[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN

               SERVICES, EDUCATION, AND RELATED AGENCIES

                        APPROPRIATIONS FOR 2000

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH 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                STENY H. HOYER, Maryland
 ERNEST J. ISTOOK, Jr., Oklahoma     NANCY PELOSI, California
 DAN MILLER, Florida                 NITA M. LOWEY, New York
 JAY DICKEY, Arkansas                ROSA L. DeLAURO, Connecticut
 ROGER F. WICKER, Mississippi        JESSE L. JACKSON, Jr., Illinois
 ANNE M. NORTHUP, Kentucky
 RANDY ``DUKE'' CUNNINGHAM, 
California                          
                                    
 NOTE: Under Committee Rules, Mr. Young, 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, Carol Murphy, Susan Ross Firth,
                and Francine Salvador, Subcommittee Staff
                                ________
                                 PART 1

                           DEPARTMENT OF LABOR
                                                                   Page
 Secretary of Labor...............................................    1
 Employment and Training Administration...........................  127
 Occupational Safety and Health Administration....................  211
 Employment Standards Administration..............................  297
 Mine Safety and Health Administration............................  359
 Management Panel (DOL, HHS, DOE, RRB, SSA).......................  383
 Inspectors General Panel (DOL, HHS, DOE, RRB, SSA)............... 1055
 Pension Benefit Guaranty Corporation, Pension and Welfare 
Benefits Administration, and Bureau of Labor Statistics Statements 
for the Record.................................................... 1371
                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 56-802                     WASHINGTON : 1999






                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 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             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 RON PACKARD, California             NANCY PELOSI, California
 SONNY CALLAHAN, Alabama             PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York            NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina   JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio               ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma     JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan           ED PASTOR, Arizona
 DAN MILLER, Florida                 CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia              CHET EDWARDS, Texas
 RODNEY P. FRELINGHUYSEN, New Jersey ROBERT E. ``BUD'' CRAMER, Jr., 
 ROGER F. WICKER, Mississippi        Alabama
 MICHAEL P. FORBES, New York         JAMES E. CLYBURN, South Carolina
 GEORGE R. NETHERCUTT, Jr.,          MAURICE D. HINCHEY, New York
Washington                           LUCILLE ROYBAL-ALLARD, California
 RANDY ``DUKE'' CUNNINGHAM,          SAM FARR, California
California                           JESSE L. JACKSON, Jr., Illinois
 TODD TIAHRT, Kansas                 CAROLYN C. KILPATRICK, Michigan
 ZACH WAMP, Tennessee                ALLEN BOYD, Florida              
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania     
                                    
                 James W. Dyer, Clerk and Staff Director

                                  (ii)

 
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2000

                              ----------                              

                                           Tuesday, March 16, 1999.

                          DEPARTMENT OF LABOR

                                WITNESS

HON. ALEXIS M. HERMAN, SECRETARY OF LABOR

                        Introduction of Witness

    Mr. Porter. The subcommittee will come to order. We begin 
our hearings on the appropriations for the Department of Labor 
and are extremely pleased to welcome Secretary Alexis Herman 
this morning. Madam Secretary, this is your third appearance 
before our subcommittee. You are doing a fine job at the 
Department, and we look forward to fashioning a good 
appropriation for your Department. As you know, we are 
undoubtedly going to be working under the budget caps that were 
put into place in 1997 and that is going to make our work 
obviously very difficult in view of the fact that the Federal 
Government is currently spending around $20 billion above the 
caps. We will do the best job we possibly can with the 
allocation we receive, and we look forward to hearing your 
opening statement and then we will, of course, have questions 
for you.
    I want to call on Mrs. Lowey for any statement she would 
like to make.
    Mrs. Lowey. Well, thank you very much, Mr. Chairman. It is 
a rare opportunity that I get to be ranking for 5 minutes 
anyway.
    It is indeed a pleasure for me to welcome you, Madam 
Secretary. You have been such an energetic, creative Secretary, 
and I know you have really led the Department in expanding the 
Welfare to Work Program, and you have in-depth knowledge about 
what is really happening with this program that I know that you 
are going to share with us.
    I am particularly enthusiastic that during this time of a 
robust economy we can continue to make progress in moving 
people from welfare to work. I believe over half a million 
people have been moved from welfare to work. This has been a 
very important part of your administration and the entire 
Clinton administration, and I look forward to hearing from you, 
and I thank you again for your leadership and for appearing 
before us. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Lowey.
    Madam Secretary, please proceed with your statement.

                           Opening Statement

    Secretary Herman. Let me begin by thanking you both for 
your opening comments.
    Let me say, Mr. Chairman and members of the committee, it 
is an honor to join you once again and to have this opportunity 
to discuss the fiscal year 2000 appropriations request for the 
Department of Labor, a budget designed to close the skills gap, 
open the doors of opportunity and meet the Nation's challenges 
in a new economy and a new century.
    And as we look to that agenda, I want to begin by thanking 
all of the members of this subcommittee who are helping us 
develop the right strategies to better the lives of working 
families. Our request for appropriations for Year 2000 builds 
on our progress together.
    Specifically, the Department's fiscal year 2000 budget 
proposal totals $39.6 billion, of which $13 billion is subject 
to the annual appropriations process and is now pending, Mr. 
Chairman, before the subcommittee. The request for 
discretionary programs is $11.6 billion in budget authority, 
which is $600 million above the fiscal year 1999 level.
    We are making this request, recognizing that now is the 
time to make the investments to help ensure that all working 
families can share in America's prosperity. Against the 
backdrop of our strong economy, I have set three strategic 
goals for the Department of Labor: a prepared workforce to 
ready all Americans for the opportunities in the new economy; a 
secure workforce where no one is left behind; and quality 
workplaces, ones that are safe, healthy and fair--and that 
means free of discrimination.
    When I speak of the challenge of a prepared workforce, we 
know that in spite of record low unemployment, millions of 
Americans are having difficulty finding new jobs or moving up 
the career ladder.
    Every day, employers tell me they are having trouble 
finding qualified workers. But as Secretary of Labor, I have 
often said we don't have a worker shortage, we have a skills 
shortage. We need to close that skills gap and open new doors 
for working families.
    That is certainly the driving force behind the Workforce 
Investment Act, which reforms our job training system for the 
21st century and delivers choice, accountability, and 
flexibility to customers. The WIA was a bipartisan effort and 
enjoys continued bipartisan support. As you know, it requires 
that all States be fully operational by July 1, 2000. Our 
fiscal year 2000 budget includes funding to help States and 
local communities meet this key goal.
    Our budget also includes $368 million for what we call the 
Universal Reemployment Initiative. This is a down payment to 
ensure that within the next 5 years, every American has access 
to a One-Stop Career Center. We also will establish a 
nationwide toll-free number, so workers can find out what jobs 
are available and where they can go for assistance.
    I am also deeply committed to expanding opportunities for 
young people. We have made progress, particularly in the last 
couple of years, but we have a long way to go. Today almost 15 
million young people between the ages of 16 and 24 are not 
enrolled in school. About 90 percent don't have a college 
degree, and 70 percent have a high school diploma or less.
    That is why we propose to continue our $250 million 
investment in Youth Opportunity Grants, to reduce unemployment 
among youths in high poverty-areas. We are also requesting $100 
million to establish a Right TrackPartnership in areas with 
high poverty rates. This initiative complements our Out of School Youth 
program. Expanding opportunities for all of our young people is a top 
priority for me as Secretary. We don't have a person to waste in this 
country, let alone a full generation.
    Ensuring a prepared workforce also requires us to move 
forward with welfare reform. Welfare rolls are at a record low, 
but the hardest work lies ahead, because those still on the 
rolls face the highest barriers to employment. So we propose to 
reauthorize the Welfare to Work Program in fiscal year 2000, 
and we want to put a special emphasis on noncustodial parents, 
most of whom are fathers.
    As we prepare workers, we must be equally committed to 
preserving and expanding the economic security of working 
families. So my second strategic goal is ensuring a secure 
workforce.
    That is why we are seeking to expand our efforts in 
pensions and health care. Today, only about half of all full-
time workers in the private sector have pension coverage. Three 
out of four workers in small businesses are not covered by a 
pension plan. The challenge looms larger for women. Today, 60 
percent of working women have no pension at all, and even if 
they are lucky enough to have a pension on the job, that 
pension will oftentimes be lower. In fact, pensions for women 
today represents half of what it is for men, in spite of the 
fact that women live longer.
    In total, our budget includes $11.8 million for efforts to 
increase pension plans and health coverage. We want to update 
rules so more employees can take their pension benefits with 
them when they change jobs. We want to make it easier for small 
businesses to establish pension plans. And we want to build on 
the success of our retirement savings campaign with the launch 
of our new Health Benefits Education Campaign.
    Each year nine million private sector workers with 
employer-based health insurance change jobs and have to cope 
with what that means for their health benefits. And every week, 
we at the Labor Department get almost 2,000 calls from 
Americans with questions about their health coverage. But, many 
of us know more about the TV show ``ER'' than we do about our 
health insurance plans. Families need to know the protections 
they have, the rights they have, and all they are entitled to 
under the law. That is what our Health Benefits Education 
Campaign will be about.
    A secure workforce is also one where we leave no one 
behind. So we want to reward work and raise the minimum wage by 
$1 an hour over the next 2 years. And we are committed to a 
strong and enforceable Patients' Bill of Rights.
    My final strategic goal is fostering quality workplaces 
that are safe, healthy and fair. We have made real progress in 
this area. The rate of occupational illnesses and injuries is 
at an all-time low. Last year the number of mine accidents was 
the lowest in history, but there is still more to do. One death 
on the job is still one too many.
    So our budget invests in innovative safety and health 
programs in the Occupational Safety and Health Administration 
and the Mine Safety and Health Administration to protect 
workers, inform employers and enforce our laws. And I want to 
add, Mr. Chairman, my thanks to you for bringing together MSHA 
and other members of the mining community to address the 
training needs of the Nation's nonmetal surface miners.
    We also need to protect workers from injuries caused by 
over-exertion or repetitive motion. We know that this is the 
cause of one-third of all disabling injuries and illnesses. 
Employers are paying between $15-20 billion in workers' 
compensation costs each year. An enormous body of scientific 
evidence demonstrates a clear relationship between work and 
these injuries. That is why we are moving forward to develop a 
proposed ergonomic standard this year. We have taken a 
thoughtful and balanced approach, and we have and will continue 
to reach out to a wide variety of stakeholders in close 
consultation throughout this process.
    We have also targeted abusive and exploitative child labor, 
both at home and abroad, through a comprehensive strategy of 
enforcement, education and partnership. And in particular on 
the international level, we are now the leader in the ILO's 
International Program for the Elimination of Child Labor, and 
we are grateful for the $30 million provided by Congress last 
year. We are proposing to continue that level in FY 2000.
    I am also committed to work with the ILO on a new 
initiative to improve labor standards around the world, and we 
are requesting $35 million for this effort. Certain fundamental 
rights should be guaranteed for every worker in every country, 
regardless of its level of economic development. With your 
assistance, we hope to advance these important protections for 
workers everywhere.
    Ensuring a quality workplace also means helping Americans 
balance work and family. So we are proposing to help more 
working Americans benefit from the Family and Medical Leave 
Act.
    We must also step up our efforts to ensure that women and 
men earn equal pay for equal work. Today, working women earn 
approximately 75 cents for every dollar earned by a male. That 
is why we seek to invest $4 million to increase outreach, 
education and technical assistance, specifically by continuing 
to develop and provide guidelines via the Internet that address 
pay issues, including industry best practices.
    The President and I strongly support the Paycheck Fairness 
Act, to improve the enforcement of wage discrimination laws and 
provide research, education, trainingand outreach on this 
important issue. We know this isn't simply a woman's issue. It is a 
family issue.
    This is a broad sketch of our agenda. A prepared workforce. 
A secure workforce. Quality workplaces. I know that even though 
we have three strategic goals at the Department of Labor, and 
many initiatives within each, there is only one way to succeed, 
not as separate agencies, but as one Department, by cutting 
across the Department and cutting to the heart of problems and 
solutions. And that is why we take very seriously our strategic 
planning process and managing through GPRA for results.
    I look forward to working with each of you on these 
important initiatives to improve the lives of America's working 
families, and I would be pleased to answer any questions you 
have, Mr. Chairman. Thank you very much.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                          NEW OSHA REGULATIONS

    Mr. Porter. Madam Secretary, let me thank you. That was an 
outstanding statement. You obviously have a very ambitious 
agenda and a great deal to do. I particularly want to comment 
on ILO and suggest that the United States ought to be a very 
strong leader in reaching out to oppressed societies and urging 
that labor be freed from that oppression and people be allowed 
to join free labor unions, not government-controlled ones. And 
I think that effort is one that is very, very worthy of our 
strong support and I intend to do my best to provide it.
    You have talked about safety and health in the workplace. 
This side of the aisle is, I think, just as strongly committed 
to safety and health for American workers in the workplace as 
the Minority side. We have differed often on how best to 
achieve that, but in your remarks you said that we have 
currently reached an all-time low in terms of violations--that 
is, injuries and deaths on the job--and the Department and OSHA 
ought to be commended for that.
    It has been about 5 years or so since the philosophy at 
OSHA was changed and greater cooperation with American business 
was sought, rather than simply inspecting and fining and the 
contentious relationship which had existed before, and I think 
that is paying off very strongly. But we also understand that 
OSHA has just developed a draft proposed rule to require that 
employers establish safety and health programs and that this 
proposed rule was reviewed by a small business panel convened 
pursuant to the requirements of SBREFA, which extensively 
criticized the draft rule for underestimating its costs to 
small business.
    It also was criticized by employers for vague language, 
imposing a one-size-fits-all approach to employers, interfering 
in management discretion by mandating employee involvement, 
reversing existing law regarding evidentiary requirements by 
making employers responsible for potential hazards that they 
should have known about, and others.
    And I know also that you are about to, as you said in your 
statement, issue new regulations on ergonomics. We thought that 
the policy of this administration as it was announced was to 
cut back on regulatory burdens; to review regulations and 
reverse those that were unnecessary. And here we see a flood of 
new regulations about to be placed on business and we wonder 
how that can possibly be reconciled to a policy announced to 
reduce regulation and a policy that you have been following and 
that we have applauded and worked with you on to have a 
cooperative attitude with American business and provide 
stringent inspection only for those who are repeated or obvious 
or intended offenders. Can you explain that for us, Madam 
Secretary?
    Secretary Herman. I can certainly try, Congressman. Let me 
say first of all that with the emphasis that you placed on 
reducing regulatory burden from the vantage point of the 
administration, I would certainly agree with you, Mr. Chairman, 
that that is something we share as a mutual goal; and the 
administration does not have an interest in increasing 
burdensome, if you will, regulations in the workplace today. 
But at the same time, I believe that we recognize that we do 
have a responsibility to invest in the safety, protection and 
health of America's workers.
    We are very proud of the fact that last year was the lowest 
on record, as you have pointed out, in terms of the number of 
injuries and illnesses in the workplace. I believe that is in 
part because the programs are working, and I think that if we 
look, in particular from 1995 through 1998, we have actually 
seen a 12 percent reduction.
    So I think many of the efforts that OSHA has put forward as 
part of its Cooperative Compliance Program, including voluntary 
partnerships with employers, I think all of that has been good 
and has moved us in the right direction.
    At the same time, I don't think that we can ignore the fact 
that when we look at what is still causing the greatest number 
of injuries and illnesses in the workplace, approximately 34 
percent of injuries reported by BLS, will relate to workplace 
musculoskeletal disorders. This issue has been around for many 
years. It has been before this committee for many years. It was 
actually under the secretaryship of Lynn Martin when the first 
proposal to correct ergonomic hazards in the workplace was 
proposed. I believe that was back in 1992. And we have had a 
series of requests from the committee, from Members of 
Congress, to go further in looking at the connections, if you 
will, between workplace musculoskeletal disorders and their 
causal effects and probable solutions.
    These efforts literally date back to when I first came to 
the Department in 1977. I can remember the very first 
ergospecialist that was brought into the Department in 1979 to 
begin to look at this issue.
    So we have literally, I think, a 20-year history of 
reviewing this particular area in the workplace, looking at the 
science of ergonomics.
    In both the NIOSH study and the NAS study, I think it is 
very significant that both of those reports in 1997 and 1998 
came back and said that there was a clear relationship between 
work and musculoskeletal disorders, and that there was no 
reason to wait, if you will, to issue a proposed standard in 
this area.

                PROPOSED SAFETY AND HEALTH PROGRAMS RULE

    Mr. Porter. Madam Secretary, I was referring more to the 
safety and health programs.
    Secretary Herman. I thought you were asking 
aboutergonomics.
    Mr. Porter. I want to get at the safety and health 
programs. I understand in the 103rd Congress, the 
administration sought legislative authority to issue such a 
rule, and it was not granted. Don't you need authorizing 
legislation to go at this and what about all of these 
criticisms that were brought by the Small Business Regulatory 
Enforcement Fairness Act Panel of the proposed regulations?
    Secretary Herman. I am sorry, I thought you were asking me 
specifically about ergo.
    Mr. Porter. Mr. Bonilla will do that, don't worry.
    Secretary Herman. I think it was because you said the 
``standard.'' This is really a rulemaking that we are going 
forward with. We are not proposing a standard in this area.
    This is a general rule where we are basically saying that 
this is an effort to bring our workplaces into the 21st 
century, to make sure that we continue on the path of reducing 
overall workplace injuries. The reality is, the criticism of 
the ``one size fits all'' criticism is, we wanted to be 
flexible. We didn't want to be prescriptive. We didn't want to 
mandate to employers how they should do this. We think that 
there is a lot of evidence in terms of solutions that are 
working with very general guidelines in the workplace today, 
and we see this program as advancing the overall safety and 
health agenda in the workplace today. So we were not trying to 
be prescriptive.
    With regard to the cost estimates that you raised, I am 
aware of one report that was contracted through SBA, but I 
would also point out that more generally taking into account 
all of the SBREFA recommendations, and those of SBA, OMB, DOL, 
we have all looked at these costs and the estimate is around 
$2.4 million, not what the SBA study was projecting.
    Mr. Porter. I think from what I know of this, it seems like 
this is going in the opposite direction from what the 
administration's stated goal is, and that is to reduce 
regulation, and that there is a great deal that is very 
contentious about this proposal. And in addition, it is not 
clear that you don't need authorizing language to issue such a 
rule.
    Mrs. Lowey.

                            WELFARE-TO-WORK

    Mrs. Lowey. Thank you very much, Mr. Chairman. Again, I 
want to thank you for appearing before us. And as I mentioned 
before, I think we have a great opportunity with this robust 
economy to continue the administration's work on moving people 
from welfare to work and urging employers to take part in this 
important initiative, and I am particularly pleased that 
according to your statistics, employers have hired over half a 
million people, through the Work Opportunity Tax Credit and the 
Welfare-to-Work Tax Credit, and I am told by those 
participating in the program that DOL has done everything 
possible on a national level to make these tax incentives 
employer friendly. I know that you share my beliefs that this 
is a major priority.
    Can you describe for the subcommittee how you use the $1 
billion for Welfare-to-Work that you are requesting and if you 
can explain to us why you are asking for just a 1-year 
extension? I am concerned that this doesn't send a strong 
enough message. If we really have confidence in this program 
and we feel that it is doing such a good job, why are we asking 
for just a 1-year extension?
    Secretary Herman. Part of it has to do with the way that 
the funds have been allocated in terms of the initial 3-year 
commitment, and with the 1 year, this would actually give us 4 
years in terms of a process. Even though the authorization 
called for the funds to be allocated in calendar year 1998, the 
reality is by the time we went through the appropriations 
process, most of those funds actually went into the last 
quarter of 1998. So, from an operational standpoint, we will 
have 1999 in terms of a full year of operation. We will have 
2000, so we are really into 2001 and 2002 on a calendar year 
basis when you look at the actual implementation of those 
funds.
    But I would agree with you generically in terms of the 
principle, and that is we will have to monitor to see, even as 
we reach those time frames, if we have completed the job that 
we set out to do. And, given the fact that this request is in 
fact for those who still face the highest burdens, if you will, 
who remain on the welfare rolls, low employment rates, poor 
work history to no work history, substance abuse problems and 
people with disabilities, we have not had a lot of experience 
in really placing more difficult employment cases such as this. 
So it is an area that we will have to come back and ask 
ourselves, is this sufficient time and will we have to go back 
and look at further extensions?
    We think right now, given the path that we are on and given 
the fact that we have seen the rolls come down as quickly as we 
have, that the private sector is kicking in, that this is a 
good time frame to work with, but obviously we want to remain 
open to that.

                        ONE STOP CAREER CENTERS

    Mrs. Lowey. I just want to emphasize again that from my 
perspective in my discussions with employers, it is very 
important for the government to send a strong and consistent 
message, because too often employers will get involved in a 
program and then it disappears. If you believe in this program, 
I think it is very important for us to send a very strong 
message that we are investing in it and we believe it is an 
important tool to get people from Welfare-to-Work. I was also 
very pleased in your comments to hear you discuss the high 
level of coordination between different areas of the Department 
in putting together the budget request, specifically with the 
one-stop shopping centers.
    I have been an advocate of these for quite awhile, and if 
you can tell us about how the Department's effort to coordinate 
will pay off for both the workers and the employers and just 
explain what is really happening?
    Secretary Herman. I think there is huge payout. As you 
know, because you have been in the field, when you go into a 
one-stop center today, it certainly short circuits a lot of 
ways that we used to do business. In our centers today, those 
laid off of work because of dislocations can go in and find out 
about the available jobs through America's job banks that are 
set up through computerized exchanges, and they can get the 
necessary consulting that they need. Oftentimes we are able to 
co-locate child care services, which is something that 
Congressman Hoyer has talked about, leveraging other resources 
into our one-stop centers.
    So basically we have really consolidated services at the 
street level, so you can go into a one-stop center and get the 
resume assistance you need, find out what the jobs are, get the 
training that you need there on site, and oftentimes the other 
support services which could involve transportationor child 
care. It is all there under one roof and it is certainly making it a 
lot easier on our customers who use the system, and, I might add, 
increasingly employers who are also coming into one-stop centers now.

                        SMALL BUSINESS OUTREACH

    Mrs. Lowey. I want to congratulate you and the Department 
in addressing the needs of small businesses and particularly in 
the area of OSHA. This committee has questioned in the past 
OSHA's respect of small business and its dealing with small 
businesses, particularly in the area of compliance, and it is 
my understanding that you have made really important progress 
in that regard. Can you tell us how the Department is reaching 
out to assist small businesses, especially with OSHA, and how 
this budget request will help you expand this work?
    Secretary Herman. We have taken a lot of innovative steps 
in working with small businesses throughout the Department. 
First, specifically with OSHA, we have increased our 
consultation and compliance assistance programs with small 
businesses. In this budget we are asking for an additional 
presence in each of our OSHA offices to continue to work with 
small businesses. This is something that we have heard 
repeatedly from the small business community, that they don't 
want to turn to OSHA simply for enforcement guidance, but they 
want to have more technical assistance in terms of compliance 
assistance and getting more general information. So the request 
in the budget is to assist with that.
    Also, as we look more generally at some of our cross cuts 
in this budget, focused on small businesses in particular, we 
want to, for instance, have a Labor desk working with SBA in 
each of its Small Business Development Centers so that we can 
work more closely with small businesses on many of the issues 
that they are covered by in terms of the Department of Labor. 
We are hopeful if we have a desk in the Small Business Centers 
with SBA, that we can provide a short cut for employers, small 
businesses in particular, to get a hold of the information. We 
want to do the same thing with the Agriculture Extension 
Offices so we can work more collaboratively as well with small 
agri-businesses in particular.
    Mrs. Lowey. Thank you, Mr. Chairman.
    Mr. Porter. Mr. Bonilla.

                SCIENTIFIC BASIS FOR ERGONOMICS STANDARD

    Mr. Bonilla. Thank you, Chairman. Good morning, Madam 
Secretary.
    I do concur with Chairman Porter's comments that it is--and 
I understand things can be said at one level and a higher pay 
grade than you are at, and how we are trying to get government 
out of the lives of Americans but proposing more regulations.
    And I also noted in your response to Chairman Porter that 
it is in the best interest of Americans that--I penciled here 
that you said ``to invest in the safety of workers,'' and we 
agree with that, and so does the private sector. There has been 
a lot of investment out there already by folks who are trying 
to desperately keep their workers safe and on the job. It is 
not in anyone's interest to have injured workers, and I think 
there is a huge fallacy that exists by some in government that 
think that small business or large business is ignorant of the 
fact that workers must be treated fairly and that they must do 
all they can to keep people healthy and on the job.
    I can cite you real life examples of progress being made in 
the area of repetitive stress injuries. Many corporations back 
home understand that they need to make the work environment a 
little safer. I want you to understand where I am coming from 
with my line of questioning this morning. We all understand 
that the National Academy of Sciences study could in the end 
wind up saying we should have done this earlier. So we have no 
control over the outcome of this and I would hope that anyone 
out there would understand that we are simply after the right 
medical research, the scientific research that exists out there 
now to make sure that we are doing the right thing.
    So if we are seeing progress in the private sector already 
and we are seeing the study move forward in a timely fashion, I 
am puzzled as to why the Labor Department and OSHA is pushing 
so aggressively. We understand that the study could show that 
this is necessary and should be done right away, but wouldn't 
you agree that any ergonomics rule would be better supported by 
the best science? That is all we are after.
    Secretary Herman. I absolutely agree that an ergonomics 
standard should be supported by the best science. I am 
persuaded that we do have a body of evidence speaking to that 
science. Again, when you go back and look at the historical 
evidence in this area, the scientific conclusions, I think 
generally the science is saying to us that we know enough; it 
may not be perfect, we may not have all of the answers, but we 
clearly have a basis at this point on which to proceed. I sort 
of liken it to cancer. We know enough about the causes of 
cancer. We know something about reducing the effects of cancer, 
but we don't know everything that we need to know about what it 
takes to prevent cancer.
    And I think that when we look at this whole area now of 
workplace musculoskeletal disorders, the same thing can be 
said. We have had, as you know better than most, over 2,000 
studies in the area. There have been all kinds of scientists, 
physicians----
    Mr. Bonilla. But they have been piecemeal. There has never 
been a conclusive effort like NAS is undertaking. With cancer, 
when a new form of treatment is looked at in the medical 
community, they always want to test it and research it further. 
The last thing you want to do is implement a treatment for some 
kind of problem that could in the end be detrimental to the 
patient.
    Secretary Herman. Let me tell you two things that 
personally impacted me. One was a recognition in the last NAS 
study that there was a belief that no future studies would 
necessarily lead to, quote, ``new scientific evidence.'' It is 
my understanding that even this new study is going to focus 
more on solutions, not necessarily the causal effect questions 
anymore. Even this second study will be more focused on 
interventions, on solutions, on what the private sector is in 
fact doing that can certainly benefit all of us in terms of 
adding to the information. So I don't personally see the new 
study as a study that is going to, advance necessarily the 
scientific basis or the scientific agenda, but essentially that 
it will point more to solutions and what we ought to be doing 
in terms of interventions that can correct what has been an 
issue now for, as I said, at least the last 20 years in terms 
of looking at the causal-effect relationships.
    Mr. Bonilla. What if it does shed new light on the 
wholeissue? Do you plan on accepting it or ignoring it?
    Secretary Herman. If it sheds new light, we want to 
incorporate it into the work that we are doing. We are just 
starting this process. This is a proposed standard. We will 
have the opportunity for a lot of comment and a lot of 
discussion. It is my expectation that as this study is 
proceeding with more of a focus on solutions and what works, 
that we will actually be on more of a convergence path to begin 
to incorporate what might be appropriate in terms of findings 
there.
    But basically when you look at, when you read through both 
the NIOSH report from 1997 and the NAS report from 1998, they 
both concluded that from a scientific standpoint we are replete 
in terms of----

                SCIENTIFIC BASIS FOR ERGONOMIC STANDARD

    Mr. Bonilla. You know the NAS study was a 2-day workshop 
and the NIOSH compilation was simply a matter of pulling 
library books off a shelf and putting them into one pile. There 
was nothing new that resulted from that.
    I know that many in the Department perhaps would react if 
the NAS study said yes, we ought to move forward; there would 
be a lot of delight. On the flip side of that, if the NAS study 
were to say, Whoa, we need to slow down and take a good look at 
this from a scientific standpoint, would you comply with it if 
the study concludes in that direction versus what I mentioned 
earlier?
    Secretary Herman. Obviously we will have to take into 
account any evidence that would contradict what has been the 
very full body of evidence that is presently on the record.
    Again, it is my understanding, even from looking at this 
last NAS study and looking at what they are proposing to do in 
this new study, that they feel as though they have already 
concentrated on the justification, if you will; that those 
issues in terms of the body of information being there, that we 
have that. And even when you say it was just a 2-day workshop, 
it really was more like a 6-month process in terms of working 
with 66 experts, professionals in the field, people who are 
hands on, employers who have occupational safety and health 
specialists in their workplaces, to really get at the most 
current and the most useful data that we presently have.
    Mr. Bonilla. Certainly you agree that the experts involved 
in the NAS study know more about this issue than perhaps 
someone who is just pushing this already at OSHA; would you not 
concur with that?
    Secretary Herman. I would think that the NAS would appeal 
to the same body of experts and scientists that they did in 
their first study, and I certainly believe that the caliber of 
NAS's work would speak for itself in that regard. But I believe 
in their own thinking that they don't believe that they are 
going to break a lot of new ground in terms of the scientific 
experts producing any information to the contrary.
    I think we really are at the point of saying, How do we do 
this? How do we make it work in the most flexible way for 
employers and the most cost-effective way? What are the 
solutions that are really working?
    There is a lot of evidence out there today from employers 
that says a safe workplace actually boosts productivity when it 
is done right. We know that it can reduce workers' comp costs 
in particular. I was personally impressed with what I learned 
from the Sara Lee record where they went from 780-odd days of 
workers' comp costs down to 8 days.
    We think that there is enough evidence to work with. The 
key here is to be thoughtful, to be balanced, to make sure that 
we are doing the right consultations. I insisted last year, for 
instance, before we moved, following up on our conversations 
with this committee, that we go out and talk to people. That is 
what we did. We have had over a dozen extensive consultations 
with employers, with experts in the field, with ergonomic 
experts who have been doing this to say, guide us, tell us what 
works here. We want to do the intervention in a way which 
actually reduces workplace injuries, particularly in this area.
    I think we have an opportunity here that we haven't had 
before based on what NIOSH has done and what NAS has done, and 
what NAS continues to do, and at the same time taking into 
account all of the other scientific evidence that we have.
    Mr. Bonilla. Secretary, I thank you for your time this 
morning. I appreciate you always responding promptly to 
anything that I have asked of you before, and your open door 
policy is something that we want to keep there and work 
together.
    Secretary Herman. Thank you, Congressman.
    Mr. Porter. Thank you, Mr. Bonilla. Ms. DeLauro.
    Ms. DeLauro. Mr. Jackson, I think, was here first.
    Mr. Porter. All of the people who are here at the start of 
the hearing are called on back and forth, and those who arrive 
after that time, we add to the list. My staff tells me that you 
were here at the start of the hearing.

                          EQUAL PAY INITIATIVE

    Ms. DeLauro. Thank you.
    Secretary Herman, thank you very much. I add my comments to 
those of my colleagues and I really appreciate your level of 
commitment and your dedication to working people in this 
country and in trying to provide a base of infrastructure, if 
you will, both on behalf of our businesses and our workers to 
make us move forward in a whole variety of areas.
    I am particularly pleased to see that the administration is 
addressing the problem of unequal pay for women. I think you 
characterized it aptly in your opening remarks that this is not 
a woman's issue, this is about families, and what in fact is 
happening is whole families are shortchanged because a woman 
brings home a smaller paycheck. We also have the instance today 
where there are many women who are primary breadwinners.
    Could you describe for us the President's equal pay 
initiative, how it addresses this problem, and what further 
improvements we could make if the Paycheck Fairness Act is 
enacted?
    The President is asking for additional resources, $4 
million, primarily to deal with education and outreach in this 
area.
    Secretary Herman. And also for us to begin to set up a best 
practices guide in this area.
    You know this is an area, Congresswoman DeLauro, that you 
have been involved in for many years. What we are finding in 
terms of our experience now in the Department is that many 
employers have policies in place, but the practices, the 
practical actions, do not support those policies. So there is 
good news and bad news here in terms of the progress that we 
have made.
    We think that we need to do more to align practices with 
policies, and to give employers the technical assistance they 
will need to make sure that they are not discriminating onbasis 
of pay in the workplace.
    We have also sought to increase in this budget, actually 
increasing the number of our glass ceiling audits where we 
particularly go in to examine for pay differences. I was 
personally surprised to see that of all of the reviews that we 
are actually doing through the Office of Federal Contract 
Compliance, approximately 50 percent of them are turning up 
violations. So this is something that clearly we need to pay 
greater attention to.
    I believe that the Paycheck Fairness Act will help us in at 
least two very specific ways. As you know, presently under the 
Equal Pay Act you can only get the prescribed amount in terms 
of damages for back pay. There is no award for punitive or 
compensatory damages in that sense. The strengthening of the 
Paycheck Fairness Act will allow for that, and I think probably 
serve as a greater deterrent to employers in that process.
    Also, the changes in the law will also protect employees 
from reprisal by their employers if they share salary data. 
That is very, very important because we are finding, again, 
that generally the way women are finding out about pay 
discrepancies is through collegial relationships in the 
workplace and sharing that information with one another. That 
is still most often the way it is uncovered.
    So if you are preventing employees from discussing salary, 
from talking about that kind of information, and then there are 
reprisals because of that, we think this is something that 
needs to be corrected for in the law.
    Ms. DeLauro. Thank you for that work.
    In particular, when we are now talking about--and I think 
this is so critical--Social Security and where we might go with 
Social Security, women's wages are particularly important 
because of how long they are in the work force, because they do 
live longer. If they earn less, they have less of an 
opportunity to be able to make their way when they do retire. 
So I think these pieces hang together. Thank you and the 
administration for moving forward in this area.

                        DAVIS-BACON WAGE SURVEYS

    Let me move to another area. I know the Department has been 
doing work to improve the Davis-Bacon wage survey process. Can 
you tell us, have you begun to implement the recommendations of 
the GAO? Has the GAO recommended that you end third party 
submissions altogether?
    Secretary Herman. The GAO has not recommended that we end 
third-party submissions. We are working to act on the 
recommendations of the GAO. What the GAO recommended with 
regard to third parties is that we actually allow third parties 
to submit wage supporting data to help with the verification 
process, but they did not recommend the elimination of third 
parties.
    They also recommended that we move more towards telephone 
verification of data. That is something we are doing as well.

