to address that,
to be sensitive to the issues. I think what we're talking about
here is differences, and how we learn to deal with differences.
And as we as a Nation change, and as the work force goes from
almost exclusively male to non-male, and from white to non-
white, we're struggling with this.
How do you respond? I don't know adequately how to answer
you, because that's a profound question you pose to me. But it
does seem that we respond by being thoughtful and recognizing
that in our differences, if we try to understand our
differences and we try to speak honestly and openly with
people, and we develop a dialogue, it's not something that
happens once a month, or once a year, you have to have a
continuous discussion.
And this notion of mediation, what we see emerging, Mr.
Chairman, is a continuous negotiation in the work places of
America, not every three or four years, but changes are
happening so rapidly. I guess what I'm trying to say is, while
we have dealt historically in collective bargaining issues,
increasingly this conflict resolution strategy that we are
involved in can be exported not only abroad, but to almost all
kinds of problems that need resolution.
Mr. Porter. I'd like to sit in on a meeting between
yourself and Dr. Solomon. I think it would be fascinating to
hear your discussion.
I'm going to ask you just one other question, and put the
rest in the record. The staff has done an excellent job of
developing a lot of important questions. But I think you can
answer them for the record for us.
Mr. Wells. Certainly.

mediator organizing attempt

Mr. Porter. I understand that you've had some activity
among your mediators to consider unionizing the mediator corps.
Can you tell us about that and what that portends and how that
would fit?
Mr. Wells. Yes, sir. First of all, let me tell you the
resolution of it. Just the 22nd of May, the Federal Labor
Relations Authority, which has responsibility for Federal
sector labor relations, dismissed the appeal that this group of
mediators had requested. They appealed after having been turned
down by the regional director of FLRA back on February 3rd.
So basically now for the second time, because there had
been a unionization effort back in 1980, the FLRA has
determined that Federal mediators in FMCS do not constitute an
appropriate bargaining unit. That has occurred.
I will tell you that the changes we have undertaken have
been pretty wrenching for a lot of our people. It's a much more
demanding environment within which we work. And although we
ourselves are a force for change in the work places of America,
it's difficult sometimes for us to change ourselves. And it's
my understanding this led to some people trying to form a
union.
Our position, I want to be perfectly clear, for the record,
was one of strict neutrality. As Director, I neither encouraged
nor discouraged this unionization effort. Some of the mediators
were upset with me, because they asked me to provide them
voluntary recognition. And I didn't do so. I said, there's an
established procedure. It's appropriate to follow that if
that's what you choose to do.
You see, the only acceptability we have to the labor
management community is if we're seen as neutral, as honest
brokers. And for me to have voluntarily extended recognition, I
felt, would have been a colossal error. Because then I, as the
head of the agency, would have shown a preference. So I felt it
was institutionally appropriate for me to be neutral and let
them proceed as they wish. And that's what we have in fact
done.
Mr. Porter. That would almost be tantamount to unionizing
the Federal judiciary or something like that, which really
doesn't fit. Because you're exactly right, you have to be
perceived as not being on one side or the other. Otherwise, you
have no credibility. And credibility is everything.
Mr. Wells. Yes, sir, that was my judgment.

airline labor relations

Mr. Porter. Can I ask you a final question? Have you been
involved in the United Airlines pilots situation?
Mr. Wells. No, I haven't. We do everything but air and
rail.
Mr. Porter. Oh, I'm sorry, that wouldn't be you.
Mr. Wells. Yes, everything but air and rail.
Mr. Porter. That's not yours.
Mr. Wells. And you were good enough to seek to give us that
responsibility a couple of years ago, as I recall. And we
appreciate that vote of confidence. [Laughter.]
Mr. Porter. I thought we succeeded, I guess.
Mr. Wells. Can I make an observation to you, though, since
you asked that question? I have a colleague and a friend, Mr.
Bill Hobgood, who has been appointed as the executive vice
president of human resources for United Airlines. He used to be
a mediator at FMCS, then he had a management position. He is as
good as there is.
And I would not be surprised that if you don't see a
significant change in labor relations at United, they're not
bad now, I think United is very good at what they do,
generally, in this arena. But I see them reaching out to bring
in talent from outside of United, to bring a more problem
solving, entrepreneurial approach, as opposed to a bureaucratic
approach to labor relations.
Mr. Porter. I was talking about American. You're talking
about United.
Mr. Wells. Oh, I'm sorry.
Mr. Porter. Which I find a fascinating subject, and
obviously it's not appropriate here. But it has to do with
technology and change in routes and which group of pilots are
going to be able to fly the more profitable routes. It's a very
interesting issue.
But the rest of the questions I think I would like to ask
you to answer in the record. They are the technical kinds of
questions that you will answer very well.
Let me again thank you for the wonderful job you're doing
there. And as I say, I think we have to let people in this
country know about things like this. Because what always seems
to be put in the media is all the negative things that can be
found, and the wonderful, good stories of success always seem
to be lost. And we need to change that culture as well.
Mr. Wells. Mr. Chairman, I've said this, I want to repeat
it, we could not have done what we have done without your
personal support and commitment. That's a fact. I understand
that, and I thank you.
Mr. Porter. That personal support and commitment comes
because you're doing such a fine job.
Mr. Wells. Thank you, Sir.
Mr. Porter. Thanks so much.
The subcommittee will stand in recess until 10:00 a.m. on
June 10th.
[The following questions were submitted to be answered for
the record:]

[Pages 1861 - 2001--The official Committee record contains additional material here.]

Wednesday, June 11, 1997.

NATIONAL EDUCATION GOALS PANEL

WITNESS

KEN NELSON, EXECUTIVE DIRECTOR

Mr. Porter. The subcommittee will come to order.
This is our final regular hearing of the year. And for the
record, it should be noted that hearings have never gone this
long in the history of this subcommittee. We have had more
hearings over a longer period of time than ever before.
We finish with three independent agencies, the first of
which is the National Education Goals Panel, headed by our
witness, Ken Nelson. Mr. Nelson, it's a pleasure to welcome you
back to the subcommittee.
I want to stress the importance we place in focusing on
results and having the type of measures in place to measure the
effectiveness of the various programs we fund. You are
undoubtedly aware of that. And we continue to emphasize it to
everyone who comes before us.
With that statement, will you please proceed with your
statement?
Mr. Hoyer, yes.
Mr. Hoyer. Thank you.

Introduction of Witness

I, too, want to welcome Mr. Nelson. I have some other
things to do this morning, but I wanted to make sure I was
here. Mr. Chairman, I have worked very closely with Governor
Hunt, who I want the record to reflect is essentially a boyhood
friend of mine. We started out as young Democrats together in
1962. So I've known him a long, long time.
And of course, Governor Hunt is, as you probably know, the
Governor in the Nation who has been most intimately involved in
education reform over the last two decades, really three
decades, as Lieutenant Governor, when he was Lieutenant
Governor in North Carolina.
And I applaud your statement. Because clearly we have for
too long, at the Federal level in particular, focused on
process rather than results. And you've heard me talk about
this in terms of Head Start and other things. But this is, I
think, an outstanding effort to say, our taxpayers are
investing and they want that investment to pay off in results,
higher standards and more competitively educated young people
in America.
So I applaud the work of this commission, and I thank you,
and I applaud the work of Governor Hunt, who has been such an
outstanding leader in this effort. And I look forward to your
testimony. Thank you, sir.
Thank you, Mr. Chairman.
Mr. Porter. Thank you, Mr. Hoyer.

Opening Statement

Mr. Nelson. Thank you very much, gentlemen.
I'm going to start with an Einstein quote, because it gets
at the core of our mission. Einstein said that we cannot begin
to solve the complex problems we face today with the same level
of thinking we had when we created them.
There's a good quote. And I do believe that when President
Bush and the Nation's Governors gathered in Charlottesville,
Virginia in 1989, they created a new level of thinking for the
country and for the States, when they said, let's establish
goals around education, let's make them specific and
measurable, and then let's report annually on progress toward
those goals, over a decade; so the goals are targeted to the
year 2000.

historical overview

So they established in 1990 the National Education Goals
Panel. The panel first worked out of the White House, the Bush
White House, and then out of the Department of Education under
Lamar Alexander and then Richard Riley, until 1994, when
Congress codified the Goals Panel. We were given the
responsibility of reporting and accountability. And as you've
indicated, toward results. What results are we seeing, and can
we document, for system performance, K-12 system primarily, and
student performance.
They intentionally established the panel as bipartisan,
keeping everybody at the table, working through a consensus
decision making process, and they had it dominated by
legislators and Governors, eight Governors, four State
legislators. So 12 of the 18 members are from the States. Five
of our eight Governors are Republican, and that balances off
the two administrative representatives.
John Engler from Michigan was our chair last year, and as
you have indicated and well know, Jim Hunt from North Carolina
is our chair this year.
In our handout, we did indicate our membership on Appendix
A, both present membership and going back to the inception,
when at that time at the first summit, President Clinton was
the lead Democratic Governor and Carroll Campbell of South
Carolina was the lead Republican Governor, who then became our
second chair.
That's a little bit of our history. A little bit more
history, speaking of results, is in our handout as well, our
budget request, Appendix 2, talks about those products that we
have delivered. In other words, the results we have achieved.
In 1990, then, we were given the charge of developing
specific measurable indicators around each of the goals, which
we did in 1990, then delivered our first report in 1991. This
is our sixth annual report. We're now working on our seventh
for 1997.

additional responsibilities

But in 1994, Congress gave us some additional
responsibilities. First of all, they came back to us on the
reporting requirement and they said, not only do we want you to
give the report, but we want it usable by the general public.
So the language in the statute says that this should be
presented in a form that is understandable to parents and the
general public, so that they are involved in the education
improvement process.
For instance, and we've tried to design all of our products
to be most usable by the public, so we've conducted focus
groups of parents, policy makers, local and State levels. And
the general public, including business groups. We've done
customer surveys. And in every one of our products, we have a
questionnaire for feedback on how well we're delivering our
product.
So we're redesigning it constantly. For instance, in the
1996 redesign, they said for instance, and that is this report
here, we put the data highlights right up front, in pages IV
and V, specific data highlights on how well are we doing, where
have we made progress for the Nation and the States, and where
have we slipped and where are we status quo.
Then we put the goals and their specific objectives, again
the measurable objectives in pages XIV through XVII, and then
we put in a theme chapter called standards and assessments,
creating them at the State and local levels. We went to the
States and the communities and said, how are you doing it, and
we wove in examples of that. We're trying to educate, at the
same time that the general public reads their materials, we
want them to better understand what standards and assessment
are about, and in fact goals.
And then we always give how much progress have we made, so
chapter 2, page 28-29, gives 25 indicators around eight goals
by which we determine how well the Nation is doing. Westart
with the baseline, what is the data that we can best gather closest to
when the goals were established in 1990. Then we give our most recent
update and then an overall progress, indicating an arrow upward or
downward or status quo.

state comparison

This data is all State comparable. So we don't get into a
judgment of one State versus the other, we just put out the
comparable data and let the States draw their own conclusions
on that.
Then we go to the State progress where we have one page per
State toward the back of this volume, starting on page 76 with
Alabama. And again, do the baseline, the most recent update and
the overall progress, per State. You will notice some blanks in
there, far more blanks than we want. But we're always
struggling to get more data. And people are always asking us to
ask you, in turn, to consider more support for data collection,
and particularly NAEP.
But data collection is very critical in this country by
which we can determine progress toward goals or other
performance objectives. And so the blanks, we're gradually
filling over our span of this decade. And when we deliver our
final report at the end of the decade, we hope all those blanks
are full, with some good data.
So they asked us to report it in a meaningful manner,
understandable manner. Then we also added our executive summary
in response to those parent focus groups. They said, you have
to distill this down to what would pass the barber shop test,
so that it's on the waiting table in the barber shop, somebody
comes in, picks it up and says, oh, now I know what you mean.
Now I understand how it affects me or my child or my community
or my school.
We hope this gets at it. We don't think we're quite there
yet.

standards and assessment

At the same time, again, this last year we were trying to
promote standards and assessments, what they mean to education.
So we included tests in here from Maryland or Kentucky or
Connecticut. Examples of tests, so that parents and readers
could better understand what we're talking about when we talk
about assessments and tests.
And we highlighted a community in South Carolina, Beaufort,
which is really creating high performance schools in that area
of the State, how they're going about doing that. We're also
putting our report on the Web, and we're making that as usable
and friendly as possible for people across the country.
In addition to this assignment, Congress in 1994 gave us
additional ones. They said we should work with States to
develop high academic standards and assessments. We feel we're
doing that in part through what I just illustrated.
They also asked us to highlight promising practices, what's
working, what are people doing out there that seems to result
in achievement, greater achievement. So we highlight that. On
our previous report, we highlighted what schools or communities
are doing on parent involvement.
Then finally, they always said, keep that bipartisan
consensus at the table. Always develop the bipartisan nature of
education improvement.

budget request

That brings us to the present. As you know, we're asking
for a $2 million appropriation this year. That would enable us
this next year to do a little bit more of what we did in 1995.
In 1995 we did a state data volume with far more indicators
than what you have in our 1996 report, about 90 national
indicators and then we have four pages per State. It allows us
to give more specific information.
And as you know, as policy makers, when you have more
specific information, you can use it better. We have also been
working with States to develop these kinds of reports
themselves, States and communities. Some States do it very
thoroughly. Ohio we always cite, as Governor Voinovich has
taken it and done an excellent job, both State level and local
district level as well as several other States.
So our request is for that $2 million so that we can then
produce more of our big reports and also more of our executive
summaries and get more material on-line.
Back to the Einstein quote, the new level of thinking to
solve complex problems. We believe that the goals process
established here is a new level of thinking and accountability.
Number one, setting measurable goals and indicators around
those goals by which we can measure progress. Number two, and
here's the critical component in a democracy, is informing the
citizens how well we're doing. And this provides good
information on how well our public systems are doing. It's not
always easy to do that.
So we're attempting to do that, and I think education is
doing it fairly well, and I suspect you'll see more of that in
Health and Human Services. But we think we're doing quite well
in that and setting a model for the country which States and
communities are emulating. Then after you've reported to the
people, then together with the people, you make course
corrections and you redesign your delivery system to better
achieve the results.
Mr. Chairman, thank you for your time.
[The prepared statement follows:]

[Pages 2008 - 2015--The official Committee record contains additional material here.]