                        CHILD LABOR INITIATIVES

    Ms. DeLauro. Thank you. Last year we fully funded the 
President's child labor initiative, in which we are trying to 
end child labor, both here and abroad. I am pleased to see that 
investment is going to continue this year.
    Can you describe what new international child labor 
initiatives you have undertaken or plan to undertake this year? 
Last week you announced a grant to combat child labor in 
Central America. Can you tell us a little bit about that 
effort?
    Secretary Herman. We want to continue to strengthen what we 
do to prevent the most abusive types of child labor around the 
globe. We have made tremendous progress. Historically, we have 
worked in Pakistan and India and we have reduced the number of 
children who have been subjected to abusive conditions in those 
countries. With our new initiatives, we have continued that 
focus.
    I was very pleased to travel with the President to Africa 
last year during this same time period, to announce the 
creation of a children's bureau with the Government of Uganda. 
A child labor bureau would deal with the most abusive forms of 
child labor in Uganda. Most recently when the President of 
Uganda was in this country, we had the opportunity to talk 
about the need to deal with child labor in that country. So, we 
continue to work with other countries who want to deal with 
this issue.
    As you have just pointed out, we are working closely now in 
Latin America and in Haiti, and we find that this is an 
opportunity for us, as we talk increasingly about child labor, 
to look more generally at the whole question of labor standards 
and the exploitation of workers.
    I want to thank Chairman Porter again for his commitment of 
support for the new funding to the ILO, in this regard. I think 
that in working in all of these venues we will have the 
opportunity to level up global standards and as the President 
has said, put a human face on the global economy. I think our 
child labor initiatives are helping us to do just that.
    Ms. DeLauro. Thank you very much, Madam Secretary.
    Mr. Porter. Thank you, Ms. DeLauro.
    Mr. Miller.
    Mr. Miller. Good morning.
    Secretary Herman. Good morning, Congressman Miller.

                               LM-2 FORM

    Mr. Miller. Let me start off with one issue we have talked 
about in the past. I am pleased that we are making progress in 
this LM-2 form, and people within the Department of Labor have 
been very helpful in moving that along. The only complaint I 
have is it is not moving as fast as we would like it to, but it 
is making some real progress.
    The LM-2 form is the form all unions have to file to make 
their financial information more accessible. Did you see the 
article in the New York Times on Sunday concerning that?
    Secretary Herman. Yes, I did.
    Mr. Miller. That is exactly where we are doing this. It 
points out some concerns that we should be looking at. What was 
pointed out in this article in the New York Times on Sunday 
about a Gus Bevona, a longtime president of the New York City 
janitors' union who made $531,529 in 1997, had a lavish 
penthouse, and the problem was he got it from several different 
sources. It was really hard to track it down. That was one of 
the goals. That should be available to the members. If the 
members want to pay that, that is their decision, but they have 
a hard time getting that information.
    Another person from Chicago was making $473,000. The 
problem with the LM-2 forms, as it brought out in this article, 
and what we can do to improve it even more, apparently this Mr. 
Bevona--no, that was the correct pronunciation of his name--was 
forced out of office. He received $850,000 in a lump sum, 
severance pay, and $650,000 in unused vacation. The members 
were upset. They didn't know that. The form did not show that 
about pension information.
    Is there any way to include any information in there, for 
the members' benefit, not a congressional argument now, but 
could we have that kind of information and expand the form? 
What can be done to make that accessible to members?
    Secretary Herman. I have asked the staff, in light of the 
article, to go back and review exactly what it is we are doing 
with the LM-2 project. As you know, one of the areas in 
particular we are trying to improve public disclosure access to 
information on the LM-2. So this is an area that we continue to 
explore.
    But I am pleased, as you said, that the work to computerize 
and to make the LM-2s more available and more accessible, is 
proceeding on schedule, and I want to thank you again for the 
commitment of resources that is making this possible.
    Mr. Miller. I think we are still looking at 2001. I don't 
know if there is any way to speed that up a little bit. GAO 
looked at it and felt it was going a little slow, too, by the 
way. If you could look at it again and see if there is anything 
we can do to speed it up, especially in light of the article in 
the New York Times.
    The other thing, most unions representing government 
employees are exempt from the requirements of the LM-2 forms. I 
was not aware of that. I would assume all unions have to file 
an LM-2 form.
    Secretary Herman. I don't know if all of the issues that 
were raised there were exactly on target. I have asked the 
staff to go back and review for me, for the record, what the 
issues are that we would have with the article.
    Mr. Miller. If you can get back to me on the issue of 
speeding it up and the fringe benefit issue as such, I would 
appreciate that. The people working on this have been very 
enthusiastic about the issue, so we appreciate that.
    [The information follows:]

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                         SMALL BUSINESS IMPACT

    Let me go back to an issue that Mr. Porter raised, and that 
is about these new anti-small business plans. I know Ms. 
DeLauro talked about what all you are doing for small business, 
but I am reading about this in articles saying--one comment I 
heard was this makes ergonomics look like a picnic. I don't 
know if Mr. Bonilla would agree with that.
    The new regulations really go after small business. I think 
that is the backbone of our economic growth in this country. If 
they are successful, they become big businesses and then you 
can regulate them. But as a small business, so many of them out 
there, we are concerned about overly burdening them. It is kind 
of scary. We are getting projections that they are costing 10 
to 20 times what you are saying they are. That is the type of 
thing you get concerned about.
    Secretary Herman. Obviously, if the projections were that 
huge we would be concerned as well. We really believe that the 
projections that we have reached in this area, approximately a 
3 to 1 cost-benefit ratio in terms of roughly the $2.4 million, 
is very much on target. As I said, this was worked through the 
SBREFA process. We did have consultations with the SBA on this, 
as well as OMB.
    We are in the process now of actually reviewing, if you 
will, all of that data in terms of putting it forward, and I 
will certainly make sure that we have the opportunity to come 
up and consult more fully with the staff in terms of what we 
are doing, and with you as well, Congressman Miller, if you 
would care to be further briefed on this.
    But as we looked at the data in this area, 25 States 
already have what we are proposing in very general terms, in 
terms of giving this guidance to employers. In those States, in 
terms of the evidence we have looked at, they actually speak of 
not only cost savings in terms of what they have managed to 
save on their workers comp costs, but also in terms of boosting 
productivity.
    So it is not as though we have not seen, in terms of this 
general guidance, that it hasn't had some real impact in terms 
of making a difference.
    I don't want this to be burdensome on small businesses.
    Mr. Miller. Certainly now it is becoming anti-small 
business, and we certainly don't want to be creating that 
image.
    Secretary Herman. We want to make a difference here.

                    VICE PRESIDENT'S RECOMMENDATIONS

    Mr. Miller. Let me go to one other subject. Vice President 
Gore in the National Performance Review made a comment about 
trying to use more private inspection companies. Is there any 
effort along those lines at all?
    Secretary Herman. We are working more closely with 
consultation, if you will. But we think when it comes to the 
actual enforcement side, that it is obviously not an area where 
we will be using third party consultants. In line with the 
report, OSHA is currently developing a safety and health 
program rule with provisions for self-inspection and employee 
involvement.

                   FUNDING FOR COMPLIANCE ASSISTANCE

    Mr. Miller. In your budget you have asked for $35 million 
for more for enforcement but nothing more for consultation, so 
I guess that is not working, or you are not----
    Secretary Herman. No. Actually, the funds that we are 
requesting for OSHA, the majority of those funds actually go 
for compliance assistance, some for enforcement. We are still 
pursuing very aggressively the compliance assistance.
    Mr. Miller. Compliance assistance, you feel that program is 
moving in the right direction?
    Secretary Herman. That program is working. I think it is 
moving in the right direction.
    As I said, we are actually asking for a desk now in each of 
our offices for compliance assistance, to be able to work more 
closely with employers, to give them the information that they 
need to prepare plans, to offer whatever technical assistance 
would be required. That is something we have heard repeatedly 
from small businesses in particular, and we are trying to 
accommodate that request.
    Mr. Miller. You think it is more money for compliance 
rather than enforcement?
    Secretary Herman. Yes, I do.
    Mr. Miller. I am confused by that. I got the idea there was 
more money increased for enforcement.
    If you can just get back to me on the LM-2, that is 
something we are working together on, and especially after the 
New York Times article I think we should feel pleased that we 
are addressing it before the New York Times did. We are 
hopefully ahead of schedule.
    Secretary Herman. At least we are 6 months ahead. We will 
try to do better. Right now we are at least 6 months ahead. 
Thank you.
    Mr. Porter. Thank you, Mr. Miller.
    The Chair owes Mr. Jackson an apology. I asked staff to 
prepare the list of people who were here when the hearing 
started, and I now find that Ms. DeLauro was not actually in 
the room when we called the subcommittee to order. She arrived 
while I was starting to welcome you, which was too late, and 
Mr. Jackson should have been called on next.
    Mr. Jackson.
    Mr. Jackson. I really don't feel bad about it, Mr. 
Chairman.
    Mr. Porter. It won't happen again.
    Mr. Jackson. Let me begin, Madam Secretary, by welcoming 
you to our committee. I am a strong supporter of your 
initiatives to help at-risk youth.

                      MINORITY YOUTH UNEMPLOYMENT

    The overall unemployment rate has improved considerably 
over the past few years. Finally the high levels of minority 
youth unemployment are beginning to show a little decline. 
However, the rates continue to be unacceptably high.
    I wonder, how do your focus initiatives address this 
serious problem, and what are some of the intended outcomes?
    Secretary Herman. We have two specific requests that I 
think can make a difference in this area.
    First, we are asking the committee to continue the 
$250,000,000 for the out-of-school-youth initiative. We believe 
very strongly that by putting the focus on out-of-school youth 
who are most at risk, that we will be able to get these young 
people into the economic mainstream.
    As I said in my opening statement, of this population, 
there are 15 million today. Seventy percent of them are high 
school dropouts. We can ill afford to lose a generation of 
young people who will never know what it is to work, and the 
investment of the $250 million is making a difference, I 
believe, in key communities where we see these initiatives now 
starting, focusing on what I call whole person-whole community 
strategies where we are bringing these young people into not 
only additional training but mentoring support.
    Some are involved in alternative school programs. Many law 
enforcement officials are working with us in these communities, 
in these neighborhoods. I could point to the efforts, for 
instance, in Houston, Texas, where we are working with 
approximately 1,000 kids, and literally half of them today have 
been impacted positively by this initiative.
    At the same time, we are also requesting funds for an 
initiative that we wish to pilot under the WIA called Right 
Track Partnership. To me it is the other side of the coin of 
the out-of-school youth, because while the out-of-school youth 
initiative is focused on high school dropouts, this initiative 
is designed to focus on those kids who would become one of 
those statistics were it not for special intervention at 
earlier ages.
    So we want to work on the early years in high school, we 
want to prevent them from becoming a dropout casualty. We think 
we know enough about what is involved in working with these 
young people on a year-round basis. It is not enough, for 
instance, just to have a summer job, and to assume that this is 
all we need to do to keep a kid productive and make sure they 
go back to school and do not drop out. These kids need 
mentoring, they may need internships throughout the year. They 
need someone to stay with them so they do not become a casualty 
as well to the program.
    Mr. Jackson. The Work Force Investment Act mandates that 30 
percent of youth formula funds go to out-of-school youth. I am 
interested in how you are changing the focus of your youth 
programs to meet the statutory requirement, but also how does 
the youth block grant reform the summer jobs program, which I 
think you briefly touched upon?
    Secretary Herman. What we are trying to do is have a youth 
policy that is year-round, that encompasses not only summer job 
experiences but year-round experiences for young people. So 
what we are proposing through WIA is to make sure that summer 
jobs are actually connected to broader experiences; that the 
touching of a kid, if you will, through a summer jobs 
experience does not end there, but in fact by having year-round 
support and assistance, that we are able to invest more 
holistically in our young people.

                         TRAINING IN TECHNOLOGY

    Mr. Jackson. I read recently an article in the Milwaukee 
Journal Sentinel about the skills gaps leading to wage 
disparity for many minorities. This article said that a major 
reason for the widening gap between the richest and poorest 
workers is the rapid development of technology in the 
workplace.
    Could you tell us more about these trends and what could be 
done to address this?
    Secretary Herman. Certainly. With the impact of technology 
on the workplace today, and the fact that many of the jobs that 
are being created are jobs that will have more of a 
technological impact, we have to make sure that kids who have 
dropped out of school or individuals who are not currently 
getting the training that they need are going to get the 
support and training that is necessary particularly when it 
comes to making sure that kids have computer training, computer 
support.
    That is one of the reasons, as you know, that the 
President, working through Secretary Riley, is trying to make 
sure that we wire all of our schools for computers by the year 
2000. But it is not just school kids. We also have to invest in 
adults to make sure that they are going to get the lifelong 
learning and skill development that they need. We believe that 
the investments in our one-stop centers, and what we are doing 
in particular with reforming our job training programs, where 
we are going to have more employee involvement, will result in 
our being able to link job training needs to where the skills 
of tomorrow are going to be.

                     INTERNATIONAL LABOR STANDARDS

    Mr. Jackson. Madam Secretary, just one additional question 
until the second round I assume we are going to have.
    As you know, I have introduced recently a bill called the 
Human Rights Opportunity Partnership and Empowerment for Africa 
Act. I am very interested in promoting sustainable African 
development.
    Do you think that your international labor standards budget 
initiative could help support positive movement on labor 
standards and working conditions in sub-Saharan Africa?
    Secretary Herman. Yes, very definitely. As I indicated to 
Congresswoman DeLauro, we are already working, with the 
Government of Uganda to set up a children's bureau there, a 
bureau that will begin to look at abusive forms of child labor.
    We have excellent initiatives that we are currently 
involved in with the South African Government that deal with 
training in the mines, and occupational safety and health 
programs. There also is another initiative for a statistical 
infrastructure akin to our own Bureau of Labor statistics 
(BLS), so they can begin to do more predictive work and to 
examine the needs of their own workplace.
    So I believe very much that this technical assistance arm 
of the ILO can directly benefit what we are trying to do on the 
Continent of Africa.
    Mr. Jackson. Thank you, Madam Secretary, for what I believe 
to be an outstanding job that you are doing at the Department 
of Labor.
    Thank you very much, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson.
    Mrs. Northup.

                           HELPER REGULATIONS

    Mrs. Northup. Yes, thank you, Mr. Chairman, and Secretary 
Herman. I have a couple of questions.
    First of all, I would like to ask you about the helpers. I 
think I have asked about that before. I know that your 
Department stated to a U.S. District Court that you would 
reissue a regulation concerning the use of helpers on 
prevailing wage jobs within one year. To date you have not 
published anything on this.
    What is the Department doing to ensure that the widespread 
prevailing practice of using helpers in the construction 
industry is available? I think the problem is that without 
these regulations on helpers, they are not included in the wage 
information that is used for prevailing wage levels. That is 
why this regulation is necessary. So I wondered what you were 
doing to make sure that helpers and their wages were included 
in the prevailing wage information, and when you were going to 
publish that regulation.
    Secretary Herman. I am very hopeful, Congresswoman Northup, 
that within the next week to 10 days we will be publishing the 
regulation. It is at OMB and it has been at OMB. It is my 
expectation that it is in its final review there, and I would 
be surprised if OMB was not prepared within the next week to 10 
days to issue that regulation.
    Mrs. Northup. Okay. Do you agree that helpers is a valid 
work category?
    Secretary Herman. You know, interestingly enough, 
Congresswoman Northup, one of the things that contributed to 
the delay was when we went back to examine the regulation to 
see if it was just a matter of reissuing, we got a lot of 
different comments. One of the comments, quite frankly, was 
first of all whether or not the use of the category of helper 
is as widely used as it was thought when we initially 
promulgated those regs. And even if it is used, there seem to 
be a lot of varying definitions as to what really constitutes a 
helper today when we look at it in the context of the 
semiskilled work force, if you will.
    So I am really interested to see what the rulemaking 
process will yield in this regard, because there is a great 
deal of ambiguity around the definition today and how employers 
are actually using helpers in their work force.
    Mrs. Northup. I think my concern is that helpers is a way 
that many young people or new workers in the work force 
actually are able to get into construction jobs, which tend to 
be high-paying. By going through the helpers route, they are 
able to get good jobs to be able to provide for their families.
    I know that within a pilot recently the Bureau of Labor 
Statistics found that 10 percent of the construction workers in 
that particular area where they did their survey were helpers. 
If your Department does not include that in the statistics that 
are necessary for computing prevailing wage rates and so forth, 
if you do not have those regulations in place, what we really 
do is create a situation where they are largely cut out from 
those opportunities.
    I don't know whether you know it, but I understand that the 
OSHA administrator actually worked in construction, starting 
out as a helper. And so even in your own Cabinet it is my 
understanding that their opportunity came by that route.
    Secretary Herman. Mr. Jeffress did?
    Mrs. Northup. I believe so.
    Secretary Herman. I will certainly talk to him about his 
experience in that area. I will tell you that I also began in 
this area, but I started off in the apprenticeship area.
    One of the issues for me always, in looking at this whole 
question, is how does it support and work with pre-
apprenticeship training, apprenticeship programs, which as you 
know has also been a standard route for getting young people 
into the skilled trades. So perhaps Mr. Jeffress and I will be 
able to have experientially-based conversations about this 
issue.

                     STATE APPRENTICESHIP COUNCILS

    Mrs. Northup. I am very supportive of the apprenticeship 
programs, but I think students and new workers come into the 
work force through different routes. It is important that we 
accommodate all of them.
    Now that you mention that I would like to follow up with 
the National Apprenticeship Act and how your office is making 
sure that State apprenticeship councils are carrying out their 
mandate under that law to certify bothunion and nonunion 
training programs on an equal and nondiscriminate basis.
    Secretary Herman. I think we are taking the right steps and 
actions in that regard. The apprenticeship program is something 
that I am personally committed to, as I have said earlier, and 
I think that we are taking a balanced approach.
    We are also looking at new ways and new opportunities to 
create other apprenticeable jobs, precisely for the reasons 
that you have just articulated, to find new ways to get more 
young people into the work force today.
    Mrs. Northup. There are communities that the private work 
force--because of the responsibility to certify both the union 
and nonunion, you have more workers banding together to create 
training opportunities for employees. It makes only sense to 
certify all of these as quickly and as responsibly as we can.
    It is my understanding that the Washington State 
Apprenticeship Council is refusing to certify nonunion 
programs. I just wondered, if you found that to be true, what 
action your Cabinet would be taking.
    Secretary Herman. I have no knowledge of what you are 
saying in terms of the Washington State Apprenticeship Council, 
but I will certainly look into that and get back to you.
    [The information follows:]

                Washington State Apprenticeship Council

    We are currently conducting a compliance review of the 
Washington State Apprenticeship Council to ascertain relevant 
information about this allegation. Upon completion of the 
review and analysis of the information, recommendations will be 
forthcoming should corrective action be warranted. We will keep 
you informed about the outcome of our review of the Washington 
State Apprenticeship Council.

                    BLACK LUNG DISABILITY TRUST FUND

    Mrs. Northup. I would like to ask you also about the Black 
Lung Disability Trust Fund that borrowed $360 million to pay 
benefits, expenses and interest payments. On the same date an 
actual interest accrual, an interest accrual of $20 million was 
booked. This seems an accrual of one full year of interest for 
a one-day period before the next fiscal year. I am concerned 
about why a full year of interest was charged on 9/30/98, and 
if this is a new accounting practice. If a monetary shortfall 
should occur at a division of the Department of Labor, could 
monies from one fund be diverted to another fund to cover the 
shortfall, and has that ever occurred?
    Secretary Herman. Typically, we certainly don't divert 
funds from one initiative to another that way. The particular 
fund transfer that you have just articulated is something that 
I would have to ask staff to look into on the accuracy and 
exactly what has happened in that instance, and get back to you 
on that.
    Mrs. Northup. I would also be interested in knowing whether 
any additional borrowing has taken place since September, 1998.
    Secretary Herman. Okay. We will look into that for you.
    [The information follows:]

                   Black Lung Trust Interest Payment

    The $20.25 million in question is a FY 1999 full year's 
accrual of interest for the $360,000,000 advance that was 
borrowed on September 30, 1998. This accrued interest will not 
be paid until September 30, 1998. Interest is accrued on a 
monthly basis during the fiscal year. The total accrued 
interest is paid on a yearly basis each September 30. This is 
not a new accounting practice. Interest has been accounted for 
in this manner for years.
    There have been no additional borrowings since September 
30, 1998.

                       PROPOSED CLAIMS REGULATION

    Mrs. Northup. I wondered why you were going to issue 
regulations on health plans, considering that right now there 
is the Agency for Health Care Policy Research that is currently 
doing research on outcomes for managed care plans, and when 
that is done they are going to make recommendations.
    Doesn't it make sense to wait until that review has been 
done, that research has been done, so that what regulations you 
want to submit would be based on evidence of real problems or 
concerns?
    Secretary Herman. Are you speaking of the patients' rights 
claims regulation in that regard?
    Mrs. Northup. You indicated you are going to develop those 
regulations regarding the health plans.
    Secretary Herman. Coming out of the work we did on the 
Patients' Bill of Rights, we are looking specifically at 
developing new regulations. I had the opportunity to co-chair 
that work with Secretary Shalala. One of the things that the 
President asked all of the departments and agencies to do was 
to go back and examine exactly, from an administrative 
standpoint, what we could do to deal with some of the issues 
that were raised as part of that year-long work.
    One of the things that came out was the fact that we have a 
20-year-old claims procedure regulation that was issued at a 
time when few plans required pre-authorization for the 
provision of medical services. Today, however, the issue is not 
so much who pays, but quite frankly it is whether or not the 
service will even be provided. We are concerned that the 
existing regulations time lines oftentimes result in real 
injury to the parties who are waiting for a response.
    What we are trying to do now is to update that regulation 
and to have consultations, to have hearings, as we are 
presently doing, with the stakeholders in this area to see what 
are the right changes to update it to make it more responsive 
in terms of the actual use today, in terms of current practice.
    With regard to what is going on on other fronts, it would 
be my expectation that as we are doing the work around this 
regulation that is within the purview of ERISA, that other 
studies are going on. I know Congress itself is looking more 
broadly at this issue. I would expect that the work we all do 
in this area will contribute to improving the final outcomes.
    Mrs. Northup. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Northup.
    Mr. Hoyer.
    Mr. Hoyer. Thank you Mr. Chairman. Welcome, Madam 
Secretary. I want to join my colleagues who have congratulated 
you on the outstanding job and leadership that you are 
displaying. The President is lucky to have you in his Cabinet.

                 SAFETY AND HEALTH PARTNERSHIP EFFORTS

    Let me make a comment, if I can. When I came in, the 
chairman was discussing some of the regulations. In your 
statement at page 13 you say that one of the things you are 
trying to do, talking specifically about safety and health,is 
to enhance partnerships with employers.
    You go on to say, ``We know most employers want to do the 
right thing, but many need help to do so. I am committed to 
enhancing our partnership efforts through compliance 
assistance, consultation programs, and cooperative 
mechanisms.''
    I think that is an important statement, because I think 
that is in fact not only your policy but the policy of the 
administration with respect to working cooperatively, and that 
the overwhelming majority of businesses, large, medium, and 
small, do in fact want to cooperate so they will have a very 
safe workplace. I know that even dealing with MSHA, the 
Maryland program, I have a lot of employers in my district who 
have been very pleased with their cooperative assistance.

       EMPLOYMENT OPPORTUNITIES FOR INDIVIDUALS WITH DISABILITIES

    Let me now, having made that statement--and I know you 
obviously agree with the statement--in 1990 we passed the 
Americans with Disabilities Act. There was a lot of hope 
attached to that act, particularly as it related to employment 
of those with disabilities.
    As you know, the statistics have not been as good as we 
would have liked them. I want to congratulate you and the 
President on the initiative, and I would like you to discuss in 
a little more depth the efforts that are being undertaken to 
make sure that those with disabilities are getting jobs, and 
using the abilities that they have.
    Secretary Herman. Thank you for your comments, Congressman 
Hoyer. Let me say that we have made enormous strides, in my 
view, in making a difference to include individuals with 
disabilities into the economic mainstream.
    The President asked last year that I chair a Federal effort 
to examine the barriers to employment of persons with 
disabilities. We will examine what, in terms of Federal policy, 
is getting in the way of making this happen, and bring together 
all of the various departments and agencies to look 
specifically at what we are doing and how our policies may work 
against this effort.
    We have been very successful in making a number of 
recommendations to the President to remove barriers to 
individuals with disabilities to boost their employment 
opportunities. This has included everything from looking at how 
our Medicare policies work against individuals with 
disabilities who have to choose between staying on health care 
or getting a job, to what we can do to actually boost 
employment opportunities and training for individuals with 
disabilities.
    In particular, for instance, in this budget we are asking 
for resources that would be incorporated into our one-stop 
centers, working with the employment service to invest in the 
training and the counseling and support services that 
individuals with disabilities need.
    We want to be able to provide, for instance, incentive 
grants to local work force development boards, to encourage 
them to come up with innovative partnerships for the purpose of 
boosting the employment possibilities of individuals with 
disabilities. This might include taking into account the need 
to provide special supportive services such as personal care, 
through personal attendants. They also will look at not just 
the physical structures but also the service infrastructures of 
our one-stop centers and how we can make them more user-
friendly.
    I am particularly pleased with the fact that we are asking 
for job vans, because part of this effort will be talking vans 
that can move around into key communities and talk about what 
is on America's Job Bank, and what services are available in a 
given location for individuals who are blind but who certainly 
want to get into the labor market. We have done a partnership 
grant in this area.
    So we have taken a number of steps to boost the employment 
possibilities and capacity for Americans with disabilities.

            UNEMPLOYMENT RATES FOR PERSONS WITH DISABILITIES

    Mr. Hoyer. Madam Secretary, do you by any chance, know 
statistically what progress we are making over the last 3 to 4 
years?
    Secretary Herman. In terms of the employment? We really 
have not made, in my view, a lot of progress in this area. I 
think that the work of the task force is now beginning to track 
that progress, by setting up systems to measure changes in 
employment and unemployment. Generally we talk about a 70 
percent unemployment rate of individuals with disabilities. We 
need to do a lot better.
    Mr. Hoyer. Thank you, Madam Secretary. I agree with you, we 
do need to do better. I was frankly shocked at the continuing 
intractability of those unemployment figures among those with 
disabilities. Anything we can do to bring those down not only 
is going to save the Federal Government money and do a great 
deal for the self-image and worth of these folks with 
disabilities, but also obviously they are going to be taxpaying 
citizens and are going to be a benefit to the community.
    Secretary Herman. I always say that this is one segment of 
the American population that actually wants to pay taxes. That 
is what you hear increasingly when you work with individuals in 
the disability community who want to get into the labor market.
    Mr. Hoyer. Let me switch to the welfare-to-work idea. You 
have been asked a number of questions on that.

                      WORK OPPORTUNITY TAX CREDIT

    What role has the Work Opportunity Tax Credit played in 
trying to attract more businesses that would not have 
participated otherwise?
    Secretary Herman. It has made a big difference. As the 
Congresswoman was saying, we have seen a doubling of the usage 
in terms of the Work Opportunity Tax Credit. We know in 
particular that the larger establishments are taking advantage 
of it, and we are trying to do more to make sure that we spread 
the message more to small businesses, because that is where, in 
my view, the big payout and the big benefits can occur, if more 
small businesses in particular would take advantage of it.
    We are working very closely with the private sector 
partnership that is working on the welfare-to-work initiative. 
They have a great education campaign around the WOTC, and in my 
own travels and work, I am meeting with chambers of commerce 
and with other employer groups to talk about the tax benefits 
of the WOTC.
    Mr. Hoyer. Madam Secretary, you have introduced and we have 
talked to people who have gone from welfare to work, and 
employers who have found it an extraordinarily successful 
transition for those folks and for their businesses. To the 
extent that we can publicize that among the small business 
community to see how successful it is, I think that will be an 
encouraging aspect.
    Secretary Herman. We clearly need to do more in that area.

                     CROSS DEPARTMENTAL COOPERATION

    Mr. Hoyer. The last question, you mentioned my name in 
conjunction with the company location and one-stop centers. 
Yours have been successful. You talked about the 
interagencycooperation that you are effecting in your Department.
    Can you reference, however, and expand upon that somewhat 
to the cross-department cooperation, and in particular, of 
course, housing, very important in terms of education and 
health and human services, all of which impact on the quality 
of life for families and access for families to services that 
they need?
    Secretary Herman. We are actually having great success in 
this area. I believe that the work that we are doing in 
particular on the welfare-to-work initiative has given us an 
opportunity to work more collaboratively, to make this work at 
the grassroots level.
    We have a working task force that looks at the housing 
voucher program in relationship to people who are getting jobs 
as we are working through the welfare-to-work strategies. We 
are working with HHS on the child care initiative and child 
care support that is needed.
    The Department of Transportation has been critical to this 
effort, as well, as we increasingly recognize the need to move 
individuals to oftentimes suburban communities where the jobs 
are being created. Two out of three welfare recipients are in 
inner cities and three out of four of the jobs are in suburban 
communities, and you cannot do it without a transportation 
strategy. So we have been very collaborative in looking at our 
own crosscuts this way.
    The other area where I think this is being manifested is 
also in the youth area. We are working very closely with HUD on 
the empowerment zone strategies, with a particular focus on 
out-of-school, at-risk youth inside EZ communities. So more 
coordination, more leveraging and targeting of the resources is 
occurring, and also with the SBA in this regard, to work with 
them on the information that employees need, to get them to 
work with us on hiring these kids and to bring them into more 
collaborative partnerships.
    Mr. Hoyer. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Hoyer.
    Ms. Pelosi.
    Ms. Pelosi. Thank you, Mr. Chairman. Excuse me for having 
to step outside. Spring is here. All of our constituents come 
to town, and when they come from California they expect to see 
you. They all send their regards to the Secretary and to you, 
Mr. Chairman.
    Mr. Hoyer. Whether they come from California or from St. 
Mary's County, they expect to see us.
    Ms. Pelosi. Welcome, Secretary Herman. Thank you, as 
always, for your excellent statement and your superb 
leadership. It is very encouraging always to hear your 
presentation. Once again the Clinton Administration makes us 
very proud with the caliber of Cabinet officer before our 
committee.

                       DRAFT ERGONOMICS PROPOSAL

    Secretary Herman. Thank you. Thank you.
    Ms. Pelosi. I wanted to just make a brief statement 
supporting OSHA's historic and ongoing effort to protect 
American workers from workplace injuries and illnesses.
    OSHA's draft ergonomics proposal provides sensible safety 
and health standards, and would significantly decrease 
America's annual $15 to $20 billion direct worker compensation 
cost. I stand with many others, the American College of 
Occupational and Environmental Medicine, America Public Health 
Association, the AFL-CIO, and other members of the medical and 
worker communities in support of the OSHA protection.
    OSHA hired its first ergonomist in 1979. This 20th 
anniversary is coming soon, and waiting 20 years for ergonomics 
protection is too long. It is time to finalize this sensible 
ergonomics standard. So I commend OSHA and the Department for 
your courage in moving forward, which is consistent with the 
statements of our previous distinguished chairman, Mr. 
Livingston, and our ranking member, Mr. Obey, in their letter 
on this topic.
    Do you have anything else you want to say on that subject? 
I know you had answered Mr. Bonilla's questions earlier, and 
you had addressed it in your opening statement. I agree with 
you completely; any of our decisions must be science-based.
    But we have had the science evaluated at NIOSH, whose 
organized purpose is to give a scientific foundation to the 
decisions that are made in this regard, and also the many 
further investigations that were made--I myself have a bad 
back. And Mr. Chairman, I know the plural of anecdote is not 
data.
    But when I was last in, my doctor was recommending an 
ergonomic chair, not like the ones in this room today. You 
know, he said, ``I am surprised that you all do not have all of 
this.'' And I said we are having a little struggle now about 
ergonomics in the Congress and a standard for it. And he said, 
``Who could possibly be against that?'' I thought that was a 
very interesting question.
    In any case, I wanted to give you time to say whatever else 
you might like to add to the record on that.
    Secretary Herman. I would just hope, Congresswoman Pelosi--
and I want to thank you for your comments, and want to thank 
you as well for your leadership in this area--that we can 
finally move from a point in time, as you said, 20 years later, 
from debating the question of whether or not we will do this to 
how we shall do this, and that we shall spend our time 
examining the best solutions, the right kinds of interventions, 
interventions that work for employers, that will be flexible, 
but also interventions that will lead to the reduction of 
injury and illness in the workplace, and that we can begin to 
pull out many of the studies that are on record regarding 
productivity changes and positive examples of what companies 
are doing to make a difference.
    What we are now learning in terms of reduced compensation 
costs, that employers are seeing as they are moving to 
implement positive ergo programs, we have not had that kind of 
evidence sufficiently, in my view, on the record. I would hope 
to be able to supply you and other members of this committee 
with positive solutions, to say this can work and we need to 
move on to protect America's workers.
    Ms. Pelosi. I appreciate that, and thank you for your 
leadership. I am concerned that any further delay of the 
ergonomics standard could victimize an additional 100,000 
employees each year and cost more than $3 billion in direct 
worker compensation and more than $9 billion in other costs 
annually. So I think it is time to act.
    My colleagues have talked about children and America's 
families and the rest, in different contexts, international 
child labor laws, pay equity, which affects America's children. 
We talk a great deal about children, whether it is their 
health, their well-being is so closely tied to the economic 
security of their families, be it the pension security of their 
grandparents, so their parents do not have to be concerned 
about that, but very much tied to a living wage.

                         MINIMUM WAGE INCREASE

    It is possible that we might have an increase in the 
minimum wage considered on the floor this year. I am hoping so. 
I am concerned about this disparity that you talked about in 
your remarks and in answers to questions, that this booming 
economy still has left some behind.
    What impact would increasing the minimum wage have for 
lower-income Americans?
    Secretary Herman. Obviously it would make an enormous 
difference for low-income Americans. We estimate that 
approximately 12 million individuals would benefit from an 
increase in the minimum wage. As you know, the President is 
proposing that we go from $5.15 an hour to $6.15 an hour, $1 in 
the increase. But the reality is when we look at who those 12 
million people are, two-thirds of them are women, so really an 
increase in the minimum wage serves disproportionately to 
assist women in this country. The majority of them are adults.
    Another reality is that we talk sometimes very globally in 
terms of the policy and the numbers, but you are talking about 
an average increase of $2,000 a family a year. That is what it 
would mean in real income. And $2,000 for an average family of 
4 that is enough money to put food on the table for another 6 
months. So this is real income that really impacts the quality 
of life for families in this country today.
    Ms. Pelosi. Clearly your answer indicates that it is a 
matter that we should address, and we should address at least a 
$1 an hour increase.
    I am concerned, because we have these debates about the 
Federal budget and food stamps and housing assistance and all 
other supports for people, but actually what we are doing in 
many of these cases is subsidizing a wage that is not a livable 
or a living wage, and there are those who disdain those who 
have to take advantage of government programs to put food on 
the table. We should not tolerate a situation where we have 
effectively starvation wages, absent the intervention of the 
Federal program with food stamps and, as I said, other 
assistance.
    As you say in your statement, low-income people usually do 
not have good working conditions, health benefits, and the 
rest. While I am pleased with the emphasis you have placed in 
your statement on ending the disparity, I wish you would just 
spend a little more time on that, too.
    If we increase the minimum wage by $1, if you had the 
worker displacement in that, some of those in the retraining 
are not the lowest low-income people. So again, how do we lift 
them up?
    I think if my question was asked before the beep, as I 
think the chairman said earlier--and if I misunderstood, please 
correct me, Mr. Chairman--that you may answer the question.
    Secretary Herman. Thank you, Congresswoman Pelosi. 
Basically what we have to do, as you said, is not look at just 
minimum wage strategy. That is why the whole question today of 
what we can do to strengthen pension coverage and to make sure 
that we can begin to provide some kind of pension support for 
low-wage workers is very, very important. These are the 
workers, obviously, who have no pension or health care 
benefits.
    I believe a Patients' Bill of Rights will go a long way to 
strengthening the economic security, if you will, of low-wage 
workers. But we need a much more comprehensive approach if we 
are going to make sure that we continue to lift them up, not 
just through minimum wage strategies but other interventions as 
well.
    That is why our dislocated worker program in particular 
puts such an emphasis on training, so that we will be able to 
help them with retraining as well if they are dislocated, not 
to take another low-wage job but to be able to take advantage 
of other jobs that are growing in the new economy.
    Ms. Pelosi. Thank you. I appreciate that. Thank you, Madam 
Secretary.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Pelosi. I understand that the 
gentlewoman from California will ask Mr. Jeffress to provide 
out of his budget ergonomically correct chairs for the 
subcommittee. Is that correct?
    Ms. Pelosi. You younger folk do not have the bad backs that 
some of us have.
    Mr. Porter. I do.
    Mr. Istook.

                              MINIMUM WAGE

    Mr. Istook. Thank you, Mr. Chairman. Secretary Herman, it 
is nice to be with you this morning.
    Let me ask, if someone is seeking a job and they are 
seeking a certain hourly rate, and they are not able to find 
someone that figures they are worth this amount, should they be 
disqualified and prohibited by law from taking a job at a 
lesser rate?
    Secretary Herman. You are saying if someone----
    Mr. Istook. If someone's job skills are such that no one is 
willing to hire them for the amount that they want, should they 
be prohibited by law from going to work for a lesser rate?
    Secretary Herman. No, I don't think they should be 
prohibited by law from going to work at--as long as we are 
paying the minimum wage here.
    Mr. Istook. That is the whole point. The minimum wage tells 
people that if there is not somebody willing to pay this amount 
for your services, you are disqualified from working. That is 
what the minimum wage does. That is why I wondered if you were 
in favor of disqualifying people from working because their 
skills were not such that an employer was willing to pay them a 
particular amount.
    Secretary Herman. I think in this instance, Congressman 
Istook, it is a hierarchy of principles here that we are 
talking about. And for me, I obviously believe that every 
worker is entitled to a basic minimum wage. That is what we 
have in terms of a basic standard.
    But if you are talking about someone----
    Mr. Istook. Yes----
    Secretary Herman [continuing]. At $25 an hour and saying, 
``I have to have $25 an hour,'' and the employer is saying, 
``No, I am only going to pay $20 or $15 an hour,'' no, I don't 
think we should have a law to mandate that.
    Mr. Istook. Madam Secretary, I find it interesting that you 
think the principle stops at a particular level, and the 
government should say that people that have the most difficulty 
finding jobs because they have fewer employable skills are 
those who are disqualified from working because their skills 
are not worth as much as the government says is the minimum 
that must be paid. Because that is the effect of the minimum 
wage.
    If you do not have opportunities for people to be trained, 
if you do not have opportunities for people to get on that 
first rung of the ladder in the work force, andespecially among 
minorities, the minimum wage has a disqualifying effect. There have 
been plenty of studies done to show that it impacts minorities most 
heavily, because they are the ones who typically will have the most 
difficulty getting that job in the first place and developing those job 
skills.
    So I wanted to ask you that question to understand whether 
you believed in the principle that government should not ban 
people from working just because their skills have not reached 
a certain echelon.
    Secretary Herman. I think if it was an outrageous wage, 
that shouldn't be mandated, but clearly I believe in the 
principle of the minimum wage as a way of setting a floor below 
which labor standards cannot fall in this country.
    And with regard to minorities, who I think oftentimes have 
been exploited when we did not have a basic minimum wage 
principle in place, I think one of the interesting things to 
note about the most recent increase in the minimum wage was the 
fact that for the first time minorities actually benefited from 
this increase. They actually were able to share in the job 
gains and the job growth, and it actually contributed to the 
reversal we are now seeing in the bottom half of the labor 
market not making any gains.
    Mr. Istook. Madam Secretary, I would say that of all of the 
minimum wage increases, if only once has it helped minorities, 
that seems to indicate to me that what actually helped 
minorities in this case were other factors in the economy, not 
the minimum wage increase. If you can have--I don't know how 
many minimum wage increases there have been over the years, 
tens or dozens or whatever, and only once did it help 
minorities, then it seems to me there was some other factor 
that was helping minorities, such as the overall economic 
performance.
    Secretary Herman. I would agree with that, Congressman 
Istook.
    Mr. Istook. It was not the minimum wage that helped 
minorities.
    Secretary Herman. I am only saying that by having the 
minimum wage in place, obviously they were able to benefit in 
terms of boosting family income because they were able to get 
jobs that paid a decent wage.
    But when you discount for other factors in the labor market 
that have served as a barrier to employment, they could not 
even get minimum wage jobs. I am only saying that at least what 
we are seeing now is that minorities are getting minimum wage 
jobs with greater pay that boosted the income.
    Mr. Istook. Those that are able to get jobs, because the 
minimum wage establishes an entry level, and unless you get 
that, you cannot get a job at all.

                      DAVIS-BACON PREVAILING WAGE

    Let me ask you about another situation. We have had of 
course for a number of years the prevailing wage laws, the 
Davis-Bacon laws, and of course they are always controversial 
because if you say we are going to pay the prevailing wage, you 
get involved in the definitions of what is the prevailing wage, 
and then how do you know indeed if it is the prevailing wage 
unless you go out and talk to each and every employer and get 
the information, and they may not want to give it.
    Therefore, if you have a system which is mandatory for 
employers to give that information, they are certainly going to 
find it very burdensome, very tedious, very time-consuming and 
difficult, very expensive. On the other hand, if you say, 
``Well, we will go with a sample,'' then you always wonder if 
the sample is representative. On top of that, we wonder if it 
is accurate.
    As you know, the General Accounting Office had a report 
released in January of this year, claiming to be the best 
survey to date about the accuracy of the WD-10s, the forms upon 
which the wages are submitted. Even among those who do submit 
them, the GAO report found that there are errors in about 70 
percent, that is seven-zero, 70 percent of the forms that they 
reviewed.
    If indeed that is a representative sample, as they try to 
make it so, that means 70 percent of the forms being submitted 
upon which to determine Davis-Bacon wage rates have errors in 
them. They found in this case, among the forms they looked at, 
that the absolute value, as they called it--I don't know why 
they said that, instead of calling it an average, they called 
it the absolute value--is 76 cents per hour.
    Now, there are millions and millions of hours worked each 
year by people in this country subject to Davis-Bacon. They 
found at least a 76-cents-per-hour-error. That is on top of the 
difficulty with the methodology. They found, for example, that 
with about 40 percent of the submissions they could not 
calculate what the Labor Department requires under the standard 
for which the averages and the number of people would be 
computed, and other difficulties there. It seems to me to 
demonstrate a lot of the inherent difficulty in trying to 
establish through government surveying a figure that we then 
say is the prevailing wage.
    Now, I realize, ma'am, we are going to disagree about 
whether Davis-Bacon ought to exist, but I hope we would agree 
that if it is there, it ought to be accurate. Is there any way 
to have an accurate determination of prevailing wage, period? 
Is there any way, seeing as what they have said about the 
methodology here?
    Secretary Herman. I think, given the recent report that you 
have correctly pointed to of GAO, and even what our own IG 
looked at, you know, a couple of years ago, that obviously we 
are seeing a pattern here in terms of inaccuracies in the data.
    It is my hope and my belief that the work that we are now 
doing as part of reengineering the Davis-Bacon wage 
determination process, we are getting more to the systemic 
issues, and as you point out, the problems, if you will, of the 
data and the submissions, and looking more to verification and 
examining, as I have asked the staff increasingly to do, where 
are we seeing these high error rates. What is it that we are 
finding, in terms of the lack of understanding and the lack of 
knowledge about the system, that is what we are correcting for.
    At the same time, as you know, because this committee has 
funded us, we are looking to whether or not BLS data is also an 
alternate way of getting at this issue.

                            PREVAILING WAGE

    Mr. Istook. If I can just finish, and we will have some 
questions for the record on it, but I am just asking in light 
of the methodology problems and knowing that to try to cure 
these problems might create a much more expensive bureaucracy 
that we would be called upon to appropriate, I am just asking 
are you questioning the very premise of being able to calculate 
a prevailing wage needs to be revisited? Does it need to be?
    Secretary Herman. No, I am not questioning that as much as 
I am recognizing the emphasis that we are putting on 
verification, going in and doing the reengineering. Can we do 
the systems changes based on the data that we are uncovering to 
make the corrections? I don't believe that we have had an 
effort to date that measures the work that we are doing right 
now in terms of what is going into this process. So I guess, 
personally, I think it is too soon to throw in the towel and 
say that this can't work. I think that we need to play it out 
and try to correct for the inaccuracies in the system, as we 
are trying to do.
    Mr. Istook. Thank you. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Istook. Mr. Cunningham is the 
last member on round one. We will not have time for a second 
round. The Chair would ask if any member has any additional 
questions for the Secretary?
    Ms. Pelosi. It depends on what Mr. Cunningham has to say.
    Mr. Porter. Okay. Mr. Cunningham.
    Mr. Cunningham. Thank you, Mr. Chairman. I recently, Madam 
Secretary, spoke to a fellow that was working up in Los Angeles 
for INS. He had a problem that they are so overworked that they 
literally hire temporary people to come in to interview 
prospective immigrants, and that individual will stay with a 
supervisor for 1 month and then they are put out on their own 
to basically make those kinds of decisions, and that they 
literally have 10 minutes per person to make a decision on 
whether a person qualifies or not.
    I think if we increase anywhere, it should be in that area. 
There are immigrants who want to come into the United States. 
There is a backlog, and I think the accuracy to make those 
kinds of decisions with the Department of Labor. I think that 
would be one area that I would like to see you focus on.
    As you are well aware, California is an immense immigrant 
State, both legal and illegal immigrants, and it is an area in 
which we need some help back in California.

                    DAVIS-BACON SCHOOL CONSTRUCTION

    I would like to go to a question, back to Davis-Bacon a 
second. I also volunteered to stay on the D.C. Committee 
because I think we can really make a positive difference. It 
doesn't do you much good as a member, but I think there are 
areas in which we can really help the city of D.C., and one of 
those is the education system.
    We had schools where literally the roofs were caving in. 
The school was delayed opening. We have made some positive 
gains. We have a new superintendent. We fully funded the public 
schools, and we started charter schools, and for the first time 
we had 20,000 children asked to come to summer school, not 
because they had to because of deficiencies, but because they 
wanted to learn. I think if we keep going in that direction, we 
will make some of those changes.
    But in the area of Davis-Bacon, we want to build schools, 
and to waive Davis-Bacon just for school construction would 
save 30 percent of the cost by letting bids to private 
contractors and even letting unions bid on it with the private 
contractors. We would save an immense amount of money. The 
President has come forward on school construction; we had a 
bill in the 105th Congress that gave a pretty good tax 
incentive for school construction and the President killed it 
in the Senate. There were some other things that he didn't like 
in that particular bill. But, in essence, it was vetoed by the 
President for school construction, and now he wants money out 
of the Federal Government budget for school construction which, 
of course, falls under Davis-Bacon, which will increase the 
cost, depending on the State, between 30 and 35 percent. Would 
the Department of Labor consider waiving Davis-Bacon and 
letting the unions compete just for school construction for our 
children?
    Secretary Herman. First of all, Congressman Cunningham, let 
me thank you for your work and your support of the District. As 
someone who has been a resident here for more than 20 years, I 
agree with you. We need to do more, not less, in this area to 
support the District.
    Mr. Cunningham. Thank you.
    Secretary Herman. But with regard to the application of 
Davis-Bacon and school construction, you know that this is an 
area where the administration is still looking at the 
intersection of Davis-Bacon with what is now a tax incentive 
proposal.
    More broadly, I think it is important to state, however, 
that the administration overall supports the application of 
Davis-Bacon. We think that the law itself, which was intended 
not to undercut a given market where we have construction 
dollars that the Federal Government is putting in, that we not 
undercut those markets but that we support those markets 
through a prevailing wage.
    I must admit that I am not familiar with the particular 
numbers that you are talking about in terms of the District. I 
can tell you more generally in terms of the work that we have 
done at the Department in looking at the application of Davis-
Bacon and prevailing wage laws, that we are not finding 
evidence to suggest that it is actually inflating the cost, if 
you will, in terms of a construction market. And so in that 
regard, I don't think that we would believe that it is having a 
negative impact. We think that it is going to help. We think 
that it actually contributes to the overall health and 
stability of the construction industry in a given community. 
But the administration is still looking at what the interchange 
is right now regarding school construction.
    Mr. Cunningham. If I can show you that there is a cost 
savings by waiving Davis-Bacon for D.C. school construction, 
would you support allowing the school to waive Davis-Bacon, and 
let the schools keep the initial amount in the savings for 
their schools. If they want additional school construction, if 
they want computers or better teacher pay, they can apply 
whatever those savings are, by waiving Davis-Bacon. If there is 
an inflation, would you support waiving Davis-Bacon for D.C. 
schools and other schools?
    Secretary Herman. As Secretary of Labor, I don't support 
waiving Davis-Bacon because when you talk about costs--and I 
guess I also speak from experience.
    Mr. Cunningham. I am saying if there is a cost 
differential, would you support it?
    Secretary Herman. When you talk about any costdifferential, 
the question for me is also the cost in terms of the workers that are 
involved, in terms of getting decent wages, who would also have the 
opportunity to work on the construction projects, who would be a part 
of contributing as well perhaps to the overall economic health of this 
area.
    Mr. Cunningham. I think you are skirting the question on 
me, because 95 percent of the construction built in this 
country is nonunion and the quality is there. People earn a 
living wage. They have paychecks and everything. But if the 
union inflates the cost of it by a great amount, I think we can 
take those savings and put back into our schools instead of 
paying the unions extra money.
    Let me go to one other real quick question. On special 
education, there are some areas that you can also help us if 
you talk to Gray Davis in California, and talk to Alan Bersin 
who is a Clinton appointee, who is now the superintendent of 
San Diego City Schools. I am trying to help both of those 
individuals in education in the State of California.
    The number one issue that they have is the Special 
Education Program in which trial lawyers are basically ripping 
off the school systems under the Individuals with Disabilities 
Education Act. We want to provide money for individuals with 
disabilities, not trial lawyers; and the idea of providing 
working wages for people with disabilities is to get them a 
good education, which I think is a key, whether you are a D.C. 
student or California student, and we would like your support 
in that.
    I have about 12 other questions for the record. I would 
like you to respond to those. But in view of that, I yield back 
the balance of my time.
    Secretary Herman. Thank you.
    Mr. Porter. Thank you, Mr. Cunningham.
    Madam Secretary, we have imposed on your time a bit. We 
thank you for answering our questions directly and candidly. We 
do have additional questions for the record. We thank you for 
the fine job you are doing and for your appearing here this 
morning.
    Secretary Herman. Thank you very much, Chairman Porter.
    Mr. Porter. The subcommittee stands in recess until 2:00 
p.m.
    [The following questions were submitted to be answered for 
the record:]

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                                         Wednesday, March 17, 1999.

    EMPLOYMENT AND TRAINING ADMINISTRATION VETERANS' EMPLOYMENT AND 
                           TRAINING SERVICES

                               WITNESSES

RAYMOND L. BRAMUCCI, ASSISTANT SECRETARY FOR EMPLOYMENT AND TRAINING
ESPIRIDION BORREGO, ASSISTANT SECRETARY FOR VETERANS' EMPLOYMENT AND 
    TRAINING SERVICES
    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the appropriations for the 
Department of Labor with a panel: the Employment and Training 
Administration, Raymond Bramucci, the Assistant Secretary for 
Employment and Training and Veterans' Employment and Training, 
Albert Borrego, Assistant Secretary for Veterans.
    Gentlemen, we welcome you. Why don't you proceed to give 
your opening statements, and then we will go to questions. Why 
don't you start, Mr. Bramucci?

                         ETA Opening Statement

    Mr. Bramucci. Thank you, Mr. Chairman and members of the 
subcommittee. Thanks for letting me speak to you about our 
Fiscal Year 2000 budget request. I am happy to be here: this is 
my first opportunity to testify before you. I would also like 
to introduce and acknowledge Ray Uhalde, the Deputy Assistant 
Secretary, who is here to be of assistance as well.
    Our request totals $10,400,000,000, an increase of 
$552,000,000 above Fiscal Year 1999. It includes $9,600,000,000 
for discretionary programs and $827,000,000 for mandatory 
programs. Our request is linked to Secretary Herman's three 
major goals: a prepared workforce, a secure workforce, and 
quality workplaces. At ETA, our secretarial priorities are 
implementing the Workforce Investment Act; carrying out the 
Universal Reemployment initiative; strengthening youth 
programs; and continuing to succeed with welfare-to-work.

                           AGENCY PRIORITIES

    The first priority area is Workforce Investment Act 
implementation. The Act is the result of four years of 
bipartisan work, and it will create a revitalized system that 
gives workers the information and training they need, and gives 
employers skilled workers. I want to compliment the Congress, 
again, for enacting WIA, and thank you for providing the 
investments to make it work.
    The American economy is strong. New high-skill jobs are 
growing three times as fast as other jobs. Employers are 
finding it harder to find skilled workers, and yet millions of 
workers feel trapped. WIA will build a system to help any adult 
interested in advancing, and give low-income adults, welfare 
parents, poor youth and displaced workers the help they need. 
It will be a great service delivery system to help our 
veterans, and I would like to compliment my colleague, 
Assistant Secretary Borrego, on the programs he is running so 
well for our service men and women. The system is being built 
with broad participation, following key principles--
streamlining services, empowering individuals, making services 
universally accessible, increasing accountability, creating a 
strong role for local boards and the private sector, providing 
state and local flexibility, and improving youth programs.
    The second Secretarial priority I will discuss with you 
today is the President's Universal Reemployment Initiative. In 
Fiscal Year 2000, the President proposes progress toward 
ensuring that all Americans, and specifically dislocated 
workers and workers receiving unemployment insurance benefits, 
have access to information and services to manage their careers 
and build bright futures. The President's budget proposes a 
$368,000,000 increase to work towards a five-year goal of 
ensuring that every dislocated worker who needs reemployment 
services gets help; that every unemployment insurance claimant 
and other job seekers get assistance; and that all Americans 
can access One Stop centers.
    The third priority area is youth. Today's changing economy 
is forcing American workers to change, too. Change is shrinking 
the demand for unskilled labor but too many kids do not have 
the skills they need. Youth minority unemployment rates have 
dropped, but they are still too high. Earnings of high school 
graduates are falling compared to people with more education. 
We have learned what works and what does not. What works is 
follow up, community focus, and employer involvement. Programs 
such as STRIVE and the Children's Village have shown great 
success with follow up strategies. The reformed formula Youth 
Activities program requires 12 months to follow up: ditto for 
the reformed Job Corps program.
    Our programs emphasize community involvement. Our Youth 
Opportunity Grants initiative relies on partnerships with 
community- and faith-based groups, local public school 
districts, the private sector; community colleges, and 
universities; and the juvenile justice system. Community 
ownership is encouraged through community boards and the 
involvement of parents, residents and local business leaders.
    As a result of the Workforce Investment Act, the Job Corps 
program is forging stronger ties to the community. The Act 
requires Job Corps centers to have a business and community 
liaison, and to be relevant to the local labor market.
    Finally, the Act establishes youth councils in every 
locality. These councils will be widely inclusive of private 
industry, youth service agencies, local public housing 
authorities, parents, former youth services recipients, and 
representatives of the Job Corps. We must involve employers in 
all aspects of youth programs. Every Job Corps center will 
establish an Industry Council that will work with business.
    Now, to discuss Welfare-to-Work. We launched Welfare-to-
Work to move the hardest-to-serve welfare recipients into 
unsubsidized jobs and self-sufficiency. We have made real 
progress. But though caseloads are at their lowest level in 30 
years, the toughest cases are people still on the rolls. To 
ensure the success of welfare reform for those toughest cases, 
President Clinton proposes to reauthorize Welfare-to-Work.

                           ETA BUDGET REQUEST

    Now, for more specifics on the budget request. Let's start 
with the youth programs. The total request totals 
$2,753,000,000. A few highlights: $250,000,000 would be 
available for Youth Opportunity Grants, the same level as 
Fiscal Year 1999. We are asking for $1,347,191,000 for the Job 
Corps program, $37,977,000 above the Fiscal Year 1999 level. 
The request includes $55,000,000 for the Department's share of 
the School-to-Work Opportunities initiative.
    We are also requesting $100,000,000 under National Programs 
authority to finance Right Track Partnership Grants that keep 
kids from dropping out of school and encouraging those who have 
to finish.
    Now, the adult programs. The request is $955,000,000 for 
Adult grants under the WIA, replacing the title II-program 
under the Job Training Partnership Act which was funded at the 
same level.
    The request contains a request for $1,595,510,000 for the 
Dislocated Worker Program, an increase of $190,000,000 above 
the Fiscal Year 1999 level. This is part of the President's 
Universal Reemployment initiative. The request for the 
Dislocated Worker program also includes $40,000,000 for aSkills 
Shortage initiative. This initiative will train and place dislocated 
workers in occupations and industries with skill shortages.
    For the Indian and Native American program, the budget 
includes a request of $53,815,000, $4,000,000 below the Fiscal 
Year 1999 appropriation, reflecting a one-time investment in an 
American Samoan facility in 1999.
    For the Migrant and Seasonal Farmworker Program, the budget 
includes a request of $71,017,000, $7,500,000 below the Fiscal 
Year 1999 appropriation that included $7,000,000 in emergency 
drought assistance. The Fiscal Year 2000 request also includes 
$5,000,000 in pilots, demonstrations and research funds to 
continue the Migrant Child Labor initiative.
    A total of $52,000,000 is requested for technical 
assistance, State incentive grants, evaluations, pilots, 
demonstrations and research, and other activities authorized in 
the WIA.
    The Community Service Employment for Older Americans 
Program provides part-time minimum wage employment to low-
income older workers, while maximizing unsubsidized employment. 
The budget request includes $440,200,000 for this program, the 
same as Fiscal Year 1999.
    The Fiscal Year 2000 budget request for States' 
Unemployment Insurance programs is $2,459,458,000, $99,100,000 
above the Fiscal Year 1999 appropriation.
    We are asking for $1,047,315,000 to build on the success of 
the Employment Service/One Stop-Career Centers; $149,000,000 of 
this total is for One-Stop career centers, $2,500,000 above the 
Fiscal Year 1999 appropriation. The America's Labor Market 
Information System component of the budget is increased by 
$48,200,000 over the Fiscal Year 1999 appropriation. It is an 
integral component of the Universal Reemployment Initiative.
    The Employment Service plays a critical role in One-Stop 
service delivery as the primary job finding source, especially 
for unemployment insurance claimants. Our budget request 
includes $761,735,000 to finance the Employment Service 
allotments to states.
    We are proposing that the Work Opportunity Tax Credit and 
the Welfare-to-Work Tax Credits be reauthorized through June of 
2000. Our request contains $20,000,000 to administer these two 
tax credits, which enable certain targeted groups to be hired 
by employers who will get a tax credit on a portion of wages 
paid to these workers.
    The budget request reflects the transfer of Alien Labor 
Certification programs and resources from the Employment and 
Training Administration to the Employment Standards 
Administration's Wage and Hour Division.
    A total of $314,400,000 is requested for the Trade 
Adjustment Assistance and NAFTA Transitional Adjustment 
Assistance programs. We will propose legislation that would 
consolidate these two programs. The consolidated program would 
harmonize existing requirements linking training and income 
support and provide supportive services as needed.
    Finally, our budget request includes $141,050,000 for ETA 
Program Administration. This represents about 1.4 percent of 
our total request.

                              EVALUATIONS

    The Labor Department takes evaluation seriously and tries 
to use the most rigorous evaluation techniques possible with 
the funds available. To mention some projects: we are finishing 
a major evaluation of Job Corps. We are evaluating promising 
youth models, such as the Quantum Opportunity program, the 
Youth Opportunity Grant program, the ``Kulick'' pilots, and the 
Center for Employment and Training. And we will be soon 
studying implementation of the Workforce Investment Act.
    ETA's Strategic Plan is an integral part of the Department 
of Labor's Strategic Plan. Our annual plan establishes 
performance goals for Fiscal Year 2000 for each ETA program. We 
plan to revise the goals to reflect the changes resulting from 
WIA.
    Mr. Chairman and members, thanks for your support of 
important investments in employment and training programs. My 
colleagues and I will be happy to respond to any questions you 
may have.
    [The information follows:]

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    Mr. Porter. Thank you, Mr. Bramucci.
    Mr. Borrego.
    Mr. Borrego. Good afternoon, Mr. Chairman. It is a pleasure 
for me to come here today with a fellow veteran, Assistant 
Secretary of Labor for Employment and Training, Ray Bramucci, 
to discuss the budget that will serve America's veterans with 
new and improved employment and training opportunities in the 
first year of the new millennium.
    The budget request for Veterans' Employment and Training 
Service will enable veterans to take full advantage of the 
dramatic growth and enduring strength of our nation's economy. 
That economy is creating unprecedented job growth without 
appreciable inflation, expanding career opportunities into new 
technology-based industries, and, more than ever before, 
allowing our veterans to use the considerable technical and 
inter-personal skills that they acquired in the military to 
build strong, stable, civilian careers for themselves and their 
families.

                      LICENSING AND CERTIFICATION

    Our licensing and certification projects with companies 
like Microsoft, Cisco Systems, and telecommunication companies 
like AT&T, Lucent, U.S. West, and others are opening new 
opportunities for veterans. In this environment, my goal for 
the agency is a simple one: to make sure that the first person 
an employer with a good career building job sees is a veteran 
with a first-class resume and the skills to dothe job that 
employer needs right from the start. That creates a win-win situation. 
The veteran wins because he or she is able to use the considerable 
skills and abilities acquired during military service to find quality 
employment on which to build a career, provide for a family, and 
contribute to a community.
    The employer wins because he or she minimizes search time 
and training costs by interviewing only veterans with the 
skills and abilities to contribute to the organization from the 
first day on the job. I believe that our budget request for 
Fiscal Year 2000 will enable VETS to succeed in this. But we 
cannot do it alone, and fortunately we do not have to.

                            ETA/VETS EFFORTS

    VETS, more than ever before, have support and cooperation 
from all the agencies throughout the Department of Labor. 
Secretary Herman has said that veterans issues are America's 
issues. With her leadership, VETS and ETA have embarked on 
numerous joint efforts to make sure that the new and vastly 
improved public employment service system will provide veterans 
with easier access to more and better services than ever 
before.
    Staff from both our agencies work together to implement the 
Workforce Investment Act. VETS is working diligently within our 
legislative mandate to make sure that veterans' priority of 
service is maintained in all Wagner-Peyser services within the 
one-stop environment.
    We jointly developed a military resume writing on the 
Internet that will help veterans, especially newly 
transitioning service members translate more than 5,000 MOSs 
into their civilian counterparts. When a veteran inputs a 
military occupational code, the resume writer offers 
professionally written choices for each section of the resume.
    We have a veterans' employment services section on 
America's Job Bank and America's Talent Bank. This will provide 
DVOPs and LVERs with an important tool to help veterans receive 
priority services in the electronic employment service 
environment. That is why the $157,500,000 that we are 
requesting for DVOPs and LVERs will bring us more bang for the 
buck in Fiscal Year 2000.

                          PERFORMANCE MEASURES

    Outcome measurements that we are developing as part of the 
Government Performance and Results Act, GPRA, will make sure 
that our resources bring veterans and employers the most 
effective and efficient services possible.
    Coming from a background in organizational development and 
human resource utilization, I have always looked upon GPRA as 
an opportunity for government managers to measure not how hard 
we are working, but how effectively we are working for our 
customers.
    It also allows VETS to move as an agency from one that 
processes grants to one that actively manages programs to 
ensure that more of our limited resources are used to help 
veterans build careers in the new economy.

                        VETS MANAGEMENT PROCESS

    But I am not waiting until Fiscal Year 2000 to improve our 
management process. Last year, I instituted a detailed monthly 
report called VETS Operations and Programs Activity Report. It 
tracks performance goals for all our programs, and these goals 
were built into my managers performance standards. When 
problems arise, I can see if they are systemic and move to fix 
them. A clearly defined corrective action plan brings 
accountability to our programs, accountability that I must show 
in my monthly meetings with the Deputy Secretary on VETS 
programs.
    As a head of a public agency, I believe in congressional 
oversight and public scrutiny; therefore, this monthly report 
is available to anyone upon request. I believe it will document 
that $26,100,000 requested for agency administration in Fiscal 
Year 2000 is being used responsibly and with the best interest 
of America's veterans always in the forefront.
    I am proud to be the assistant secretary that will take 
VETS into the 21st century. America's veterans have unselfishly 
done their duty to bring peace and stability around the world. 
Working together, we can make the coming century one of 
opportunity and prosperity for them here at home.
    I would be happy to take any question, Mr. Chairman.
    [The information follows:]

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    Mr. Porter. Gentlemen, thank you for those excellent 
statements. I am sorry more members of the subcommittee were 
not here to hear them. Unfortunately, there are many other 
subcommittees meeting at the same time, and people are torn 
between where they can be.
    Mr. Bramucci, you are fairly new on the job. This is your 
first appearance before our subcommittee. You were, I think, 
confirmed late last year, so you have had several months at 
ETA. You get a honeymoon question: how have you found the 
agency? Is it what you expected? Give us your initial 
impressions of your new position, and tell us something about 
the background you bring to your position.
    Mr. Bramucci. Those are great questions. I hope you have 
not run out of those.
    Mr. Porter. No, I've got a lot of them, but you only get 
them one year. [Laughter]

                           WITNESS BACKGROUND

    Mr. Bramucci. Let me take the last part first. I come from 
working class people of Massachusetts. A school drop out, went 
off to the Air Force, worked in factories around, became an 
ILGWU official, became Bill Bradley's chief of staff in New 
Jersey for 11 years, served as Commissioner of Labor in New 
Jersey for four years, been a mediator, an arbitrator, a 
lecturer, an advisor to school college presidents and here I 
am.
    Mr. Porter. Sounds exciting.
    Mr. Bramucci. The thing that sticks out in my mind as being 
here at this time, since I have been around quite a bit and 
heard a lot of rhetoric and seen a lot of acronyms and 
programs, is that this is an opportunity at this juncture to 
really do something to rebuild the American workforce and to 
forge the bonds between employers and workers, because we have 
a non-partisan, non-ideological opportunity, since 
conservatives and liberals, Democrats and Republicans are 
talking the same talk. And so, this is a real opportunity to 
build credibility. And we have got a sensitive bill, unlike 
CETA and JTPA and others.
    So we have an opportunity to be ultimately accountable. I 
would say that is the main challenge that I see of being really 
important to the system and having a role to get the right 
people in the right rooms to make the right deals, to make 
locally driven systems relevant.

                            PROGRAM RESULTS

    Mr. Porter. Yes, I often say publicly, and I say here 
publicly also often that for the first time in a long time, I 
think the executive branch and the legislative branch have both 
come to a definite understanding that our job is to take the 
tax dollars that we are using and get results for people, not 
just to set up programs, but to see whether those programs 
really do anything. And if they do not, then set upbetter 
programs that get the job done so that people get the help that they 
need to get the kind of opportunities within a society like ours that 
are there with the right training and the right chance to get that job.
    So I think we are very much reading off the same page on 
all of this, and I am very encouraged by that. And I said last 
week, I will say it again because we have different groups in 
the room and I want people to hear it, the American media 
missed completely the stories that are out there about what is 
really happening in America, and the good things that are being 
done in a bipartisan way. They spend all of their time on 
Monica Lewinsky and very little on the things that really are 
making a difference in our country for people and for their 
lives and for their futures and their families. And it is sort 
of sad that we have that situation in our country.
    Mr. Borrego, is there somebody over at the VA that is doing 
about what you are doing?

                             VA ACTIVITIES

    Mr. Borrego. Is this the Congressional Commission on 
Transition Services for Veterans?
    Mr. Porter. No, I am saying is there somebody working over 
in the Veterans Administration that is doing what you are 
doing?
    Mr. Borrego. No, sir, not that I am aware of.
    Mr. Porter. That is the right answer. [Laughter.]
    I--you know, we have spent a lot of time--this is another 
area--we have spent a lot of time creating programs without 
kind of looking at where we were going, and the last few years 
have seen a lot of consolidation where we are putting things 
back together again so we are focused on getting where we need 
to go. And if your answer was yes, there is another guy, and I 
talk to him all the time, that would worry me. There has been 
consolidation in veterans programs, has there not? But can you 
describe that a little bit?
    Mr. Borrego. What we have done, and you mentioned--
employment is very important to the VA, especially with the 
veterans with service-connected disabilities that Chapter 31 
puts through education programs. And there was a large concern 
from the congressional committees that the focus of that 
program was training and education and not jobs. So we have 
been working very closely with them. We do the employment, and 
since we have worked with them and they have been referring 
those Chapter 31 participants to us, we have gone from 42 
employment rate to 64 percent this last year. And if you take 
out those that were terminated by the VA, because they either 
were not ready, or they left the community, our entered 
employment rate goes up to 81 percent.
    What we have been doing in the process over the last few 
years is we have restructured, reengineered our own 
administrative. We reduced the national office, put a lot of 
the resources out in the field--out in the States and in the 
regions--so closer to veterans.
    As we have been taking a look at our programs, clearly, and 
I think Mr. Bramucci is right, the world is changing. We have a 
new economy. We have new companies. We have been working really 
hard to make sure that through licensing and certification of 
military skills that we respond to these companies' needs for 
the 300,000 or 400,000 jobs that they say are open. By 
certifying military skills, they get qualified people. We have 
had the CISCO Systems. We have had Microsoft. We have had the 
telecommunications company, and I think that those are models 
that are good for the workforce of the 21st century.
    So we have been working very closely with the VA. But we do 
the employment. They do the VA services. We have done training 
and have included them as well. We are doing a lot of work in 
licensing and certification at the Federal and State levels. We 
work very closely together, but employment is our piece. 
Health, benefits, hospitals, cemeteries--those are VA's.
    Mr. Porter. Thank you. Mr. Bramucci, I actually have a lot 
of questions here. I do not know who is going to arrive. If 
they arrive, I am going to call on them. But I want to see if I 
can get through as many of these questions as possible. So if 
you can keep your answers right on the point, I think we can 
get a long way through it.