Mr. Porter. Thank you, Mr. Nelson.
Mr. Hoyer.

baseline data

Mr. Hoyer. In looking at your assessment, your State
assessments, you referenced Ohio. I look at Maryland and then I
looked at Ohio. There are a lot of blanks, as you pointed out
in your testimony, with reference to baseline or recent update
data.
Are we urging the States to do that? I do a lot of work
with the Governors. And I would be glad to talk to Governor
Dean and others about this.
Mr. Nelson. Yes. We work here with NGA, almost annually we
get reminders out to Governors through the NGA auspices, and
our chair, last year Engler, this year Hunt, reminding them of
our data needs. And for some States, it means just a little
twitching of the language. It has to be uniform. For instance,
in the school completion, we're working on more consistency
there. But not all States are reporting on that, because minor
definitions are different sometimes.
So in order for us to report it, and it has to be exactly
comparable in terms of the language used, the procedures for
data collection. But yes, we are working on that. I think we've
got to do more. And I was at a staff meeting yesterday for the
future, and as we face the end of the decade, we feel that
we've got to start working with other groups in terms of how
are they not only data collecting, but data reporting.
Mr. Hoyer. Let me ask you another question about the
analysis of the data that is collected. Some arrows you were
pointing up were the one point change from previous data to
this year's most current data. I notice in some goals you have
where one point is status quo in some cases, and a one point
increase is an arrow up and where one point down is the same.
What makes the distinction?

significant change

Mr. Nelson. Well, I almost have to defer to the
psychometricians, but they will say, or the statisticians----
Mr. Hoyer. Oh, please don't. That's for the Speaker. I'm
not in that league. [Laughter.]
Mr. Nelson. And I'm impatient, too. I used to be a
legislator in Minnesota. In fact, Mr. Chairman, I chaired the
appropriations committee in the Minnesota House for education
for eight years. It was a difficult task. Yours is far more
difficult.
But as a policy maker, I got impatient, too, with
psychometricians, still do, actually. But they will say that it
has to be more statistically significant in order for us to
report progress. So we take their judgment, if there's only so
much progress, and it will vary per indicator, because the data
will mean different things per indicator. In some, it might be
a one point increase and still not be statistically
significant, and in another it might.
Mr. Hoyer. I understand what you're saying.
Mr. Nelson. We yield to them, because we really still want
that full endorsement of the research community, which we have.
Mr. Hoyer. Well, I think to the extent, Mr. Nelson, that we
get better information from the States and therefore can more
accurately reflect this. I think it will be very helpful to
this committee, which plays a relatively small role in
education at the primary and secondary level, a significant
role at the higher education level, because of the number of
dollars, obviously, special programs like Head Start, Chapter
One, would play a significant role in it.
I think this Goals effort, Mr. Chairman, is a very
important one. And I'm very supportive of the funds to make
sure that we accurately collect data so that we can make
informed decisions.
Thank you. And thank you, Mr. Chairman.
Mr. Porter. Thank you, Mr. Hoyer.
Mr. Nelson, the data that you gather is provided by the
States, is it not?

naep data

Mr. Nelson. Well, it's primarily, finally the data comes
from the States. But it's usually gathered by national groups
like NAEP or Centers for Disease Control or the Census Bureau.
They pull it out of the States. They gather it, then we pull it
over from them and put it out in our form.
Mr. Porter. We don't have national tests, for example?
That's an issue that, we don't have national standards. But
we're discussing those kinds of things. What you are providing
in your report is data that you've collected from various
sources, including the States, as to how they're doing, is that
correct?
Mr. Nelson. That's correct.
Mr. Porter. And although there are a lot of standardized
tests that are used, not every State uses the same test to
measure achievement in math, science or reading or whatever, is
that correct?
Mr. Nelson. Right. The only exception to that would be the
NAEP process, where they random sample. And that's uniform. But
it doesn't mean that students have been taught by any
particular curriculum.

comparable data

Mr. Porter. The point I'm trying to get at is, how
comparable is the data State to State, if we show a State at a
certain level for math-science, is that comparable to another
State?
Mr. Nelson. And we just use the NAEP data on academic
achievement, and that is comparable.
Mr. Porter. Then it is comparable.
Mr. Nelson. Some Governors have come to us, some States
have come to us and said, they know they're doing more than
what we're reporting. And we've acknowledged that. So we've
done what we call a Profile of State Assessments, a publication
we put out last year.
We went to each State and said, what kind of tests are you
offering, what grade levels, and what kind of results are you
reporting. And we put out a separate publication, which was not
comparable data, because it was each individual state's
reporting against their own baseline, which is very critical.
But it was not comparable.
So we think that we should be doing more of that. But not
at the expense of this. We think this is very important
comparable data, but that would be non-comparable.
Mr. Porter. Yesterday, the President announced that we were
doing much better compared to the rest of the world in math-
science. Did that data come from you?

timss report

Mr. Nelson. No. That came from the Third International Math
and Science Study, TIMSS. We're going to make that a theme this
year in a report, as we did last year on standards and
assessments. We think the international benchmarking or
reference is important to mobilize our country to greater
achievement. And yes, those results in fourth grade science
were particularly encouraging yesterday.
Mr. Porter. Who takes the TIMSS test? Everyone? All the
kids?
Mr. Nelson. No, that's again a sample. And I don't recall
the numbers. It's either 13,000 or 130,000 in the States
participated. And then I think in this case there are 25 other
countries, and it's a sample test.
Mr. Porter. We have a group in my district called the First
in the World Consortium. Have you heard of them?
Mr. Nelson. I've heard of them, yes.
Mr. Porter. They took the TIMSS test earlier, with
extraordinarily good results. But they were not an accurate
sampling of the country by any means. How do we know that when
you take 13,000 or 130,000 that you're going to be reflecting
what's really happening out there across the whole country?
Mr. Nelson. Well, that's a very good question, which I
don't think I can adequately answer. Because I'm not one of
those people on the front line on that issue. That comes
through the NAEP process and the National Center for Education
Statistics coordinates that collection.
So I'm sure they do it by a scientific sampling, but I
can't characterize how.

star states

Mr. Porter. Who are your two or three star States?
Mr. Nelson. We're going to highlight that much more this
fall. So I might have to postpone answering that question.
Mr. Porter. You can't give me a sense of our three or four
states that really seem to be doing well, and the ones who are
not doing well?
Mr. Nelson. This last year, in 1996, and I should
havebrought that information on page V of this 1996 report, in the
middle of the page, improvements have occurred in the following areas.
And that's State data. Thirty-six States have reduced the percentage of
infants born with one or more health risks. That's a goal one
indicator.
But as we get to goal three, which is our academic goal,
ten States have increased the percentage of eighth graders
performing at proficient or advanced levels.
We didn't print this out in a separate form. But we know
there are about 20 States, if I recall correctly, that have
made improvement on eight or nine of our indicators. And this
year, we're going to highlight that much more than what we
have.

BUDGET INCREASE

Mr. Porter. You're requesting an increase in your budget of
about 33 percent, 34 percent.
Mr. Nelson. Yes.
Mr. Porter. Which is very substantial, but you're starting
from a low base. If this were done, you would have doubled your
budget in two years.
Mr. Nelson. That's correct.
Mr. Porter. When we see a number like $2 million, sometimes
we kind of think that's picked out of the air. How did you
arrive at a $2 million figure exactly?
Mr. Nelson. Let me go back one prior year, because that
makes us look a little better. When we delivered this report,
this was fiscal year 1995. Our budget then was $2.3 million.
And we delivered, as I said, both the State and the national
data volumes. Actually, we were able to print 500,000 of these.
Then in 1996, we were cut 60 percent. We were cut back to
$1 million. In 1997, we increased to $1.5 million, our current
operating year. And so we're asking for $2 million, which only
gets us to 85 percent of where we were in 1995.
Now, back more pointedly to answer your question, what
would we do with the money, two things primarily. We would hope
to be able to delivery, as I've indicated already, more of
these volumes, which we've suspended since 1995. Because they
do provide a lot more data and a lot more indicator
information, about 90 around the eight goals. And therefore,
it's far more usable for States, number one.
Number two, we want to do more of this. And in fact, our
latest focus groups for parents are saying, we even have to
downsize this a little bit. Keep this for the interest and the
active parents. But for those who you have to get the
attention, we still have to get down to almost a brochure, to
get their attention.
So we want to do more of that, and we want to do more with
our Web site.
Mr. Porter. So the increase of $500,000 would come from
personnel or printing or what?
Mr. Nelson. Primarily printing and our data contracts. We
would hope to add two people. We're at six people. We used to
be at twelve in 1995. We also moved into smaller quarters, and
actually per square foot reduction in cost. So we're now at
six.
We would hope to build back to eight if possible, one
programmatic and one administrative, just two people. But
primarily in product. And we're working with the Governors and
others now on developing a standards implementation process.
And they've asked us to characterize the classroom, go right to
where the kids learn, and what are the characteristics of that
classroom and how can we make that happen more.
Mr. Porter. Thank you, Mr. Nelson.
Mr. Wicker.
Mr. Wicker. Thank you, Mr. Chairman.
And let me just begin, Mr. Nelson, by asking you to
differentiate between your mission and the mission of the
Office of Education Research and Improvement within the
Department of Education. I noticed you outline on page one of
your testimony that the panel is charged with measuring the
Nation's and States' progress toward achieving the goals. Then
on the second page, you list four primary responsibilities.
Is there overlap between the Office of Education Research
and Improvement? What are the differences there?

NEGP MISSION

Mr. Nelson. Well, first of all, we were sprung out of the
Department by design, when Congress acted in 1994. They wanted
us independent and bipartisan, not under any particular
Administration. So we are directly accountable to Congress. So
we're not of the Department of Education, even though we
contract with them for some services.
I'm not clear about the mission of the agency you
referenced. I know that our mission, as outlined here in the
statute, really speaks to the reporting phenomena, that's the
core and critical function of our mission. And we're to do this
annually through the year 2000 with the best data possible and
the best presentation and usability possible. No one else, at
least I don't think that agency has that charge. That's our
principal charge.
Spinning off of that, the legislation also talks about
promoting promising practices. We like to focus in on reports
when we do that, because we think reporting is a powerful
activity, so that people get better informed. So we're focusing
in on that, because we believe we do that well, and we want
more States and communities to do that.
Then two other ingredients I would say that would separate
us, the bipartisan-ness. We are, everybody is at the table,
it's a balanced forum that we operate in, 18 members, 9
Republican, 9 Democrat. So that enables us to work both sides
of the aisle at the State level as we work with Governors and
with State legislators and anybody else.
The other separating ingredient would be that we have had a
long-term commitment toward higher academic standards. The
Governors, especially, since its inception, have strongly
believed that we won't get to the goal of achievement,
especially goal three, the academic goal, without higher
academic standards, both performance and assessment standards.
So that has been another focus of our responsibility.

TEACHER DEVELOPMENT

Mr. Wicker. Next let me ask you about the fourth national
goal, dealing with teacher development. Your report shows that
the percentage of secondary school teachers who hold a degree
in their main teaching assignment has actually decreased. Is
this because of any one factor? Have we discouraged teachers
from majoring in a specific subject in favor of a more generic
teaching degree?
Mr. Nelson. That's a very good question. We first got this
charge when Congress acted in 1994. They gave us this new goal
in 1994. So in 1994-1995, we set the indicators around the
goal. And then reported the progress that you're referencing.
Because it looked to me, you're citing indicator 12? I'm
wondering which one. Maybe it's teacher preparation, has the
U.S. increased the percentage of secondary school teachers?
Mr. Wicker. That's it.
Mr. Nelson. Yes, 11, from when it dropped from 66 to 63. I
would have to get back to you on the reason for that. We have
just reported the data without explanation. And in fact, I
think that's another thing, Mr. Chairman, I would pledge with
this additional appropriation. We'd do far more analysis. We
realize that from now, especially through the year 2000, we
have to pull out implications of this data. And that would be
one of our analyses that we would present.
But we will get back to you more precisely on that.
[The information follows:]

The 1996 Goals Report indicates that the percentage of
secondary school teachers who hold an undergraduate or graduate
degree in their main teaching assignment decreased from 66% in
1991 to 63% in 1994. Although we can not identify any single
factor that is responsible for this decline in the proportion
of fully-prepared teachers, we can point out several factors
that are likely influencing the direction of change. According
to the 1996 report of the National Commission on Teaching &
America's Future (What Matters Most: Teaching for America's
Future):
More than 40 states allow school districts to hire teachers
who are not fully licensed. States usually allow districts to
waive licensure requirements in cases of genuine teacher
shortages in particular subject areas. For example, changing
student demographics can produce teacher shortages in subject
areas such as bilingual education or special education. And
below-market wages produce teacher shortages in areas such as
mathematics and science.
Standards for entry into teaching vary widely across the
states and are not always enforced. While some states have
taken steps to raise teaching standards for preparation and
licensing and have created professional standards boards,
others continue to hire large numbers of teachers who do not
meet minimal qualifications. Minority students and those who
attend high-poverty schools are most likely to be taught by
teachers who are assigned to teach courses out-of-field.
It does not appear to be the case that states are
discouraging teachers from majoring in a specific subject in
favor of a more generic teaching degree. In fact, state
strategies to upgrade the skills and knowledge of beginning
teachers include requiring prospective teachers to take more
credits in academic subject areas and to pass discipline-based
assessments in order to gain entry into the teaching field.

NATIONAL TESTING

Mr. Wicker. And finally, the first chapter of your 1996
report highlights the need for standardized testing. As you
know, the President has been advocating a national testing of
fourth and eighth graders in the subjects of reading and math.
Has your panel found that there is a necessity for developing
tests in these subjects at these grade levels, and are there
other subjects which should be tested? How successful do you
believe the program in the individual States have been?
Mr. Nelson. Well, I supposed we would all like greater
achievement, the achievement in respective States, I think we
would all like more and all need more if the country is truly
going to remain competitive internationally. Thus far, of
course, we have the laboratory of the States, which is a
phenomenal activity of creativity. The States generate their
own tests and their own delivery system.
We hope through the goals process that we've raised the
standard and expectation, so that they can look upon that and
say, wow, we're doing okay, but we're sure not doing as well as
that other State, and we ought to be doing better.
Our panel has not taken a position on any of the
standardized tests, and probably is unlikely to do so. We
really work toward consensus, and if there's something
controversial, they try to steer clear from it. Yet I know that
some of our specific panel members, and as Governors and their
States have chosen to get on board with the President's program
there. But as a panel, we have not taken a position on that.
We do know, in fact we have a new process now called
standards implementation. When the TIMSS data for eighth grade
was released last November, it begged the question of why
aren't our students doing better. Because there, in
international science, we're just a little above average. In
the international math, we're below. And we were compared to 45
countries, and we felt we should have done better.
So it begged the question, if we've been promoting
standards, why aren't we doing better. The realization is that
the standards haven't penetrated the classrooms as much as they
should. So we're looking at textbooks, how are the textbooks
chosen and can States choose textbooks differently if they
choose to, so that they can get to higher standards. We're
looking at curriculum, instruction and assessments in an
advisory capacity to States and local communities to see how we
can get higher standards into the classroom.
Mr. Wicker. Thank you.
Mr. Porter. Ms. Northup.

STUDENT TESTING

Ms. Northup. I have a couple of questions. The first one is
the question of testing.
There are two issues here. One is, how we're doing
internationally, and the other one, how is each student doing
in terms of achievement in their own classrooms.
Mr. Nelson. Yes.
Ms. Northup. And we know that testing has a great deal to
do within, or it's supposed to, the direction that teaching
goes in. So if we are, first of all, the question is, are we
going to do sampling and look at how our schools are doing in
an aggregate sort of way, or are we going to test every
student.
And I don't think that parents particularly are happy about
the idea that samples are going to speak for how the schools
are doing. They very much want to know where their child is.
And quite honestly, I'm from Kentucky, and you're probably
very well of the KIRA tests. I've been very engaged in those.
They're not happy with names like novice and apprentice. They
want to know 91 percentile, 81 percentile and so forth. That's
something they understand.
How do you answer that question to parents about are we
going to do both, are we going to go one direction or the
other? What do you advocate?
Mr. Nelson. I'll first speak for the panel, then I'll just
personally respond. But the panel only uses, as I indicated
earlier, the NAEP test, which doesn't go below a State level.
So it uses the aggregate and a sampling across the country, as
you well know. So it characterizes Kentucky's achievement on
that.
But that is very relevant. Because the Southern Regional
Education Board, of which Kentucky is a part, has done a little
analysis of how States do report their own assessment results,
vis-a-vis the NAEP. They find generally the NAEP is a higher
standard. So some States will be saying, yes, their students
are performing at 80 percent, while NAEP will say 20 percent.
So there's quite a disparity there on State reporting.
Ms. Northup. I think what I'm saying is, if I'm a parent
and I have a child in school, it's no consolation to me that
somebody tells me how Kentucky's schools are doing. I want to
know how my student is doing.
Mr. Nelson. Yes. And that's the personal response, because
the panel hasn't gotten into that. But I absolutely see the
need for that.
And States are doing that in one way or another. And the
more they do it, it seems to me, the more they are energizing
the parents to become an active parent.