                        WORKFORCE INVESTMENT ACT

    Mr. Bramucci, last year the Congress passed the Workforce 
Investment Act that you referred to. This is the replacement 
for the Job Training Partnership Act. Can you tell me what is 
the major difference in the way those two acts work?
    Mr. Bramucci. Well, for me, not being a long-time Labor 
Department bureaucrat, I would say that the difference is that 
WIA provides a locally-driven system. The empowerment is local. 
The resources through the States are provided to the 
localities. And the accountability ultimately will be local.
    The idea of empowering people is new, and it is I think the 
reason why the employers are so heavily bought in now. They are 
buying into a system that they will ultimately, if they 
organize themselves properly locally, actually control their 
own destiny. That is the difference in layman's terms that I 
see.
    Mr. Porter. Now, has the new Act fully taken effect?
    Mr. Bramucci. No. We are in transition.
    Mr. Porter. No, you are in a transition period.
    Mr. Bramucci. The earliest that States can opt to produce a 
plan to submit to the Secretary is April 1. We have to be fully 
transitioned by next year, July 1, the year 2000. So it is an 
ongoing process, but the first bite at the apple is April 1, 
1999.
    Mr. Porter. And, at this point, all of the States are on 
track to make this judgement. There is work going on in each 
one of them?
    Mr. Bramucci. Big time.
    Mr. Porter. One assumes, right?
    Mr. Bramucci. We have had an unprecedented outreach 
program, Congressman. Not only with the States, the Governors 
Association, the mayors, the local officials, but with all of 
the stakeholders. I could not imagine any agency being more 
willing to open their ears and minds to what the opinion is out 
there, and I view this as an opportunity for me, as the person 
in charge of that agency, to be the coach. That is another new 
one, the coach of a new effort to get people into the right 
molds to do the right things.
    Mr. Porter. Well, you have given me some understanding of 
the differences. Since the new Act, the WIA, is more focused 
locally, and the accountability is more local, how does the 
role of ETA change in administering the Act and can you do the 
same kind of job administering the WIA as you did administering 
the JTPA with less workers in ETA?
    Mr. Bramucci. That is going to be a question that will 
evolve. I do not know. I will tell you that one of the 
challenges that I see, Congressman, is to put a lot morerubber 
on the road in terms of our staff not being located in Washington, but 
actually having a consultive and monitoring and mentoring role in the 
program. So I am not sure how that plays out.
    We have got to build alliances and partnerships with the 
local and state communities to look at outcomes. But I think 
that measuring outcomes becomes a lot simpler because people 
either buy it or they do not. If employers are not involved in 
the local workforce system, it is a failure. If employers are 
not buying the people coming out of training, it is a failure, 
no matter what money you are putting into it.
    So what we are going to try to find a way of doing is to 
have more of a hands-on ability to get people to be relevant to 
the economic needs in their communities. Some of them are 
further along than others, but that also is a new role for us. 
And we are affecting the mentality and the kind of culture of 
our office. We have got a lot of people who are doing things 
top down. This is bottoms up with our governors and our 
localities. And that is the challenge, and that is why I am 
excited to be where I am.
    Mr. Porter. All right. Now, I have some GPRA questions for 
you. To what extent does the WIA affect your agency's strategic 
plan or your annual performance plan under the Results Act? Do 
you have to make changes in them as a result of the new law?
    Mr. Bramucci. You see, this is an area that I get lost in, 
because you are going to start getting technical, and I do not 
know what the answer to that is. I have not figured it out as a 
down-to-earth human being for my consumption and understanding, 
so I am going to pass it on to somebody who does understand it, 
Ray Uhalde.
    Mr. Porter. All right. Mr. Uhalde.
    Mr. Uhalde. Mr. Chairman, yes. The answer is yes we will 
have to change the strategic plan and the annual plan. The Act 
specifies some precise performance indicators and a procedure 
for incentives and sanctions for all our programs, and we will 
have to make changes accordingly. And we will. But we are doing 
it in consultation with all our stakeholders so that will 
evolve over this spring to summer period.

                     VETS GPRA PERFORMANCE MEASURES

    Mr. Porter. Thank you. Mr. Borrego, are you satisfied with 
your GPRA performance measures as they currently stand or have 
you refined them since last year?
    Mr. Borrego. We are in the process of evaluating them as we 
move from activity measures to outcome measures. A big part of 
the problem is how do you measure them, and that is something 
that is new and developing and we are looking for ways to 
measure. And if we cannot have one measurement, we are looking 
for different indicators. We are looking to make sure that 
veterans have better quality jobs, long term; that they keep 
those jobs; then we have to face the area of measuring them. 
And so, that is evolving. So we are seeing what we can do with 
the resources we have; what indicators we can use that BLS 
uses. Not all of them are ours.
    So, we are about in the middle of that process in evolving. 
I think we are moving in the right direction, but we are really 
clearly focused on how effective we are for veterans, and that 
is the direction that we want to move in.

                HOMELESS VETERANS REINTEGRATION PROJECT

    Mr. Porter. If you look at the Homeless Veterans Job 
Training program?
    Mr. Borrego. Yes, sir.
    Mr. Porter. Is that program authorized in the next Fiscal 
Year?
    Mr. Borrego. It needs to be reauthorized.
    Mr. Porter. It needs to be reauthorized. Okay. You are 
proposing a $2,000,000 increase in the program, correct?
    Mr. Borrego. Yes, Mr. Chairman.
    Mr. Porter. Just for the purpose of being argumentative, 
one would assume in a good economy like this, there would be 
fewer homeless veterans rather than more. What are you going to 
put the $2,000,000 to accomplish that you cannot accomplish 
without it?
    Mr. Borrego. When you look at all the money that is going 
into homeless for HUD and the VA, our piece is probably the 
smallest but the most important, because it is our piece that 
puts those veterans to work. And, as a requirement of our 
grants, we make sure that when the grantees are getting support 
from HUD for housing, the VA for support services, our piece 
gets those veterans away from the support system and makes them 
independent, because we are the ones that find them jobs. That 
is the importance of that small amount of money.
    Mr. Porter. How many homeless veterans are there, in rough 
numbers?
    Mr. Borrego. I have heard estimates anywhere from 250,000 
to 275,000. That number has been around for years. I think we 
got it from the VA. And clearly, through our HVRP, we have been 
placing about half of the people that come into our programs 
into jobs. And like I said, these are veterans who are 
homeless, so we have been doing a good job.

                               JOB CORPS

    Mr. Porter. All right. Mr. Bramucci, how many Job Corps 
Centers are currently operating?
    Mr. Bramucci. 118, Mr. Chairman.
    Mr. Porter. And how many more are planning to come on line 
in this Fiscal Year and next?
    Mr. Bramucci. In FY 2000, we will add centers in Rhode 
Island, Connecticut, and, Ray could you help me?
    Mr. Uhalde. Delaware.
    Mr. Bramucci. Delaware.
    Mr. Uhalde. And Louisiana we will do the following year.
    Mr. Bramucci. Yes, I do not think we have the money for 
those yet.
    Mr. Uhalde. Don't have the money for Louisiana.
    Mr. Porter. And how many young people will be served by Job 
Corps this year roughly?
    Mr. Bramucci. I think about 70,000.
    Mr. Porter. Okay. And is this an increase over previous 
years?
    Mr. Bramucci. It is the same level as in FY 1998.
    Mr. Porter. The General Accounting Office reported last 
year and I quote ``our work raises serious questions about the 
Department of Labor's claims about the program's achievements. 
Reported statistics on placement rates, the percentage of 
participants who are vocational completers, and the percentage 
of participants who obtained jobs related to the training they 
received are misleading and overstate Job Corps results.'' What 
is your response to that finding by the GAO?
    Mr. Bramucci. I am concerned about it because I respect 
GAO. Yet, I have visited probably 20, 22 Job Corps facilities 
in the seven and a half months that I have been active. And I 
can tell you there are rays of hope. Now, we are going to do an 
awful lot better as a reconstituted groupto make sure we have 
more firm ties with employers. But my sense is as an American that 
absent our effort to turn these lives around, the country would be 
worse off. And while I cannot say that everything is perfect, I know 
that in looking in the eyes of these kids and seeing the morale of the 
staff and seeing the buy-in from communities, all the signs of health 
are there, and I can tell you that as an investment by this Congress 
and by this country, it is a good investment. But, we can make it 
better.
    Mr. Porter. Well, we think so, too, obviously. We have put 
it at a high priority, but, on the other hand, when the GAO 
tells us that maybe we are not getting accurate information, we 
have to be concerned about that as well. And what I guess you 
are telling me is that you are going to adopt what they have 
suggested in terms of evaluation criteria, and follow that from 
now on? Is that right?
    Mr. Bramucci. Indeed.
    Mr. Porter. All right.
    Mr. Bramucci. Indeed.
    Mr. Porter. Ms. Delauro, are you ready? You are up.
    Ms. DeLauro. Sorry. Sorry to be late, but welcome. And I'm 
delighted to see you all. And, Mr. Bramucci, good to see you.
    Mr. Bramucci. Good to see you again.
    Ms. DeLauro. Again, our fond memories of our days in New 
Jersey. I am not sure they have fond memories of me, but--back 
in New Jersey. [Laughter.]
    Anyway. Inside joke here, Mr. Chairman. I was dispatched to 
be the State chair for the Mondale-Ferraro campaign of the 
State of New Jersey way back then and that is where I got an 
opportunity to meet Mr. Bramucci.
    Mr. Porter. Is this before you were from Connecticut?
    Ms. DeLauro. This was while I was a staff member to Senator 
Dodd, and I took a leave of absence for months.
    Mr. Porter. And went down to New Jersey?
    Ms. DeLauro. In a campaign. But always from Connecticut. 
Born and raised in Connecticut, yes.
    And, Espiridion Borrego, wonderful to see you here today.

                           DISLOCATED WORKERS

    Let me ask just a couple of questions that I have. 
Actually, I have several. I hope to be able to get to most of 
them. The budget includes a major increase in the dislocated 
worker program. Let me just ask you to talk about why this is 
so important? What benefits do you think we will see from this 
program? And can you tell us in this context about the 
successful Rapid Response that is ongoing at the moment?
    Mr. Bramucci. Well, taking the last one first. As 
Commissioner of Labor in New Jersey, we called the Rapid 
Response Team Business Services? There was not a single unit of 
government that I had more confidence in in terms of getting in 
at a time when downsizing and dislocation was occurring. To 
deliver a message both for the workers as to what available 
services were, but also to employers who may have been worrying 
about how those dislocations were going to affect their 
communities.
    But as to the $190,000,000 more in dislocated workers, this 
is part of the Reemployment Initiative of the President that we 
are putting into effect. We plan to ask for $190,000,000 for 
the next four years so that at the end of this five-year 
period, we can say, with assurance, that every worker who has 
lost their job, through no fault of their own, can get the kind 
of services that they wish to get.
    Now, mind you, this is also the pool of money that will 
fund the Individual Training Accounts where we have empowered 
workers in the out years to make decisions on their own behalf.
    And so the combination of the additional resources, the 
strengthening of the One-Stop Centers, and the breaking down of 
the silos will provide improved assistance to those who are 
dislocated even though the economy is successful. As we speak 
dislocation is going on, in a major way, in a number of 
corporations throughout the country. You have got Boeing. You 
have got Kellogg. You have got Burlington Industries. You have 
got a whole bevy of companies who come and go.
    Now, the track record is workers who are generally on the 
upside of skills and experience sometimes do better out of 
those dislocations. But dislocations do occur. And we have to 
be in place to get people into jobs, because the jobs are 
there. And frequently, what the task, then, is to make that 
match. And so this effort, which includes, by the way, a 
program that we are beginning to trot out which will be a 
universal telephone number that would be keyed in the capital, 
but go back into the States. We are presently putting a group 
of States together that will pilot this to give us some idea of 
what the problems are.
    Dealing with the issues of this mobile workforce, the 
global economy exploding, and jobs decreasing in various parts 
of the country is a challenge. And it is a match up challenge. 
And it is dealing not with the past and protecting the past, 
but in dealing with the opportunities of the future.
    So I think this is a great investment, and we are very 
determined to make this work.
    Ms. DeLauro. I am delighted to hear you say that because I 
think, as you know, Connecticut has had serious, serious 
problems with dislocated workers, not only from a changing 
defense industry, but from an insurance industry that is 
merging and consolidating and now a banking industry that is 
doing the same so that we have people who are in serious need 
of assistance. And I was happy to hear you talk about business 
services because, as I understand the program this is an 
opportunity to work with businesses in how we plan for the 
future for these folks, and not wanting to look backward, but 
forward so we can help people maintain their standard of 
living, and to make that a transition that is easier than it is 
now for people who, through no fault of their own, find 
themselves in a difficult spot.

                WORKFORCE INVESTMENT SYSTEM PARTNERSHIPS

    In Connecticut, we have a lot of resources which make our 
State attractive for small, start-up biotech companies. We are 
finding that our employers are having a lot of difficulty 
finding entry-level workers to be able to deal with the 
machinery, and the preparation that is needed for this kind of 
an industry. We also have an excellent Job Corps Center in New 
Haven and looking at a new opportunity for a Job Corps Center 
in Hartford.
    My sense is that we could consolidate here in this sense; 
we could combine the resources; create a partnership between 
Connecticut's pharmaceutical companies, the biotech companies, 
and the Job Corps Center to try to look at employers'needs and 
to provide what is an interesting, non-traditional career path, highly 
paid jobs for Job Corps students.
    But I would just love to sit with you, to talk to you about 
how--if you think it is a good idea--we might try to work 
together to do something about this, and look at what kind of 
trades are taught at the job center. So, I see an opportunity 
because in terms of this industry and Connecticut, this is what 
our future is about. I cannot speak for other States, but this 
is where our future is, given what I have said about the 
industries that are either downsizing or consolidating. So----
    Mr. Bramucci. Well, I welcome the opportunity to chat with 
you about Connecticut and about this whole idea of taking a 
resource, like the Job Corps Center, and not just end it at the 
graduation, but have a more sure way of getting those kids 
involved in the communities in which they are located.
    We tend to do these interventions with kids episodically. 
And one of the things we are trying to do now in ETA is to tie 
in these programs so that we can hand off kids to a point where 
they become plausible citizens and candidates.
    So the law, the new WIA, requires new, more deeply involved 
relationship with employers. We have the responsibility of 
setting up these Job Councils, and employers will be there so 
that your insights as to what we need in Connecticut, I want to 
hear. And I will call your office, and we will sit down and 
make some music.
    Ms. DeLauro. Amen for that. Thank you, Mr. Secretary. I 
know the Chairman, by the way, is very much interested in the 
whole Job Corps program, and has been for a very, very long 
time. I thank you. I have got some other questions that 
hopefully we will come back to or I will get them in the record 
for you. Thank you very much, Mr. Chairman.
    Mr. Porter. Thank you, Ms. DeLauro. You all have your 
timing down perfectly today. Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman. I appreciate that. We 
are trying very much to honor the Chairman's time without 
taking up too much of anyone else's. Welcome, Mr. Secretary.

                             YOUTH PROGRAMS

    We in Chicago are looking forward to the opening of a new 
Chicago Job Corps Center this year. I am particularly 
interested that the Job Corps Center will be one of just a 
handful to provide on-site dormitories for students and 
families with child care--with provided on site--that will be 
provided on site. When do you anticipate that the Chicago 
center will be open for students? What trades will be taught 
there? And how will Chicago students find out about the 
availability of training once the Center opens?
    Mr. Bramucci. Congressman, that is a good question. I am 
not aware of the details that you have asked, and I do not want 
to waste time in filibustering, so I am going to pass it off to 
Mary Silva, if she is here, or to Mr. Uhalde.
    Mr. Uhalde. I do not have the dates at this time, 
Congressman, but we will provide it to your office.
    [The information follows:]

                        Chicago Job Corps Center

    The Chicago Job Corps Center is tentatively scheduled to 
open on April 19, 1999. The center enrollment capacity will be 
354 students, and we expect to serve about 500 students a year.
    The Chicago Job Corps Center will offer training in 
bricklaying, carpentry, business and clerical occupations, 
computer operator, electronic assembler, health occupations, 
hotel clerk, landscaping technician, machinist, painting and 
welding.
    The availability of training opportunities for young people 
in the Chicago area is being publicized through a number of 
local media outlets. Bilingual brochures and materials have 
been developed and are also being distributed in the community. 
The Chicago Job Corps Center and the outreach and admissions 
staff responsbile for the Chicago center will continue efforts 
to keep potential students and the public at large informed 
about the center, through direct contact with local agencies 
and community groups as well as through appropriate advertising 
media. If you would like to receive additional information 
about the Chicago Job Corps Center, Ms. Mary Silva, the 
National Director of Job Corps, would be happy to brief you.

    Mr. Jackson. I appreciate that. Yesterday, I discussed with 
Secretary Herman the persistent problem of youth unemployment, 
particularly for minority youth. For some students with 
multiple, persistent disadvantages which must be overcome Job 
Corps represents their last chance to turn their lives around. 
I am wondering what percentage of eligible youth does Job Corps 
serve, and how many of those kids would benefit from Job Corps 
if we could make it available to them?
    Mr. Bramucci. Well, if you look at this--just the simple 
math of the number of high school drop outs, 4.7 million last 
year. We have 70,000 kids in Job Corps programs. So it is 
infinitesimal. If you add the kids that we expect to touch in 
our other youth programs in FY 2000, we are still under 
1,000,000, so that we are scratching the surface here, 
Congressman. What we are going to try to do is to bring our 
year-round services and our non-Job Corps services into a 
single revenue stream, and then strengthen the Job Corps, and 
to begin to put into the field our Youth Opportunity grants, 
which we are going to be putting out there after July 1, 1999. 
We have $250,000,000 which we intend to invest in empowerment 
zones and similar communities in a saturation attempt to get at 
limited communities of extreme poverty and deprivation.
    Now, my bottom line is that if we can get those kids that 
we talk about in the right rooms with the right adults, we can 
change their lives. And we have some resources to do that. And 
we are going to do the best job we ever did to do that. We are 
organizing ourselves now with the widest possible inclusion 
with the community, with not for profits, with the police 
departments, with foundations, with anybody interested to take 
part in this effort to halt this leaving behind of so many 
potentially productive young people who have been assigned to 
something, but in the words of the song: it ain't necessarily 
so.
    But we have got to put the right medicine on the wound. 
This is not about doing an audit. This is about people like 
Mother Theresa. We have got to have spirit. We have got to have 
drive. We have a commitment, and we can turn those lives 
around. And we have got some money to do that, and we are not 
going to blow it.
    Mr. Jackson. I thank you for your testimony, Mr. Secretary. 
I thank you for your service, and thank you, Mr. Chairman.

                    ELIGIBILITY OF HOMELESS VETERANS

    Mr. Porter. Thank you, Mr. Jackson.
    Mr. Borrego, are homeless veterans going to be eligible for 
programs authorized by the Workforce Investment Act?
    Mr. Borrego. Yes, sir.
    Mr. Porter. Make for me the argument or arguments why we 
need a separate small categorical program to serve this 
population rather than having them served under the WIA?
    Mr. Borrego. Clearly, and it is a feeling from the people 
that work with the homeless veterans that homeless veterans 
come with their own special characteristics, which make them 
fairly different than other veterans that may have other kinds 
of barriers such as being dislocated. And clearly, I think that 
part of what they see is if it loses its identity, they will 
lose the program, because I think that there is a lot of 
interest in that homeless community and in maintaining its 
separate identity.

                      VETERANS EMPLOYMENT PROBLEMS

    Mr. Porter. Well, I realize that there is a lot of 
interest, but why cannot they be served along with the other 
population that has the same employment problems?
    Mr. Borrego. Depending upon how the programs were 
structured, I think there could be a possibility to do both. It 
would take taking a look at both programs.
    Mr. Porter. Why don't you put in the record for me an 
answer to that question?
    Mr. Borrego. Okay.
    Mr. Porter. All right. I just want to hear the arguments 
involved in it.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                       ETA contracting procedures

    Mr. Bramucci, the GAO--picking up on what I started on 
before--also criticized your agency's reliance on sole-source 
contracts for a substantial portion of Job Corps vocational 
training. This is not a new criticism. They have raised this 
issue before.
    Are you planning to take any steps to reduce the program's 
reliance on sole-source contracts for vocational training?
    Mr. Bramucci. I have been concentrating on the issue of our 
numbers for small business and minority-owned contractors and 
women-owned, non-traditional owners, and trying to get up our 
numbers up there. I am not sure of the answer to that question, 
Congressman. But I know it has been considered in our 
Department, and I would like to pass that one off to Mr. 
Uhalde, also.
    Mr. Porter. All right.
    Mr. Uhalde. Mr. Chairman, we have national contractors. 
They all are sole source. Generally, they perform at a very 
high level. We are prepared at any time when performance 
falters to be able to address those issues, and we do review 
those periodically.
    But right now, they have unique capabilities to do multi-
state and national placements. They have the connections to 
both train the kids and hook them into, for example, the trades 
and follow up apprentices. And so, we are, delivering results 
for the kids. Where we see that falter we review it. But right 
now, we think we have good performance.
    Mr. Porter. Okay, how about for architectural and 
engineering services. That is also sole sourced, is it not?
    Mr. Uhalde. No, sir. That is a contract that we have 
generally put out for full and open competition. The issue on 
that has been whether some portion or all of it ought to be set 
aside in some fashion for small or 8(a) business. We are 
reviewing that with Small Business. We may break it up somehow, 
but we are intending to try and do the architectural part on 
full and open competition and reviewing some of the management 
part maybe for competitive small business.

                        RIGHT TRACK PARTNERSHIPS

    Mr. Porter. Mr. Bramucci, the budget contains a request for 
$100,000,000 for a new program that you are calling Right Track 
Partnerships. As we understand it, this has to do with 
preventing school drop outs? Why is preventing school drop outs 
the job of the Labor Department rather than the Education 
Department?
    Mr. Bramucci. I think it also includes people who are 
encountering difficulty with English and their proficiency 
therein.
    I see this as a complement to our Youth Opportunity 
investments. We are going to be making investments around the 
country in areas of high concentrations of poverty, drop outs, 
and all of the social pathology that we understand is 
prevalent.
    We are going to use our efforts to interact with 
communities to see if we can be helpful to those people whose 
grip is being lost in school. And we will know who they are; 
they are not attending school. They have not officially dropped 
out yet. I would use this $100,000,000 to complement those 
efforts to build cohesion in those communities, to maintain 
school presence.
    Mr. Porter. Is Right Track Partnerships authorized?
    Mr. Bramucci. Mr. Uhalde.
    Mr. Uhalde. We are treating it as a demonstration in our 
research and demonstration because we do want to learn from it, 
so it is authorized.
    Mr. Porter. At $100,000,000?
    Mr. Uhalde. Yes, sir.
    Mr. Bramucci. It is new.
    Mr. Porter. Since one of the goals is the reduction--under 
the Youth Opportunities grants--is the reduction of school drop 
out rates, I am not sure I understand how these two programs 
really differ.
    Mr. Bramucci. Well, the Youth Opportunity grants are really 
to target, as a major portion of our clientele, school drop 
outs. I am not sure how easy it is in the setting that we are 
going to be making these investments, Mr. Chairman, to 
differentiate. There are a lot of kids in limbo, who are out 
there struggling and not finding the mesh to be a part of 
anything. They are kind of not in school; they are not out of 
school.
    Whatever resources Congress gives us to intervene in the 
lives of kids that are going backwards are needed. I think that 
is a judgement call that a community can make as we make an 
investment in those communities. I would think that our school 
systems would be part of that; our police departments. And we 
would target that money to save kids, and to get them going in 
the right direction.
    Mr. Porter. Is the mechanism of spending that money 
different for the Right Track Partnerships than for the Youth 
Opportunity grants?
    Mr. Bramucci. We are much further along on where we are 
with the requirements on the Youth Opportunity grants. We have 
thought about it longer. We have put more ideas on paper. There 
will be a different procedure for those grants, yes, sir.
    Mr. Porter. Answer me for the record, Mr. Bramucci, if you 
will, the difference in mechanisms and why you need a separate 
line item for this than you do for Youth Opportunity grants if 
we have money to put into this account, okay?
    Mr. Bramucci. Well--I----
    Mr. Porter. You can do that for the record.
    Mr. Bramucci. I would answer you this way: I welcome the 
money, and we will spend it well.
    Mr. Porter. And you don't care what line item it is in?
    Mr. Bramucci. That is right. [Laughter.]
    Mr. Porter. Somehow, I knew that. [Laughter.]
    [The information follows:]

                        Right Track Partnerships

    Right Track Partnerships (RTP) was requested as a separate 
line item because the goals of the program differ from the 
Youth Opportunity grants. RTP targets in school youth who are 
at-risk of dropping out of school and youth who have dropped 
out of school, primarily recent dropouts, who can return to 
school. The program is designed to provide a continuum of age-
appropriate services to these students to encourage them to 
stay in school, complete their high school education and then 
go on to post-secondary education and employment. Students will 
enter the program when first identified as ``at-risk'' of not 
completing school. For a high proportion of students, services 
will be provided over a period of several years or more and be 
tied very closely to their classroom work. The Youth 
Opportunity grants have a more immediate goal of reducing the 
unemployment rate among youth residing in high poverty areas. 
Thus, the focus is on providing these youth with the basic 
academic skills, the behavioral or ``soft skills' training, and 
sufficient occupational skills to move directly into the job 
market. A lengthy follow-up period will track these young 
people as they enter the world of work to help insure job 
retention.
    The mechanism for awarding grants is still under discussion 
in the Administration. Current thinking is that local workforce 
investment boards would be eligible to apply. The competitive 
process would select communities based on the potential 
effectiveness of their partnerships between the school 
district, private sector, and community-based organizations. 
Preference would be given to communities involved in 
Empowerment Zones and Enterprise Communities. Funds would be 
targeted to those areas with highest need as demonstrated 
through either high dropout or high poverty rates.

    Ms. DeLauro.

                        YOUTH OPPORTUNITY GRANTS

    Ms. DeLauro. Mr. Secretary, last year, I visited a summer 
jobs program in West Haven, Connecticut. The youngsters there 
were gaining real-world experience that would help them to get 
a job when they finished high school. Many of them are just 
wonderful young people who talked about saving that paycheck 
for college. Some talked about helping their parents pay some 
of the bills. Can you tell us how the newly consolidated Youth 
Opportunity grant is going to help to improve services that we 
offer to at-risk young people. I believe that is different than 
what the Chairman was talking about in terms of the Right Track 
proposal.
    Mr. Bramucci. Well, the Youth Opportunity grants are 
targeted for the empowerment zones and places where there are 
heavy, heavy concentrations of deprivation and lack of economic 
opportunity, huge numbers of school drop outs, teenage births, 
crime, et cetera, all of them under the heading social 
pathology.
    What we are trying to do with these investments, 
Congresswoman, is to reverse that. We have some knowledge based 
on our Kulick grants, which are a little more limited around 
the country. We are about to trot out about four more in making 
these investments and then learning from them. There is one, 
for instance, in Houston, Texas that is doing very well. But 
this is about getting into the kids' heads and hearts that 
going backwards is not the way to go. And if we don't make this 
investment, I am not sure who does. The reason this is the most 
advantageous time is that employers are buying what they never 
bought before. Employers are hiring people that they never 
dreamt of hiring 10, 15 years ago. So that we have this 
opportunity to hook up kids with jobs. If we can clean them up, 
get them on the right page, get them looking up instead of 
down, we can do some good.

                               CHILD CARE

    Ms. DeLauro. We have talked about the difficulty of finding 
safe and affordable child care, especially for low-income 
families. And I truly do thank you for the work that you have 
done in establishing the child care centers so that young 
people and young parents can stay in training and getting the 
job skills they need to improve their lives.
    I know this is something that my colleague, Mr. Hoyer, is 
interested in, and the two of us have worked on together on 
this issue for a long time. I am particularly interested in the 
Job Corps and the Head Start partnership, because it is my view 
and I think lots of folks' view that Head Start does more than 
just provide child care. It teaches parenting skills, and some 
of the skills that youngparents need today.
    Does Job Corps have enough child care slots to meet the 
needs of its students? Is lack of child care a barrier to some 
students who want to participate and succeed in Job Corps?
    Mr. Bramucci. I do not think we have scratched the surface 
on how well we can coordinate this. Most child care 
opportunities are locally driven, and probably one of the real 
opportunities that we are going to get out of a better system 
of workforce investment will be a better chance to coordinate 
this.
    Now, there is a lot of money that is around, such as TANF, 
to pay for child care and other services for people who are 
either working or schooling, or whatever. I do not think we 
have even scratched the surface on coordinating that effort, 
and that would be a very high priority for us now to make more 
clearly enunciated our willingness to go to any extreme to get 
that money into Job Corps so that no child or no young woman 
would have that as a bar because she did not have somebody take 
care of her child.
    Ms. DeLauro. That seems to me that those are the kinds of 
ways in which we can move forward in getting young people and 
people at-risk or teenage parents employed. We would keep our 
head in the sand if we do not understand that there are 
transportation problems or that there are child care problems 
and so forth to deal with in order to really, truly make this 
work.

                SPECIAL JOB TRAINING NEEDS FOR VETERANS

    Secretary Borrego, can you describe the special needs of 
veterans for job training? Why are not veterans being 
adequately served in job training programs designed to reach 
the broader population. In your opinion are we doing enough to 
address the needs of people who are veterans or should we be 
doing more?
    Mr. Borrego. Congresswoman DeLauro, right now about 57 
percent of the unemployed veterans are over 45. So when we talk 
about unemployed veterans, we really are talking a lot about 
the dislocated workers cross over with Secretary Bramucci. A 
lot of them are veterans that, in their young years, got into 
construction, physically demanding. Vietnam veterans that are 
now at the point in their lives where it is more difficult to 
do that kind of work. There is a need for retraining.
    So clearly, I think that when we look at that population 
and a lot of the new jobs are opening up in the high-tech 
industries that require high-tech skills, so there is a 
mismatch there. And the two areas that we are working with, in 
our training program are: we compete to the States $6,000,000 
so that they can address their local needs, and keep a little 
bit in discretionary where we are working to open up this new 
economy to veterans through licensing and certification, 
certification of military skills, getting--and we have the 
high-tech companies that are coming to us because the military 
is a good pool, so we are getting them initially from the 
transition sites, but companies like Microsoft, CISCO, 
telecommunications companies--AT&T, Lucent, and we are just 
starting those programs. And this is an area that is opening up 
that has a lot of promise for not only transitioning veterans, 
veterans in general and the workforce in general.
    Ms. DeLauro. Just a comment, and I am through with 
questions. Right now we are looking at the increase in defense 
spending and in terms of our readiness and salaries and 
benefits for our folks in the service, and I am very, very 
supportive of that effort. But as we are doing that on the one 
hand, it seems to me if we are not willing to pay attention to 
those who have been there, done that; and now that the trumpets 
have blown and the flags are, you know, not flying, that we 
have a sense of what we are doing or what we are not doing for 
those who have been there. It seems to me I see an awful lot of 
veterans who are unemployed; as the Chairman pointed out, 
homeless veterans. But we seem to be not paying much attention 
to people who have proven their worth, not that the others are 
not. But we ought to be taking a look at where we are going, 
particularly in this budget process in terms of raising those 
defense numbers and not leaving these folks behind. And I thank 
you for your work, both of you.
    Mr. Borrego. Thank you.
    Mr. Porter. Thank you, Ms. DeLauro. Mr. Jackson.
    Mr. Jackson. Mr. Chairman, I have no further questions.
    Mr. Porter. I understand we have four votes that will take 
us the better part of an hour unfortunately.
    I do have some additional questions. I want to try and 
cover them before we have to go vote and then we will have to 
recess for the next panel and come back as soon as we finish 
voting.

                        RIGHT TRACK PARTNERSHIP

    Mr. Bramucci, you are not going to know the answer to this 
question because you were not there, but, Mr. Uhalde, I think 
you might know the answer to this question. Was Right Track 
Partnerships by name a part of your submission to the OMB? Did 
you specifically ask for Right Track Partnership money when you 
submitted your budget to the OMB?
    Mr. Uhalde. No, Mr. Chairman.

                TANF FUNDING FOR EMPLOYMENT AND TRAINING

    Mr. Porter. Okay. Mr. Bramucci, we understand that the 
States have a substantial amount of unobligated TANF funds in 
their coffers. They are allowed by law to use their TANF funds 
for employment and training purposes. Why not just let the 
States use their TANF funds for this instead of appropriating 
new money?
    Mr. Bramucci. The money that we have been authorized to 
distribute to the States on a matching basis is really not 
restricted to TANF populations, but rather to the difficult to 
employ. And I think TANF focuses to support families. Although, 
yes, you can spend the money for a variety of things. It is 
pretty fluid. But generally, the focus for TANF has been on 
custodial parents rather than non-custodial. We do not have 
restrictions on what the category of a person's status is. If 
they have lost their eligibility, for instance, for welfare, 
they would be clients of ours.
    I would say this to you: I think that the money that we 
have made available to the non-traditional community-based 
organizations to effectuate the transition of a person from 
dependency to work is the most promising that we could have as 
a government program.
    Consider it venture if you will. A lot of these people, and 
I have talked to hundreds of them around the country, have not 
only never worked before, but many of them do not know anybody 
who has worked before. Now, we are not going to be able to get 
those kinds of people into sustaining work without a real 
effort that will take a lot of professionalcaring and 
expertise.
    I think that is a good investment, because the alternative 
is to just put them back on the scrap heap but not expect 
anything of them. I think we are making some changes out there. 
And I am pretty satisfied that this is a good shot at a 
reasonable effort to change lives of people who are non-
productive.
    And I have seen it happening, not as often as I would like, 
but we are building it, and I think we have an opportunity to 
make some changes that will give us a report card of at least a 
B.

                       EMPLOYMENT SERVICE FUNDING

    Mr. Porter. All right. Mr. Bramucci, the Administrations' 
budget proposes to level fund the Employment Service State 
grants for the fifth year in a row at $761,000,000.
    That, of course, amounts to a cut given a degree of 
inflation over that period of time. This has clearly not been a 
priority in the budget process for some years now. Why hasn't 
this been placed at a higher priority?
    Mr. Bramucci. Well, I would answer you this way: I think 
the investments that we have been making in One-Stops are 
essentially investments in practically the same thing. We have 
been building capacity in different ways; that is, by 
concentrating our services to be delivered not from 
compartmentalized employees, but really in a broader context--
holistically.
    We have essentially been investing in the delivery of that 
service. Although not specifically for ES Allotments to States, 
we have requested additional monies for the Employment Service 
this time, because it is part of the President's Reemployment 
strategy to give everybody who has been displaced or lost his 
job, who wishes the service, to get the service.
    So, I do not think the flatness necessarily reflects our 
disinterest, because we have been using another avenue, and I 
think it is even a better attitude of having a combined, 
revitalized job service and a newly focused and empowered One-
Stop center system.
    Mr. Porter. My last question will be for Mr. Borrego. Mr. 
Bramucci, I would like to thank you for answering all of our 
questions. It is too bad you do not bring much energy or 
enthusiasm to this job. [Laughter.]
    This was your honeymoon year; next year the questions get 
tough. All right. Thank you very much for your testimony.