NAEP

Ms. Northup. Let me then compare that to, NAEP, as I
understand it, I use depth and breadth. Breadth is how much
information the child covers, did they get to multiplication,
did they get to division, did they get to percentages. Depth
is, can they apply it, can you give them a real world question
and can they apply what they've learned in percentages to it?
As I understand it, NAEP attempts to test application and
depth of a child's knowledge.
Mr. Nelson. Yes. In fact, they're redesigning some of the
NAEP tests, the science tests. They're going to redesign those
to be more hands-on application. That will get more at the
depth, how do you apply what you've learned in the classroom to
a science problem solving situation.

kentucky example

Ms. Northup. Are you aware of, Kentucky, you're talking
about spending $1 million, $2 million, Kentucky has probably
spent $65 million in trying to be the leader--not trying to be
the leader, just trying to buy into that application, being
it's important.
The problem we have is consistency. The application
requires kids to write an answer, not check A, B, C or D. It
requires people to distinguish the level of an answer on a
consistent basis. And what we have is, you and I might read the
same student's response and judge it differently.
Mr. Nelson. Yes. However, I think the testing industry and
the testers are getting more challenges, but also more
competence in making some of those judgments that are uniform,
even though somewhat objective in writing samples, for
instance. With NAEP, as you probably well know, they have
basic, proficient and advanced achievement levels. And we just
report on proficient and above. We don't report on the basic.
So they have cut points. It's not, as you said, the
preferred cut point of 90 percent here or 80 percent there. But
it's a cut point on knowledge level.
Ms. Northup. The longer we looked at it, and actually
brought in a team of national experts, the less confidence most
of us who supported this had in the testing. It's very elusive.
It's very subjective. The cut off points are, I mean, it's
astounding to me that we can give a score of 254, when we do
sampling, when we do subjective based judgments on the scoring.
And then different people assessing different students,
different students approaching a problem a different way.
And what we found from a team of experts, is which persons
looked at which test is sort of how the score came out.
Mr. Nelson. Yes, it can't be that subjective. It's got to
be improved so it's truly comparable.
Ms. Northup. What concerns me is, then the Department of
Education comes in here and points to that State, our State. If
we're the leader, that ought to scare everybody to death,
because we have invested more money than any other State in
trying to get a high level of tests. And I'm concerned with
testimony that somehow conveys that this is a science, when
it's such an imperfect science. It's like sociology compared to
calculus.
Mr. Nelson. It's a real struggle that we're all in now, I
think, to move from sort of the more objective tests, the
multiple choice tests, to the trying to measure other skills,
be it writing skills or calculation skills. But I'm sure we're
not there yet.
Ms. Northup. And then the question is, if on top of that
we're going to test every student, I mean, I'm sure you know
the costs of these tests, these subjective tests, they're like
$4 per student in multiple choice and $26 per student when it
gets to be one of the more in-depth tests.
The question is, what kind of teaching the teacher is
responsible for, are we going to do sampling that does depth of
understanding and then do multiple choice, how many days out of
the year are we going to take for tests. How many days does
NAEP take?
Mr. Nelson. I don't know off hand how long that takes, and
with the different subject matters and different grade levels.
I don't know. But I could get back to you on that.
[The information follows:]

NAEP 8th and 12th reading, writing and math tests each take
about 50 minutes while science takes about 90 minutes. In
addition, all subjects take about 15 minutes for background
questions. Fourth grade tests take less time.
During this decade these national level NAEP tests have
been or will be taken less often than every other year and less
often still at the state level. State level NAEP does not test
12th grade.
During this decade history, geography, arts and civics each
has been or will be offered one time at the national level, but
not at the state level. Each of these tests takes about 50
minutes in addition to 15 minutes for background questions.

Ms. Northup. Let me ask you, going in a different
direction, Kentucky's education reform package bought into the
idea that every school was going to be run by teachers, parents
and a principal. And we have had great success in many of our
schools with improved testing scores, however they test.
And they are responsible for curriculum, they can override
the school board. And it's, again, pointed to in the testimony
of the Secretary of Education, twice Kentucky was pointed to as
a leader, our kids have done better. Goals 2000 and judgments
like this seem to me to go in exactly the opposite direction.
And I wondered if you would comment on that. There are a
lot of issues, especially when, you're going beyond math and
science, you're getting into healthy lifestyles, you're getting
into things that go outside of curriculum. And my concern is,
by establishing these national standards, what we do is
undermine the confidence of the public in public schools.

Goals

I'll give you an example. In Kentucky, Goals 2000 and you
probably know, all schools had to be smoke free by 1994, I
think, or 1995, no teachers, no parents, nobody could smoke. I
supported that. I've been the leader in Kentucky of getting
smoke and anti-smoking.
But Shelby County schools happen to be right in the middle
of where all tobacco is grown. The first thing they decided to
do is not take any more Federal money. In the end, they had to
back down from that. But the anger of the public school system,
the anger that Washington was going to tell that culture and
that school, ``we know better, we're big brother, we're going
to tell you.'' The damage it did to the confidence in the
public school system was immeasurable.
And I think we've seen plenty of examples of that. I could
give you some other ones. I was just wondering if you would
comment on that.
Mr. Nelson. Yes. We are just a reporting agency. We have no
authority to advise States or mandate anything. We just provide
information. We're just a small entity, the panel, bipartisan
panel, with the responsibility of reporting results. And so we
are not Goals 2000 and we are not a Goals 2000 program. We were
created in 1990 before, by the Bush White House, then sustained
through Lamar Alexander and Richard Riley's leadership, then
Congress acted in 1994 to put us into statute.
So our responsibility is just to focus in on the results.
Now, States get their children there in different ways. And
that's the excitement and energy of America, is the
laboratories of the States and the communities in those States.
Ms. Northup. But in fact, that's not what's happened. When
you talk about healthy lifestyles, and--you don't do that? Are
you only academic?
Mr. Nelson. Yes. In fact, Congress directed us toward nine
subject matter areas.
Ms. Northup. Okay.
Mr. Nelson. And those are only the measurable ones of
academic achievement, reading, math, science, geography, only
those. And they are as precisely stated in the language of the
law. And that's the only ones we report on. We don't report on
any subjective----
Ms. Northup. I'm sorry. I thought you also did the
evaluations in other areas.
Mr. Nelson. No.
Ms. Northup. I'm going to let you take over.
Mr. Wicker [assuming chair]. Let me ask one more question,
then we'll recess. In your larger publication, pages IV and V,
five areas that have seen improvement. In eight areas, national
performance has gotten worse. In ten areas, no discernible
progress.
Mr. Nelson. Yes.
Mr. Wicker. So you go all through this publication. Most of
the arrows are either sideways, no progress or down. There's a
general feeling among many Americans that we're just continuing
to throw tons of money at the problem and that things are
getting worse. This report seems to back that up.
Why shouldn't we be depressed about this report?
Mr. Nelson. That's a good question. We report it as it is,
by the data that we get. So we're nothing but the facts.
Mr. Wicker. I appreciate that.
Mr. Nelson. But simultaneously, let me say that, this is
the first time the country has done this. So maybe that's been
happening ever since we were created as a democracy. But now at
least we're knowing where we're at. And we also know our areas
for improvement.

Encouraging News

Now, yesterday's news was very encouraging. I know there is
a great debate, when you look at goal five, we'll be the first
in the world in math and science. And yesterday's results are
showing we're second to Korea in math for fourth grade.
Now, we could take hope from that that maybe this younger
cohort of youngsters moving through the system now will produce
more and better and more favorably with their international
counterparts. We're not sure. But that might be a sign of
things to come. We're hopeful, of course.
But there's more positive news in the States, it's on the
other side of the page, here. And that's what we emphasize
more, is what States are doing. And there are several States
that are far surpassing what the country is doing as a whole.
So we put our spin, if you will, we put our emphasis upon
States and what they are achieving. And having them be more the
models for what other States could learn from. So that's the
way we make this more positive.
But we don't camouflage the truth. And the taxpayer, the
parent, policy maker, should know absolutely how is the system
delivering, and these are the results that we're reporting with
the best data possible.
Mr. Wicker. Thank you.
The committee will stand in recess, subject to the call of
the Chair.
[Recess.]
Mr. Porter [resuming chair]. The subcommittee will come to
order.
We want to thank Ken Nelson for his good testimony and for
his answers to our questions. We have other questions for the
record that we would ask that you respond to, please, and thank
you for the fine job that you're doing there.
Mr. Nelson. Thank you.
[The following questions were submitted to be answered for
the record:]

[Pages 2028 - 2078--The official Committee record contains additional material here.]

Wednesday, June 11, 1997.

NATIONAL MEDIATION BOARD

WITNESSES

KENNETH B. HIPP, CHAIRMAN
STEPHEN E. CRABLE, CHIEF OF STAFF
PRISCILLA C. ZEIGLER, DIRECTOR OF ARBITRATION
JUNE D.W. KING, CHIEF FINANCIAL OFFICER

Opening Statement

Mr. Porter. Next we have the National Mediation Board.
We're pleased to welcome the chairman, Kenneth B. Hipp.
Very nice to see that you're requesting less funds than
last year's allocation, in fact, a 2.2 percent reduction. We
want to commend you for the changes you have instituted to make
the cost savings that have allowed you to submit a request for
less funds.
I know that the agency has been in the process of
reorganizing as a result of recommendations from the National
Performance Review, as well as from recommendations from the
Dunlop Commission. And I would like to think that these
recommendations have helped to make the agency more efficient.
We appreciate the work you're doing and we hope the agency
continues to look for ways to increase its efficiency while
keeping its costs down.
Would you proceed with your statement, Mr. Hipp?

Introduction of Witnesses

Mr. Hipp. Thank you, Mr. Chairman. I appreciate those
remarks.
I want to say at the outset, I'm pleased to be here this
morning, and I want to indicate that I have with me many of our
senior staff. Directly to my left is our Chief of Staff,
Stephen Crable. To my right, our Chief Financial Officer, Ms.
June King. And our Director of Arbitration Services, Priscilla
Zeigler, is at the end of the table.