                                  NVTI

    Mr. Borrego, the National Veterans Training Institute is 
funded at $2,000,000 in your budget. Are all of these funds 
awarded through one contract?
    Mr. Borrego. Yes, sir.
    Mr. Porter. And how much money does the Training Institute 
receive through reimbursements from the Department of Defense?
    Mr. Borrego. Let me get that for you, sir, and provide it.
    Mr. Porter. You can provide that for the record. And then, 
give me some information for the record then as to who is 
actually being trained at the Institute, and how frequently 
people are allowed to go the Institute for training.
    Mr. Borrego. Yes, sir.
    Mr. Porter. If you can provide that for the record. And 
thank you for your testimony this afternoon as well. We thank 
both of you, gentlemen. And thank you for the fine job you are 
doing.
    [The information follows:]

                       Training at the Institute

    During FY 1998, 638 DVOP specialists, 771 LVER, 291 VETS, 
164 DoD and 1,091 SESA and 131 other veteran service provider 
staff were trained at the Institute. The training varied 
according to the recipients of the training--DVOP and LVER 
staff attended Labor Exchange Specialist, Case Management, TAP 
and Managing Case Management, while VETS staff attended mainly 
USERRA Investigator and Managing Veterans' Programs training, 
DoD staff attended TAP Facilitation or TAP Management training; 
SESA staff attended Veterans' Program Orientation; and the 
other veteran service providers such as our TAP facilitation 
contractor staff attended TAP Facilitation. Our HVRP or JTPA 
grantee staff attended Managing Veterans' Programs and VA staff 
attended Joint Vocational Rehabilitation and Counseling Program 
training with our own staff and DVOP and LVER Staff. The 
frequency of attendance at training is determined by the core 
competencies needed by staff. For example, a DVOP specialist 
that is newly appointed would have to take the Labor Exchange 
Specialist course first, which may be followed either by case 
management or TAP or both depending on the DVOP specialist's 
needs or assignments. We have no set rules as to frequency, but 
rather, we have priorities--newly appointed staff need core 
competencies to serve veterans, those appointed to conduct TAP 
workshops need facilitation training, those coordinating the 
VR&C program with the VA need the joint training, State staff 
that are implementing One-Stop Career Services need the 
Veterans Program Orientation and so on. For each training 
course we have waiting lists based on such needs and 
priorities.
                                ------                                


             Reimbursements From the Department of Defense

    During FY 1997, National Veterans' Training Institute TAP 
training provided to the Services and Coast Guard resulted in 
reimbursements of $111,675 from the Air Force, $32,402 from the 
Marine Corps, and $31,942 from Navy. Training during FY 1998 
resulted in reimbursements of $190,896 from Navy, and $4,440 
from the U.S. Coast Guard.

    Mr. Porter. The subcommittee will stand in recess for these 
votes.
    [The following questions were submitted to be answered for 
the record:]

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                                         Wednesday, March 17, 1999.

             OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

                                WITNESS

CHARLES N. JEFFRESS, ASSISTANT SECRETARY

                           Opening Statement

    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the appropriations for the 
Department of Labor with the Occupational Safety and Health 
Administration, and we are pleased to welcome the Assistant 
Secretary, Charles Jeffress, and, Mr. Jeffress, why don't you 
simply proceed with your statement, and then we will have 
questions for you.
    Mr. Jeffress. Thank you, Mr. Chairman and members of the 
subcommittee. I am pleased to be here today to discuss the 
President's Fiscal Year 2000 budget, the request for the 
Occupational Safety and Health Administration (OSHA). We 
started this conversation last year; it was my first year in 
this position, and I look forward to continuing conversations 
with you about how we can best protect American workers.
    I am happy to report that for the fifth consecutive year 
the injury and illness rate among American workers has 
declined. The rate for 1997 was the lowest since the Bureau of 
Labor Statistics first started this series on occupational 
safety and health beginning in the early 1970's. For five 
consecutive years the rate has declined. It has been five years 
of a booming economy when a lot of new and inexperienced 
workers have been coming into the economy, so a lot of credit 
goes to American workers and American business for 
concentrating on safety and health even during this booming 
economic time and bringing the injury and illness rate down. I 
am proud of the role that OSHA and our 25 State plan partners 
have played as a catalyst in helping focus attention on safety 
and health, but the credit goes to the employers and the 
workers who are working together.
    Many challenges remain though. In 1997, more than 6,000 
workers were killed on the job in the United States; more than 
6,000,000 suffered workplace injuries and illnesses that year, 
and thousands more die each year as a result of exposures to 
toxic materials in the workplace. To help meet these challenges 
of reducing these statistics, the President is proposing a 
Fiscal Year 2000 budget for the Occupational Safety and Health 
Administration of $388,142,000, a $35,142,000 increase from 
Fiscal Year 1999.
    The increase will help us reach the primary goals of our 
Strategic Plan which we are managing by. We will produce 
results for you on: first, a 20 percent reduction in injuries 
and illnesses at 100,000 workplaces; second, a 15 percent 
reduction in injuries and illnesses at the five industries that 
we have focused on in our plan, those being construction, food 
processing, logging, shipyards, and nursing homes; and our 
third primary goal, a 15 percent reduction in 3 particular 
hazards in the field--silicosis, amputations, and lead 
poisoning.
    The largest single program increase in our budget request, 
$12,142,000, and 67 full-time equivalents, is for compliance 
assistance. It is the President's goal to place a compliance 
assistance specialist within reach of every American business 
and every American worker. These specialists will be devoted 
exclusively to providing training, technical assistance, and 
outreach to employers with their safety and health programs. In 
addition, in our operation, in terms of compliance assistance, 
the budget proposes increased funding for the Susan Harwood 
Training Grants and additional funding for ``expert advisors,'' 
our interactive software programs which are available through 
our home page on the Web. We have over 10,000,000 hits per 
month now with individuals using our information on the 
Internet. It is a major communications medium for our outreach 
to American business and workers.
    In addition to our outreach activities, OSHA will continue 
to form partnerships with workers, employers, insurance 
companies, safety and health professional groups, trade 
associations, and anyone else interested in improving workplace 
conditions. As a part of our partnership with States, the 
President's request includes $1,735,000 for the State of New 
Jersey to implement an OSHA Program for its public employees.
    Our credibility as an agency requires balance. Not onlyare 
outreach and partnership important, but the agency must pursue 
employers who ignore the rules and endanger their employees. Our 
requested increase of $8,336,000 for enforcement will bolster the 
resources for targeted inspections at the Nation's most dangerous 
workplaces, and it will support our assumption of full safety and 
health coverage at U.S. Postal Service facilities.
    Our request also includes $750,000 to establish an 
alternative dispute resolution capability in the agency which 
will become an avenue for resolving difficult enforcement cases 
before an employer undertakes time-consuming and costly 
litigation.
    Improved rulemaking is another priority for OSHA this year. 
We seek no additional funds for new standards as we are 
determined to work smarter in developing standards. In June of 
last year, the agency eliminated over 1,000 pages of outdated 
or redundant regulations which will result in a savings of 
$10,000,000 annually for American business. This year, OSHA 
will continue to simplify regulations when we issue final 
revised rules on exit routes and on dipping and coating 
operations. The Fiscal Year 2000 budget request does include 
$400,000 for ``lookback'' studies, reviews of significant 
standards to determine how effective they have been in meeting 
their goal of saving lives and whether they are still needed.
    This year, of course, OSHA also plans to issue proposed 
rules for safety and health programs as well as for ergonomics. 
We will also finalize a revision of the agency's recordkeeping 
regulations. These are what we call ``building-block 
standards,'' because they are fundamental to employee 
protection in every workplace.
    And, finally, Mr. Chairman, to support the agency's 
operations, OSHA is requesting $8,095,000 for maintenance, 
replenishment, investment in our information technology 
infrastructure. This will allow us to meet the public demand 
for Internet service and will assist with Year 2000 compliance 
issues. We are also requesting $100,000 to conduct customer 
surveys to measure how well the agency is serving those it 
deals with and their satisfaction with our efforts.
    In short, the President's budget request balances tough 
enforcement with creative partnership and results-driven 
management. The request supports the agency's strategic plan 
and builds on our past successes.
    I appreciate the opportunity to present it to you today and 
will be happy to respond to questions you may have about our 
program and our budget.
    [The information follows:]

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                          REINVENTION EFFORTS

    Mr. Porter. Thank you, Mr. Jeffress. This is your second 
appearance before our subcommittee. Last year, you told us that 
changes needed to be made in the culture of the agency. I think 
you mentioned actually changing the attitudes of OSHA 
employees. How much success have you had since last year in 
making some of these basic changes, and are further fundamental 
changes needed in the way the agency does business?
    Mr. Jeffress. We have had major success, Congressman, with 
the Reinvention Program that was started prior to my arriving, 
and I can assure Joe Dear, my predecessor, that we are 
continuing our commitment to reinvent every area office. There 
were 40 remaining to be done at the time that I took this job; 
there are 16 remaining at present. We will complete the 
reinvention and the revised training, the team approach 
training, in every area office by the end of this fiscal year.
    The next big area of training for us will be for our 
compliance officers to move from being simply rules enforcers 
to being aids in identifying safety and health issues that an 
employer needs to resolve. The direction of our standards is an 
indication of this.
    Mr. Porter. So, we are not yet there with the people on the 
front line?
    Mr. Jeffress. We have done all but 16 offices, Congressman, 
around the country. They will be done by the end of September. 
When those people walk into a business, the approach that they 
will use in making the inspections is to ask the question: What 
is it that is hurting people here, and how can I help this 
employer fix those problems? It requires a kind of systems 
approach, a program approach--what in this program could be 
improved; not simply measuring the height of the guardrails off 
the floor or not simply looking at, is every electrical wire 
grounded but looking at the system in place in that workplace 
and what could be done better here. That is the direction we 
are taking; that is the training that we are planning for our 
employees. We have done some of that initially; we are revising 
that and improving that this year. That is my emphasis in terms 
of training for compliance officers.

                             NEW TECHNOLOGY

    Mr. Porter. Did I hear you correctly say 10,000,000 hits a 
month? Is that what you said?
    Mr. Jeffress. Yes, sir; yes, sir.
    Mr. Porter. It is 120,000,000 hits a year?
    Mr. Jeffress. If it continues at this rate.
    Mr. Porter. That is a tremendous number, is it not?
    Mr. Jeffress. It is phenomenal.
    Mr. Porter. Hits, obviously, are not communication; they 
are simply seeing what you have available on the page----
    Mr. Jeffress. That is correct.
    Mr. Porter [continuing]. But is technology going to change 
the fundamental way this agency does business?
    Mr. Jeffress. Technology is clearly changing or adding anew 
dimension to how we communicate what we do. The ability of people to 
get information from us and to use information from us is greatly 
increased by technology. It is important to me and important to the 
agency, I believe, to invest in this technology to deliver services. As 
an example, we had a conference recently for small businesses to talk 
about the services OSHA provides. We gave free of charge to every 
business that came, and offered to others, a CD-Rom that has on it aids 
to small businesses to assist them in identifying their own hazards. 
For instance, there is a hazard awareness advisor where you can type in 
the type of business you are in, identify the kinds of materials you 
use, the kinds of equipment you have, and the advisor walks you through 
step by step what kind of hazards you should plan for and what kind of 
assistance you should get to protect your employees.

                        NEW COOPERATIVE APPROACH

    Mr. Porter. How much resistance in the cultural change of 
an inspector being a cooperative officer as well as an 
enforcement officer have you had? Is this hard to do? Tell us 
about this.
    Mr. Jeffress. It varies. When a compliance officer moves 
from being an inspector and applying the rules to being a 
strategic planner and looking at how we go about preventing the 
next injury, some take to it well. There are stories of a Jerry 
Ryan in Denver or a Doug Radford in North Carolina--I can give 
you stories of individuals who have won great praise from 
employers for their approach; for others it is very 
uncomfortable, and it is a new skill, and it varies from person 
to person.

                     COOPERATIVE COMPLIANCE PROGRAM

    Mr. Porter. Last year, the U.S. Court of Appeals for the 
District of Columbia Circuit stayed your proposed Cooperative 
Compliance Program, known as CCP. Where does this matter stand 
in reference to the court, and do you have any idea when a 
final decision might be reached? And what have you done since 
that time to address what you were attempting to address 
through this Cooperative Compliance Program?
    Mr. Jeffress. The court hearing was held on December 3, 
1998. They heard the oral argument; but have not issued their 
opinion, and we have no indication from the court when they 
might issue their opinion.
    In responding to the briefs filed prior to the hearing, the 
court indicated they had no objection to OSHA proceeding with 
inspections based on the identification of the most dangerous 
workplaces, but they did have a concern about the Cooperative 
Program, the partnership aspect where if an employer 
implemented or improved a safety and health program, they had a 
reduced chance of inspection. So, with that authorization, we 
have proceeded with inspections of the most dangerous 
workplaces, but the cooperative part of that, the partnership, 
we have placed on hold and have not proceeded with until we 
hear from the court.
    Mr. Porter. One would think that American business might 
welcome that approach rather than to be opposed to it. Argue 
their side of the case for me so we can understand their 
reaction to it.
    Mr. Jeffress. Your statement is correct. There have been 
hundreds of businesses that have said to us, ``Gee, we wanted 
the partnership; we wanted to have a reduced chance of 
inspection; we wanted to get some credit for improving our 
safety and health program,'' and every area office has 
experienced that. Our inability to offer that partnership has 
been a disappointment to some employers. The Chamber of 
Commerce's point of view, as represented in their lawsuit, is 
that we are seeking a culture change, if you will, on the part 
of American business by implementing safety and health programs 
and Government should not be seeking such behavior change 
without going through notice and comment rulemaking. I think 
that is the thrust of their argument.
    Mr. Porter. Is there any assumption one way or the other in 
your budget request about the CCP Program being resolved one 
way or the other this coming year or the coming fiscal year, I 
should say?
    Mr. Jeffress. The only part of the budget proposal that 
reflects this one way or the other is that our experience with 
making inspections of these high hazard workplaces, which will 
continue regardless of which way that suit comes out, is that 
the inspections are more complicated; we are finding bigger 
problems; they are more difficult to resolve; we are finding 
significant cases at four times the rate that we find them with 
our other targeting programs. Therefore, we ask for more 
resources to do these inspections as a part of our targeting 
program.

                   REINVENTION OF RULEMAKING PROCESS

    Mr. Porter. When you were here last year, you told us that 
the entire standard setting process at OSHA needed to be 
changed--I think you used the term ``reinvented.'' What steps 
have you been able to take over the last year to reinvent your 
standard-setting process, and to what extent do you try to work 
with industry before you go into rulemaking for a new process, 
for a new standard, to get their input in the front end rather 
than waiting to hear their complaints after you come out with a 
standard?
    Mr. Jeffress. Mr. Chairman, last month, after several 
months of talking about how best to reinvent our process, we 
initiated a pilot program to change the way that we do 
standards. We have taken the three different groups within OSHA 
that each had a piece of standards development and on a pilot 
basis have combined them and have one person in charge of that 
pilot process. We have 10 teams; each team is responsible for 2 
to 3 standards projects depending on the complexity of them, 
and that team has on it the standards writers; has the 
economists; has the attorneys; has the risk assessors; has 
everyone that needs to be present at one place to produce that 
standard. I hope by bringing the focus together in one place on 
one team that we will produce a better product.
    A piece of the process, as you indicated, is to get the 
policy decisions done earlier. The process we used with 
ergonomics and safety and health programs, of extensive 
stakeholder meetings where people told us first what their best 
practices were before we developed a proposal, I think has 
stood us well in these two proposals, and I believe will stand 
us well wherever go forward. We will build in, continue to 
build in, significant input from employers, from employees, 
from the public as we develop the standard and not just wait 
for the public hearings at the end of the process.
    Mr. Porter. Thank you. Mr. Bonilla.

                    FOCUS ON HIGH HAZARD WORKPLACES

    Mr. Bonilla. Thank you, Chairman. Good morning again, Mr. 
Jeffress. I want to start out by, again, reaffirming that our 
goals are apparently the same. We despise and want to punish 
those who do not concern themselves with worker safety and want 
to applaud the overwhelming number of companies out there that 
are really doing a lot, as I think it is pointed out in the 
decline of injuries that you outline with the five-year 
decline, and we applaud that as well.
    My concern has generally been that in trying to deal 
withthe few that are negligent that the overall group is punished by 
rules and laws that are burdensome to them when they are, in fact, 
already complying and doing all they can to keep workers healthy and 
productive on the job; that is, after all, the smart way for any 
employer to operate in America. There is a fallacy that exists, I 
think, among some that somehow the goal of some employer is to chew 
them up, spit them out, and get a new person in there, and that is 
actually an insane way to look at it, because it cost them more money 
in the long term anyway, even if you look at it just as an economic 
issue.
    My first question, of course, is going to be about 
ergonomics--we have talked about that for some time now--and 
the NAS study. I am just curious, I am sure that you would 
agree that we need the best science and research in order to 
move forward on this issue. What do you intend to do when the 
NAS study is completed? Are you going to ignore it? Are you 
going to incorporate it? Are you going to somehow--if the study 
says, theoretically, that ``My gosh, OSHA, you have done the 
right thing and moved at the right speed on this issue,'' that 
may happen. But, on the other hand, if it says, ``Well, there 
is really not any link yet that we can find,'' are you going to 
say, ``Well, man, we ought to stop and take a look at this 
again?''
    Mr. Jeffress. Thank you, Mr. Bonilla, and let me say at the 
outset, I agree with you, our goal in OSHA needs to be to reach 
out to those who are not yet doing the job on safety and health 
and motivate them to improve their safety and health 
protections and focus where people are having problems. That is 
the intent of the two initiatives that we have. As I mentioned, 
we are identifying for inspection those employers that report 
to us the highest rates of injuries and illnesses. So, the 
employers that report to us very low rates, we do not go visit; 
we will not be spending our time with those who are doing a 
good job.
    With regard to the new standards we are proposing in safety 
and health programs and ergonomics, we made a specific clause, 
a grandfather clause. Those people who have effective programs 
in place and are meeting their basic obligations are 
grandfathered in, and will not be required to modify their 
programs to meet each of the requirements of the new proposal. 
If they have effective programs that meet the obligations, they 
are grandfathered. So, we are trying to take into account the 
same thing that you are saying. For those folks who are doing a 
good job, let us praise them, applaud them, and move on, and 
then focus our attention where people have not gotten the 
message yet.

                      PROPOSED ERGONOMICS STANDARD

    In terms of ergonomics, by all means, the National Academy 
of Sciences (NAS), I hope this will not be the last study that 
they do on ergonomics. My goal, certainly, every year is for us 
to learn more about what kinds of hazards there are in the 
workplace that cause problems; what are the best solutions for 
these hazards; what are the best practices. In this century, 
there have been over 2,000 studies that have identified 
particular problems with ergonomics and how people can respond 
to those problems and ways that will prevent people from being 
hurt. The National Institute of Occupational Safety and Health 
(NIOSH), as you know, did a review and an index study of 600 of 
those, had their study peer-reviewed, and came to the 
conclusion that these studies clearly showed that there were 
hazards in the workplace that were causing these problems, and 
there were solutions that were known.

                      SCOPE OF ERGONOMICS STANDARD

    Mr. Bonilla. We have had discussions about that before, Mr. 
Jeffress. We do not agree on the fact that these were extensive 
studies, and that is why I specifically am interested in the 
NAS study, but I appreciate what you are saying.
    Mr. Jeffress. All right.
    Mr. Bonilla. If I could just follow up on a point you made 
a second ago--because I do not want to run out of time--but in 
the draft regulation, my understanding is that any business 
which receives a single complaint on a work-related 
musculoskeletal disorder----
    Mr. Jeffress. It is fine with me if you want to call them 
ergonomic injuries. [Laughter.]
    Mr. Bonilla [continuing]. Is subject to the regulation as 
well. For example--and tell me if this is not the intent of the 
draft so--does that mean if, for example, if a dental hygienist 
comes to the office one day and complains of a sore back and 
decides to file a complaint, is that dental office then forced 
to comply with the regulation and would that mean that the 
whole dental industry would then be covered by the ergonomic 
mandate? That is a scary prospect, not only for this profession 
but for any others, because that would mean that you would not 
even have to determine whether or not that injury occurred 
outside the office before they might have to fall under 
compliance. Do you hear what I am saying?
    Mr. Jeffress. I do, and let me reassure you on two points: 
first, the regulation is employer-specific, so one employer's 
experience is not automatically compared to another. If one 
dental office comes under it, the one down the street does not 
necessarily come under it; it is employer by employer. 
Secondly, a complaint by someone that they have a sore back is 
not necessarily an OSHA recordable case. The only thing that 
triggers coverage in the situation you suggest would be an OSHA 
recordable case. Before a determination is made that this 
injury triggers the coverage of the ergonomic standard, there 
would have to be a determination that it is job-related and 
that the conditions that gave rise to it were conditions that, 
in fact, are covered by the standard. To give you an example, 
if it is a regular routine part of someone's job and doing that 
day after day causes an injury, then that is going to trigger 
coverage for the standard. On the other hand, if you are 
walking and step off the curb and catch your back as you step 
off the curb, that is not going to be considered something that 
triggers coverage of the standard. So, there is a determination 
that the employer would make about whether it is job-related. 
Only if it is job-related----
    Mr. Bonilla. Before they could be under----
    Mr. Jeffress. Before they would be covered by the standard, 
and that is the determination they make today, whether it is 
job-related. They have to make those determinations for 
workers' compensation purposes today. This standard does not 
change in any way how they make those determinations or what 
determination gets made. It would be the same determination 
after the standard's adopted as they make today.

                      TIMING OF ERGONOMIC STANDARD

    Mr. Bonilla. You visited our State the other day and spoke 
about the ergonomics issue in Houston, I believe, and there was 
a comment--I want to make sure we understand whereyou are 
coming from on the rulemaking process for ergonomics--and I believe you 
said that the rulemaking process will be much speedier than past 
rulemakings and will be done by 2000 which is before the study will be 
completed. I am not sure if you are trying to beat the clock with NAS 
and have it done before that. Again, just being concerned, we want to 
have the right research and science prepared in advance of a final 
rule. If you have to fine tune down the road, then why not just wait a 
little longer especially, Mr. Jeffress, in light of the fact that we 
are seeing declining injuries for five years now in the workplace. 
There does not seem to be a sense of urgency, and, again, understanding 
this NAS study could wind up saying that you are doing the right thing. 
What is the hurry?
    Mr. Jeffress. The injuries are on the decline, and I am 
proud of that, and the American workers and businesses should 
be proud of that as well, but over those five years, a third of 
all the injuries have been ergonomic injuries, the 
musculoskeletal disorders; that has not changed. The proportion 
of the injuries that are related to ergonomics has been 
consistent, so we need to make progress in ergonomic injuries, 
more progress than we have made. Last year, the National 
Academy of Sciences brought together 66 people, experts in the 
field of ergonomics--physicians, epidemiologists, academics, 
people from business--brought together 66 people who were 
deemed to be experts to review the ergonomics; to review what 
information was out there, and to draw a conclusion about where 
the Government should head in this direction. The conclusion 
that they drew was that ergonomic injuries are related to 
conditions at work; that there are solutions which can affect 
those conditions at work and reduce ergonomic injuries. They 
drew that conclusion, and when they reported that----
    Mr. Bonilla. After two days?
    Mr. Jeffress. After drawing in the best information from 
around the country--the best people to review the best studies; 
they looked at the information in advance; they came together 
for two days to discuss what they had studied and what they had 
learned and what they knew as experts in this field. So, it was 
an extensive review by these 66 people and discussion amongst 
them.
    Mr. Bonilla. Well, we will have some more questions, Mr. 
Jeffress, and I always appreciate the fact that you get back to 
me promptly, and I appreciate the open door policy we both have 
in continuing to discuss this issue. I have great concerns, and 
I know you have some different views on that, but we are going 
to keep at it.
    Mr. Jeffress. Thank you, Mr. Bonilla. I look forward to 
continuing to work with you; I will be happy to do that.
    Mr. Porter. Thank you, Mr. Bonilla. Mr. Obey is ranking 
member who has responsibilities at the Foreign Operations 
Subcommittee--ranking member for the minority on all 
committees, and has asked to be recognized next. Mr. Obey.

                     SCIENTIFIC BASIS FOR STANDARDS

    Mr. Obey. Thank you, Mr. Chairman. I think it is useful to 
remember how OSHA got started and the way it got started. The 
impression is somehow that this is some labor-imposed, left 
wing conspiracy that was posed on American businesses. As a 
matter of fact, my best friend in Congress in those days, Bill 
Steiger from Wisconsin, a very strong Republican, was the 
principal sponsor of the OSHA Act, and I think he would be very 
pleased that it has protected as many workers as it has today.
    I do think it is also useful to correct the general 
impression that somehow all of these OSHA standards that have 
been followed were imposed by pointy-headed bureaucrats in 
Washington. The fact is that the history of OSHA is that when 
OSHA was created, because business did not trust the pointy-
headed bureaucrats in Washington, they required OSHA to adopt 
consensus standards that were developed by the American 
National Standards Institute, as I recall, which was largely 
dominated by people from big business. As a consequence, Silvio 
Conte and I were driven nuts by your agency for years, because 
many of these standards were understandable to an engineer at 
IBM or General Motors, but they sure as hell were not 
understandable to a small businessperson who did not have the 
budget or the ability to hire the same kind of technical 
expertise that the fortune 500 corporations were able to hire.
    And so for a number of years we worked together. We 
provided some impetus to see who at OSHA created first-time--no 
fine situations for first-time, non-serious violations; we were 
able to get additional changes in the way OSHA trained their 
inspectors so that they would be more practical on the job, and 
so I find it kind of unfair that Mr. Bonilla looks at me as 
being a major defender of OSHA when in fact I have been a 
critic of the agency most of my life.
    But I do want to say this: I hope that you do not listen to 
anybody in a suit who tells you to go slower in developing 
standards to protect workers, be they ergonomic or any other 
standards. That is awfully easy for guys in suits who do not 
have to engage in those activities everyday, when they are 
talking about somebody else's arms, somebody else's hands, 
somebody else's back, somebody else's knees, somebody else's 
neck, and somebody else's livelihood.
    Having said that, I would like to ask a few quick 
questions, and if you could give me some quick answers, I would 
appreciate it, because my time is limited. Some people are 
saying, for instance, that there is no real science behind what 
you are trying to do, so, therefore, you should slow down or 
stall it out. Isn't it true that the American Public Health 
Association, the American College of Occupational and 
Environmental Medicine, the Association of Occupational and 
Environmental Clinics, and the American Association of 
Occupational Health Nurses, and many other groups have agreed 
that there is plenty of science for you to proceed?
    Mr. Jeffress. Yes, sir. From the medical community, from 
the scientific community, from labor and from business, all 
around, there is encouragement for us to proceed.
    Mr. Obey. Second, some people are saying, ``Well, you ought 
to wait for the new National Academy of Science study to be 
complete. No matter what you do, they are going to say you 
ought to wait and get more evidence.'' If we did that in the 
area of cancer, I doubt the National Cancer Institute would 
exist today. You have got the American Tobacco Institute that 
has suggested that you should not take action until we 
understand the precise mechanism by which tobacco causes 
cancer. That has not prevented us from proceeding to try to 
protect people from known carcinogens, and it would seem to me 
that it would be inconsistent if we asked you to delay in 
developing a standard which would preserve workers' health in 
the situations that you are looking at here.
    Let me ask you, other people say, ``If the science is so 
good, why has OSHA lost every ergonomics case that it 
hasbrought?'' Isn't it true that, in fact, that is a falsehood?
    Mr. Jeffress. That is a falsehood. There is only one case 
that has gone to the Review Commission level, the Pepperidge 
Farm case. We won most of the issues in that case; one issue we 
did not win; most of the issues we won. The only other cases 
that have been heard have been at the ALJ level and have not 
gone to the Review Commission level yet.
    Mr. Obey. But haven't you been able to successfully enforce 
400 of those cases?
    Mr. Jeffress. We have had over 400 citations to employers 
where we have found problems and have resolved those cases with 
employers agreeing to make the changes.
    Mr. Obey. Another charge that is made is that even NIOSH, 
the occupational safety and health research arm, concedes that 
the cause of back pain can rarely be identified. What is your 
response to that?
    Mr. Jeffress. The cause of back pain can be identified 
clearly when people are doing repetitive motion time after 
time, lifting, making awkward movements. When it is clear that 
that back pain is related to the work that they are doing, we 
believe it should be covered by an OSHA standard.
    Mr. Obey. Another charge is that you are trying to force an 
ergo standard on business that makes no sense, because your 
draft does not reflect today's businesses practices or culture. 
What is your response to that?
    Mr. Jeffress. We held stakeholder meetings with hundreds of 
businesses all across the country, and the standard we put 
forward reflects what those businesses told us they do. I have 
got a book here on applied ergonomics that give you success 
stories from businesses across the country, and this is the 
kind of basis we use for the standards we develop.
    Mr. Obey. I have got a number of other questions for the 
record.

                     TIMING OF ERGONOMICS STANDARD

    I just want to end by telling you a story. Mr. Bonilla 
suggests that OSHA took the position it did after two days 
thought on this issue, because the meeting that he referred to 
lasted two days. It seems to me that would be like saying that 
this committee reaches the judgment that it ought to reach on 
the National Institutes of Health solely on the basis of the 
number of hours that members spend in committee in hearings, 
not recognizing the countless hours that go on in member's 
studying in their offices, talking with their staff, reading, 
and doing other things.
    To show you how unfair that is, I want to tell you a story. 
When I was in the legislature, we had a newspaper editor for 
the Madison Capital Times. His name was Bill Evey, and he was 
contemptuous of the legislature, and so the third day of the 
session--we were just getting organized and there was not any 
legislative sessions--he starts up, ``You are only in session 
for a few minutes, and then you go into committee and you try 
to get things going.'' He welcomed us back to Madison by 
putting a box on the front page, and it said, ``Well, this 
useless legislature today worked for 32 minutes in earning its 
pay--because we were in session for 32 minutes. He did not 
count committee sessions; he did not count other meetings we 
had. So, Jerry Flanagan from Milwaukee stood up the next day 
and he said, ``I am going to post in the lobby out in the hall 
the number of minutes that Mr. Evey has worked everyday as 
editor of the Capital Times.'' And he said, ``So, I have 
counted the number of words in his editorial today, and on the 
basis of the assumption that any idiot can type 35 words a 
minute, I have decided that Mr. Evey worked a total of 14 
minutes yesterday.'' And he said, ``I am going to post the 
number of hours he worked everyday on the bulletin board 
outside the chamber.'' Well, everybody recognized that was 
silly, just as I think it would be silly to suggest that you 
have only reached your conclusions on the basis of two days 
work. But the end of the story is that after Flanagan posted 
Evey's work habits on the bulletin board for about a week, we 
had a dinner with the Rural Electric Association. Drew Pearson 
was then the main speaker at that dinner. Evey was supposed to 
introduce Pearson that night, and when he went to the rostrum 
to introduce Pearson, the first words that came out of Evey's 
mouth were, ``Where in hell is Flanagan?'' [Laughter.]
    So, it was ludicrous then the way our work habits were 
described by Mr. Evey, and I think it is ludicrous now to 
suggest that you have arrived at your conclusions based on a 
couple days review of the evidence. I thank you for the job you 
are doing.
    Mr. Jeffress. Thank you, Mr. Obey.
    Mr. Porter. Thank you, Mr. Obey. Mrs. Northup.
    Mrs. Northup. Thank you, Mr. Chairman. I really enjoyed Mr. 
Obey's story, and I hope the next time somebody comes to the 
floor of the House and talks about a do-nothing Congress, he 
will tell that story again. [Laughter.]
    Mr. Obey. As a matter of fact, given what this Congress is 
likely to do, I think we will get off lucky if it is a do-
nothing Congress.

                    COOPERATIVE COMPLIANCE PROGRAMS

    Mrs. Northup. Well, I know as I find myself weary-eyed and 
trying to make more hours in the day, I am always sort of 
amused by those standards. I also think that we are all here 
concerned about the same thing: the importance of worker 
safety, and how we invest all of our resources in the very best 
way to protect workers, both from incidental incidents that 
involve a one-time or repetitive incidences.
    But we are also concerned about how we keep good jobs in 
our district. My district is a district that has had a lot of 
manufacturing jobs. Many of those manufacturing jobs are as 
high-paying as any hourly wages in the district, and they are 
very concerned about losing some or all of those overseas. So 
the point is to make sure that we achieve the worker safety in 
as an affordable way as possible, not in a way that drives up 
cost overall to manufacturing in this country without 
necessarily getting better results.
    I wanted to go back and review--the chairman asked you 
acouple of questions, and I thought maybe I would just answer the 
question in the way that I understood it. He asked why businesses would 
oppose the Voluntary Compliance Program I asked extensively about last 
year, and I think the reason is that, first of all, the injury rate has 
not been finalized--I asked you about it last year. The standard is 20 
years old. OSHA was going to review their standards--as I think you 
told me last year. Maybe the standards need to be updated.
    I will give you an example, one where people trying to 
avoid repetitive motion injuries transfer employees to five 
different jobs, and if any one of them, if they end up with a 
joint any place, any part of their body that keeps them from 
doing one out of those five jobs, but they still have a full 
day's work, they do the other four, they are paid for a full 
day's work, it is still counted as an injury day, and so it 
drives up their rate even though they are trying to do worker 
safety programs, perhaps this is because of out-of-date 
regulations.
    In any event, based on these old definitions that you are 
in the process of updating, you picked out what you believe are 
industries with higher rates, and they basically had to either 
choose to get into the Voluntary Compliance Program or they 
would be subject to a comprehensive safety and health 
inspection. Almost every business tells me the same thing and 
that is that if an OSHA inspector comes into their business 
with the thousands and thousands and thousands of regulations 
that exist, if they are determined to find violations, they can 
find pages of them. And, so, ultimately, these companies feel 
like they have no choice but to join the Voluntary Compliance. 
Yet voluntary compliance involves things that are not accepted 
by the NLRB or the National Labor Relations Act, setting up 
special committees to work with management and so forth, and 
that it is very expensive to employers and that they do not 
believe that they should be forced into this. It is voluntary, 
but it is voluntary with a gun to their head. Whether you agree 
with that standard, I believe that that is the case that the 
people on the other side of that lawsuit are making, isn't it?
    Mr. Jeffress. Well, all of the businesses that are in the 
high-risk category remain subject to OSHA inspection. There is 
no exemption from inspection if they do what we say on safety 
and health programs. So, it is not a case of ``Do what we say 
or else we are going to come inspect you.'' All of them on that 
list remain subject to OSHA inspections. And, Ms. Northup, in 
about 30 percent of our inspections, when we go out to make 
inspections in response to complaints, we find no violations, 
so it is not a fact that every time we go out and make an 
inspection we use the rules to always cite someone. In fact, 
when people are doing a good job, we are able to give credit 
for them doing a good job and not issue citations.
    Mrs. Northup. And that is impressive and I appreciate that. 
I just felt like it was important to clarify why there is a 
suit and sort of the feeling that it is not quite as voluntary 
as the definition would imply.

                    ENFORCEMENT AT U.S. POST OFFICE

    I also wanted to ask--I am not sure whether it was last 
year--I asked about whether or not OSHA was inspecting the 
United States Post Office, and I believe that the answer was 
that you all were conducting those inspections. Now, I think 
what you told me is that you had the personnel necessary and 
that you all were inspecting those. Now, I see that you are 
asking for new funding in order to do that. So, I wondered what 
the difference was, but what you told me also last year was 
what you lacked was enforcement authority, and I wondered if 
you had asked for the Congress to grant you enforcement 
authority?
    Mr. Jeffress. Yes, ma'am, and I appreciate your response on 
that, and Congress passed the bill last year that brought the 
Post Office under OSHA jurisdiction just like private 
employers. With that jurisdiction, we have experienced a slight 
rise in complaints. We have inherited the responsibility for 
investigating discrimination complaints that we did not do 
previously. The question last year was do we do inspections of 
the Post Office, and we did. Once Congress passed the bill that 
now requires them to be subject to the same rules as others, we 
issued penalties. Those inspections become more difficult 
inspections, more difficult to resolve; some will be litigated, 
I am sure. Plus, we are then going in and doing the 
discrimination cases where employees feel that they have been 
discriminated against for filing a complaint. We did none of 
those in the past; simply deferred them to the Post Office.
    Now that we have jurisdiction, we are having to do those 
complaints. So, it is our expectation that about 10 full-time 
equivalent positions will be needed to implement this new 
authority that Congress gave us last year.
    Mrs. Northup. I had forgotten that we had passed that 
enforcement authority--but I would just like to point out that 
unless the very suspicious aspect that some people would apply 
to the private sector, is applied to the U.S. Postal Service it 
is not fair. The Postal Service is now going to struggle with 
the same thing and while last year the Post Office assured me 
that their voluntary compliance and that their work with OSHA 
was all that was necessary to be on a fair playing field to the 
private sector. However Congress knew that was not true and 
finding that middle ground of fairness is what we are all 
talking about. You cannot just let the Postal Service go on 
forever without the same standards applied to the private 
sector.
    I looked at the list that you submitted to me of violations 
and repeat violations that fall under this serious category, 
and so there is a need for some enforcement. On the other hand, 
the U.S. Postal Service resisted it, because they are also 
afraid of the overreach that OSHA has and that they will be 
subject to inspections that will overreach or go beyond worker 
safety issues, and I think that it is just important that we 
find that middle ground for everybody--for the private and the 
public sector.
    Mr. Jeffress. I appreciate that, and I want to assure you 
that I am working with the Postmaster General on this. I have 
met with Mr. Henderson; I am meeting with him and the unions 
representing the postal workers next month. We are working hard 
to find the right middle ground there to make sure that safety 
is a priority for the Postal Service and that we handle our 
responsibilities appropriately.
    Mrs. Northup. And then carry the same thing to the private 
sector.
    Mr. Jeffress. We will try to do that.
    Mr. Porter. Thank you, Mrs. Northup. Mr. Wicker.

                       PEER REVIEW OF RULEMAKINGS

    Mr. Wicker. Thank you, Mr. Chairman, and welcome, Mr. 
Jeffress. You and I had a conversation last year about peer 
review in which I mentioned that the level of peer review, for 
example, in the Environmental Protection Agency, isstructured 
and much stronger than the one in OSHA, and our conversation and your 
testimony was that ``Well, we consult with scientists, we talk to 
experts before making a rule,'' and I am sure that is true, but the 
fact is--as Mr. Bonilla has pointed out both this morning and yesterday 
with the Secretary--that there is not the level of structured mandatory 
peer review that we have in other agencies. That is the reason that the 
committee and the Congress last year imposed the requirement on the 
Ergonomics Rule for outside peer review by the National Academy of 
Sciences.
    I am sure you are aware that last year the language 
concerning OSHA in our House bill included $300,000 for 
establishing peer review of OSHA much as we do with the EPA and 
it was taken out in the conference report, and if you oppose 
such a structured language, why?
    Mr. Jeffress. First, in the areas that are new for us, 
where the research is uncertain, as to our research, we have 
used peer review in the past. We have used it in tuberculosis 
rulemaking; we have used it for methylene chloride; we use it 
from time to time where the research is uncertain. Standards 
where information is better known have been peer reviewed. For 
instance, in ergonomics, the NIOSH study was peer reviewed and 
the NAS 66 folks, experts in the area, we considered a peer 
review.
    Where the research has been peer reviewed, the OSHA process 
does not repeat that, does not duplicate what has been done in 
terms of that. What we do, instead, and are required to do is 
to, at the public hearing, present the experts that are 
supporting the evidence, the research, that has led to this 
rule, and expose those individuals to cross-examination by 
anyone who wants to query them. The advantage of this is it is 
a public process and that people have to defend in public to 
others who have questions about their work the research and 
conclusions that they have drawn.
    The closed peer review process that is otherwise used is 
not a public process; people do not get to cross-examine the 
experts, if you will. They present their particular individual 
views, but it is a public process and public cross-examination 
that is required under the OSHA procedure. We think that is a 
superior way to give people an opportunity to question the 
conclusions and the research the individuals have done.
    So, we do the peer review where the research is not clear, 
where it has not been previously peer reviewed, but the 
superior process, I believe, the crucible of public opinion, is 
to get people who are concerned about the rule together at a 
public hearing; present each other's point of view; cross-
examine each other, and have that information available to OSHA 
as we make our decision on what kind of rule to issue.
    Mr. Wicker. And, so your agency opposed the provision in 
the House bill last year.
    Mr. Jeffress. The provision mandated a specific amount of 
money to be used for peer review. It would appear to us that it 
is better to have a process that uses it where it is 
appropriate, but it is not mandated for any particular rule.

                       CHALLENGES TO RULEMAKINGS

    Mr. Wicker. Well, with all due respect, it seems that is a 
very convenient approach for the agency to take, because, 
basically, the decision is yours. It cannot be denied that a 
lot of the conclusions that you reach are very forcefully 
denounced from other sectors. It seems to me that you would be 
better off in the long run if you would adopt a mandatory peer 
review program, and that way the decision would not be just 
yours. For example, the hearing that you talk about, if in the 
opinion of some employers, a witness comes in and totally 
annihilates your position, the agency is capable of going 
forward nonetheless. They can reject that testimony, because 
the decision to go forward is yours and not that of an outside 
agency. What would be wrong with enacting the very same type of 
peer review that the Environmental Protection Agency has to 
follow?
    Mr. Jeffress. Let me comment, first, on the statement that 
the agency decision is ours to go ahead. In fact, we are 
required to respond to every kind of comment that comes to us 
that impacts on the rulemaking, and we cannot proceed with a 
comment out there that destroys, as you say, or annihilates the 
agency's position. We are unable to proceed. If we tried to 
proceed, the court would strike us down in a heartbeat, so it 
is not simply the agency's decision here; there is a 
significant review of the responses we make to people's 
comments----
    Mr. Wicker. If I could interject, I have not seen any 
courts acting in a heartbeat on issues such as this. It is a 
very time-consuming process.
    Mr. Jeffress. The Chamber of Commerce went to court and got 
a stay on our CCP Program within a few weeks, Mr. Wicker. It is 
certainly possible for courts to respond pretty quickly.
    Mr. Wicker. Was that on a rule?
    Mr. Jeffress. Well, the Chamber says it is a rule. We say 
it is not; that is the crux of the lawsuit. But the issue 
really is--your question to me is about peer review--what would 
be the problem with mandating peer review in every case for 
ever rule? It would be one additional step for OSHA rulemaking 
to deal with.
    What I would like to do with you, if you are interested, is 
to look at all of the steps that an OSHA rulemaking goes 
through at present. Rather than adding on one more, let us talk 
about what that peer review could substitute for. If we are 
going to use that process instead of some other, let us reform 
the whole process. The peer review process has value; the OSHA 
process as currently structured has value as well. And I would 
be interested and be willing to engage in a conversation about 
the entire process, but I would hate to see us continue to add 
step after step after step to the process without ever really 
looking at the process in its entirety.
    Mr. Wicker. Well, let us engage in that process and have 
that conversation, and I will be contacting you to make an 
appointment. I would appreciate an answer on the record about 
what your specific objections would be, just simply adopting 
the very same statutory rule that the Environmental Protection 
Agency has to abide by right now. I would appreciate an 
analysis by your office on the record in response to this.
    Mr. Jeffress. All right, I will be happy to oblige you with 
that.
    [The information follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Wicker. Thank you, Mr. Chairman.
    Mr. Porter. Ms. Pelosi is ranking on Foreign Operations and 
has asked to be recognized. Ms. Pelosi.

                    ELEMENTS OF ERGONOMICS PROPOSAL

    Ms. Pelosi. Thank you very much, Mr. Chairman. I thank the 
indulgence of my colleagues. We have the Secretary of the 
Treasury in there now, and many of my colleagues including Ms. 
Lowey, Mr. Jackson, and you are a member of our committee as 
well, Mr. Chairman, so thank you for your accommodation, 
because we have important testimony in both rooms.
    I want to commend Assistant Secretary Jeffress for his 
leadership. I applaud the standards that OSHA has put forth, 
and I was hoping that you could just spell it out for us, 
because I think your presentation on ergonomics would clear up 
exactly what OSHA is presenting.
    Mr. Jeffress. I appreciate that, Ms. Pelosi.
    That is what seems to be most important and on most 
people's minds at the moment. What we have done on ergonomics 
is to say to business and labor, ``Tell us what the best 
programs are in your workplaces. Tell us what provisions you 
use to determine whether a program is effective. Tell us what 
you use to determine whether action needs to be taken.'' And 
after listening to those employersand those unions over the 
course of several years, we have now proposed--and it is a draft of a 
proposal; it is not an official proposal yet--a rule that requires six 
basic elements for an employer to follow in ergonomics.
    First, to demonstrate that there is management leadership 
and employee involvement in addressing the problem. We know 
that no program is effective if management does not stand up 
and say, ``This is important, and we are going to do it, and we 
are going to do it right.'' We also know that no program works 
if employees are not involved in saying, ``This is how it 
affects me, and this is what we need you to do to protect me 
from getting hurt.'' So, management leadership and employee 
involvement is essential to this program.
    The second piece of it is to train employees in what to 
look for. Many times, we are unaware of what kinds of things 
may be causing our problems, so some training of employees in 
what the ergonomic problem may be; how to recognize one; when 
to report it, and the freedom to report to the employer that 
they are having a pain or having an injury is the second 
piece--employee training--the second piece of our program.
    Third, then, is hazard identification. If people are 
reporting problems, then we want the employer to find out what 
is causing the problems; very simple, very basic. And sometimes 
it can be as simple as watching the employee and what they are 
doing and recognizing this is what is causing the problem, and 
if we adjusted the workstation this way or provided a slightly 
different tool or give the employee sometimes a box to stand 
on, so they can reach where they are working. Hazard assessment 
is the third basic requirement that we expect an employer to 
do, and once they have identified the hazard, then to fix the 
hazard; find it and fix it, the basic principles of the Safety 
and Health Program.
    We expect the employer to provide medical management if an 
employee has been hurt to make sure they get the medical 
treatment that is appropriate for the kind of injury that they 
have had. And then we expect them to evaluate the program and 
see that it is working.
    One of the issues with ergonomics is that when you put a 
fix in place, it may work for some people; other folks may have 
additional problems, may have different problems, and you may 
have to try a different fix. What employers told us time after 
time after time is that some of the solutions are simple, and 
you can try a simple solution, and if that does not work, then 
you try another simple solution but that there are solutions 
that work, and you have to find the right one for the right job 
and the right one for the person involved. But the processes 
they go through are very simple and basic processes in 
management leadership and employee involvement, training 
employees, identifying hazards, fixing those hazards, medical 
management for your employees, and then evaluating your 
program.

                    EXAMPLES OF ERGONOMICS PROGRAMS

    Ms. Pelosi. I appreciate that, and I understand that your 
standard is based on solutions that have already proven 
workable. The science and medical ergonomics issues have been 
researched thoroughly, and the medical evidence clearly 
demonstrates that the Department of Labor should issue an 
ergonomic standard. Many medical and scientific organizations 
support OSHA, including the American Public Health Association, 
the American College of Occupational and Environmental 
Medicine, and the National Academy of Sciences.
    I noted yesterday--we went through some of this with 
Secretary Herman--that it has been 20 years since OSHA hired 
its first ergonomist. Since then--we have been hearing that we 
should further delay, further delay about issuing this 
standard, and that is why I applaud the stand that you all have 
taken.
    Could you just tell me--as I said earlier, your proposed 
standard is based on solutions that have been proven workable; 
certainly, they make common sense as you describe them here--
but could you describe examples of these solutions and the 
companies that are effectively reducing employee injuries at 
their own costs?
    Mr. Jeffress. Yes, ma'am. And I think it is important that 
people view this as OSHA's proposal. As you pointed out, we 
have heard from business and from labor about what is working 
in their workplaces, and our standard is built on that. It is 
built on the big companies, the 3M's of the world, the Xerox's, 
the Ford's, the IBM's, and the programs that they have put in 
place. It is built from small companies, the Woodpro Carpentry, 
Visteon Automotive Systems, Betcher Industries, the small 
companies as well as the large companies putting programs in 
place. Insurance companies have endorsed this.
    I was at a program, as Mr. Bonilla mentioned, in Houston 
last week. The Liberty Mutual Insurance Company presented on 
behalf of their client a five-year program addressing 
ergonomics in the workplace, resulting in a 74 percent 
reduction in their injuries and $2,500,000 in savings for that 
one company.
    Woodpro Carpentry, one of the small employers I mentioned, 
put a conveyer belt on the line instead of having people 
lifting and carrying things. They are saving $42,000 every year 
as a result of that installation; again, a payback in three 
years on their investment.
    Field Crest Cannon in Georgia is a textile operation. They 
cut their injuries from 121 to 20 in the course of 3 years, an 
87 percent reduction in their injury and illness costs.
    And it goes across every industry, even newspapers. There 
has been a reference here to the newspaper of the Fresno Bee in 
California, and their medical and temporary disability costs 
because of carpal tunnel from people working on keyboards. They 
spent about $800,000 redesigning their workplaces, and they say 
that in two years they have more than offset the cost of that 
with the reduction in the medical payments.
    Perdue Farms, Sequins International, Aurora Packaging 
Company, Osh Kosh B'Gosh, Armor Navistar, company after 
company, I could go right down the list, and it is both the 
Fortune 500 and the small companies at the end of the list that 
have successful interventions that have made a difference, and 
this standard is built on their stories. The important thing 
that we learn from their stories is this was not a cost to 
those companies; that the investment, in fact, paid off, and 
they were more productive as a result. Ergonomics is not 
something that slows down production; ergonomics is good 
economics, and it made good sense for them to invest this 
money.

                       WHISTLEBLOWER PROTECTIONS

    Ms. Pelosi. During the last decade, Labor Secretarys Dole, 
McLaughlin, and Reich have each stated their support for 
improved safeguards for workers who complain about unsafe 
conditions. Given this history of bipartisan support and the 
fact that Congress passed the OSHA Act in 1970, isn't it 
timeOSHA updates this law, the whistleblower law, and develops stronger 
whistleblower protection?
    Mr. Jeffress. Yes, ma'am. The protections for 
whistleblowers in the OSH Act are outdated compared to more 
recent legislation that Congress has passed. I would urge you 
all to pass more protective legislation. In particular, we need 
to extend the amount of time that employees have to file their 
complaint.
    Right now, the Labor Department has to take any valid 
complaint before a Federal District Court judge. We need an 
administrative law judge proceeding here rather than tying up 
the Federal courts with these complaints, and we need employees 
to be able to have their own attorneys take them through the 
ALJ process and not have the Department's solicitors tied up 
with these cases as well.
    It is time that we updated those whistleblower protections, 
and the administration will be coming forward with a proposal 
recommending to you that we do that.
    Ms. Pelosi. Thank you, Mr. Secretary. Thank you, Mr. 
Chairman.
    Mr. Porter. Thank you, Ms. Pelosi. Mr. Jackson, apparently, 
has gone back to Foreign Operations as well. We will fit him in 
as soon as he returns. Ms. DeLauro.

                   COMPANIES WITH ERGONOMICS PROGRAMS

    Ms. DeLauro. Thank you very much, Mr. Chairman. Mr. 
Secretary, thank you, and thank you for the work that you are 
doing. I was listening to your last answer to Ms. Pelosi, the 
prior one, where you to began to tick off the companies around 
the country that have, in fact, saved substantial amounts of 
money, and oftentimes we have misconceptions about what is 
going on, and, in fact, how employers in the cooperation in 
this effort have, in fact, seen an opportunity to save funds.
    It may very well be the thing to do--and I do not want to 
add to the burden of your administration here--but it might be 
useful to have this list and engage in the public education 
campaign, and to the extent that it can be organized by 
district, so that, in fact, members get some idea of the 
companies--small, large, medium, whatever it is--in their 
district that, in fact, have participated, have saved money, 
and are proceeding along. Sometimes, we go along in this body, 
because you are dealing with lots of different issues where we 
are not up to speed on everything that has happened, so I would 
love to see that kind of document produced for all of us, if I 
can make such a request.
    Mr. Jeffress. I appreciate that suggestion. We will be 
happy to comply.
    [The information follows:]

                       Ergonomics Success Stories

    OSHA is in the process of developing a database containing 
hundreds of ergonomics success stories by state. We will 
provide a copy for the record as soon as it is completed.

    Mr. Jeffress. Last year, we held regional conferences 
around the country and invited businesses that had put 
ergonomics programs in place to come tell about their 
experiences. We had 1,500 people come to those conferences; 
about 150 different reports of businesses describing what they 
had done. Last week, in Texas, we had another national 
conference to bring together best practices nationally. Over 
700 people came; we had 80 different presentations on actions 
companies had taken to implement ergonomics in their workplace, 
and successful actions I should say. And we would be happy to 
get those hundreds of names and some results from those 
presentations to you and let you look at them and help educate 
the rest of the public about what is going on.
    One of the things I find is that the people who are working 
in the plant are putting these systems in place, and they know 
that they are working; they would not be investing money if 
they were not--you know, American business does not throw away 
money on things that do not work--and these things are working, 
but sometimes the representatives from Washington, the trade 
associations, who, perhaps, are not actually seeing what is 
going on on the factory floor are not aware of what is 
happening. So, I think this list might be helpful in educating 
people.
    Ms. DeLauro. I think it would be terrific; I mean, even 
with regard to--you know, hospitals, I understand, you know, in 
terms of what we are looking at in terms of health care costs 
today, and how there are hospitals who have participated and 
are moving costs down et cetera. So, thank you very much.

                     TIMING OF ERGONOMICS PROPOSAL

    Let me just say, can you describe how you determined that 
it was appropriate to move forward with the ergonomic standard 
before the National Academy of Sciences completed its second 
study? Didn't you receive assurance from former Chairman 
Livingston and from Congressman Obey that the rider did not 
prohibit you from doing so?
    Mr. Jeffress. We did receive that explicit assurance, Ms. 
DeLauro. We, of course, have been collecting information for 10 
years and more and observing what is happening in businesses, 
so we had that information to draw on. We also had the results 
of the National Academy of Sciences workshop last year which 
drew the conclusion, yes, there are things that reasonably can 
be done here. Based on that, we were proceeding with the 
development of a proposed rule. When Congress funded an 
additional study by the National Academy of Sciences, we asked 
the question to the chairman of the Appropriations Committee, 
does this mean that we should wait? And Mr. Livingston, as you 
pointed out, and Mr. Obey co-signed a letter back to the agency 
that you have in your hand that said it is not the intent of 
the Congress in funding this study that OSHA should delay its 
issuance ofstandards in this area.
    Ms. DeLauro. And that is in the report agreement as well--
--
    Mr. Jeffress. Yes, ma'am.
    Ms. DeLauro [continuing]. From the last effort, as I 
understand it. Thank you.

                         HIGH HAZARD TARGETING

    Mr. Porter asked about the most dangerous workplaces, et 
cetera. If I could just follow up on that. How are you focused 
on the most dangerous locations and workplaces? What do you do 
in that regard to try to focus in on those places? And, 
secondly, to be honest with you, what will you do, what will 
the fallout be if this hold that is on this Cooperative 
Compliance Program, if it moves against what you are doing? 
What will happen? What is the contingency?
    Mr. Jeffress. The focus on the most dangerous workplaces 
comes from the information that employers send us. We do a 
survey each year of about 80,000 employers and ask them what is 
your experience, and they tell us what their experience is; how 
many injuries they have and how many employees they have and 
what their rate is. So, we, then, from the employers' own 
information, determine which ones are having the highest rates 
of injuries and target our enforcement resources to those that 
are having the highest rates. So, our focus on what the most 
dangerous workplaces are comes from employer information 
itself.
    If the lawsuit is lost, if the court decides that we should 
not proceed with the CCP, we will continue to proceed with the 
inspections of these most dangerous workplaces, but what we 
will be unable to do is offer the partnership to American 
business to say ``If you will go ahead on your own, then we 
will go tend to someone who is not acting to improve their 
program.''
    Ms. DeLauro. Does this mean, in essence, that you go back 
to a system, if you will, in which there was these great 
complaints about inspections and a way that brings it back to 
where we started this process without the value of the joint 
partnership?
    Mr. Jeffress. Well, we will have gotten half a loaf, 
because we will be able to target inspections to the most 
dangerous workplaces, but the partnership that I think is so 
important in driving safety and health to greater achievement, 
the national partnership, will be lost, and the ability to 
cooperate with businesses in extending safety and health 
programs will be lost.
    Ms. DeLauro. Thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. DeLauro. Mrs. Lowey.

                       OUTREACH TO SMALL BUSINESS

    Mrs. Lowey. Thank you, Mr. Chairman, and I do apologize for 
coming in late, but, as you know, there are many hearings going 
on at the same time.
    Mr. Porter. Yes, indeed.
    Mrs. Lowey. So, I join my colleagues, Mr. Jeffress, in 
welcoming you here, and, as I told Secretary Herman when she 
was here yesterday, I am very impressed with your activities in 
dealing with the small business community. You referred in your 
statement to the small business forum held this month and your 
plans to do more in May, and while conventional wisdom may hold 
that small businesses complain about OSHA, as we have been 
hearing, and I know you have been working very hard to reach 
out to small businessowners, most do want to comply but simply 
lack the information and resources to do so. Could you give us 
some examples of what you have been doing in the area of 
reaching out to small businesses and communicating with small 
businesses and how the Fiscal Year 2000 budget enhances your 
efforts?
    Mr. Jeffress. Yes, ma'am. I appreciate your recognizing the 
forum we held earlier this month for small businesses, and 
before you came in, I believe we passed out to everyone a CD-
Rom that provides information free of charge to small 
businesses on how to get assistance with OSHA compliance. We 
will take that conference on the road in every region of the 
country during Small Business Week in May. We will have other 
regional forums with small businesses around the country to 
extend that outreach.
    In addition, as directed by Congress, we have been spending 
15 percent of our time on compliance assistance, so that we are 
not solely an inspection program; we are not only doing 
inspections, we are reaching out and trying to provide 
technical assistance to employers, especially to small 
employers, on what they might need to do to come into 
compliance and how they can protect themselves.
    One of our great concerns is that while the smallest 
businesses with less than 10 employees represent only 15 
percent of the employment in this country, more than 28 percent 
of the fatalities on the job occur in these small businesses. 
It is very important for us to be able to reach out and assist 
these businesses to motivate them to put safety and health 
programs in place. We are doing that through materials; we are 
doing that through the Internet; we are doing that through 
conferences. Probably a premier program for reaching small 
businesses is the State Consultation Program. In every one of 
the 50 States in the country, OSHA has consultants to provide, 
free of charge, safety and health advice to small businesses, 
and we do 24,000 on-site visits to small businesses across the 
country every year on a one-on-one basis helping identify the 
problems of that particular business and what solutions would 
work for that particular business.
    Mrs. Lowey. At your forums, do the businesses that have 
less than 10 employees have the capacity to actually send 
people? Do they take advantage of it?
    Mr. Jeffress. It varies. Certainly, the forum in Washington 
was probably attended more by the representatives than the 
businesses themselves. A small businessperson who is learning 
the business generally is not going to take time off to come to 
a Government forum. So, we have to reach out through these on-
site visits, through our consultants; provide information 
through the Internet, so they can access it from the home or at 
their leisure in order to get the information to them.
    Mrs. Lowey. Well, actually, that was my next question. I 
know that Mr. Porter was talking about your Website----
    Mr. Jeffress. Yes.
    Mrs. Lowey [continuing]. And I wanted to follow up on that, 
because it is clear that OSHA's Website with its interactive 
experts is, as I understand it, a big hit with businesses 
seeking advice and information. Just as I would expect it would 
be difficult for the very small businesses with fewer employees 
to attend a forum, what do know about the businesses who are 
clicking onto the websites? Are they predominantly small 
organizations? And can you give some idea of how much time and 
money is saved through these efforts to businesses?
    Mr. Jeffress. Well, we do not take the identity of everyone 
who hits on our Websites, because some folks whowant to do that 
do it because they do not want to call us in person. I cannot identify 
all of the employers for you that are using the Website, but I knew 
that we had achieved success when the National Federation for 
Independent Business, which has not in the past been a fan of OSHA, on 
their Website, made reference to the fact that the Hazard Awareness 
Advisor, the Expert Advisor on the OSHA Website, would be very useful 
for small businesses and actually provided a hotlink, so if you hit the 
NFIB Website, you can click on the OSHA one and you get directly to the 
OSHA material. So, that says to me that we are making an impact; that 
we are working in a way that people respect and find useful.
    Mrs. Lowey. That certainly is extraordinarily good news; 
thank you. [Laughter.]
    Mr. Jeffress. Yes, ma'am.

                        PLAIN LANGUAGE STANDARDS

    Mrs. Lowey. I know there has also been reference in your 
testimony specifically about plain language rules; that you are 
rewriting the rules in what we call plain language, and I must 
tell you I think this is great news, because workers and 
employers who are affected by OSHA should not need a dictionary 
to get through OSHA publications. I just wondered when I read 
that, are you overhauling the entire rule book? What is the 
feedback? How are employers responding to these changes, and 
would some of the funding that you are requesting for 
``lookback'' customer surveys go towards evaluating these 
simplified rules and regulations?
    Mr. Jeffress. Yes, ma'am. Well, clearly, I will give the 
President and the Vice President credit for they have been 
telling OSHA and every other agency of Government, ``We will 
speak in plain language,'' and it is a message that needs to be 
heard, and we are trying to respond appropriately.
    The question and answer format of a rule is really foreign 
to rulemakers. It is very difficult for the people in our 
Solicitor's Office to adapt to this change, but we are making 
it, and all of our new rules are being proposed is in that 
format using very simplified language. The question, ``What 
must I do?'' The answer is, ``Here is what you must do,'' as 
opposed to a paragraph of technical detail. So, I think it is 
good learning for us, and I think it is having a positive 
impact on the public. We will do this for all of our new rules.
    We have looked back at a few rules and have rewritten them 
in plain language. The task of rewriting all the rules in plain 
language is probably more than we are equipped or resourced to 
do at the moment. The President's direction to us was, ``Okay, 
go forward. Let us make all the new stuff in plain language.'' 
We will go back in our procedural issues, we will try to put 
them into plain language, and then the direction is, as time 
and resources permit, go back to all the old rules. But over a 
period of time, as we adopt the new rules and rewrite old ones, 
we should get to the point where all of our rules are 
understandable to the American public which is our ultimate 
objective.
    Mrs. Lowey. Just following up on the rule question, and you 
said, ``As we rewrite some rules,'' is there a regular process 
in place, because I would imagine that some of the rules if 
reviewed may not be relevant, and you are trying to instill 
such energy into that agency that I would think rewriting the 
old rules would serve an important purpose of making sure they 
are all relevant?
    Mr. Jeffress. There is a real need to do that, as has been 
pointed out here earlier. Most of our rules were adopted--I 
think Mr. Obey pointed out--were adopted from the American 
National Standards Institute in the early 1970's, so most of 
them are at least 25 years old; some of them are still written 
to apply to processes that are no longer in use in the American 
workplace.
    We were told that if we were just going to rewrite the rule 
in plain English and not change anything, that we could have an 
expedited rulemaking process. But, in fact, because so many of 
the older rules you have got to change, because they really do 
not apply in the workplace, but address things that no longer 
exist, then each rewriting actually becomes a new rulemaking, 
and rulemaking requires extensive resources and time and 
effort.
    So I would like to be more optimistic that we had a process 
in place to update all of our old rules, but I will have to 
tell you that at the moment I do not have a good solution to 
this. It is something I would be happy to work with you all on, 
but it is a challenge.
    Mrs. Lowey. Thank you very much. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mrs. Lowey. Mr. Jackson.
    Mr. Jackson. Mr. Chairman, I had a series of questions, but 
having the least amount of seniority on this committee, my 
questions have been asked and answered many times. [Laughter.]
    However, I do just want to get some clarity on one. Mr. 
Jeffress, thank you for your testimony. We have heard from the 
opponents of the Ergonomics Rule that the science of ergonomics 
is not adequate to support OSHA's rulemaking. But isn't it true 
that most medical and scientific experts believe that the case 
for an Ergonomics Rule is clear and that OSHA should propose 
such a rule?

                  SCIENTIFIC BASIS FOR ERGONOMICS RULE

    Mr. Jeffress. Yes, sir. This is probably best illustrated 
by the American College of Occupational and Environmental 
Medicine which is the premier trade association, if you will, 
for occupational physicians across the country. Seven thousand 
physicians, corporate physicians, business employees, as well 
as private physicians with an occupational practice, joined 
together and stated to the agency in a letter saying that an 
adequate scientific basis exists to conclude that OSHA should 
proceed with the rulemaking in this area, so that the premier 
occupational physicians in the country have said OSHA should go 
ahead.
    The American Public Health Association has said OSHA should 
go ahead. The Occupational and Environmental Clinics, hospital-
based groups that treat people who have ergonomic injuries have 
written a letter saying OSHA should go ahead. The American 
Association of Occupational Health Nurses, which has nurses in 
larger plants throughout the country has said OSHA should go 
ahead. The National Academy of Sciences, the National Institute 
for Occupational Safety and Health, the scientific and medical 
community have weighed in and have said OSHA should proceed in 
this area.
    There is enough knowledge to proceed. Do we know everything 
there is to know? No, and we never will, and hopefully we will 
learn things every year, and we will use that as we apply the 
Ergonomics Rule, but we know enough to act, and that is what is 
important right now.
    Mr. Jackson. Thank you very much for your testimony, Mr. 
Jeffress; Mr. Chairman.

                          ERGONOMICS OUTREACH

    Mr. Porter. Thank you, Mr. Jackson. Mr. Jeffress, when do 
you expect to issue a proposed regulation on ergonomics,and 
when will you issue a final regulation? What is your timetable for a 
final regulation?
    Mr. Jeffress. Currently, we expect to issue a proposed rule 
this Fall, and then hold hearings early next year, and it is my 
expectation that we should be able to conclude the process by 
the end of the year 2000.
    Mr. Porter. What provision are you making or are likely to 
make once the standard is in final form to give employers 
assistance in complying with it? It will be quite extensive, 
one assumes, and they are going to need some guidance, 
especially the smaller ones.
    Mr. Jeffress. It will be extensive. For small employers, 
our premier assistance is going to be the consultation programs 
in the States, and we will be training those individuals on 
identifying ergonomic hazards, on what solutions work in 
different industries and how to provide that information in a 
helpful way to employers that they meet with. We have a request 
before you for compliance assistance specialists. Our goal is 
to put one in every OSHA office, one full-time, outreach 
worker. It would be my expectation that this person would also 
be capable of providing assistance to employers in 
implementation of ergonomic programs.
    I agree with you that the challenge of taking the best of 
what the companies are doing and spreading it to the rest is a 
challenge that we bear some responsibility for, and we will 
have an extensive outreach program in this area.

              REQUESTED INCREASE IN COMPLIANCE ASSISTANCE

    Mr. Porter. This question may bear upon that. Your budget 
proposes a significant increase in Federal compliance 
assistance funding, about 26 percent over Fiscal Year 1999 or 
about $12,000,000, and yet you are proposing no increase for 
State compliance assistance, on-site consultation grants. Why 
is there the big increase in Federal activity there but no 
increase for consultation grants?
    Mr. Jeffress. The State Consultation Program, as you know, 
has been the fastest growing part of the OSHA Program over the 
past few years; it is about a 35 percent increase that those 
programs have had in the past 2 years. Our experience in 
working with the States today that run these programs is that 
they are still digesting the growth that has occurred in the 
past two years. It would be my intent to continue that growth 
in the future, but for next year, I would suggest that Federal 
compliance assistance, which has not been increasing as fast, 
needs the attention, and we will probably come back and even 
this out in future years.

                     PERFORMANCE ORIENTED STANDARDS

    Mr. Porter. Last year, you indicated that you were planning 
to utilize performance goals in setting new standards without 
dictating how employers must meet the goals. To what extent 
have you been able to do this in your standards process?
    Mr. Jeffress. I believe the two that are out there now, Mr. 
Chairman, in draft form, are going to be big tests of this--the 
Safety and Health Program Rule and the Ergonomics Rule. Neither 
of them specifies a particular solution that fits each 
employer. The Ergonomics Rule does not suggest that someone 
should not lift 43 pounds, but it is okay to lift 42. Both of 
them are oriented to finding the problems that exist in the 
workplace, and fixing the problems with solutions that work. 
So, the way these standards are being written I think is 
performance oriented. The challenge will be to assure employers 
that we will use reasonable judgment when we have these 
performance standards and apply reasonable tests to see whether 
an employer has acted in good faith to implement these rules.
    Mr. Porter. Mr. Jeffress, a good number of our witnesses 
come before us and filibuster our subcommittee. The hour is now 
just short of 11:30. You have not done this. You have answered 
our questions directly, quickly, efficiently. Obviously, you 
know what you are talking about, and you are kind of a model 
witness here. You have got to tell all of the other people in 
all those other departments that they need to model their 
testimony on the way you do it, because we have run out of 
questions, and it is not even 11:30. [Laughter.]
    Mr. Jeffress. Mr. Chairman, I will take that as an 
expression of confidence in the way the agency is going. I 
appreciate the confidence of the members. [Laughter.]
    Mr. Porter. It is certainly an expression of confidence in 
your ability as a witness. [Laughter.]
    I really mean this. A lot of people answer our questions 
with more time. It is frustrating for members who have five 
questions to ask to get a five minute answer to one of their 
questions and have no time left. And, so we really appreciate 
the way you handle the questions and give us the directness of 
your answers and the candor. I think you are doing a fine job 
there; we do not agree on everything, obviously, and we are not 
against setting standards; we are worried about the cost of 
compliance and whether small businesses can meet those costs, 
and I know that you are going to take that into account in what 
you do as far as rules are concerned and giving help to smaller 
businesses.
    But I think all in all we are seeing a lot of progress 
being made. We congratulate you upon that progress. The figures 
of an all-time low in five straight years in the injury 
statistics is very impressive, and I think the American people 
ought to know the good job that is being done.
    Mr. Jeffress. Thank you very much.
    Mr. Porter. Thank you for your good work and thank you for 
your testimony.
    Mr. Jeffress. Appreciate the chance to be here.
    Mr. Porter. The subcommittee will stand in recess until 
1:30.
    [The following questions were submitted to be answered for 
the record:]

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                                           Tuesday, March 16, 1999.