Statement Summary

Before I proceed with my statement, let me also thank you
and the committee for your assistance with us in providing
funds for our reorganization last year. I appreciate the
investment you made. And as I'm going to indicate in my remarks
today, I think we're returning the first down payment on that
investment. And I'll describe how we see this unfolding in the
future.
We're going to present this morning our proposal for our
1998 budget. And we're going to not only present a request for
a reduced, I believe it's 2.4 percent, to give ourselves a
little additional credit, reduction, but we're going to talk
about some enhanced services that we're providing that are
going to get to the root of making collective bargaining better
in the transportation industry.
In my commentary this morning, I want to first familiarize
you briefly with some of the functions of our agency, and also
the issues and challenges that we're going to face this coming
year in 1998 and what we've had to deal with in fiscal year
1997.
The mediation board serves the Nation by administering the
Railway Labor Act, which is a unique law. It is a law that was
negotiated by the parties subject to the law, and that is the
unions and the carriers in the transportation industry, the
railroad and airline industry. They had to sit down years ago,
after a turbulent period of time, particularly in the railroad
industry, and reach an agreement, which they did, back in 1926,
as to how to deal with labor relations problems in the
industry.
What they came up with was a unique law. The law that we
administer really cuts across all the three major areas of
labor relations. The first area is how a representative gets
selected. We perform that function for these industries in
terms of overseeing representation elections.
The next is how you get a collective bargaining agreement.
We mediate these negotiations that lead to collective
bargaining agreements. The third is the administration of
collective bargaining agreements, once you get them. And we
assist the parties through the administration of our section
three operations, in selecting arbitrators and in progressing
cases through arbitration.
What's the goal of the Railway Labor Act and the National
Mediation Board? It's to assure that there are minimized
disruptions in these two key transportation industries. We've
done that for over 60 years. I would like, I frequently cite
the statistic, when you look at the railroad industry, for
example, it has downsized over 90 percent since this agency was
created.
During that time, unlike the turn of the century, when we
really had bloody strikes and we had tremendous shutdowns of
the railroads, that downsizing has been accomplished in a
peaceful manner. The workers remain in the top 10 percent of
compensated workers throughout the economy. And they are also
heavily organized. They are about 90 percent organized.
In addition, we have to administer the arbitration services
that I indicated earlier. This is a unique characteristic of
our agency. And that takes a significant portion of our funds,
as I'm sure you're aware, each year. We have a tremendous
number of cases that we deal with through that system, and I'm
going to describe for you later how we're attempting to cut
into the backlog of those cases.
Let me briefly indicate what our budget was for 1997. It
was $8.3 million. We're asking for $8.1 million for fiscal year
1998. We're going to absorb this reduction in our budget
despite having to absorb approximately 3 percent in statutorily
required increases in wages and benefits, which account for
over three-fourths of our budget every year.
Our budget is based on three components. First, for
mediatory and representation services, as well as for
administration of the agency, we are requesting $5.571 million
for fiscal year 1998. That compares with $5.781 million under
our current 1997 budget.
We managed to achieve this decrease by cost cutting in
travel and rent as well as the savings from the completion of
our reorganization, which required office reconfiguration,
personnel costs associated with moving staff to Washington and
paying for retirement benefits for a number of our mediators
who retired.
Second, for arbitration services, which includes three
tribunals used for the railroads and unions to resolve employee
grievances, we're requesting $2.129 million. That's an increase
of $10,000 over our fiscal year 1997 estimated expenditures.
Let me make a little departure here from my prepared
remarks, just to indicate to you how we're making these
savings. And I indicated somewhat later in my prepared remarks,
we're making savings in travel costs by bringing all of our
mediators into Washington.
We now have completed that. Our whole staff is here in
Washington. That's allowed us to have a slightly smaller
mediator corps. We cross-utilize those folks, a lot of whom
worked out of their homes before. Previously, in performing
their services, if they had a time when a mediation canceled,
for example, then they were at home and it was very difficult
to get case work to them. As it is now, we can immediately make
use of them, either in representation cases or in other
functions, including the new services that we've provided.
So we get a lot better utilization of our mediator corps
out of this. We've also had a review of all of the grade levels
for our positions. And we've been able to have a reduced grade
level for our mediators. We have in fact cut in half the number
of GS-15 positions that we're going to have for our mediator
corps.
Now, this doesn't produce immediate savings. But over time,
this will have more savings. I'm sure you're aware of the pay
protection and grade protection laws. But as people retire or
leave the agency, and as those positions are filled, we will
see some additional savings over time for that.
The final $400,000 of our budget request is for the support
of emergency boards that may be created by the President to
help resolve any major dispute that threatens interstate
commerce. This is the same amount that's been made available
over the past few years. At the end of fiscal year 1998,
usually what we've done, last year you gave us a special
exception, but we return to the Treasury the emergency board
monies that are left over, if we don't have to use the funds
for emergency boards.
This last year, we had four emergency boards. This year, so
far, we've had one rather significant emergency board which
involved the American Airlines and pilots situation. We don't
know exactly what our additional costs will be associated with
emergency boards for the remainder of the year.
During this coming year, let me indicate some of the
challenges we're going to be facing. In the airline industry,
we've recently received a mediation request from Continental
Airlines and its pilots. We have been in contact and had
significant discussions with Northwest Airlines, which has
openings on all of its contracts as to its major employee
groups. They have a lot of simultaneous negotiations going on,
covering virtually their entire work force.
TWA, which has had some financial difficulties, as you are
no doubt aware, is also in negotiations with its pilots and
U.S. Airways is also in negotiations. We have been in contact
and discussion with them.
As you are aware, we had the first Presidential emergency
board in the airline industry in over 30 years. That is, of
course, a matter of some concern as to how collective
bargaining is conducted in the airline industry.
Let me indicate to you what I consider to be a rather
significant success of the Railway Labor Act related to the
airline industry. If you go back to 1978, when you had the
Airline Deregulation Act passed, I've taken a look at the
strike days lost in the last 11 years in the airline industry.
And only 13 days were lost, leaving aside Eastern Airlines,
which was, I'm sure you're aware, a very difficult situation,
somewhat unique.
But that was in the face of no Presidential emergency board
until this American Airlines emergency board. So the Railway
Labor Act has fulfilled its function of very few strike days in
the airline industry and the railway industry, at the same
time, with relatively few Presidential emergency boards being
appointed.
On the rail side of the house, our major set of
negotiations right now involves Amtrak and the 18 unions
representing the Amtrak employees. We're conducting ongoing
negotiations with regard to Amtrak. Of course, those are quite
difficult in light of the funding problems that Amtrak faces.
We have a rather major success that we can report from last
year, and that is the finalization of the first set of
negotiations covering the Class I freight railroads in 20
years. Negotiations ended in a collectively bargained set of
agreements, instead of having to go to Congress or having a
shutdown of the railroad at the end of the pipeline.
Now, we did have three Presidential emergency boards
covering the Class I freights. But all of the agreements were
reached by negotiation instead of through self-help being
employed or Congress having to act.
While all of this has been taking place, and while we face
the challenges that I've described, we've also been acting on
the Administration's National Performance Review mandate, and
reorganizing the agency while also listening to what you
certainly have indicated to us with regard to the need to be
very efficient and to try to deal with ever-decreasing
resources on a relative basis. So we have heard you loud and
clear.
How did we go about dealing with the strictures that we
have? We started with our customers and we asked them what it
was they liked about what we did and what they didn't like.
They gave us reports through the customer service groups that
we set up. That in turn led to customer service standards. We
put out frequent reports with regard to the objective criteria
which our customers set for us in telling us what they wanted
us to do.
And I'm pleased to say that we have made a great deal of
progress in complying with the customer service standards that
we got out of our first round in the National Performance
Review.
On top of that, we had the Dunlop Commission process, which
I'm sure you're aware of, whereby the Nation's labor laws were
reviewed through the Department of Labor. Uniformly, our
customers, carriers and unions, I won't say uniformly, but
virtually unanimously, they said, we don't want the Railway
Labor Act changed.
They also said, however, that there are some ways that it
should be administered differently. Two committees were set up,
one for the rail, one for the airline side of the house. And
the customers then responded in committee reports. And we have
since responded to those committee reports last December, and
implemented virtually all of the changes recommended by the two
committee reports.
As I indicated earlier, we reorganized the agency's
personnel structure. We downsized the size of management; we've
reduced the grade structure to the extent permitted by law.
Certainly in position grade structure we've cut that. We've cut
travel costs by relocating our mediators.
We have hired a training person with over 20 years of
experience in interest based bargaining. And he is taking on
this new service that we're offering. And that service is,
we're training the parties in these industries in engaging in
other than positional bargaining. We're helping them learn how
to make mutual gains bargaining or interest based bargaining,
where instead of getting into positions early, they try to look
at each party's interests and seek out ways that they can
mutually benefit from negotiations.
We've introduced the second new service, which we hope will
greatly cut the number of cases that we have in the grievance
arbitration area, and that's grievance mediation. I checked
today with Ms. Zeigler as to what our actual pending case
backlog is in that area. We have a little over 10,000 cases
pending right now.
There's very little we can do as an agency to control that
number because the parties basically control how those cases
are brought to us and how they're progressed. A lot of those
cases settle or are withdrawn. So that figure is a difficult
figure to work with.
One figure we try to work with is how many cases have we
actually had heard and are pending decision. Because that's
something we in essence do control. We implemented as part of
our reorganization a new standard for our referees requiring
them, if they want to continue doing work for us, to get their
decisions out in writing within six months after a hearing.
The effect of that, for example, at the end of last fiscal
year, there were over 800 cases that had been heard and not
decided. Right now there are somewhere about 450 or 430 cases
heard and not decided. So that means that the referees
understand that they have to get the cases decided if they want
to continue doing work with us.
Of course, as time goes on, as you are not doubt aware,
they are greatly underpaid relative to other private industry
arbitrators. And that's one of the concerns we have, as to
whether we can retain the services of good referees over time.
I've described for you the customer service plan that we've
put into place, and I would also say that, I want to make one
other notable success, mention it before we conclude, and that
is in that area of grievance mediationthat we've been offering.
We recently, and Mr. Crable certainly was instrumental in
getting this done, mediated the resolution of 4,000 grievances,
approximately, between the UTU and the Grand Trunk Railroad. To
give you some perspective on that situation, those 4,000
grievances covered only a unit of about 30 employees.
The key there was that there was an agreement that came
about whereby the parties agreed that a number of those cases
would be resolved by virtue of one or two cases being decided
by an arbitrator, and then the rest were agreed by contract to
be resolved as a result of that particular decision.
In sum, let me say that we believe that fiscal year 1997
has proven to be one of the most fruitful years in the long
history of the NMB. The agency's reorganization is virtually
complete, and that reorganization has already resulted in
substantial savings to the public as demonstrated by our
significantly reduced budget request for fiscal year 1998.
The savings have not, however, come at the expense of
agency services. To the contrary, the NMB has instituted two
new services designed to improve the bargaining culture in the
railroad and airline industries, and to reduce the number of
publicly-funded grievance arbitrations in the rail industry. We
at the NMB remain committed to providing the best possible
service to the public under a law that had served the Nation
well for over 70 years.
That completes my statement. If you have any questions,
I'll be pleased to answer them.
[The prepared statement follows:]

[Pages 2085 - 2094--The official Committee record contains additional material here.]

Mr. Porter. Well, Mr. Hipp, you're doing a fine job there.
We're going to reward you by not asking very many questions,
because you're asking for less money, unless Mrs. Lowey has
some.

nmb vs fmcs

I have just two I'd like to ask. First, you have rail and
air. And the Federal Mediation and Conciliation Service has
everything else, is that it, basically?
Mr. Hipp. In private industry, that's right.
Mr. Porter. You have rail and air only.
Mr. Hipp. That's right.
Mr. Porter. Is there any, is it reasonable, and is there
any point in comparing what your two agencies do? In other
words, can you say we have so many matters before us in a year
and we have so many employees, and is there any comparability
between these? Do you ever look at what they do and how they
use their personnel and say, well, gee, they seem to be doing
it much better than we are or much worse? Do you ever look at
that?
Mr. Hipp. We compare programs that they offer. They've
engaged in quite a few training efforts in this area of
interest based bargaining. But we're really talking apples and
oranges here. Because what we offer is an integrated service in
these particular industries. And you will recall, I'm sure,
that our service begins with the representation case and moves
right into the negotiation of agreements.
So that combination is very different than what they're
looking at. This law, RLA, is specifically designed in essence
to prevent the kinds of swings that you see in collective
bargaining, with the strikes and other things that you see,
depending on how the business cycle is running on their side of
the house.
We, by virtue of the fact that our collective bargaining
agreements in these industries become amendable rather than
terminating, and that we have to proffer arbitration or release
the parties before they can engage in any form of self-help,
the result of that is that you have a much more stable working
relationship over time.
I'd say that, we have statutory differences. You can't
really lump the two together. If you were to try to lump the
two together, you would in essence have to repeal the Railway
Labor Act, or change how it is done, in which the parties
certainly have shown that they do not want to see happen.
So we are quite different than they are, and I think it has
worked so well. When you look at an $8 million investment and
what our transportation infrastructure is, and how we have
avoided the tumult that has existed historically in this
industry, not only at the turn of the century here but in other
countries, we are remarkably fortunate that we have this law.

gpra

Mr. Porter. Have you made a GPRA submission to OMB yet?
Mr. Hipp. I don't believe we have. We're working on that
right now.

strategic plan

Mr. Porter. You have developed a strategic plan?
Mr. Hipp. In large part, we have already reflected that in
our report to the Dunlop Commission, which I would commend to
you and we can provide to you. It is almost roughly 30, 40
pages long. And it covers all of our objectives over time. It
will be the basis whereby we give the OMB response.

american airlines

Mr. Porter. My last question is, where are we on the
American Airlines and Pilots Association case? Because that
seems to be a very, very significant and kind of unique piece
of negotiation.
Mr. Hipp. I'm very happy that you rescheduled, the hearing,
because I can now report that the pilots ratification of the
contract has occurred.
Mr. Porter. They've worked it out?
Mr. Hipp. We were able to avoid any further shutdowns or
the parties coming to Congress. And that will run, I think,
through the year 2001.
The broader question presented by American Airlines,
though, is what it means for Presidential emergency boards in
the airline industry, which is a very significant issue, since
I'm sure you're aware of the difficulties that the creation of
PEBs create in the railroad side of the house with regard to
how collective bargaining is conducted.
So one of the things that we're certainly working on is
trying to get the airline industry to deal with their
collective bargaining without having to go to this sort of end
game process with PEBs.
Mr. Porter. My understanding is that this was a concern
between two different pilots associations, one that represents
their major routes and one that represents their, I guess it's
a wholly owned subsidiary that does smaller routes.
Mr. Hipp. There were a number of issues. But one of the
major issues was the so-called regional jet issue. And that was
a question of whether or not the American Eagles, that's the
regional carrier you referred to, it's a series of four
regional carriers, actually, who are subsidiaries, wholly owned
subsidiaries of American Airlines, or AMR, actually.
The American Eagle pilots, as a regional character,
historically, have flown turbo props and the jets are flown at
the main carrier. We see an innovation in the industry taking
place now and that involves 50 to 70 seat regional jets
starting to take place. So obviously, you have the whole
question presented of who performs that work.
A very novel approach was in the end used there. You're
correct that the Air Line Pilots Association represented the
regional carriers. They're in a single carrier format. They
bargain all together, all the employees for those regionals.
And the Allied Pilots Association represented the pilots at
American Airlines.
What was worked out there, though, was a system that will
allow some upward mobility for those regional pilots, getting
preference to go up to the big airline, where of course over
time, their wages and benefits are much better. And on the
downside, in the event of contracting economy, if we run in to
a bad cycle, there will be some opportunity for the least
senior AMR, American Airlines pilots, rather, to move down to
American Eagle instead of being furloughed.
Mr. Porter. My understanding was that the Air Line Pilots
Association was very concerned that their jobs were going to
dry up and they were going to use the smaller regional aircraft
much more at, of course, a lesser cost to the airline in terms
of costs of pilots.
Mr. Hipp. It was actually the other way around. Allied
Pilots represents the main carrier.
Mr. Porter. Oh, I'm sorry.
Mr. Hipp. So they were concerned that ALPA, the Air Line
Pilots Association group, would get their flying, since
obviously they get lower wages. And that resulted in one of the
things that came out of that, and it's probably something we're
going to have to deal with at all of these major carriers,
because they all have regional affiliates, which is something
called an expanded scope clause. The scope of a collective
bargaining agreement in these industries defines who gets to do
the work under the collective bargaining agreement.
The American Airlines-Allied Pilots Association scope
clause was one page from prior contracts. It's now some 20
pages long, just to deal with the whole question of
international code sharing, all of the things that you're
seeing in the globalization of the airline industry, and these
regional jets.
So there's quite a bit of detailed negotiations. I might
hearken back to one of your earlier questions about FMCS. Our
mediators in general are experienced people who come out of
these industries. If you would take a look at a collective
bargaining agreement on the National Labor Relations Act side
of the House, in general it's going to be a short document.
Our collective bargaining agreements may look like the Los
Angeles telephone directory. They're very thick documents with
a lot of intricacy, especially in these areas of job
performance, who gets to do what work and the work rules part
of collective bargaining.
Mr. Porter. Thank you.
Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman, and thank you, Mr.
Chairman.

interest-based bargaining

I have one question, which is probably relevant to the
district which I represent, because Metro North exists in that
district. I wonder if you could discuss with us, and following
up on some of the issues which you touched on in your
presentation, the tools at your disposal to prevent strikes in
the railway industry.
Specifically, can you define the practice of interest based
bargaining and how you employ it to prevent strikes?
Mr. Hipp. The tools that we have available to prevent
strikes begin under our reorganization with grievance mediation
and training of the parties and collective bargaining,
including interest based bargaining. That's where everything
begins.
We believe if we can change the culture of bargaining in
the railroad industry, over time we will change how the end
game takes place, so that instead of having emergency boards
and going to Congress, we'll start seeing people reach
collectively bargained agreements earlier on.
How does interest based bargaining work? How is it
different than adversarial bargaining? A lot of this goes back
really to a Fisher and ury book that was written years ago,
about 15 years ago, called ``Getting to Yes.'' These are
professors at Harvard-MIT. They have a group, along with Tufts,
that studies negotiations and how to conduct negotiations.
One of the things they learned over time is that if you
start from an adversarial or positional approach at the outset,
it's very hard for you to recognize when you may in fact be
able to gain something, along with the other party, by
abandoning your position and looking at your interests.
So interest based bargaining starts with the idea, let's
don't talk about your position going in. Let's just sit down at
the outset and talk about what the interests of the parties
are. And you may start very globally. You may start with the
employer saying, well, gee, we have to be competitive, and the
union saying, we have to get a competitive wage structure.
And then from that, you can start breaking down your
interest into sub-interests and then after that, the next stage
you start looking at is, how can we further these interests in
a way that we can both agree to.
A lot of times, there can be efficiencies, I mean, an
example that comes readily to mind is, if you're a company that
contracts out a lot of your work, you may be able to say, look,
if you guys can cover this work in an efficient fashion, we can
cut down on our contracting out in a way that will save us
money and that will help us be competitive, at the same time
get you work that will keep your membership up, etc.
So it's a change in mind set. What we find is that as we
teach these courses, people, when they're sitting across the
table from each other and they're actually giving back and
forth as to what their interests are, they get a lot more
amenable to reaching agreement than when they start, ``I want X
percent increase,'' and response is ``No, I only want to give
you Y percent increase.'' It's very difficult for them to
bargain from that position into something other than an
impasse.
After we move beyond these services that we've indicated,
these new ones, and training, then we have what I think the
hallmark of the Railway Labor Act really is: the Mediation
Board's authority to make the determination as to when the
parties should be released for purposes of self-help.
We bring in these mediators who have a great deal of
experience in the industry. They gauge how the parties are
performing in collective bargaining over time. The parties
can't automatically say, oh, I'll just stonewall the other side
and wait for the contract to run out, then I'll strike, or if
I'm an employer, I'll lock out or I'll do whatever.
Instead, they know we are a player in this process. We
evaluate whether they're bargaining in good faith. If people
are not bargaining properly, then we will usually do the
opposite of what they're seeking. If they're seeking an early
release, we'll say, look, you're not bargaining properly. Until
you bargain properly, we're not giving you a release.
If they're seeking to drag out the process, they don't want
a change in the contract, for example, then we'll tend to say,
look, get busy, bargain. If you don't bargain properly, we're
going to give you an early release. So we evaluate how the
parties are bargaining. We determine whether or not we have the
ability, through our mediatory services, and that's a statutory
standard, to take people out of impasses and into agreement.
So we apply the statutory standard. But that statutory
standard is dramatically different from the National Labor
Relations Act, FMCS side of the house. So that's the primary
tool that we have at the end in preventing strikes. Of course,
then, you have our cooling off period after a rejection of
arbitration is done. We try to get people to arbitrate if they
can't reach agreement. Sometimes we're successful. Sometimes we
aren't. So we have another tool there.
If they go into the countdown period, the cooling off
period for 30 days, then a Presidential emergency board may be
recommended. That's another way of preventing strikes and
reaching, getting the parties to reach agreement. And then as
you're aware, after the Presidential emergency board's report,
there's another 30 day cooling off period and finally, outside
the Railway Labor Act, Congress may get involved, as they have
sometimes in the railway industry.
And that leaves aside, and I don't want to give you a long-
winded response, but the whole problem of commuter rails, in
which we have an additional provision under Section 9A as to
two emergency boards that may function over time to deal with
preventing strikes in the sensitive commuter rail area.
Mrs. Lowey. Thank you.
Thank you, Mr. Chairman.
Mr. Porter. Thank you, Mrs. Lowey.
Mr. Hipp, thank you for the fine job you are doing and for
your good testimony.
Mr. Hipp. Thank you, Mr. Chairman.
[The following questions were submitted to be answered for
the record:]

[Pages 2100 - 2159--The official Committee record contains additional material here.]

Wednesday, June 11, 1997.

ARMED FORCES RETIREMENT HOME BOARD

WITNESSES

DR. DENNIS W. JAHNIGEN, M.D., CHAIRMAN
MAJ. GEN. DON HILBERT, DIRECTOR, U.S. SOLDIERS' AND AIRMEN'S HOME
MICHAEL FOX, DIRECTOR, U.S. NAVAL HOME
Mr. Porter. Finally today, we will hear from the Armed
Forces Retirement Home.
Dr. Jahnigen, we're happy to welcome you. I want to
apologize to you for having to postpone the hearing earlier. We
understand that you made the trip previously to Washington, and
we also understand that you've had some very serious health
problems, from which you're now fully recovered. We're
delighted to have you back.
We want to thank you very much for the fine job that you
are doing there at the Armed Services Retirement Home. Why
don't you proceed with your statement.
Dr. Jahnigen. Thank you.

Introduction Of Witnesses

Mr. Chairman, honorable members, I'm pleased to appear
before you today to testify on behalf of the Armed Forces
Retirement Home.
You have my prepared statement, which is in detail, which I
would request be submitted into the record. And at the end of
my opening comments, I'll be happy to take questions as you see
fit.
I'm accompanied by the directors of our two facilities,
whom you know. On my right is Major General Don Hilbert, United
States Army, Retired, who is the director of the United States
Soldiers' and Airmen's Home here in Washington, D.C. On my left
is Mr. Michael Fox, who's the Director of the United States
Naval Home in Gulfport, Mississippi.

Opening Statement

I come before you today as my last time as the Chairman of
the Armed Forces Retirement Home Board. Expanding commitments
dictate that I step down as Chair of this important
organization. Mr. David Lacy, who's currently the Vice Chairman
of the Board, will testify at next year's hearing.
In my final visit before you, I urgently and earnestly ask
that you act favorably on our first major capital funds request
in five years. The Armed Forces Retirement Home is set on a
path of downsizing due to the decreasing trust fund which
supports us. We're also, over the next three fiscal years,
incrementally increasing the monthly fees that our residents
pay.
In order to preserve the quality of life for that smaller
population, to condense our facilities into more efficiently
operating structures, which will require a smaller staff, and
to retain that target population, certain improvements in
living conditions are essential. We need to provide better
accommodations in existing gang latrines, which are currently
at the ends of our Sheridan Dormitory floors for our steadily
aging population. We need to provide dedicated long term care
beds at the U.S. Naval Home in Gulfport, Mississippi for
residents who are aging in place and are gradually requiring
more and more care, to the point of needing 24 hour nursing
care.
Our operation and maintenance budget this year is at $55.4
million, and equates to a reduction from the previous year,
even considering inflation. The Homes, the local Boards and the
AFRHB have sought out efficiencies and economies of operation
by outsourcing and sharing agreements with local and other
Federal facilities.
We continue to seek additional venues of funding, such as
our newly created foundation. But the difficult truth is, our
funding stream, tied to the active duty force size, has been
steadily decreasing, and we must adjust and accommodate.
The renovation in the Sheridan Dormitory at the United
States Soldiers' and Airmen's Home and the long term care beds
at the Naval Home have been needed for several years. We
implemented a study by Coopers & Lybrand, which spent a year
and a half to help examine options and alternatives. The
deliberations of the Board have concluded that this is the best
recommended course of action, and now we must act on that need.
Again, Mr. Chairman, I ask that you allow us to respond to
your questions on our proposed budget, and that you consider
favorably our request for capital expenditures for the next two
years from our trust fund.
Thank you.
[The prepared statement follows:]

[Pages 2163 - 2190--The official Committee record contains additional material here.]

CAPITAL BUDGET REQUEST

Mr. Porter. Thank you, Dr. Jahnigen.
Can you explain again, we've had capital expenditures that
were, I believe, about $2 million in fiscal year 1996, less
than $500,000 last year, and suddenly we're jumping to $24.5
million.
What do you expect in the out years, if these are to go
ahead this year? In other words, is this kind of a one time
major blip in the capital expenditure account?
Dr. Jahnigen. Yes. If you look at the long term record of
capital expenditures, it's been significantly higher. But for
the last four or five years, it's been in the range that you
cite, from a half million to $2 million, which is really for
infrastructure maintenance, basically emergency type capital
projects. We deferred all major capital projects, while we
prepared our strategic plan. Our analysis, the Coopers &
Lybrand study, a decision of how large we should be, that
helped us to provide a substrate of a lot of our policy
decisions as far as sizing. Out of that has come a plan to
downsize both the staff and the resident population over the
next several years. Accompanying that is our one time priority
capital request, which are for these two facilities, basically.
Mr. Porter. The budget requests that we appropriate the
capital funding on a no-year basis. Our understanding from your
staff indicates that the Home expects to obligate all the
funding early in fiscal year 1998, and expects all construction to be
completed and presumably funding to be outlayed by the second quarter
of fiscal year 1999. Why do we want to provide no-year funding?
Dr. Jahnigen. The U.S. Soldiers' and Airmen's Home contract
is on a design-build process, which does speed up as opposed to
the traditional design bid which follows with the contract for
construction. The three years allows a bit of time for slippage
in that time frame, but enough time to get the project done.
For the Naval Home project, we're only requesting design
dollars. The Soldiers' and Airmen's facility has the much
larger price tag, if you will, so the greater savings occur by
doing that design/build contracting with them.

goal of balanced budget

Mr. Porter. At the staff level, the subcommittee has
discussed the balanced budget objective as part of the
strategic plan. One of the indicators which had been discussed
was reducing operating expenditures by 5 percent by the year
2004, compared with 1996. First, do you still intend to meet
that goal? And second, since the 1996 appropriation was $52.8
million, can we anticipate a request for operations in 2004 of
51.1 million in comparable dollars, or 5 percent less than the
1996 appropriation? Is that your intention?
Dr. Jahnigen. Our hope and goal is to achieve a balanced
budget. We are working on several additional revenue sources.
We're increasing the resident fee structure, which is going to
help. We've established a foundation that took about two years
to get up and running. It is just now coming to life, and we're
going to anticipate some revenues from that. This committee and
the Senate authorized the increase of the active duty pay
withhold, which would also be a revenue enhancement.
Our goal of a balanced budget is still there, but to
achieve it, we're going to have to generate some additional
revenues, along with our becoming more efficient, outsourcing
and downsizing our staff.
The other part of your question relates to perhaps a lack
of clarity in how we phrased our goal under the strategic plan.
Our goal is a 5 percent reduction in constant dollars, for the
operating budget as opposed to current year dollars.

government performance and results act

Mr. Porter. What about GPRA? Where are you? You're subject
to that, I imagine?
Dr. Jahnigen. Yes.
Mr. Porter. Where are you in the process of compliance?
Dr. Jahnigen. The senior leadership of both facilities and
our Strategic Planning Committee have been meeting over about
the last eight or nine months to formulate the response to
GPRA. We have a draft plan which is now in the hands of OMB.
We're working out the linkage of that with performance
standards. We're looking at the budget as it conforms to this
plan.
Some of the capital projects that are before your committee
today actually relate highly to a major aspect of one of those
objectives, improving the residents' perceived quality of life.
One of the measures we use is a survey of residents that we did
for the first time--a 100 percent survey that the Air Force
scored--of attitudes and perceptions of leadership and
facilities. We have specific numeric targets that relate to
that survey, relative to the residents' perception of
facilities.
Our Strategic Planning document is in a draft state, and
we'll be happy to provide either the draft to you or the final
document, as it gets a little further along.
Mr. Porter. The staff has many other difficult questions
for you to answer in the record, if you will.
I want to say that I'm very sorry to hear that you're
leaving. You've done an excellent job there at the Armed
Services Retirement home and therefore, for our country as
well. We are going to miss you and wish you all the best.
We understand that you've recently assumed the presidency
of the American Geriatric Society, and that's going to occupy a
great deal of your time, and we wish you well in that endeavor
as well.
Dr. Jahnigen. Thank you very much.
Mr. Porter. Thank you for coming today as well.
The subcommittee will stand in recess until the call of the
Chair.
[The following questions were submitted to be answered for
the record:]

[Pages 2193 - 2223--The official Committee record contains additional material here.]

W I T N E S S E S

----------
Page
Baker, Richard................................................... 1773
Barnes, C.R...................................................... 1839
Bell, Linda...................................................... 1245
Bower, G.L....................................................... 1
Briggs, E.D...................................................... 1041
Bristo, Marca.................................................... 1041
Callahan, J.J.................................................... 1289
Carlson, R.W..................................................... 539
Crable, S.E...................................................... 2079
Cunninghame, Donna............................................... 1545
Darden, Harding.................................................. 655
Dickman, Martin.................................................. 1
Dyer, J.R........................................................ 1289
Endres, Tom...................................................... 1545
Feinstein, Fred.................................................. 655
Fox, Michael..................................................... 2161
Frankel, D.B..................................................... 1245
Gainer, William.................................................. 1693
Gould, W.B., IV.................................................. 655
Hentges, Harriet................................................. 353
Hilbert, Maj. Gen. Don........................................... 2161
Hipp, K.B........................................................ 2079
Jahnigen, Dr. D.W................................................ 2161
Jordan, M.L...................................................... 1773
Kever, Jerome.................................................... 1
King, J.D.W...................................................... 2079
Klassen, Robert.................................................. 1245
Kowalczyk, Gary.................................................. 1545
Leonard, Fran.................................................... 1839
LeRoy, L.B....................................................... 1125
Liebman, W.B..................................................... 1839
London, Diana.................................................... 1545
Lucci, David..................................................... 1
Nelson, C.E...................................................... 353
Nelson, Ken...................................................... 2003
Newhouse, J.P.................................................... 1199
Simon, J.H....................................................... 989
Solomon, R.H..................................................... 353
Sopper, D.W...................................................... 1289
Stewart, William................................................. 655
Weisberg, S.E.................................................... 1693
Wells, J.C....................................................... 1839
Wilensky, G.R.................................................... 1125
Williams, David.................................................. 1289
Wofford, Harris.................................................. 1545
Young, P.R....................................................... 989
Zeigler, P.C..................................................... 2079