                  EMPLOYMENT STANDARDS ADMINISTRATION

                                WITNESS

BERNARD E. ANDERSON, ASSISTANT SECRETARY FOR EMPLOYMENT STANDARDS 
    ADMINISTRATION
JOHN R. FRASER, ACTING ADMINISTRATOR, WAGE AND HOUR DIVISION
JAMES McMULLEN, DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION AND 
    MANAGEMENT

                           AFTERNOON SESSION

    Mr. Porter. The subcommittee will come to order. We 
continue our hearings on the appropriations for the Department 
of Labor with the Employment Standards Administration, and we 
are pleased to welcome Dr. Bernard Anderson, the Assistant 
Secretary for Employment Standards. Mr. Anderson, it is good to 
see you.
    Mr. Anderson. Thank you.

                       Introduction of Witnesses

    Mr. Porter. Why don't you introduce the people who are with 
you and then proceed with your statement?
    Mr. Anderson. Thank you. I am accompanied by John Fraser 
who is the Acting Wage and Hour Administrator, and by Jim 
McMullen who is representing our Budget Office in the 
Department of Labor.

                           Opening Statement

    Mr. Chairman, we submitted a written statement that I hope 
you have received. I would like to make a very brief opening 
statement and then move on to the questions and answers. I want 
to express my appreciation for the opportunity to appear before 
you today to present the fiscal year 2000 budget proposal for 
the Employment Standards Administration.
    ESA, the largest agency in the Department of Labor, 
includes the Wage and Hour Division, the Office of Federal 
Contract Compliance Programs, the Office of Workers' 
Compensation Programs, and the Office of Labor-Management 
Standards. ESA is the largest agency in the Department of 
Labor, including nearly 4,000 employees, 90 percent of whom are 
located in regional and district offices throughout the Nation 
where they provide direct services to virtually all American 
workers.
    ESA's work is indispensable to the Department's success in 
achieving two of Secretary Herman's three strategic goals for 
the Department of Labor. First is to assure a secure workforce, 
and the second is to assure quality workplaces. Our staff 
pursues those goals by administering more than 100 laws and 
regulations that are aimed at protecting the economic 
opportunity available to working men and women. Under the 
Government Performance and Results Act, our goal is to maximize 
compliance with the Nation's labor laws and to improve the 
quality of services that we provide.
    I want to comment briefly on the work we do, Mr. Chairman, 
and to put that work in context. I begin by saying that we are 
now enjoying the most favorable economy our Nation has seen in 
nearly 40 years. Nearly 19 million new jobs have been created 
in the last 6 years. The rate of unemployment, at 4.3 percent, 
is the lowest it has been in nearly 3 decades. Inflation is 
effectively under control. Profits are up for large and small 
businesses alike.
    But I have to say, Mr. Chairman, that thousands of workers 
are not benefiting from the Nation's prosperity because they 
are not receiving the wages that they have earned, not enjoying 
the protection of economic opportunities which they deserve and 
which the Nation's laws assure. This is especially true of low 
wage workers, workers like the farm workers who pick the fruit 
and vegetables that we eat; the restaurant workers who serve 
the food we eat; the custodial and janitorial workers who clean 
up after we eat; the garment workers who make the clothes we 
wear. These and other low wage workers are often exploited in 
ways that would shock most Americans.
    Our job in ESA is to end those practices and to see that 
workers receive the fruit of their labor. I must tell you that 
anyone who sees the problem of child labor in America as a 
collection of dusty photographs of unhappy children out of 
school and working to the bone has not seen the children as 
young as 4 years old that our investigators have identified 
picking fruits and vegetables in the field.
    Last year the Wage and Hour Division identified 5,500 child 
labor violations and assessed $5.5 million in civil money 
penalties for those violations. The law that protects our 
Nation's children requires vigilant enforcement. We must do 
more to end the scourge of abusive child labor practices.
    And we must do more, Mr. Chairman, to end discrimination in 
the workplace. In my lifetime we have made significant progress 
in widening the circle of opportunity for all groups to 
participate in our economy. But I must report to you that 
discrimination still exists. Women earn only 75 cents for every 
dollar earned by a man in the workforce, and women in senior 
management and executive positions earn only 68 cents for every 
dollar earned by their male counterparts. Similar disparities 
exist for minorities, for the disabled, and for others in our 
economy.
    With your support, our Office of Federal Contract 
Compliance Programs will do more to end that discrimination and 
to close the pay gap between men and women. I would add that 
once the job of ending discrimination meant assuring equal 
access to all job opportunities. The challenge today is to 
assure equal pay for equal work and to end the practice of wage 
discrimination.
    Our Workers' Compensation Program, the second largest 
program in ESA with some 1,200 employees, assures that Federal 
employees who in the course of their duties become sick or 
injured will receive the medical care they deserve and other 
assistance to help them get back to work in the service of the 
American people. Our budget includes a request for funds to 
continue the multiyear effort to modernize and streamline the 
Workers' Compensation Programs which will save millions of 
taxpayer dollars in compensation costs.
    Finally, Mr. Chairman, I believe it is our continued duty 
to remain vigilant on behalf of the interests of working men 
and women and their families. Since the Fair Labor Standards 
Act was passed 60 years ago, thanks to the support of Congress, 
this agency has been able to protect countless workers and 
children from abuse, to assure their participation in the 
economy.
    We ask now for your full support for the programs that were 
created to protect all American workers by approving our budget 
proposal request for $405 million and 4,050 employees, so that 
the promise of American prosperity will leave no one behind.
    That concludes my opening statement, Mr. Chairman. My 
colleagues and I would now be happy to answer your questions.
    [The information follows:]

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                         CHILD LABOR VIOLATIONS

    Mr. Porter. Mr. Anderson, you mentioned child labor 
violations in this day and age and not just a few but 5,500 of 
them, I think.
    Mr. Anderson. Yes.
    Mr. Porter. Is there any provision in the law to give 
people a term in jail as well as a fine for these kinds of 
violations? It seems to me that a country like ours ought to be 
able to put a stop to this fairly easily with some good, stiff 
enforcement of the law. Is there any provision for jail terms?
    Mr. Anderson. There are provisions in law for criminal 
violations. Violation of child labor is a civil violation.
    Mr. Porter. Do we refer them for criminal prosecution as 
well?
    Mr. Anderson. I am not aware of any case, to my knowledge, 
in which an individual has been referred.
    Mr. Porter. It seems to me when you have a civil penalty, 
all you do is add it to the cost of doing business. It is 
absorbed. If it is in the employer's interest to use children 
and they simply pay a fine, they pay the fine and do it again. 
I think it is time to refer these people for criminal violation 
and prosecution and send a message out that a country like ours 
should never tolerate this occurring within our boundaries. We 
criticize other countries for the same kinds of violations, but 
apparently we have a number in our own country.
    Mr. Anderson. There is a conviction for a second violation. 
I would like to have John Fraser elaborate on that.
    Mr. Fraser. There is a criminal provision in the Fair Labor 
Standards Act for child labor violations, but it is a 
misdemeanor, and in order for jail time to be available, there 
has to be a second conviction. In other words, you have to be 
prosecuted and convicted once before you are subject to 
potential incarceration for up to 6 months.
    Mr. Porter. You are telling me that nobody was a second-
timer here?
    Mr. Fraser. No. What I was explaining to you is it is a 
very difficult charge to get an assistant U.S. attorney to 
prosecute because there isn't incarceration available for a 
first conviction. One of the things that we have been looking 
at----
    Mr. Porter. You have to have a misdemeanor conviction and 
then a second conviction?
    Mr. Fraser. Before jail time.
    Mr. Porter. Not just the civil penalty?
    Mr. Fraser. That is correct. We have been looking at 
whether there is a need to strengthen those criminal 
provisions.
    Mr. Porter. I think there should be zero tolerance for 
child labor violations myself.

                          EQUAL PAY INITIATIVE

    Mr. Anderson, the administration is proposing an equal pay 
initiative, and at the same time Senator Daschle has introduced 
a bill he calls the Paycheck Fairness Act. Is this the same 
thing or are these two different things?
    Mr. Anderson. Well, the Daschle bill would authorize 
activities to examine the degree of wage discrimination in the 
workplace; and our proposal for $4.2 million for OFCCP would do 
the same thing. That is to say, with those funds we would be 
able to provide assistance to employers, technical assistance 
so they could examine their pay records and determine whether 
or not there might be some disparity which is impermissible 
under the law.
    Mr. Porter. Under the existing law?
    Mr. Anderson. Under the existing law, yes.
    We also would reach out to employers. OFCCP's authority, of 
course, is limited to those companies which have government 
contracts, but that covers about 25 percent of the workforce. 
We would assist the employers in doing analysis of their 
workplaces and their pay systems to be sure that there is no 
discrimination taking place in employee compensation.
    We also would use those funds to promote better public 
understanding of the extent of wage discrimination and the 
disparity in pay between men and women, between minorities and 
others, so that we would gain more support for efforts to close 
the pay gap.
    Mr. Porter. And this does not require a new authorization, 
does it?
    Mr. Anderson. No, it does not. It would be within the 
authority of the OFCCP as presently structured.
    Mr. Porter. Apparently one of the problems that your 
Department has run into, and this was written up sometime in 
January in the Wall Street Journal, but employers apparently 
are being asked to routinely submit all kinds of information 
that have up to this point in time only been required of them 
if there is a charge of discrimination against them, an actual 
existing charge. Now I understand you are going to ask all 
employers to submit data such as the name, address, sex, race, 
employment terms and pay of every employee. Is that part of 
this initiative?
    Mr. Anderson. Let me explain it in this way, Mr. Chairman.
    At the present time, the OFCCP in its investigatory 
activities requests information on the wages paid to employees. 
That is part of what OFCCP does in conducting compliance 
reviews. And the compliance reviews are part of the 
investigation of companies that might be thought to be in 
violation of the Executive Order, not in compliance withtheir 
obligations under the law.
    Mr. Porter. Right. So you ask for this data when you 
suspect that there may be a violation. You don't ask it 
routinely of every employer?
    Mr. Anderson. No, not under this provision. Under this 
provision the only difference is, instead of asking for the 
information at the time the OFCCP investigator arrives at the 
place of business, the information would be requested at an 
earlier stage of the investigation; and the reason for that is 
to allow us to decide more efficiently where to conduct a full 
investigation to determine whether or not there might be a 
problem. At the present time, the investigation goes on for 
some time and then preliminary information is obtained and 
OFCCP would have to go out to the employer's premises and 
inspect that information at the site.
    By requesting the information earlier in the process, a 
determination could be made as to whether or not there is a 
problem in wage discrimination and if there isn't, there would 
be no need to investigate.
    Mr. Porter. But that sounds like what is usually termed a 
fishing expedition. You don't know if there is a violation but 
you are going to force the employer to provide information to 
you on your terms to see whether there is a violation.
    Mr. Anderson. No.
    Mr. Porter. I think you have to be very, very careful with 
that.
    Mr. Anderson. I have not explained it clearly enough. Let 
me go back. No employer would be requested to provide any 
information unless the information that we have would indicate 
that there might be a problem of noncompliance on the part of 
that employer.
    For example, there are 200,000 government contractors. We 
have information on all of those employers, the employment 
profile of those employers. Based on an analysis of the 
employment information, each year some number of those 
government contractors are selected for reviews.
    In 1997 we changed the process for conducting reviews. 
Instead of conducting only one kind of review in which it was a 
comprehensive wall-to-wall review of the employer's' premises, 
we developed a tiered review process. One tier would be a desk 
audit, a limited examination of the employer's evidence on 
employment. Then there is a second level of review which is 
somewhat more comprehensive, looking at several of the 
employer's premises. Then there remains the more comprehensive 
review in which a number of issues are examined in the process 
of examining whether or not that employer is in compliance with 
the law.
    Now, the wage examination is conducted only after there is 
evidence in the employer's employment profile that there might 
be a problem of noncompliance. We do not have access to wage 
information at the present time before we have conducted an 
extensive review of the employer's premises.
    So if we are able to obtain the wage information sooner, we 
then can identify whether or not there is reason to do the 
complete review of the employer, in which case it would take 
more time and we would have a more comprehensive investigation.
    Mr. Porter. It still sounds to me like you are going ahead 
without having any information, and then forcing the employer 
to provide you the information at a point when there is no 
reason to believe that there may be a violation.
    I would like you to provide for the record an extensive 
explanation of exactly the mechanisms--you have explained them 
orally to some extent, but I would like a full explanation of 
exactly the procedures that you would be following before we 
would want to fund this, because I think I am hearing things 
that worry me a lot. Let's take a look at it.
    [The information follows:]

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                  FOREIGN LABOR CERTIFICATION TRANSFER

    Mr. Porter. You are proposing to transfer foreign labor 
certification to your agency from the ETA. I wonder if you 
would tell us about why this is proposed to be done, what 
changes you would plan to make in foreign labor certification, 
what role will State employment security agencies play in the 
program, and would there be a change in how the program is 
funded, including is there a request for user fees?
    Mr. Anderson. First let me say, Mr. Chairman, that at the 
present time the Foreign Labor Certification program 
administration is split between two parts of the Department of 
Labor. The adjudication of applications is done by the 
Employment and Training Administration. The protection of labor 
standards for both domestic workers and foreign workers is 
conducted by the Employment Standards Administration.
    I think it is clear from a careful examination of this 
system conducted by the Commission on Immigration Reform, which 
reported in 1997, and also our own inspector general, that the 
current system does not work very well. It is widely recognized 
by employers, by immigration lawyers, and by workers who are 
affected by this, that the system does not work well.
    It is characterized by long delays in processing 
applications, the development of a horrendous backlog, the lack 
of clarity in where to come to get information about the 
program, where to lodge a complaint if it is not working well, 
and a number of other administrative and operational problems.
    And so the inspector general recommended that this 
responsibility of the Department of Labor be consolidated and 
lodged in one place, and that is why the decision has been made 
to transfer the responsibilities from ETA to ESA. It is hoped 
that through that transfer that we can improve program 
administration; we can increase accountability; and we would be 
able to communicate better with employers, with workers, with 
others who are interested in this program. We would also be 
able to offer better protection against abuse of the Foreign 
Labor Certification program which would affect both domestic 
workers and foreign workers. The goal here is to assure that 
American employers have access to foreign labor that they need 
when it is clear that domestic American workers are not 
available to fill certain positions. That is the purpose for 
these programs. And the objective is to redesign the system so 
that the application process is more efficient, more cost 
effective, and that the system will work better in the 
interests of both employers and workers.
    Now, in addition to the change in location of where the job 
would be done within the Department of Labor, there is 
arecommendation to fund this program through the application of fees 
rather than general funds. And you are aware that the current H-1B law 
that passed last session includes the payment of $500 for each 
application for H-1B. This new program would include the payment of 
fees for covering the administrative costs of operating the system.
    Mr. Porter. That same $500?
    Mr. Anderson. I think it is $500 per application.
    Mr. Porter. And that is already in law?
    Mr. Anderson. For the H-1B program, not for the other.
    Mr. Porter. So you are proposing additional user fees?
    Mr. Anderson. Yes.
    Mr. Porter. How sanguine are you about getting those?
    Mr. Anderson. That depends on you.
    Mr. Porter. You have to get that from the authorizing 
committee.
    Mr. Anderson. We believe that this would be an appropriate, 
efficient way to pay for this program. And if the services are 
funded through the payment of fees, then it won't be necessary 
for general funds from the taxpayers to be used.
    Mr. Porter. I can believe the arguments, I just don't 
believe that it is going to happen and I don't believe that the 
President believes that it is going to happen.
    Mr. Anderson. Well, the President is asking for the fees, 
and that is above my pay grade.
    Mr. Porter. He is asking for them, but he is asking for us 
to pay for it because there aren't going to be any fees.
    Would there be cost savings associated with the transfer of 
authority to one agency with the Department?
    Mr. Anderson. We think that there would be. When you 
consolidate activities----
    Mr. Porter. How much?
    Mr. Anderson. It is difficult to say exactly how much would 
be saved.
    Mr. Porter. Maybe we can save all of it so that there 
wouldn't be need for user fees or additional appropriations.
    Mr. Anderson. I don't know that we can save all of it 
unless we get rid of the people doing the work.
    The budget for the program estimates that it would cost 
about $10 million less in the year 2000 than it costs at the 
present time.
    Mr. Porter. That is very helpful.
    Mr. Anderson, I am going to turn the chair over to 
Representative Dickey, and I will be gone about 10 or 15 
minutes and then I will be back. Representative Dickey.
    Mr. Dickey [presiding]. Mr. Anderson, I would like for you 
to know that we have the same problems in Arkansas with H2(a) 
temporary costs of work program, and I have listened to some of 
what your answers were. But we would like for that process to 
get a little more simple and for it to be more streamlined and 
improved, but we don't know if your goals are aimed in that 
direction. But we will watch, and I won't ask you any questions 
about it, but we will just watch as that progresses.

                             FMLA PROPOSALS

    Family Medical Leave Act. The President's budget includes 
$10 million for the Department to study the impact of that. At 
the same time, the President has asked for an amendment to FMLA 
so that businesses with 25 or more employees, down from 50, 
would be affected and add 3 days of leave. Is that a correct 
understanding?
    Mr. Anderson. The President this year recommended that 
there be an expansion in FMLA coverage, dropping the threshold 
from 50 to 25. I don't know that that has been introduced as a 
bill this year yet.
    Mr. Dickey. Mr. Fraser, do you know?
    Mr. Fraser. I believe it has been in the Senate but I don't 
know about the House at this point.
    Mr. Dickey. Why do we have $10 million to study the impact 
and yet we are going forward with the legislation? Can you help 
me with that?
    Mr. Anderson. One of the things that we are planning to do 
with the $10 million request is to study the impact of the 
Family and Medical Leave Act. This is a law that has been in 
effect since 1993 and the Family Medical Leave Commission in 
1994 and 1995 conducted a review of the early implementation of 
the act.
    By the year 2000, this act will have been in place for 7 
years and it would seem appropriate to update the work of the 
FMLA Commission to understand more fully what the impact of 
FMLA is on American workers, on employers, on families and to 
determine, among other things, whether the FMLA is costly for 
employers; whether it is convenient for workers to use; whether 
workers in fact are aware of their rights under the law. A 
series of questions like that. And part of the $10 million 
funding would be used to support research, conduct surveys, 
some of it conducted by State and local governments to 
determine exactly what the impact of the FMLA really is.
    Mr. Dickey. Well, I think that is a good thing and maybe we 
should have had that before we got into the act in the first 
place. I don't guess we did, or do you know?
    Mr. Anderson. There was a study conducted. This is an issue 
that has been in the public domain for some time. In fact 
during the 1980s, there were efforts made, I think, to pass a 
Family Medical Leave Act.
    Mr. Dickey. Either we need this data to make decisions or 
we don't.
    Now my question is if we are going to spend $10 million, 
why don't we wait to consider these other amendments until that 
report comes in?
    Mr. Anderson. I think in part, Mr. Dickey, because we 
already have information on how the act is being implemented in 
the many different places in which it is now in place, given 
the coverage of 50 or more employees. The Family Medical Leave 
Commission, after an extensive study of the act, found several 
things. One, they found that employers in the main had little 
or no difficulty in implementing the FMLA for workers who would 
take leave for up to 12 weeks a year during which time 
employers would maintain payment of their health benefits.
    Mr. Dickey. Excuse me; how was that data collected?
    Mr. Anderson. It was collected, I believe, through a survey 
conducted by the Family Medical Leave Commission.
    Mr. Dickey. Did that cost anything?
    Mr. Anderson. Do you know the budget?
    Mr. Fraser. I don't know the budget for the Commission. It 
was a bipartisan commission set up in the enactment of the 
Family and Medical Leave Act itself. I am sure that the 
Commission had a budget and there were costs associated with 
it. They conducted both a survey of employers and a survey of 
workers that Dr. Anderson is referring to. I am sure that there 
were costs associated with that. I don't have them here. We can 
certainly get them for you.
    [The information follows:]

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    Mr. Dickey. Are we going to duplicate that effort by 
spending $10 million? Are we going to parallel what they did? 
Why can't we just go with what they have?
    Mr. Anderson. As I said, what they looked at was 1 year of 
experience. At the time the studies that are proposed to be 
supported under this recommendation are undertaken, we will 
have had 7 years of experience. That will give us more 
information to understand what the impact of FMLA is on 
American workers and their employers.

                            FMLA COMPLAINTS

    Mr. Dickey. Tell me what complaints you have gotten from 
employers that have reached your office about the Family and 
Medical Leave Act.
    Mr. Anderson. I would like to give you the overview of that 
and ask Mr. Fraser to provide any details here.
    I think since the act was first implemented, we have 
received about 13,000 complaints from workers.
    Mr. Dickey. From whom?
    Mr. Anderson. From workers.
    Mr. Dickey. I am talking from the employers.
    Mr. Anderson. I don't know how many we have received from 
employers.
    Mr. Dickey. Have you received any?
    Mr. Anderson. I am sure we have, but we can check the 
record and report that back to you for the record.
    [The information follows:]

                      Family and Medical Leave Act

    Since the Family and Medical Leave Act of 1993 (FMLA) first 
took effect, the complaints we have heard from employers 
principally revolve around the definition of ``serious health 
condition.'' Some employers feel the definition is too broad, 
and that it therefore qualifies too many types of illnesses for 
the protections that FMLA provides. Because it is unlawful for 
employers to discharge or discriminate against employees for 
exercising their rights to take FMLA leave, these employers 
complain that the FMLA prevents them from disciplining 
employees for absences under ``absence control policies.'' 
Employers have also complained about FMLA's provisions for 
employees to take job-protected leave intermittently. One 
example is where an employee suffering from cancer may need 
radiation or chemotherapy treatments each week and must take 
part of a day off each week to receive medical treatment. Some 
employers object to the right of employees with chronic health 
conditions to take time off intermittently, and sometimes 
without much advance notice of their need for leave.

    Mr. Dickey. Have you ever been an employer?
    Mr. Anderson. Yes, immediately before I entered government.
    Mr. Dickey. Tell me about that.
    Mr. Anderson. I was substantially below the 50-employee 
limit, so FMLA would not have covered me. I had a small 
consulting firm in Philadelphia before I entered government.
    Mr. Dickey. And the people who worked for you did what?
    Mr. Anderson. Well, two kinds of people. There were 
professional employees. This was an economic strategic planning 
outfit which provided strategic services to businesses and 
nonprofit organizations. So we had clerical and support staff 
employees. We also had professional employees.
    Mr. Dickey. Did you schedule their time? Did each day they 
have something they needed to do?
    Mr. Anderson. Well, for the professionals, we didn't have 
to schedule them. They knew what they had to do. They knew what 
the bottom line was. It was a partnership essentially.
    Mr. Dickey. And you had deadlines?
    Mr. Anderson. Absolutely.
    Mr. Dickey. And if you were two days away from a deadline 
and two employees didn't show up, it would affect your 
deadline?
    Mr. Anderson. It would. But they could do their work at 
home or wherever they needed to do it.
    Mr. Dickey. Let's just say they couldn't do it. You would 
have to extend the deadline or go to some expense to avoid the 
failure to meet the deadline; isn't that correct?
    Mr. Anderson. Yes.
    Mr. Dickey. What I am saying is, have you heard from any 
employers about how they have scheduling problems with their 
employees if they don't know when and how and with what 
regularity their employees are going to take one of the days of 
the 12 weeks off?
    Mr. Anderson. Well, let me go back to the findings of the 
FMLA Commission----
    Mr. Dickey. Wait a minute. You can do that but I will 
forget the question. Why don't you answer the question and then 
you can go back?
    Do you know of any circumstances where employers have come 
back and said, How in the world can we schedule if we don't 
know one day to the next who is going to show up?
    Mr. Anderson. Well, Mr. Dickey, I did not conduct the study 
and I am not aware of anyone in the Department of Labor who, 
since this Act has been in place, has conducted such a study. 
However, the question that you are asking was one of a series 
of questions investigated by the FMLA Commission at the time 
that they conducted their study and will be one of the 
questions that will be asked if you will provide the funding 
that we are asking for to conduct the studies in the year 2000.
    And the answer, of course, is that when employers were 
asked about any difficulties that they had in living with the 
FMLA, the overwhelming majority of employers who were asked 
that question--and remember these were questions asked to 
employers with 50 or more employees--the answer was that they 
did not have any significant difficulties living under these 
requirements.
    Mr. Dickey. If you had a choice between the $10 million 
study or the two amendments that we are talking about, reducing 
it to 25 and adding 3 days extra leave, which would you think 
is more important, the $10 million study or the amendments?
    Mr. Anderson. I don't see a conflict between the two. We 
need the $10 million, and the amendment should also be passed, 
unless you are suggesting that the amendment should not be 
adopted until we have the results of the study. And I think we 
already have enough information on how this law works to 
justify expanding it to far more workers so that they can 
benefit from harmonizing their work life with their family 
life. That is the objective.
    Mr. Dickey. What is more important to you, the $10 million 
study or getting the amendments in place?
    Mr. Anderson. Mr. Dickey, I am obligated to suggest toyou 
that both requests that have been put before you by the President of 
the United States should be honored.

                     FMLA COMPLAINTS FROM EMPLOYERS

    Mr. Fraser. Mr. Dickey, maybe I can add a little bit here. 
With respect to your first question about complaints from 
employers, over the course of administering the Family and 
Medical Leave Act, the two principal complaints that we have 
received from employers have to do with definitions of terms in 
the act that the framers left open both in the legislation 
itself and in the legislative history.
    Family medical leave is unpaid leave and it is available 
only to certain employees of certain employers and only for 
certain conditions, for a serious health condition affecting 
the employee or family member. And one of the contentious 
issues is what constitutes a ``serious health condition.''
    We tried in the regulations implementing the law to follow 
the framework and the legislative history, but employers feel 
quite strongly that the regulatory definition of what 
constitutes a serious health condition is not restrictive 
enough. Worker advocates, on the other hand, feel that it is 
insufficiently broad. So the definition of serious health 
condition--in other words, what kind of medical circumstance 
does an employee experience--is a source of considerable 
concern to employers.
    They are also concerned about a second issue, and that is 
the availability of family medical leave for intermittent 
absences. And the most common occurrence of that, or the thing 
that you recognize most quickly, is someone who has cancer and 
is undergoing a series of chemotherapy treatments. And that is 
what intermittent use of family medical leave was intended to 
cover.
    Employers express concern about circumstances in which 
employees use family medical leave intermittently for less 
serious conditions or less serious treatment. But what I think 
Dr. Anderson was saying is that we have not seen evidence of 
any significant number of complaints from employers about the 
difficulty they have getting their work done while 
accommodating this time off. The employer concerns that we have 
heard have more to do with whether someone should be able to 
take the time off, given the condition they have, not their 
ability to get their work done.
    And the connection here to the research, one of the things 
that the Commission found was that the greatest impediment to 
people using family medical leave when they needed it was the 
fact that it was unpaid leave. They couldn't afford to take the 
time off. Even if they had a very seriously ill family member, 
they couldn't afford to take the time off. And part of the 
research that would be funded through this request would be to 
look at that, what we do know about the obstacles to using 
family medical leave and seeing if there are ways to overcome 
those obstacles so more people can take advantage of what 
exists in law. I hope that clarifies the connection.
    Mr. Dickey. I still have the same question. This study 
might have as one of its goals to decide whether or not 
employers over 50 would suffer from someone intermittently 
taking off and not letting them know until the day before or 
whatever. That seems like it is a pretty significant factor. 
Why don't you answer the question: Which is more important?
    Mr. Fraser. I defer to my superior on that, Mr. Dickey. He 
is right. They are both important. They deal with really 
different aspects of this law. One deals with who can benefit.
    Mr. Dickey. They are exactly the same level of importance? 
In other words if we have objections to one, you are saying--if 
we get objections to one of them, those objections would apply 
to the other two because they are the same level of importance? 
I don't think that you want to say that because that means that 
you would eliminate both of them.
    You are asking for a lot. I watch the newspaper reports and 
they say that the Family Medical Leave Act is the greatest 
thing since sliced bread. And employers are coming to me--and 
you have been an employer--somebody has to make up the 
deficiency. The other employees are saying, I have to cover for 
you and I am not getting paid any more to cover for you. The 
customers who are dealing with the firm have to deal with 
delays because somebody has called in and said, I can't come in 
today.
    Somewhere in here you have to say there is a consideration 
that we need to give to the employers somewhere, other than 
just keep piling it on. I hear what you are saying about the 
study, and I think it is awful good. I want to know as far as 
the workers are concerned, is it more important that we have 
the study or we give them the relief? Which is more important?
    Mr. Anderson. I don't think that I can draw a distinction, 
Mr. Dickey.
    Mr. Dickey. Well, who can? Is there somebody else who has 
enough knowledge and experience in this area who can draw a 
distinction between the two rivaling requests?
    Mr. Anderson. The President.
    Mr. Dickey. When was he an employer?
    Mr. Anderson. He was the Governor of your State, Arkansas, 
I believe. I don't mean to be flippant about that, but this 
request before you is part of the President's budget request 
for fiscal year 2000. That is why I am here to defend this 
proposal and I am trying to do the best I can.

                   IMPACT OF FMLA ON SMALL BUSINESSES

    Mr. Dickey. Have you discussed this with any of the small 
businesses or the organizations representing small businesses?
    Mr. Anderson. Well, again there have been communications 
steadily since 1993 with businesses affected by the FMLA, and I 
refer back to the study and examinations that were undertaken 
by the FMLA Commission. I can't think of any specific inquiry 
that we have undertaken with employers on the specific question 
that you asked, but that would be part of the process in 
developing regulations after the threshold is dropped to 25. 
That is, as part of the regulatory rulemaking, when the law is 
passed. It is then necessary to promulgate rules that would 
guide employers in the implementation of that law.
    I haven't the slightest doubt that part of the regulatory 
rulemaking process would be a small business study of some type 
to see what the impact would be on small business, and then the 
information that you are seeking would be developed.
    Mr. Dickey. I turn the hearing back over to the chairman.
    Mr. Porter [presiding]. Thank you very much, Mr. Dickey. 
Mr. Jackson.

                     RACE RECONCILIATION INITIATIVE

    Mr. Jackson. Thank you, Mr. Chairman.
    Mr. Anderson, the President has been engaged in a Race 
Reconciliation Initiative for the last couple of years, and the 
Department of Labor has clearly played a role in 
thatinitiative. I am wondering what is included in your budget request 
in support of the findings of the initiative?
    Mr. Anderson. Well, there are two parts of our budget 
proposal, Mr. Jackson, that would be part of that.
    One is the request for $500,000 for the Office of Federal 
Contract Compliance Programs to participate in a multiagency 
effort to track discrimination in our society. Funds are being 
requested of varying amounts for the Department of Labor, the 
Departments of Education, Justice, Housing and Urban 
Development, and I think one or two others.
    Each of them would use those funds to examine the extent of 
discrimination in the various areas of the Department's 
responsibility.
    In our case that would be employment discrimination. The 
intent is to see how much discrimination is really there. One 
of the results of the President's One America Initiative--and 
the follow-on is the One America Project run out of the White 
House and handled now by Ben Johnson--is to show that we still 
have not arrived at a place in our country where there is full 
and equal opportunity available to all Americans. And while we 
have made progress, there are still substantial disparities 
between the economic status and the administrative justice 
status and other domains of American life between people based 
on their race, national origin, gender and other insignificant 
characteristics.
    Mr. Jackson. Are you of the opinion that considering the 
size of your agency, the $500,000 is a sufficient request to 
track the kind of discrimination that you are talking about?
    Mr. Anderson. We would like more, but I think that when you 
add the $500,000 funding to all of the other things that we are 
doing through the OFCCP, that that would be a significant 
addition that would help us participate in the multiagency 
project that is planned through this initiative.

                      LOW-WAGE WORKERS INITIATIVE

    Mr. Jackson. Millions of workers each day get caught and 
work in jobs as janitors, health care workers, and in fields as 
agricultural workers. What are the Department's initiatives to 
help low-wage workers in America?
    Mr. Anderson. We have a major initiative underway, one that 
we have been pursuing for the past 4 years, to increase 
compliance with the labor laws in low-wage industries, with a 
concentration on the garment industry, agriculture, 
restaurants, janitorial services, protective services, the 
industries in which a disproportionate number of workers are 
low-wage workers. And the objective there is to increase 
employers' compliance with the law which requires them to pay 
the minimum wage and overtime to workers in those industries. 
We have a strategy as part of this initiative that includes 
three parts.
    One is enforcement, to identify where violations exist and 
to get the penalties paid for such violations.
    We also have a major effort underway in public information 
and education to make employees aware of their rights under the 
law and employers aware of their obligations under the law. In 
specific reference to the employment of young people and the 
child labor laws, we have spent considerable resources on three 
public education campaigns called Work Safe This Summer. This 
will be the fourth summer that we have run that. And last year 
we introduced another initiative aimed at agriculture which we 
call Fair Harvest Safe Harvest. And the purpose of those 
efforts is to get information out to teenagers, parents, 
employers, and school officials, about the importance of safety 
on the job; and in agriculture, to get information out to farm 
workers and to growers and to others about what is a violation 
and what should be done to try to improve the opportunities for 
young people who are in that low-wage industry.
    And finally, we work also with various partners. In the 
Work Safe This Summer campaign last year, one of our partners 
was the K-mart chain. They printed our Work Safe This Summer 
logo on 37 million shopping bags so that if you bought anything 
in K-mart last summer, you would have seen our logo promoting 
compliance with the child labor laws in that industry.
    We have also worked in agriculture with some of the 
poducers: The H.J. Heinz Company which is a major operator in 
the Midwest, and Newman's Own, which makes salsa and salad 
dressing and the like.
    We are trying to partner with those companies that use the 
products produced in agriculture so that they can use their 
influence with the growers to see that the labor laws are 
observed.