I N D E X

----------

Railroad Retirement Board

Page
Agency:
Accomplishment, Recent....................................... 16
Accountability and Cooperation, Promoting.................... 170
Administrative Efficiency.................................... 10
Alliances and Competition, Utilizing......................... 175
Archiving.................................................... 241
Backlogs..................................................... 249
Organizational Structure, Transforming....................... 165
Vehicles..................................................... 184
Audit:
Compliance Unit and.......................................... 32
Financial Statements................................29, 70, 74, 162
Office of.................................................... 63
Benefits:
Automation Processing........................................ 249
Drug Addiction and Alcohol Abuse Impairments................. 221
RRB and SSA Comparison of.................................... 221
Incarcerated Felons.......................................... 221
Lump Sum:
1937 Act................................................. 223
Deferred................................................. 223
Residual Payment......................................... 223
Nancy Johnson Cases.......................................... 224
Non-Resident Aliens.......................................... 221
60/30 Age and Service Cases.................................. 222
Widows, OBRA................................................. 223
Biographies:
Glen L. Bower................................................ 59
Martin J. Dickman............................................ 67
Jerome F. Kever.............................................. 61
V. M. Speakman, Jr........................................... 60
Board:
Office Expenses.............................................. 183
Organization................................................. 105
Three Member Board, Problems with...........................89, 114
Budget:
Appropriations Request, FY 1998.............................. 16
Inspector General, Office of................................80, 110
Labor Member, Office of................................88, 111, 122
OIG Operating................................................ 104
Claims Processing...........................................23, 35, 155
Contracts:
Medical Consultation......................................... 31
Medical Exam Scheduling...................................... 31
Recompeting30................................................
Correspondence, Priority (Centralization).......................18, 136
Cost Accountability.............................................. 33
Customer Service:
Improvements................................................. 10
Improving Through Enhanced Technology........................ 171
Plan........................................................19, 136
Debt Collection.................................................. 24
Direct Deposit/Vendor Express.................................... 22
Electronic Fund Transfer......................................... 150
Evaluation and Investment Activity............................... 177
Federal Agencies:
Department of Treasury.....................................202, 241
Interaction with............................................96, 119
Interagency Coordination..................................... 202
Internal Revenue Service..................................... 203
IRS-Safeguarding of Tax Return Information................... 204
Meeting, High Level with Agency Officials.................... 27
Social Security Administration............................... 204
Field Service:
Function...................................................131, 248
Headquarters versus.........................................94, 119
Restructuring................................................ 21
Technology................................................... 161
Fraud Control.................................................... 25
Future of Changes to System...................................... 248
Goals:
Claims Processing............................................ 180
Correspondence............................................... 180
Electronic Fund Transfer..................................... 181
Ongoing Performance.......................................... 182
Government Performance and Results Act:
Annual Performance Plans..................................... 191
Goals........................................................ 189
Implementation of............................................ 68
Pilot Phase.................................................. 192
Management Changes Due to.................................... 195
Involvement of Other In Planning............................. 192
Special Management Improvement Plan, with.................... 68
Improvements:
Automation................................................... 35
Management, Recent........................................... 134
Regulatory................................................... 41
Taxation..................................................... 36
Information Technology:
Automated Procedure Manuals.................................. 37
Imaging System............................................... 36
Mainframe Computer, New...................................... 37
Plan......................................................... 185
Strategic Information Resources Management Plan.............. 250
Systems...................................................... 26
Year 2000 Date Standard Compliance........................... 145
Initiatives:
Automation................................................... 74
Completed/Ongoing............................................ 27
Interagency.................................................. 142
Outscoring................................................... 149
Inspector General:
Actuarial Assumptions, Review of............................. 159
Administrative Costs......................................... 73
Administrative Support of Office............................. 179
Budget....................................................... 218
Deputation, Blanket.......................................... 104
Funds Recovered by Office of................................. 131
Investigations:
By Office of Inspector General........................... 158
Office of................................................ 65
Memorandum of Understanding with............................. 152
Office of.................................................... 218
Reinvention Proposals........................................ 151
Responsibilities............................................. 208
Staffing..................................................... 158
Statistics................................................... 104
Investment:
Activities................................................... 103
Earnings and................................................. 40
RRB Authority Should Be Expanded............................90, 115
Justification of Budget Estimates:
Office of Inspector General.................................. 335
Railroad Retirement Board.................................... 252
Labor Member:
Information Conference Program............................... 125
Statement.................................................... 73
Views of..................................................... 241
Legislative Proposals...........................................42, 187
Social Security Number Project............................... 27
Management Control, Streamlining................................. 168
Medicare:
Carrier Contract.......................................71, 213, 242
Carrier Operations........................................... 210
Claims Processing............................................ 217
Contract Unit Cost........................................... 157
Part B Contract.............................................. 31
Reimbursement................................................ 209
Transfer of Jurisdiction for Part B to HCFA.................77, 108
Transaction Systems........................................146, 239
Occupational Disability:
General...................................................... 222
Background of Issue.......................................... 244
Mr. Bower's Remarks to Issue................................. 246
Opening Statement................................................ 2
Outleasing, First Floor.......................................... 197
Outsourcing:
Information Systems.......................................... 220
Potential for Significant Savings...........................91, 116
Reviews...................................................... 28
Personnel:
Buyouts and Reductions in Force.............................. 140
Leadership, Exerting Quality................................. 165
Position, Chief Financial Officer............................ 133
Reduction in High Graded Positions........................... 180
Staffing Levels, Previous.................................... 141
Railroad Retirement Act, Simplification of......................93, 118
Railroad Retirement Benefit Information, New Database............ 35
Railroad Retirement Board, Background............................ 15
RRB Hearings, ALJ's Should Conduct..............................99, 119
RRB Help-Line...................................................21, 139
RRB Home Page...................................................21, 140
Real Property Management...................................30, 140, 183
Regulations:
Finalizing, Important Outstanding...........................93, 116
Pending...................................................... 147
Proposed..................................................... 243
Review of.................................................... 14
Reinvention Task Force.....................................20, 138, 165
Remarks of:
Glen L. Bower, Chairman...................................... 2
Inspector General............................................ 62
Reorganization:
Agency...................................................6, 16, 134
Office of Administration....................................18, 136
Downsizing, Additional Consolidation........................94, 119
Reports, External, Reexamine Need for..........................100, 121
Restructuring:
Field Service................................................ 138
Office of Programs........................................... 17
Special Management Improvement Plan.............................. 6, 23
Management Performance Agreement................................. 162
Streamlining Efforts............................................. 28
Suggestions for the Future:
Glen L. Bower, Chairman...................................... 76
Martin J. Dickman, OIG, Comments............................. 235
V.M. Speakman, Labor Member, Comments........................ 107
Tax Acounting.................................................... 25
Tax Notices, Elimination of...................................... 34
Testimony of:
Glen L. Bower, Chairman...................................... 15
Inspector General............................................ 63
Travel:
Inspector General, Office of................................. 160
Review of.................................................... 103
Trust Funds:
Integrity of................................................. 26
Treasury and IRS Support Needed for.......................... 27
Status of.................................................... 11
Financial Status of.......................................... 38
Railroad Retirement.......................................... 38
Railroad Unemployment Insurance.............................. 39
Repayments................................................... 188
Unemployment and Sickness Insurance Program, New Database........ 36
Bar Coding/Scanning UI Claims................................ 33
Experience Rating, Implementation of......................... 32
Working Balances, Normal......................................... 161
Zip Code Project................................................. 32

United States Institute of Peace

Afghanistan...............................................364, 461, 462
Africa......361, 363, 366, 392, 393, 395, 396, 399, 404, 408, 429, 430,
431, 432, 448, 449, 451, 456-458, 457, 465, 477, 482, 494, 503, 504
Agency for International Development (AID)...........402, 404, 448, 449
Albania...................................................362, 404, 425
Algeria........................................................431, 461
Angola....................................................364, 457, 462
Appendices....................................................... 516a
Appropriations Request..........................................416-419
Argentina........................................................ 465
ASEAN Regional Forum......................................459, 460, 468
Asia...................................356, 384, 408, 431, 458-460, 503
Balkans.............................................361a, 425, 430, 431
Belgrade......................................................... 354
Biographies:
Richard H. Solomon.........................................367, 522
Harriet Hentges............................................368, 521
Charles E. Nelson..........................................369, 521
Board of Directors..........................................517-520
Officers and Senior Staff...................................521-523
Board of Directors....................................439-440, 477, 513
Bosnia.....355, 356, 361a, 365, 366, 357, 361-361a, 379, 420, 424, 426,
428, 430, 447, 448, 460, 465, 466
Burundi.....................................357, 363, 429-430, 458, 466
Cambodia.............................................364, 430, 462, 466
Carry forward of unobligated funds............................... 418
Caucasus......................................................... 430
Center for Strategic and International Studies (CSIS)..........426, 472
Central Africa............................................355, 366, 429
Central Asia....................................364, 357, 384, 430, 461
China..................355, 357, 362, 408, 420, 421, 431, 458, 459, 473
Cold War.......................................................357, 358
Conference on Security and Cooperation in Europe (CSCE)...460, 465, 468
Conflict resolution.......358, 359, 361a, 364, 400, 401, 402, 403, 405,
406, 407, 409, 410, 422, 431, 432, 478, 491, 493, 505
Constraints on federal budget..................................357, 417
Croatia...................................................402, 404, 411
Cross-cultural negotiation.......432-433, 445, 446, 447, 474, 478, 479,
480, 488
Cyprus.........................................................398, 406
Dayton Peace Accords.........355, 398, 402, 424-427, 448, 466, 486, 492
Early warning and preventive diplomacy....358, 359, 360, 363, 402, 408,
434, 478
East Africa...................................................... 429
East and Southeast Asia...................................361, 362, 408
East China Sea............................................362, 458, 459
Eastern Europe............................................398, 403, 404
Education and Training Program........386-387, 389, 400, 401, 411, 437,
444-454, 456, 462, 502, 514
El Salvador...................................................... 469
Endowment........................................................ 418
Ethiopia......................................................... 465
Ethnic conflict.................................................. 363
Europe........................................................... 418
Evaluation of customer survey.................................... 438
Federal Mediation and Conciliation Service....................... 381
Fiscal Year 1998 Institute Budget Request.................353, 357, 383
Funding, additional.............................................. 381
Full-time equivalent (FTE).......................385, 388, 389, 440-441
Government Performance and Results Act (GPRA)...................383-386
Grants and fellowships.............418, 424-427, 437, 473-474, 499, 515
Grant Program..........384, 401-402, 405, 410, 424, 426, 427, 437, 456,
468-469, 475-482, 494, 514, 516
Greater Horn of Africa Initiative..............................432, 442
Great Lakes Region (Africa)...................................... 363
Greece....................................................398, 404, 406
Guatemala............................................403, 430, 461, 466
Haiti.................................356, 365, 399, 402, 420, 430, 431
Hellenic Foundation..................................404, 426, 449, 482
Human Rights...............................363, 408, 426, 427, 473, 474
India..........................................................431, 433
Indonesia........................................................ 431
Inter-American Defense College................................... 432
International Conflict Resolution Skills Training (ICREST)...361a, 365,
404, 426, 432, 448
International security environment............................... 357
Iran.................................................399, 430, 431, 461
Iraq.................................................399, 402, 430, 461
Israel.........................................................398, 461
Japan................................................356, 408, 458, 463
Jennings Randolph Fellowship Program.......361a, 384, 386-387, 391-399,
424, 437, 456, 483-489, 501, 513, 514, 516
Jordan.........................................................431, 461
Kashmir...............................................433-434, 462, 463
Korean Energy Development Organization (KEDO).......................362
Korean peninsula...........................355, 362, 407, 429, 458, 459
Korean situation.................355, 356, 379, 408, 429, 453, 458, 488
Latin America........................................398, 404, 432, 461
Lebanon...................................................364, 403, 462
Liberia.......................................................... 399
Library program.......................361a, 418, 426, 437, 490-494, 507
Life cycle of a conflict.......................................435, 436
Malawi.........................................................466, 468
Management and administration..............................437, 509-516
Management review..............................................383, 384
Managing Chaos conference........................................ 502
Matsunaga Medal of Peace......................................... 418
Matsunaga Scholars............................................... 418
Middle East...............................................398, 411, 477
NFATC..........................................................488, 449
National Defense University...............................494, 503, 507
National Peace Essay Contest..........365, 384, 387, 389-390, 406, 433,
453-454, 503, 513, 515, 516
National Performance Review....................................416, 438
Nigeria.......................................................... 405
Non-appropriated sources of revenue.............................. 389
Non-governmental organizations (NGO)......379, 400, 402, 404, 420, 426,
427, 431, 432, 434, 445, 446, 447, 448, 449, 450, 452, 457, 460,
474, 479, 480, 508
North American Treaty Organization (NATO)............364, 460, 480, 487
North Korea............355, 362, 399, 407, 429, 453, 456, 458, 462, 463
Object classification.....................444, 455, 464, 470, 475, 510a
Obligations and commitments......389-390, 437, 476, 483, 490, 495, 500,
509, 511-516
Office of Communications...............426, 437, 492, 494, 500-508, 514
Opening statement of Richard H. Solomon.........................357-366
Operating budgets.....................437, 476, 483, 490, 495, 500, 509
Organization and staffing......................................439, 440
Organization chart............................................... 442
Organization of African Unity (OAU)............................468, 482
Organization of American States (OAS)............................ 468
Organization on Security and Cooperation in Europe (OSCE)......407, 424
Pakistan.......................................................431, 433
Palestine......................................................431, 461
Peace Watch....................................................438, 503
Personnel summary................................................ 441
Political Islam.................................431, 471, 473, 486, 488
Post-Cold War challenges....357, 398, 399, 416, 420-421, 422, 423, 435,
487
Practitioner training............................................ 360
Preventative diplomacy.........................................421, 447
Publications program.............................399, 437, 495-499, 514
Publications...................................................401, 419
Radio Free Europe..............................................354, 407
Relevance of USIP Programs.....................................354, 359
Religion, Ethics, and Human Rights............408, 427 437,470-474, 515
Research and Studies Program.....................437, 440, 455-463, 514
Romania.......................................................... 404
Rule of law..................361, 363, 408-409, 402, 424, 430, 437, 514
Russia................................356, 357, 364, 398, 403, 420, 460
Rwanda...........................363, 420, 425, 430, 458, 465, 466, 467
Saudi Arabia..................................................... 461
Serbia..........................361a, 402, 404, 407, 411, 420, 457, 462
Somalia...............................364, 366, 399, 402, 403, 405, 408
South Africa...................................................430, 465
South Asia......................................................462-463
South China Sea.................................................. 362
South Korea....................................................362, 407
Sri Lanka........................................................ 399
Staffing Levels.................................................. 440
Summer institutes..........................387, 410, 433, 450, 451, 513
Sudan.....................................................405, 434, 457
Syria..........................................................430, 461
Taiwan....................................................431, 458, 459
Track II diplomacy.....356, 362, 421, 423, 433, 459, 462-463, 478, 479,
482
Training professionals in conflict management skills.....364, 416, 422,
423, 426, 431, 434, 445, 446, 479, 482
Transitional justice..............361, 363, 403, 405, 424, 465-466, 479
Turkey.....................................398, 404, 406, 430, 431, 461
Ukraine........................................................364, 403
United Nations...399, 401, 405, 420, 425, 457, 466, 467, 472, 474, 478,
482, 506, 507
United States Information Agency (USIA)........................449, 503
United States Institute of Peace Act.......................418, 524-538
United States Institute of Peace, New Initiatives................ 364
United States Institute of Peace, Programs.....................361, 516
United States Peacekeeping Institute (PKI).....365, 432, 435, 447, 448,
Virtual Diplomacy Conference...............354, 359, 403, 494, 506, 507
Voice of America.....................................403, 481, 502, 503
War crimes....................................................... 466
Witnesses for March 19, 1997 hearing............................367-369
Written statement of Richard H. Solomon.......................... 357
Yugoslavia.......................354, 357, 363, 397, 404, 405, 425, 466
Zaire...........................................363, 399, 405, 408, 429

Corporation for Public Broadcasting

Analysis of public stations' financial data 1995, 1992 and 1986.. 545
Ancillary income...............................................576, 608
Appropriation Request for fiscal year 2000....................... 610
Common Sense for the Future...................................... 562
CPB's funding request............................................ 558
Changes over five years.......................................... 541
Employment in public broadcasting................................ 578
Federal funding sources.......................................... 583
Full time employees for CPB, PBS, NPR and stations............... 579
Federal funding as a percent of industry income.................. 578
Federal funds:
Federal funding sources...................................... 583
Federal funds as a percent of industry income................ 578
Funding in light of the federal budget deficit............... 553
Inventory of federal funds................................... 585
Need for additional federal funds, the................544, 560, 608
Total federal revenues....................................... 601
Funding in light of the Federal budget deficit................... 553
Grants:
One base grant per market.................................... 542
Radio grant standards........................................ 606
Station overlap.............................................. 600
Inventory of federal funds, 1995................................. 585
Last year's reauthorization efforts............................555, 557
Minority and Multicultural Programming and Training.............. 602
Minority and independent producers............................... 558
Need for additional federal funds, the....................544, 560, 608
New fund raising opportunities................................... 575
Next Generation program, the..................................... 559
Noncommercial versus commercial programming...................... 556
One base grant per market......................................542, 606
Policies to encourage efficiencies and new revenue............... 543
Radio grant standards............................................ 606
Reauthorization.................................................. 552
Reforms:
Ancillary income...........................................576, 608
Common Sense for the Future.................................. 562
Last year's reauthorization efforts........................555, 557
New fund raising opportunities............................... 575
Policies to encourage efficiencies and new revenue........... 543
Statement of Richard W. Carlson.................................. 539
Station overlap.................................................. 600
The Government Performance and Results Act....................... 601
Total federal revenues........................................... 601

National Labor Relations Board

Accountability.................................................907, 909
Administrative Law Judges:
Bench Decisions............................................670, 677
Costs of Trials.............................................. 895
Number.....................................................672, 933
Procedures............................................670, 930, 953
Production.................................................660, 786
Settlement Judges............................................ 670
Settlements, Increase in...................................671, 932
Time Targets...............................................671, 932
Advisory and Assistance Services................................. 983
Advisory Panels...........................................667, 953, 962
Appeals, Office of............................................... 959
Appeals, U.S. Court............................................895, 907
Appropriation..................................................973, 974
Appropriations Language.......................................... 967
Attorneys Assigned to Board Members.............................. 712
Authorizing Language............................................. 967
Automated Data Processing.................................951, 962, 965
Bargaining Relationships......................................... 688
Beck Dues......................................................694, 792
Bench Decisions...........................................670, 677, 931
Bias, Alleged.............................................718, 869, 905
Board Decisions:
Dissemination of............................................. 763
Issued.....................................................661, 674
Board Members:
Furnishing of Offices......................................713, 920
Staff Attorneys.............................................. 712
Term Expiration.............................................. 982
Travel....................................................... 813
Vacancies.................................................... 911
Bodenstein Case................................................715, 790
Budget Authority...............................................968, 971
Cars Leased...............................................715, 717, 811
Case Activity Tracking System.............................741, 924, 951
Case Backlogs..............................658, 699, 705, 849, 927, 936
Case Coordinator, Designation of................................. 766
Case Intake by Field Office...................................... 764
Case Inventory of Board........................................669, 935
Case Load Trends..........................................712, 738, 936
Case Processing Time Standards................................... 853
Case Processing Times.....................................851, 945, 981
Casehandling Process............................................. 726
Cases Brought Against Employers.................................. 744
Cases Brought Against Unions..................................... 744
Cases, Types of NLRB............................................. 985
Caterpillar Case...............................................720, 802
Chairman:
Role of...................................................... 829
Three-Year Report............................................ 663
Changes, Summary of.............................................. 969
Class Action Remedies............................................ 717
Commentary, Dissemination of..................................... 785
Commenting to Media, Policy on.................................706, 768
Compliance................................................946, 956, 963
Computerization, Investments in.................................. 763
Computers, Increased Use of...................................... 761
Congressional Directives......................................... 976
Contempt Actions................................................. 673
Cost Saving Initiatives..........658, 699, 747, 750, 915, 946, 961, 964
Costs to Process Cases....................................865, 894, 895
Credibility in Court............................................. 656
Declining Use of NLRB..........................................828, 906
Deputy General Counsels........................................708, 789
Dismissals, Case...............................................743, 894
Disposition Patterns.......................................978, 979,980
Double Breasting................................................. 845
Elections, Stipulated............................................ 911
Elliott Turbomachinery Co. Case.................................. 862
Employee Participation........................................... 691
Employee Speech.................................................. 686
Enforcement Orders............................................... 988
Enforcement Rate...............................................666, 676
Extravagance, Allegations of..................................... 710
Federal Contractors, Proposed Regulations on..............711, 867, 922
Field Case Backlog.........................658, 699, 705, 849, 927, 936
Field Offices, Closing of........................................ 764
Full-Time Equivalents (FTE)...........703, 746, 944, 961, 964, 972, 975
Functions........................................................ 942
Fund Raising Events............................................720, 802
Funding Request, FY 1998..................................656, 701, 919
Funding Reductions, Impact....................................... 737
Furnishing of Political Appointees' Offices....................713, 920
General Counsel:
Directing Regional Director to Change Decision............... 725
Reappointment of............................................. 721
Responsibilities of.......................................... 698
Reversing Regional Determination............................. 726
Term Expiration.............................................. 982
Travel....................................................... 813
Government Performance and Results Act (GPRA)........702, 730, 921, 960
Hammer Awards.................................................... 937
Impact Analysis.................................................. 954
Information Officer Program...................................... 944
Information Management....................................951, 962, 965
Injunctions...............................................672, 678, 911
Jurisdiction...................................................684, 793
Jurisdictional Thresholds......................................796, 847
Justification of Estimates....................................... 939
Kalin Construction Case.......................................... 862
Labor Officials, Association with................................ 721
Litigation, Efforts to Reduce..................................687, 930
Mail Ballots..............................................673, 683, 863
Management Officials, Association with........................... 721
Management Training Corporation................................684, 708
Manganaro Case.................................................845, 865
Media, Policy on Commenting to.................................706, 768
Negotiate, Failure to............................................ 690
Opening Statements:
Fred Feinstein.............................................657, 698
William B. Gould IV........................................655, 660
Organization...................................................942, 966
Oversight........................................................ 909
Performance Goals..............................................735, 853
Performance Measurement.......................................... 962
Permanent Replacements.........................................694, 856
Political Appointees:
Furnishings of.............................................713, 920
Travel....................................................... 813
Political Fund Raising.........................................720, 802
Recognition Disputes............................................. 687
Reduction in Litigation, Promotion of..........................687, 930
Regional Case Coordinator, Designation of........................ 766
Regional Determination, Reversing................................ 726
Regional Director, Directing to Change Decision.................. 725
Relationship with Unions and Employers........................... 719
Remedies.............................................696, 717, 956, 988
Representation Case Procedures............................681, 957, 986
Sacramento Bee Case.............................................. 845
Salting...................................................728, 865, 893
Secondary Conduct, Illegal....................................... 695
Section 10(j) Injunctions.................................672, 678, 911
Service Improvement Initiatives................................659, 700
Settlement Judges..............................................670, 930
Settlement Rates..........................................855, 896, 945
Single Location Bargaining Units......673, 722, 724, 727, 869, 919, 923
Speeches, Dissemination of....................................... 785
Speed Teams..........................................661, 669, 933, 954
Spentonbush Case................................................. 717
Staff, Field..................................................... 759
Staff, Headquarters.............................................. 757
Stipulated Elections............................................. 911
Streamlining...................................................950, 962
Striker Replacement Ban........................................694, 856
Super Panels.........................................662, 668, 934, 962
Supreme Court Review............................................. 666
Time Targets, Administrative Law Judge........................... 671
Training......................................................... 927
Travel Funds, Use of......................................813, 936, 948
Triage Approach to Representation Appeals........................ 954
Trial Success Rate............................................... 907
UAW, Meeting with Caterpillar and................................ 802
Unfair Labor Practices, Procedures for........................... 987
Union Access Cases............................................... 685
Union Conduct, Unlawful.......................................... 695
Union Political Activity, Dues Paying for........................ 790
Unions' Declining Use of NLRB.................................... 828
Voluntary Resolution of Disputes, Promotion of................... 687
Withdrawals, Case................................................ 743
Worker Rights.................................................... 846
Workload and Output Data......................................... 977
Yale University Case............................................. 709

National Commission on Libraries and Information Science

Achievements...................................................990, 999
Biography: Jean Hurley Simon, Chairperson........................ 998
Government Printing Office....................................... 1003
Internet and Libraries........................................994, 1004
Institute of Museum and Library Services......................993, 1002
Justification for Federal Funding.............................999, 1008
Justification of Budget Estimates, Fiscal Year 1998.............. 1025
Libraries, Federal Support for................................... 1001
Library Services and Technology Act.............................. 1001
Opening Statement: Jean Hurley Simon, Chairperson..............990, 993
Partnerships with Other Organizations............................ 996
Program Areas of the Commission................................991, 994
Public Information............................................... 1005
Statistics, Library.............................................. 1015

National Council on Disability

Activities:
Current...................................................... 1048
Planned...................................................... 1118
Biographies:
Ms. Marca Bristo............................................. 1051
Ethel D. Briggs.............................................. 1053
Budget Request for FY 1998....................................... 1049
Cabinet Meeting.................................................. 1081
Civil Rights..................................................... 1042
Closing Statement................................................ 1044
Education Research............................................... 1081
Housing.......................................................... 1042
Impacting Policy Making Implementation........................... 1074
Individuals with Disabilities Education Act...................... 1077
International.................................................... 1043
Introduction of Witnesses........................................ 1041
Letter to Representative Anne M. Northup......................... 1063
Major Accomplishments............................................ 1047
Major Activities Summary......................................... 1112
Mission.......................................................... 1056
Narrative Justification.......................................... 1101
National Summit on Disability Findings........................... 1043
NCD Priorities................................................... 1074
NCD Publications................................................. 1054
Nonappropriated Revenues......................................... 1080
Opening Statement................................................ 1041
Other Services................................................... 1050
Public Awareness Campaign........................................ 1079
Public Policy.................................................... 1041
Reauthorization of the Rehabilitation Act........................ 1042
Rehabilitation Act:
Separate Vocational Rehabilitation Agencies for the Blind.... 1065
Independent Living Services for Older Individuals who are
Blind...................................................... 1068
Social Security Reform........................................... 1042
Summary of Request............................................... 1109
Supplies and Materials/Equipment................................. 1050
Technology....................................................... 1078

Physician Payment Review Commission

Additional Staff................................................. 1145
Administration and Management.................................1186-1187
Advice to Congress........................................1126, 1169-71
Amounts Available for Obligation................................. 1163
Appropriations:
History Table................................................ 1164
Language..................................................... 1155
Request..................................................1126, 1135
Authorized Funding Levels........................................ 1157
Authorizing Legislation.......................................... 1156
Budget Authority by Activity..................................... 1158
Budget Justification............................................. 1165
Commission:
Accomplishments..........................................1129, 1166
Meeting and Hearing Schedule................................. 1192
Members...................................................1193-1194
Merger....................................................... 1139
Operations................................................1171-1173
Reports...................................................... 1125
Work Plan..................................1131, 1166-69, 1173-1185
Broader Market Issues.................................1183-1185
Medicaid..............................................1182-1183
Medicare Fee for Service..............................1174-1177
Medicare Managed Care.................................1177-1180
Program Wide Issues...................................1180-1182
Comparison of FY95 and FY96 Activities........................... 1144
Estimate for Fiscal Year 1996.................................... 1185
Estimated Obligations:
Consulting Services.......................................... 1195
Related Services............................................. 1196
Executive Summary of Request..................................... 1152
FY 1997 and 1998 Budget Authority by Object Classification....... 1161
Gag Rules........................................................ 1148
Importance of Beneficiary Surveys................................ 1146
Joint Work by PPRC and ProPAC.................................... 1139
LeRoy, Lauren..........................................1125, 1138, 1140
Medical Savings Accounts......................................... 1146
Medicare:
Effect of Proposed Changes................................... 1142
Restraining Growth........................................... 1141
Intermediate-Term Problem.................................... 1141
Long-Term Problem............................................ 1142
Short-Term Problem........................................... 1141
Physicians' Response to Policy Changes........................... 1148
Policy Analysis and Data Development..........................1187-1190
Provider-Sponsored Organizations................................. 1147
Research Analysis Contracts, FY 1996............................. 1191
Salaries and Expenses........................................1159, 1162
Summary of Appropriations........................................ 1197
Summary of Changes............................................... 1160
Wilensky, Gail.....................................1125-1127, 1138-1149

Prospective Payment Assessment Commission

Access and Quality............................................... 1218
Activities and Accomplishments................................... 1237
Administration and Management.................................... 1240
Amounts Available for Obligation................................. 1232
Appointment of New Commissioners................................. 1217
Appropriations Language.......................................... 1227
Appropriations History Table..................................... 1233
Appropriation:
Fiscal Year 1998 Request.................................1208, 1224
History Table................................................ 1233
Justification of Estimates for Committee on Appropriations... 1222
Language..................................................... 1227
Authorizing Legislation.......................................... 1228
Budget Authority by Object Class................................. 1230
Commission Members............................................... 1240
Commission Responsibilities...................................... 1201
Commission:
Activities and Accomplishments............................... 1237
Current Work................................................. 1201
Members...................................................... 1240
Merger of.................................................... 1211
Responsibilities............................................. 1240
Computer and Analytic Support.................................... 1209
Conclusion....................................................... 1210
Congressional Directives in House and Senate Appropriations
Committee Reports.............................................. 1235
Constant Changing................................................ 1221
Current Work..................................................... 1201
Data Development, Analysis, and Research......................... 1240
Disproportionate Share Hospitals................................. 1205
Estimates for Related Services................................... 1244
Estimates for Consulting Services................................ 1243
Executive Summary................................................ 1224
Fiscal Year 1998 Appropriation Request.......................1208, 1224
Furnishings and Equipment........................................ 1219
General Statement................................................ 1236
Hospitals and Competition........................................ 1212
Hospitals:
Competition.................................................. 1212
Disproportionate Share....................................... 1205
Payments to PPS.............................................. 1202
Payments to Teaching......................................... 1204
Teaching..................................................... 1214
Impact of Budget Reductions...................................... 1217
Introduction of Witnesses........................................ 1199
Justification of Appropriation Estimates for Committee on
Appropriations................................................. 1222
Activities and Accomplishments............................... 1237
Administration and Management................................ 1240
Amounts Available for Obligation............................. 1232
Appropriations History Table................................. 1233
Appropriations Language...................................... 1227
Authorizing Legislation...................................... 1228
Budget Authority by Object Class............................. 1230
Commission Members........................................... 1240
Congressional Directives in House and Senate Appropriations
Committee Reports.......................................... 1235
Data Development, Analysis, and Research..................... 1240
Estimates for Consulting Services............................ 1243
Estimates for Related Services............................... 1244
Executive Summary............................................ 1224
Fiscal Year 1998 Appropriation Request....................... 1224
General Statement............................................ 1236
Justification of Budget Proposal............................. 1239
Narrative Justification...................................... 1236
Organizational Chart......................................... 1226
Personnel Summary............................................ 1231
Staffing History............................................. 1234
Summary of Changes........................................... 1229
Justification of Budget Proposal................................. 1239
Medicare Capitation Savings...................................... 1215
Medicare Trust Fund.............................................. 1211
Medicare Payments to PPS Hospitals............................... 1202
Medicare:
Access and Quality........................................... 1218
Capitation Savings........................................... 1215
Disproportionate Share Hospitals............................. 1205
Hospitals and Competition.................................... 1212
Payments to PPS Hospitals.................................... 1202
Payments to Teaching Hospitals............................... 1204
Post-Acute Care Providers.................................... 1206
PPS Operating Update......................................... 1203
Teaching Hospitals........................................... 1214
Trends in Spending........................................... 1202
Trust Fund................................................... 1211
Trust Fund Solvency.......................................... 1218
Urban Providers.............................................. 1219
Merger of Commissions............................................ 1211
Narrative Justification.......................................... 1236
Opening Statement................................................ 1199
Organizational Chart............................................. 1226
Payments to Teaching Hospitals................................... 1204
Personnel Summary................................................ 1231
Post-Acute Care Providers........................................ 1206
PPS Operating Update............................................. 1203
Staffing.................................................1208, 1218
Staffing History............................................. 1234
Staff Levels................................................. 1220
Staffing:
History...................................................... 1234
Levels....................................................... 1220
Organizational Chart......................................... 1226
Personnel Summary............................................ 1231
Staffing.................................................1208, 1218
Summary of Changes............................................... 1229
Teaching Hospitals............................................... 1214
Trends in Medicare Spending...................................... 1202
Trust Fund Solvency.............................................. 1218
Urban Providers.................................................. 1219

Institute of Museum and Library Services

Accountability................................................... 1257
ADA Renovation................................................... 1263
Administration...............................................1259, 1263
Appropriation Transfer.......................................1254, 1256
Availability of Funds to States.................................. 1264
Block Grants..................................................... 1270
Condition of Libraries........................................... 1269
Construction Grants.............................................. 1264
Cost Savings..................................................... 1272
Disabilities, People with........................................ 1267
Federal Role..................................................... 1272
Frankel, Diane B., Director:
Opening Statement............................................ 1245
Prepared Statement........................................... 1248
FY 98 Budget Request IMLS Office of Library Services............. 1273
Government Performance and Results Act.......................1253, 1256
Indian Tribes, Grants to......................................... 1262
Internet......................................................... 1266
Leveraging Support............................................... 1266
Maintenance of Effort............................................ 1258
Museum and Library Services Act..............................1248, 1271
Museum Library Partnerships...................................... 1264
National Leadership Awards.......................1246, 1258, 1259, 1265
Opportunities Ready to be Exploited.............................. 1268
Other Federal Library Programs................................... 1256
Professional Budget.............................................. 1266
Public Library Services.......................................... 1257
Role of Libraries................................................ 1267
School Libraries................................................. 1269
Serving Underserved Populations.................................. 1272
State Plans..................................................1257, 1270
Technology Focus.............................................1253, 1268

Social Security Administration

Administrative Law Judge:
Certification of............................................. 1398
Qualifications............................................... 1397
Reform of the Adjudication System............................ 1398
Appeal Rate...................................................... 1396
Automation:
Efforts...................................................... 1335
Funding and Workers' Compensation............................ 1382
Implementation Schedule...................................... 1371
Percentage of Funds for Furniture............................ 1372
Biographies:
Dale W. Sopper, Acting Deputy Commissioner................... 1316
John J. Callahan, Acting Commissioner........................ 1313
John R. Dyer, Acting Principal Deputy Commissioner........... 1314
Black Lung Benefits.............................................. 1321
Block Grants for SSI............................................. 1339
Carryover of Funds............................................... 1368
CDRs.........................................................1366, 1369
Periodic Review.............................................. 1368
Processing................................................... 1367
Welfare Reform Work.......................................... 1391
Chronic Fatigue Syndrome (CFS)................................... 1401
Advisory Committee........................................... 1399
Training on Related Issues................................... 1399
Consultant Review................................................ 1338
Demonstration Projects........................................... 1323
Direct Deposit................................................... 1394
Disability Redesign.............................................. 1393
Government Performance and Results Act........................... 1317
Focusing on Results.......................................... 1363
Results of Pilot............................................. 1360
Hearings:
Processing Time....................................1330, 1331, 1365
Workloads.................................................... 1329
Historical Tables................................................ 1373
Impact of Welfare Reform......................................... 1320
Initial Disability Determinations:
Appealed..................................................... 1396
Claims Receipt............................................... 1391
Sustained by the ALJ Corps................................... 1395
Inspector General:
Audits....................................................... 1337
Report on Office of Program and Integrity Reviews............ 1370
Role of...................................................... 1336
Labor-Management Relations...................................1344, 1411
Legislative Proposals:
Noncitizens.................................................. 1340
SSI.......................................................... 1340
National 800-Number.............................................. 1384
Office of Program and Integrity Review Assessment Activity....... 1390
Opening Statement............................................1289, 1292
Partnership Council..........................................1345, 1411
Performance Goals and Measures................................... 1317
Processing Disability Cases...................................... 1318
Resource Levels and Performance Objectives....................... 1359
Return-to-Work:
Demonstration Projects....................................... 1401
Pilots....................................................... 1329
Security of On-Line PEBES........................................ 1319
Social Security Numbers on Checks................................ 1319
Solvency of the Social Security Trust Funds...................... 1335
SSI and Immigration Policies..................................... 1339
SSI User Fee Proposal............................................ 1336
Stakeholder Input................................................ 1361
Strategic Plan:
Consulting with Congress..................................... 1363
Coordinating with Other Federal Agencies..................... 1362
Development of............................................... 1358
Linking Goals with Performance Plans......................... 1359
Unfair Labor Practices........................................... 1344
Savings from Decreased....................................... 1412
Union Activities:
Benefits..................................................... 1410
Employees Engaging in........................................ 1371
Expenditures................................................. 1408
Expenses.....................................1341, 1343, 1383, 1384
Increase in Estimate of FY 1996 Expenses..................... 1406
Increase Since FY 1993....................................... 1405
Official Time..........................1343, 1345, 1346, 1405, 1409
Paying from Trust Funds...................................... 1342
Percentage of SSA's Budget................................... 1412
Reporting Partnership Activities............................. 1389
SSA Employees on Official Time............................... 1409
SSA's Prediction of FY 1996 Expenses......................... 1407
Stemming the Increase in Union Time.......................... 1407
Subsidizing with Trust Funds.............................1409, 1411
Time Spent.........................................1388, 1389, 1390
Tracking System..........................................1388, 1389
Vocational Rehabilitation........................................ 1322
Witnesses........................................................ 1289
Workers' Compensation............................................ 1372
Year 2000 Systems Fix........................................1338, 1341

Corporation for National and Community Service

Additional Questions for the Record.............................. 1591
AmeriCorps*VISTA................................................. 1548
America Reads Challenge................................1548, 1565, 1575
Budget Request................................................... 1594
Budget Summary................................................... 1639
Corporation for National and Community Service Mission Statement. 1638
Cost-Effectiveness............................................... 1577
Empowerment Zones................................................ 1580
Government Performance and Results Act........................... 1567
Harris Wofford--Oral Testimony................................... 1545
Harris Wofford--Written Testimony................................ 1549
National Senior Service Corps.................................... 1547
Presidents' Summit for America's Future.......................... 1545
Program Sustainability........................................... 1589
Retired and Senior Volunteer Program Report...................... 1612
Senior Corps Involvement in Literacy Programs.................... 1592
Sustainability Study............................................. 1603

Occupational Safety and Health Review Commission

Additional Questions............................................. 1724
Admissible Case Evidence......................................... 1709
ALJ Decisions:
Commissioners' Affirmation of................................ 1718
Commissioners' Review of..................................... 1720
Directed Review.............................................. 1720
Appeals of Decisions............................................. 1706
Case Tracking/Case Management.................................... 1720
Case Trends...................................................... 1711
Commissioners' Affirmation of ALJ Decisions...................... 1718
Commissioners' Directed Review................................... 1720
Commissioners' Review of ALJ Decisions........................... 1717
Equal Access to Justice Act...................................... 1717
Ergonomics...................................................1707, 1712
E-Z Trial Procedure.............................................. 1713
Federal Health & Safety Compliance............................... 1718
Financial Audit.................................................. 1695
Fiscal Year 1998 Budget Request.................................. 1695
General Duty Clause Cases....................................1708, 1712
GPRA............................................................. 1714
Introduction of Witnesses........................................ 1693
Legal Fees, Reimbursement of.................................1715, 1717
Opening Statement............................................1693, 1697
Operational Savings.............................................. 1695
OSHA:
Appellate Function........................................... 1716
Case Activity................................................ 1695
OSHA's Appellate Function........................................ 1716
OSHA Case Activity............................................... 1695
OSHRC Caseload...............................................1719, 1722
Pepperidge Farm Case.........................................1709, 1710
Regional Office Closings......................................... 1705
Relationship to OSHA.........................................1705, 1721
Staff Training................................................... 1721

Federal Mine Safety and Health Review Commission

Appellate Decision and Inventory Ages............................ 1788
Automated Case Tracking System................................... 1788
Automation Improvements.......................................... 1808
Budget:
Request...................................................... 1779
Justification................................................ 1813
Commission Review:
Staffing..................................................... 1787
Statistics................................................... 1798
Dust Cases:
Chronology of Events......................................... 1811
Pending...................................................... 1781
Status....................................................... 1785
FTE Distribution................................................. 1790
Government Performance and Results Act........................... 1779
Justification of Budget Estimate................................. 1813
Office of Administrative Law Judges..........................1791, 1801
Opening Statement................................................ 1793
Settlement Rate.................................................. 1799
Strategic Plan:
Accomplishment............................................... 1783
Baseline..................................................... 1808
Objectives................................................... 1794
Staffing History................................................. 1810
Year 2000 Transition............................................. 1802
Workload:
Decrease..................................................... 1808
Estimate vs. Actual.......................................... 1807
Objectives................................................... 1807
Revised Estimates............................................ 1786
Trends....................................................... 1786

Federal Mediation and Conciliation Service

Adaptation to Globalization...................................... 1866
Alternative Dispute Resolution...............................1868, 1876
Arbitration..................................................1845, 1864
Concluding Remarks............................................... 1846
Customer Survey Initiative...................................1848, 1864
Education and Training Initiative............................1848, 1863
Education, Advocacy and Outreach................................. 1879
Federal/State Partnership Activities.........................1877, 1885
Field Offices.................................................... 1867
FMCS Institute................................................... 1865
Gift Acceptance Authority........................................ 1875
Historical Review................................................ 1855
International Activities...............................1857, 1866, 1871
Interstate Commerce.............................................. 1875
Mediation Activity...........................................1844, 1868
Mediator Organizing Attempt..................................1859, 1862
New Initiatives..............................................1845, 1858
Opening Statement................................................ 1842
Peace Institute.................................................. 1865
Performance Measurement.......................................... 1861
Performance Standards and Hiring Criteria........................ 1870
Preventive Mediation............................................. 1878
Programs......................................................... 1850
Reinvention Efforts..........................................1842, 1847
Resource Center.................................................. 1884
Staffing and Funding............................................. 1873
Technology Initiative........................................1849, 1863
Welfare Reform................................................... 1884
Witnesses........................................................ 1839
Workload......................................................... 1880

National Education Goals Panel

Additional Responsibilities...................................... 2005
Baseline Data.................................................... 2016
Biography of Witness............................................. 2015
Budget Increase...............................................2019-2020
Budget Request................................................2006-2007
Comparable Data...............................................2017-2018
Congressional Budget Request for Fiscal Year 1998.............2045-2078
Encouraging News................................................. 2026
Goals.........................................................2025-2026
Historical Overview.............................................. 2004
Introduction of Witness.......................................... 2003
Introduction:
Introduction of Witness...................................... 2003
Opening Statement............................................ 2004
Historical Overview.......................................... 2004
Additional Responsibilities.................................. 2005
Kentucky Example..............................................2023-2025
National Assessment of Education Progress (NAEP)................. 2023
National Assessment of Education Progress (NAEP) Data............ 2017
National Education Goals Panel:
Mission...................................................... 2020
Goals.....................................................2025-2026
NEGP Mission..................................................... 2020
National Testing..............................................2021-2022
Opening Statement................................................ 2004
Questions and Responses.......................................2028-2044
Responsibilities:
Additional................................................... 2005
State Comparison............................................. 2005
Baseline Data................................................ 2016
Significant Change........................................2016-2017
Significant Change............................................2016-2017
Standards and Assessment......................................... 2006
Star States...................................................2018-2019
State Comparison................................................. 2005
State Data:
NAEP Data.................................................... 2017
Comparable Data...........................................2017-2018
NAEP......................................................... 2023
Statement of Witness..........................................2008-2014
Student Testing...............................................2022-2023
Teacher Development...........................................2020-2021
Testing:
National Testing..........................................2021-2022
Student Testing...........................................2022-2023
NAEP......................................................... 2023
Kentucky Example..........................................2023-2025
Third International Math and Science Study (TIMSS) Report........ 2018
TIMSS:
TIMSS Report................................................. 2018
Encouraging News............................................. 2026

National Mediation Board

American Airlines Negotiations................................... 2096
Arbitration Services:
Customer Service............................................. 2116
Precedent-setting Boards..................................... 2122
NRAB Chicago Office.......................................... 2122
Biography of Kenneth B. Hipp..................................... 2093
Customer Service:
Achivements.................................................. 2107
Internal Review.............................................. 2117
Summary Report Through Fiscal Year 1996...................... 2108
Government Performance and Results Act:
Goals and Performance Indicators............................. 2100
Submission to OMB............................................ 2095
Interest-Based Bargaining:
Practice of.................................................. 2097
Training..................................................... 2104
Introduction of Witnesses........................................ 2079
Mediation:
Caseload..................................................... 2106
Case Tracking System......................................... 2101
Customer Service............................................. 2112
Grievance Mediation.......................................... 2102
NMB Budget, Fiscal Year 1998..................................... 2123
NMB Reorganization............................................... 2100
NMB vs. FMCS..................................................... 2095
Opening Statement of Kenneth B. Hipp............................. 2085
Representation:
Caseload..................................................... 2105
Customer Service............................................. 2114
Statement Summary................................................ 2079
Strategic Plan................................................... 2096

Armed Forces Retirement Home

AFRH Budget Justification:
AFRH Board................................................... 2222
Appropriations History....................................... 2219
Authorizing Legislation...................................... 2213
Budget Authority by Activity................................. 2215
Capital Outlay............................................... 2216
Executive Summary............................................ 2210
Organization Chart........................................... 2211
Resident Data................................................ 2221
Staffing History............................................. 2220
Summary of O & M Changes..................................... 2217
Total Obligations by Object Class............................ 2218
Trust Fund................................................... 2212
Biographies:
Frederick M. Fox, Jr., Director, U.S. Naval Home............. 2190
Donald C. Hilbert, Director, U.S. Soliders' and Airmen's Home 2189
Dennis W. Jahnigen, M.D., Chairman, AFRHB.................... 2186
Capital Budget:
Capital Budget Request....................................... 2191
Consequences of Reductions................................... 2199
Future Capital Requests...................................... 2194
Multi-Year Capital Funding................................... 2194
Sheridan Building Breakdown.................................. 2198
Term of Capital Initiative................................... 2193
Unobligated Capital Funding.................................. 2195
Consequences of Capital Funding Reductions....................... 2199
Decline in Residents............................................. 2196
Draft Strategic Plan............................................. 2200
Finalization of Strategic Plan................................... 2195
Financial Statement Audits....................................... 2197
Future Capital Requests.......................................... 2194
FTEs:
Levels after 2002............................................ 2197
Reduction in FTEs............................................ 2196
Staffing History............................................. 2220
Goal of Balanced Budget.......................................... 2191
Government Performance and Results Act........................... 2192
Impact of Proviso Elimination.................................... 2198
Integrated Financial Systems..................................... 2198
Multi-Year Capital Funding....................................... 2194
Opening Statement................................................ 2161
Reduction in FTEs................................................ 2196
Reduction in Operating Expenses.................................. 2196
Resident Satisfaction Survey..................................... 2176
Resident Levels after 2002....................................... 2197
Residents:
Data......................................................... 2221
Decline in Residents......................................... 2196
Levels after 2002............................................ 2197
Resident Satisfaction Survey................................. 2176
Sheridan Building Breakdown...................................... 2198
Strategic Plan:
Conformance with GPRA........................................ 2195
Draft Plan................................................... 2200
Finalization of.............................................. 2195
Government Performance and Results Act....................... 2192
Reduction in Operating Expenses.............................. 2197
Term of Capital Initiative....................................... 2193
Unobligated Capital Funding...................................... 2195
Witnesses........................................................ 2161
Written Statement................................................ 2163