                           OFCCP INITIATIVES

    Mr. Jackson. I want to go back to my first point before my 
time expires. At least it is my understanding that the 
President in the race initiative for an entire year asked Dr. 
Franklin to do a year-long study and hold town hall meetings 
and compile essentially a report on the status of race 
relations for the Nation. So for a year, maybe even as long as 
a year and a half, there was an enormous amount of research. 
And part of your request is for $500,000 to examine what I 
assume Dr. Franklin and, I assume, others took very careful 
examination of over the initiative. I believe that the race 
initiative in some of its conclusions acknowledged the 
disparities that exist at various aspects of the society.
    And so it appears that at one level we are beyond the phase 
of study but that we are at the phase of requesting resources 
to address how we are going to enforce laws, enforce payment 
standards, enforce ensuring that minorities are hired fairly; 
to make sure that women are not discriminated in the workplace.
    For example, in the garment and textile industry, 
overwhelmingly they are African American women and many are 
single mothers. And so the race initiative goes into great deal 
about those Americans who have been left behind and the 
enormous disparities that continue to plague the Nation.
    So when I ask what resources are being used and set aside 
by the Department of Labor to enforce existing laws with 
respect to compliance, penalties, failure to address the 
disparities that the President has already spent a considerable 
amount of resources and a considerable amount of time focusing 
on, I am sure that that request after that year-long initiative 
by the President is more than $500,000?
    Mr. Anderson. Oh, yes, Mr. Jackson. I am glad that you 
clarified the question. I did not understand your question in 
its broader domain.
    If you look at our request this year, I think one can add 
together the request for the $500,000 with the $4.2 million for 
OFCCP, and the rest of the budget for OFCCP. Within the 
Department of Labor, the entity which is primarily responsible 
for fighting discrimination in the private sector is the Office 
of Federal Contract Compliance Programs. I think that the 
increase of $4.2 million which is aimed at a special effort 
looking at paydiscrimination might be part of--I am sure that 
it is part of--a follow-on to the work of the President's initiative on 
race, now focusing more specifically on the problem of equal pay for 
equal work.
    Mr. Jackson. Thank you, Mr. Chairman.
    Mr. Porter. Dr. Anderson, your nameplate says Mr. Anderson, 
but your CV says you have a Ph.D. from the University of 
Pennsylvania.
    Mr. Anderson. Yes.
    Mr. Porter. Do I call you Dr. Anderson?
    Mr. Anderson. When I was in the academy, as you might know, 
for many years I was a member of the faculty at the Wharton 
School, the West Point of American capitalism, and I was a very 
proud member of the faculty there. But since I have come to 
Washington, I have not been able to get people to stop calling 
me Dr. Anderson and call me Mr. Anderson. So after 4 years I 
have just given up, and they call me whatever they would like 
to call me.
    Mr. Porter. What do you like to be called? I would call you 
Dr. Anderson, but if you don't want to be called Dr. Anderson--
    Mr. Anderson. Mr. Chairman, you can call me whatever you 
want to call me.
    Mr. Porter. That is very helpful.
    Mr. Dickey. Having experienced this in my asking of him, I 
think he wishes for you to call him both, Doctor and Mr. 
Anderson.
    Mr. Porter. Well, Dr./Mr. Anderson, I want to apologize 
because we have had so little time here. The votes took up 50 
minutes and I apologize. I had to make some remarks down the 
hallway at another hearing, but you have answered all of our 
questions. We have a number of them for the record that we 
would ask that you also answer, and thank you for the fine job 
that you are doing.
    Mr. Anderson. Thank you for the opportunity, Mr. Chairman. 
It is good to see you again.
    Mr. Porter. Thank you, Dr. Anderson.
    [The following questions were submitted to be answered for 
the record:]

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                                           Tuesday, March 16, 1999.

                 MINE SAFETY AND HEALTH ADMINISTRATION

                               WITNESSES

J. DAVITT McATEER, ASSISTANT SECRETARY FOR MINE SAFETY AND HEALTH
JAMES E. McMULLEN, DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION AND 
    MANAGEMENT
    Mr. Porter. Our hearing on the appropriations for the 
Department of Labor continues with the Mine Safety and Health 
Administration, and we are pleased to welcome J. Davitt 
McAteer, the Assistant Secretary for Mine Safety and Health. 
Mr. McAteer, it is good to see you again.
    Would you please just proceed with your statement? We are 
obviously pressed for time, but we will do the best we can.

                           Opening Statement

    Mr. McAteer. Chairman Porter, I want to thank you and 
members of the committee. I am pleased to appear here today to 
discuss our fiscal year 2000 appropriation request. We are 
proposing a budget of $228.3 million and 2,317 full-time 
equivalent positions. This is an increase of $13.2 million and 
56 FTE.
    What we are proposing to do in the area of mine safety and 
health is to attack some significant problems, as well as to 
try to build on the successes that we have had in mine safety 
and health. Last year we had a record low year in the number of 
fatalities and nonfatal accidents that occurred in the mines of 
this country.
    In 1998 there were 80 fatalities, 29 in coal and 51 in 
metal and nonmetal. For those 80 families and victims, it is 
little solace to say that is a low number. We must continue to 
be vigilant about trying to bring those numbers down and to 
work very hard to try to reduce them, and that is what we 
propose to do, as well as to continue to try to address the 
significant health problems which exist in our mining 
industries.
    Our proposal in the coal area is to attack the dust problem 
which we believe to be significant. One of our findings this 
last year was in a series of x-ray surveys of miners in five 
different States. We had some revealing statistics which we 
were concerned about. Now, granted, these samples are free 
samples and they are random samples given to us by miners or by 
doctors, in which we try to pinpoint if there a problem and 
what is the significance of the problem. It is not an 
epidemiological study and we recognize the limitations of the 
study.
    After we have surveyed some 2,700 miners and find, in an 
area of 5.5 percent up to 9.5 percent, a presence of some 
abnormality which can lead to black lung or silicosis or is in 
fact black lung or silicosis that is of concern to us.. I mean 
we would hope that there would be none.
    This new information, and building on the old information 
that black lung continues to be a problem in the mines, leads 
us to come back to the committee and ask for an increase of $2 
million for additional inspectors so that we might assemble a 
number of inspectors to do a significant round of sampling of 
our own, because we believe that the sampling process should be 
taken over by the agency and that that process should, in fact, 
support our work to try to eradicate this disease.
    We believe that the mine operators should continue sampling 
for their purposes and the purpose of engineering controls, but 
that our sampling, coupled with a series of actions that we 
have taken to try to eradicate this disease from the American 
workplace, is the kind of step that we would like to do. 
Single-shift sampling, advances in technology, including the 
black box and the person-wearable real-time sampler, plan 
verification and changes in the administration of the process 
so that we can get real numbers in real-time and protect miners 
are all parts of our health effort in the coal mining area.
    In the metal and nonmetal area, while we did have a 
decrease of 10 fatalities from the preceding year and this 
reversed the trend of the three years prior to that, we still 
believe there is a significant problem, in part because of the 
increase in the spending for aggregate mining and increased 
spending for roads and transportation. We mentioned that last 
year. We have worked very closely with the industry and with 
labor organizations to try to bring attention to that. We think 
we have raised the public's awareness of it.
    We think we have made some strides, but we are going to 
continue to make more. And to that end, we want to thank you 
and the members of the committee for the modification of the 
rider which prohibits us from enforcing training requirements. 
Working with the coalition from labor, from industry, and with 
various labor organizations, we have developed a proposed rule. 
Seven public hearings were held throughout the country, and we 
are here today to say that that proposed rule has left the 
Department of Labor and is now in the hands of the Office of 
Management and Budget. They have been advised of your interest 
in this matter and of the interest of the other members of the 
committee, and understand the urgency. We have requested that 
they try to deal with this in an expeditious way. We think that 
that is going to happen.
    We reported to you on March the 8th about our public 
meetings and about the progress that we have made. We want to 
commend labor, management and the entire mining community on 
the work that they have done here, as well as your staff, to 
make that progress.
    Further, we are asking for an increase in the metal and 
nonmetal area of 44 FTE and $6.7 million to focus on this 
increased inactivity in that area increases in the production 
work, as well as the increase in the efforts of our education 
and training outreach.
    Finally, this year we have modified our education and 
training program to get away from education and training people 
being in the office and being paper-pushers, to in fact being 
out providing education and training at the mines. We are 
diligently trying to make certain that we are providing the 
kind of education, as thisindustry and the metal and nonmetal 
area expands and as we have new people entering the business. We want 
to make certain that in small mines and with new employees we make the 
effort to try to resolve their safety and health problems.
    Thank you, Mr. Chairman, I would like my entire statement 
placed into the record.
    [The information follows:]

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    Mr. Porter. Thank you, Mr. McAteer. You interestingly 
enough answered many of the questions I had in your statement.

                            SAND AND GRAVEL

    Let me thank you for the progress that you have made on the 
changing regulations in sand, gravel and stone. You have told 
us that they are over at OMB right now.
    Mr. McAteer. That is correct, sir.
    Mr. Porter. Do you expect to publish a final regulation in 
the Register by September 30th, 1999? Do you think that is 
doable?
    Mr. McAteer. That was the direction of the chairman of my 
Appropriations Committee, and I intend to follow that.
    Mr. Porter. Okay, good. I am glad to hear that. Well, you 
are making real progress. This is something that has been with 
us for----
    Mr. McAteer. Nineteen years now.
    Mr. Porter [continuing]. Longer than I have been on the 
subcommittee, which is a long, long time, and I am glad to see 
the progress being made. If you promulgate a final regulation 
by September 30th, what would the effective date be? In other 
words, would there be some kind of transition period before the 
agency would actually enforce the new regulation, or not?
    Mr. McAteer. We contemplated a transition period. In part 
one must understand that we are dealing with a large number of 
mines, probably 11,000 or so, perhaps a little more than that. 
We don't expect on the 1st of October to be able to go out and 
enforce that regulation, nor do we think that the industry 
would be ready to do that.
    So in our public meetings and in the comments that we have 
received from both labor and the coalition, we have heard 
suggestions to have a transition period. We will contemplate 
and we will deal with those suggestions.
    Our point here is not to try to have a ``gotcha'' system 
where we go out and say, ``You didn't do the training.'' Our 
point is to get the training into the hands of the employees 
and to get it there systematically. Our concerns are not so 
much with large operators who have a program in place 
currently; our concerns are small operators who do not have a 
program.
    We are looking at how we might package, for example, a 
program to put into place for them so that we can hand it to 
them and say, ``Here is one suggested model of how you do 
that.'' That is going to take some time, and we propose to have 
a period of transition.
    Mr. Porter. Well, you are going to provide them some 
technical assistance. The goal, of course, as you say, is that 
they comply, and I assume that you will get a high degree of 
cooperation if you work with them. The ones that don't 
cooperate are the ones that are going to get into trouble.
    But I hope that we can get this whole thing done, and it 
sounds like you have got it exactly on track. That would mean 
that we would no longer need any kind of rider after September 
30th in our bill that has been carried all of these years; is 
that correct?
    Mr. McAteer. That is our position.
    Mr. Porter. That is what we hope to accomplish. You will 
keep us informed as to the progress made there, please.
    Mr. McAteer. Sure.

                               MINE DUST

    Mr. Porter. You mentioned the mine dust problem. This is 
something that has concerned me for a long, long time. If you 
need $2 million more to provide for that enforcement that you 
just described in your oral testimony, I am going to see that 
you get that money.
    Mr. McAteer. Thank you.
    Mr. Porter. This is something that I think has to be taken 
care of. Now, in your justification you talk about an adverse 
ruling by the 11th Circuit Court of Appeals with respect to the 
coal dust monitoring program.
    What was that adverse ruling, and what does that mean to 
what you are trying to accomplish?

         ELEVENTH CIRCUIT COURT RULING ON COAL DUST MONITORING

    Mr. McAteer. The adverse ruling has to do with the single-
shift sample system. Presently we take five samples and we 
average those samples, take five samples among five 
individuals.
    One of us could be in a very high level of dust exposure 
that can be at 3, 3.5 milligrams per millimeter and that person 
typically stays in that high level of dust exposure. Our 
numbers indicate that the continuous miner operator, the shield 
operator and the long wall, the persons who are at the face 
working with the machine and making the cuts, typically are the 
persons who have the dust levels that are very high. What we 
have in effect done is brought those numbers down by averaging 
them in with the folks that are working back away from where 
the coal dust is.
    We are quite concerned about that system. It was set up in 
1974 and 1975, and we have gained 20 years of experience since 
that time. And we believe and understand that we can in fact 
provide accurate samples that are scientifically sound based on 
the single-shift sampling system. We actually do this in the 
metal and nonmetal side of our house, and OSHA and other 
agencies do single-shift sampling both in this country and 
abroad. So we believe that single-shift sampling is the way to 
go. We believe it is supported scientifically.
    The adverse ruling was from the 11th Circuit. The mechanism 
that we chose to try to change that rule was the same mechanism 
that was used prior to 1974. Since we were changing an internal 
policy, we didn'tbelieve we had to go through rulemaking to 
deal with the economic and technical feasibility. The 11th Circuit 
suggested otherwise.
    We are following the 11th Circuit. We are developing a 
regulation to deal with the economic and technical feasibility 
and we will be promulgating a rule in short order. We hope to 
have a proposed rule to the department and to OMB by the 
spring.
    Mr. Porter. Thank you. Can I ask you about coal mining, and 
this is just general information. How much coal is currently 
being mined annually in the United States, and how does that 
compare with 5 years ago? Can you give me some idea?

                         COAL MINING PRODUCTION

    Mr. McAteer. Last year's prediction was 1.1 billion tons of 
coal. And it compares, it is an increase of say 300 million 
tons over the last 5 years, roughly that; I can't speak to the 
exact number 5 years ago, but roughly that.
    Mr. Porter. And during that same time, the coal mining work 
force has declined; is that correct?
    Mr. McAteer. That is correct.
    Mr. Porter. Do you have figures on that?
    Mr. McAteer. I don't have them off the top of my head. We 
can give you some numbers to that end. The number of mines has 
decreased and the number of miners has decreased.
    Mr. Porter. That is my next question, the number of mines.
    Mr. McAteer. Right. But if I can beg your forgiveness and 
supply you with those answers, I have them here but I don't 
want to hold you up.
    [The information follows:]

                        COAL INDUSTRY STATISTICS
------------------------------------------------------------------------
                                                      Number of active
                                 Coal production  ----------------------
                                  number of coal      Coal
                                    [in tons]      mines \1\  Miners \2\
------------------------------------------------------------------------
1998..........................      1,122,503,217      2,479     107,854
1997..........................      1,091,263,148      2,609     112,100
1996..........................      1,063,470,287      2,689     112,425
1995..........................      1,029,516,404      2,946     117,413
1994..........................      1,029,445,594      3,268     127.022
1993..........................        940,415,182      3,429     124,327
------------------------------------------------------------------------
\1\ Number of distinct coal mines reporting employment to MSHA in each
  year.
\2\ Includes contractors and office workers.

    Mr. Porter. You can certainly provide those for the record. 
I would ask you about the number of coal mines, active coal 
mines that are in existence over that same period, as well as 
the number of people in the coal mining work force.
    Do we assume that the difference there is technological, 
that there is more technology being brought to bear, that we 
can produce more coal with fewer workers?
    Mr. McAteer. I think two things are happening. One is that 
we are moving from an underground population in terms of the 
number of mines to a higher level of production at surface 
mines.
    Mr. Porter. So it is easier to strike it at the surface 
ones, I assume?
    Mr. McAteer. Right. And we have also improved the 
technology, so we are reducing the number of people generally 
in both of those kinds of operations.
    Mr. Porter. And is there also a consolidation within the 
industry where the larger companies are buying up some of the 
smaller ones? Is that happening?
    Mr. McAteer. We are seeing significant consolidation and 
mergers in the coal industry, as well as in the metal and 
nonmetal industry, although to a lesser extent, but we are 
seeing significant mergers in those populations.
    Mr. Porter. Okay. That was just for my information. I am 
just curious about that.
    Mr. Jackson.
    Mr. Jackson. Thank you, Mr. Chairman.

                             FATAL INJURIES

    Thank you, Mr. McAteer. The number of fatal injuries in the 
mining industries are at an all time low. Are there lessons we 
can learn from this program?
    Mr. McAteer. I think there are. I mean it is difficult--
mine safety, any occupational safety is an art, not a science, 
or part art and part science. I think that what we can learn is 
that over a period of time, if we devote the energy and if we 
get the cooperation and commitment, particularly of the labor 
unions and the labor organizations as well as of the industry, 
we can make great strides, combining both enforcement and 
compliance.
    I would like to think of it in terms of us as human beings 
and how we operate. We all need to have an encouragement from 
the enforcement side, as well as knowledge of what the problems 
are and how to avoid them. And that kind of combination is what 
I believe has led to this, as well as technology. We shouldn't 
negate that there have been technological advances which have 
reduced some of our problems.
    Mr. Jackson. The MSHA fiscal year 2000 budget requests 
additional resources to address black lung disease.
    Mr. McAteer. Yes.
    Mr. Jackson. I am interested in how important these 
resources are and whether or not they are enough.

                    RESOURCES FOR BLACK LUNG DISEASE

    Mr. McAteer. This is the third year we have requested 
additional resources. We began to address the black lung 
problem and black lung disease in 1995 and '96, with an 
advisory committee made up of industry, labor and the academic 
institutions, to deal with the problem. We recognize that we 
have made significant strides since 1970 when the Federal Coal 
Mine Health and Safety Act of 1969 was passed, but we still 
have a problem and it is still a severe problem.
    As I mentioned to the chairman, we also have this new 
evidence that indicates this problem continues to exist and 
needs to be addressed. The problem is that the system that we 
have in place was created in 1974 and has never been modified 
since then. At that time it was dealing with levels of dust, 8 
to 10 to 12 milligrams per cubic meter. The rule requires us to 
get to a level of 2.0 milligrams per two cubic meters. We have 
moved it down.
    But the system itself permits, for example, samples to be 
taken when the mines are running at 50 percent production. 
Well, you breathe when the mine is operating at 100percent 
production as well. The samples also can be taken and averaged. As I 
mentioned, you average five, so four of us are doing well and one of us 
can be doing badly and/or two of us can be doing badly.
    We narrowed the problem, as it were. So what the advisory 
committee did was to suggest 20 recommendations, and they deal 
with both the analysis of the disease problem, i.e., give us 
real-time readouts of what dust I am facing; and, secondly, 
they deal with how we go about controlling and sampling for the 
dust levels, the single-shift sampling, and presently the mine 
operators are required to take compliance samples.
    We think that is a flawed system. We want to change that 
and we have proposed to change that, and that is part of this 
request that we have for 94 FTE and $6.4 million over 3 years. 
We believe that that change will allow us, and we began the 
process of taking over the sampling, by doing pilot projects in 
four districts to know where we do sampling four times a year 
at underground mines, two times a year at surface mines 
throughout the country, coupled with single-shift sampling. The 
technology advances the black box, as well as planned 
verification will result in an improved system.
    Presently, an operator comes in and proposes to mine in a 
way that uses this much air and that much water. We say, okay, 
you go ahead and do it, and your plans are approved. If you are 
out of compliance, you can back it up and modify your plan. The 
system didn't have a verification system.
    What we are going to say now, what we are going to propose 
in our regulations is that you come in and verify your system 
will work: ``Here's my air, here's my water, here are my 
controls. I'm going to put them in place and I think it's going 
to work, and I'll show you that it works.'' That verification 
system, again a recommendation of the advisory committee, is 
one where we will have real-time, real knowledge of what is 
working in the mines.
    Mr. Jackson. I spent a lot of time, Mr. McAteer, in 
Appalachia, and there has never been a time that I have been 
there where coal miners and coal miner families have always 
expressed that their government is not doing enough on the 
issue of black lung.
    Now, the regulations may occur between the corporations 
that own the mines and the government, but assurances to mine 
working families that the government has increased its efforts 
and raised the standard by which these tests and examinations 
take place are of enormous concern, and I am obviously 
concerned about the education of what the government is doing 
for these coal mining families.
    I will submit further questions along that line for the 
record. But I do have another question.
    Mr. McAteer. If I can answer that----
    Mr. Jackson. Sure.

                   MONITORING OF DUST SAMPLING LEVELS

    Mr. McAteer [continuing]. We recognize that it is a problem 
because, you know, it is one of those kinds of problems with 
health problems, as opposed to safety problems, it is not a 
quick fix, a permanent fix. We put a mechanical guard on the 
safety problem, we can pretty much fix it. With a health 
problem it takes longer. There is a longer latency period. You 
have exposures that occur at one time and the disease doesn't 
show up for a number of years later. This is a much more 
complicated kind of problem.
    But what we tried to do is, we tried to attack it from an 
overall standpoint and say, look, we have got people who are 
submitting illegal samples and we are going to go after that 
criminal. We have got legalized cheating, not--legalized 
cheating isn't the proper phrase, but if you sample at 50 
percent of production--that is a problem for us, or you sample 
five people and average them, that is a problem for us.
    We need to change the system, so we have started to do 
that. We also have gone back and done an education and training 
program, much as you suggest, because people don't recognize 
what is going on and what the levels are and what actions to 
take. In fact, we have miners who are entering the industry now 
who believe that the disease has disappeared and they don't 
have to worry about it. Well, it still does exist and we need 
to worry about it. So we have done a very comprehensive 
program.
    Now, to say that there are people who are still concerned, 
I understand that. I am from Appalachia, and I know that there 
is a concern. It is a concern in the mountains of West Virginia 
and Kentucky and Pennsylvania, and we need to address it and we 
are continuing to try to address it.
    What our frustration is, and your frustration is the same, 
is it has taken time to move this process forward. I wish there 
were a quick fix, but we have to say that we have got to fix 
this dust problem at every mine, at every section, every day 
over the next 20 years to eradicate this disease. And that is 
where the problem comes in, is to make people, one, understand 
the nature of it and, two, put the mechanical things in place.
    Right now you take a dust sample, that dust sample is sent 
to us. It takes a week to do that. We send you back the 
results. Even if you are exposed today, let's say, you won't 
know that for 2 weeks. Well, then you change your system 2 
weeks down the road, but your conditions have all changed by 
that time.
    We are trying to change that system. That is why we want to 
go to single-shift. That is why we want to do all of these 
other mechanical changes to the system to put it in place.

                             TRAINING RULE

    Mr. Jackson. Has the MSHA made any effort to reach out to 
the affected members of the mining industry before promulgating 
its proposed training rule?
    Mr. McAteer. The proposed----
    Mr. Jackson. Training rule.
    Mr. McAteer [continuing]. Training rule? Most certainly. We 
had involvement from the nonmetal mining community. The unions 
that were involved in it include the Teamsters, the Laborers, 
the Boilermakers, the Steelworkers, have been in part of these 
meetings and process.
    Mr. Jackson. Thank you, Mr. McAteer.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Jackson. Do you have any further 
questions?
    Mr. Jackson. I do not, Mr. Chairman.
    Mr. Porter. Mr. McAteer, thank you. You have answered all 
of our questions. In fact, you anticipated a good deal of them. 
We appreciate the job that you are doing there at MSHA, and 
obviously we want to work with you and provide the resources 
that you need to do it even better. Thank you for appearing 
today.
    Mr. McAteer. Thank you.
    Mr. Porter. The subcommittee will stand in recess until 
10:00 a.m. tomorrow.

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                                           Tuesday, March 23, 1999.

   DEPARTMENT OF EDUCATION, DEPARTMENT OF HEALTH AND HUMAN SERVICES, 
    DEPARTMENT OF LABOR, RAILROAD RETIREMENT BOARD, SOCIAL SECURITY 
                             ADMINISTRATION

                               WITNESSES

MARSHALL S. SMITH, ACTING DEPUTY SECRETARY, DOE
JOHN J. CALLAHAN, ASSISTANT SECRETARY FOR MANAGEMENT AND BUDGET, HHS
PATRICIA W. LATTIMORE, ASSISTANT SECRETARY FOR ADMINISTRATION AND 
    MANAGEMENT, DOL
KENNETH P. BOEHNE, CHIEF FINANCIAL OFFICER, RRB
JOHN R. DYOR, PRINCIPAL DEPUTY COMMISSIONER SSA

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    This is a consolidated hearing on departmental management, 
and we are pleased to welcome Dr. Marshall Smith, the acting 
Deputy Secretary of the Department of Education; Dr. John 
Callahan, the Assistant Secretary for Management and Budget, 
Department of Health and Human Services; Patricia Lattimore, 
Assistant Secretary for Administration and Management, the 
Department of Labor, Kenneth P. Boehne, Chief Financial 
Officer, the Railroad Retirement Board; and John Dyer, the 
Principal Deputy Commissioner of the Social Security 
Administration.
    We have had great interest, obviously, in the Y2K problem, 
and let me announce that I have asked the staff to arrange a 
briefing on this matter for the committee in late April after 
we finish our regular hearings; and I expect that each of the 
departments and agencies here will have their chief technology 
or information officer present at that hearing to give us an 
update on the progress that has or has not been made as we 
approach the end of the century and the beginning, perhaps, of 
a problem we hope to avert.
    Let's have each of you give your opening statements. We 
will begin with Dr. Smith.

                           Opening Statement

    Dr. Smith. Thank you, Mr. Chairman, Mr. Cunningham. Thank 
you for inviting me here today.
    I would like to highlight our progress on the year 2000 
computer issues, as well as the modernization of the student 
aid delivery systems and the alignment of management reforms of 
our strategic plan. My written statement provides more detail 
on these subjects.
    Our success in large part has been possible because of the 
support of this subcommittee. Thank you, Mr. Chairman, as well 
as other members of the subcommittee for recognizing the 
importance of investing in sound financial and administrative 
management to reach our shared goal of improved educational 
opportunity in the United States.
    For fiscal year 2000 we are asking for $552 million in 
discretionary management funds. This includes funds for the 
Offices of Civil Rights and the Inspector General. This request 
will be a $33 million increase over the 1999 level, mostly for 
pay raises, other built-in costs and investments in technology. 
I hope you will give careful consideration to this request 
which remains less than 2 percent of the Department's total 
discretionary budget.

                          YEAR 2000 COMPLIANCE

    Since last year's management hearing, which focused on the 
year 2000 problem, I am pleased to tell you that all of the 
Department's 175 data systems, including our 14 mission 
critical systems, have completed Y2K renovation, independent 
verification and validation, and have been implemented. On 
February 22, Congressman Steve Horn's subcommittee gave the 
Department a grade of A-minus. We are working up to an A.
    Also, the Office of Management and Budget has placed us in 
the highest Y2K rating tier. We are proud of this progress, but 
we are taking nothing for granted. We are working on 
contingency planning, data exchange, testing, and outreach 
efforts. We are working hard with our customers and partners to 
keep Federal aid to States, schools, and students flowing 
without a hitch when the year 2000 arrives.

                          STUDENT AID PROGRAMS

    Like the year 2000 problem, the student aid programs have 
presented some of the most pressing management challenges. I am 
pleased to report we are meeting these challenges and are 
poised to comprehensively modernize and integrate our systems.
    For example, three years ago the processing of student aid 
applications was disrupted. This year we are processing aid 
applications appropriately for the third year in a row. Student 
aid and loan consolidation applications can now be submitted 
via the Internet, which is quicker and easier for both students 
and the Department. Aid applications received via the Internet 
are less than one-tenth as likely to be returned to the student 
due to an error, which saves everybody money.
    The latest student loan default rate is a record low 9.6 
percent, less than half the 22.4 percent when President Clinton 
took office. By improving the quality of data in the National 
Student Loan Data System, we have prevented the disbursement of 
as much as $1 billion in grants and loans to ineligible 
students.
    Although the direct loan consolidation program faced 
serious management problems some time ago, today it is smoothly 
processing consolidations well within the expected 60 days, 
which is the industry benchmark despite our workload of up to 
ten times larger than it was last spring. In all these ways we 
have stabilized the student aid programs.
    We are now ready to move forward with a comprehensive 
strategy to modernize and integrate our systems. This strategy 
will be finalized and implemented by the new performance-based 
organization, or PBO, that Congress created to administer the 
student aid programs. The PBO has greater flexibility in 
personnel and procurement, new incentives for higher 
performance and greater accountability for results.
    Secretary Riley and I were very pleased that Greg Woods 
agreed to become the Chief Operating Officer of the PBO. He has 
the right mix of experience and expertise to make the PBO a 
success, including 8 years as the CEO of a software company. 
The PBO is now developing an interim performance plan for the 
rest of this fiscal year. Its priorities will include promoting 
customer service, integrating student aid delivery systems, and 
strengthening our financial management system. PBO is also 
developing a modernization budget which, under the legislation, 
we will share with Congress in early April.

                           MANAGEMENT SUMMARY

    The Department's overall strategic vision is defined by its 
strategic plan and annual performance plans created in response 
to the Government Performance and Results Act. Our fiscal year 
1999 annual performance plan received high marks from Congress. 
This year we will build on that. We have built on that success 
by strengthening performance indicators, expanding baseline 
data, and developing stronger links between strategic plan 
objectives and individual programs.
    We are using technology to support our strategic goals, 
particularly to improve customer service. In 1998, there was a 
dramatic increase in our contact with our customers. Our home 
page on the web has been viewed 8 million times a month so far 
this year, up from 5 million times each month last year. Total 
call volume on our postsecondary student financial aid 
information line grew by more than 50 percent in 1999 to over 2 
million. A 1998 survey by Quality Education Data found that the 
two most popular web sites among teachers were the Department's 
web site and the Education Resources Information Center web 
site which we sponsor.
    To help meet the challenge of balancing flexibility forour 
customers through the accountability of American taxpayers, we have 
invested in a new core financial system, the Education Central 
Automated Processing System. This system simplifies reporting, allows 
Internet access to the system, and provides more timely and accurate 
information.
    Our insistence on accountability extends to all senior 
department officials and staff. As acting Deputy Secretary, I 
have insisted on performance agreements for all senior 
officers, including measurable objectives. We have also 
implemented a new 360-degree performance assessment system. I 
hope this information and responses to questions will be 
helpful to you as you consider our fiscal year 2000 budget 
request for $552 million in discretionary management funds.
    With your help, we will continue this learning process, 
invest in professional development and technology, and create a 
high performance agency that successfully blends flexibility 
and accountability to meet the needs of all of our customers.
    I would be delighted to take any questions you might have.
    [The written statement of Dr. Smith follows:]

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    Mr. Porter. Thank you, Dr. Smith.
    I neglected to apologize to each of you. Normally we 
wouldn't be forced to have a panel like this. We will see how 
it works. But I am sure you are aware that the budget process 
is moving very quickly along this year. We will complete work 
on the House version this week. The Senate will do likewise. We 
expect to have it conferenced and all work completed on the 
budget by April 15.
    The Speaker has given us directions that we should complete 
our hearings as quickly as possible after that date, and we 
expect to finish by the end of the month and be prepared to 
mark up very early this year and get the bills out on time as 
the law requires. So we have compacted our hearings a great 
deal for that reason.
    I would much rather take a great deal longer and look into 
these matters in greater depth, but we are simply not able to 
do that this year, and we do apologize to each one of you.
    Now, Dr. Callahan.

                           Opening Statement

    Mr. Callahan. Thank you very much, Mr. Chairman, 
Congressman Cunningham. I thank you for allowing us to testify 
here today. I would like to submit my full testimony for the 
record, if I may.
    Let me touch on a number of key items very quickly. First 
of all, our Year 2000, or Y2K efforts: This is the Department's 
top priority, and we do think that the work that we have been 
doing with regard to Y2K is starting to reap substantial 
benefits. As of February 28, 88 percent of our mission-critical 
systems were Y2K compliant. As of March 31, which is the 
deadline that is coming up very quickly, we believe that 
approximately 95 percent of our mission-critical systems will 
be compliant.
    It is very clear to us that our efforts in this regard 
could not have been possible without the financial support that 
the Congress and this subcommittee provided us. In this current 
fiscal year, we expect to spend approximately $427 million on 
Y2K efforts in the Department, $324 million of which was 
provided to us through emergency supplemental funding that you 
passed last year.
    And it was your effort, Mr. Chairman, and the effort of the 
members of the committee that said, if you need the money, ask 
us for it. We have done that, and you have provided us with 
those fiscal resources.
    We are confident that all our Year 2000 system issues will 
be resolved well before the end of this year. All of HCFA's 
internal mission-critical systems are certified as Year 2000 
compliant. Seventy-eight of their contractor systems, which is 
where the contractors working with the providers throughout the 
country are, have been renovated; 54 are now self-certified as 
compliant. We believe all 78 systems will be compliant within 
the next several weeks.
    We are also reaching out to our State partners, Mr. 
Chairman. We have provided technical assistance from HCFA to 
all State Medicaid agencies to make sure their systems are 
compliant, and we will be providing technical assistance, as 
well, to States for their child support enforcement systems, et 
cetera.
    On the matter of audited financial statements, we have a 
copy of our FY 1998 Accountability Report which we will leave 
for the subcommittee. HHS will receive a qualified opinion from 
the Office of Inspector General this year. That is the same 
level of opinion that we received last year, but the number of 
qualifications to that opinion has dropped from 5 to 2, and two 
of our Operating Divisions, FDA and CDC, have received clean 
opinions.
    Indeed, we believe a number of our other Operating 
Divisions would also have received clean opinions if not for 
the new financial statements that we all had to do this year. 
We are on the threshold, we believe, of receiving a clean 
opinion next year.
    We will devote substantial resources to the area of 
Medicare contractor accounts receivable, and to making sure 
these new financial statements are properly completed by our 
Department.
    On GPRA, which we know is a major concern of the committee, 
we have provided more than a thousand performance measures in 
our overall GPRA plan. We have also provided a copy of this 
document to the subcommittee. It coordinates with our strategic 
plan, and we believe a lot of these measures will help us in 
fiscal year 2000 and beyond. We will be able to evaluate the 
resources that we have committed, and you can look at the 
program performance measures.
    Let me end with two things that we would hope the committee 
would look at over time. One is electronic commerce. This is an 
idea whose time has come, and we are making strides inside the 
Department. The vendors that receive our payments via 
electronic funds transfer is now 80 percent, up from 44 percent 
last year. The number of our purchase card transactions grew to 
90 percent of all small purchases last year, since we have 
gotten purchase cards out to all our managers.
    The National Institutes of Health has implemented an 
electronic catalogue, which is used by all the Institutes for 
purchasing scientific and administrative equipment. They are 
also developing an Internet-based system to collect and 
disseminate contractor performance data, so that all our 
procurement offices will know how good their contractors are 
when they go out and seek to procure things.
    We hope to continue along these lines, and we would like to 
work cooperatively with the subcommittee in pushing this.
    The last area I would like to highlight is work force 
planning. We are an aging work force in HHS, as many other 
governmental agencies are. We have cut the number of employees 
by 7,300 since 1993, but we also have a large number of 
employees who are getting ready to retire. We need to replace 
those individuals with highly skilled employees, and it is 
going to be a great challenge to get the right people into the 
Department with appropriate financial and recruitment 
incentives.
    This is an area that is a little bit off on the horizon, 
but it is one that is very, very central to the Department in 
terms of having the work force that we need and that you expect 
us to have to run our programs. So again, we would like to work 
with the subcommittee on this and in a longer timeframe.
    That concludes my statement. I would be happy to answer any 
questions.
    Mr. Porter. Thank you very much, Dr. Callahan.
    [The information follows:]

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    Mr. Porter. Patricia Lattimore.

                            Opening Remarks

    Ms. Lattimore. Good morning, Mr. Chairman, Mr. Cunningham. 
Secretary Herman conveyed, when she was here on March 16, that 
she is fully appreciative of the committee's support for the 
programs you have and will fund, and also is cognizant of your 
interest in ensuring that these programs are administered 
effectively with maximum fiscal responsibility.
    My challenge at the Department is to ensure that the 
administrative infrastructure is appropriately positioned to 
support the achievement of the Secretary's goals.
    As the administrative appendage of the Department, I work 
in tandem with the Chief Information Officer, the Chief 
Financial Officer, and the Inspector General to maximize the 
delivery of services to American workers and their families.
    The Department's fiscal year 2000 budget proposals provide 
a total request for $39.6 billion in budget authority, 17,399 
FTE. The request for discretionary programs is $11.6 billion in 
budget authority, which is $626 million above the fiscal year 
1999 level with an additional 501 FTE.
    The Department's budget is the product of a new and 
vigorous unified management process. Given the complexities of 
the challenges now facing America's working families, under the 
Secretary's leadership, all components of the Department are 
working together, where feasible, to develop cross-cutting 
initiatives that would better focus and leverage our resources.
    This budget is not only innovative and fertile with sound 
and exciting programmatic ideas, but we at the Department gave 
equally serious consideration and effort to exploring new ways 
to administer and manage these programs. We believe the efforts 
that we have put forth will elevate and enhance the 
Department's management capability. Our strategic management 
cross-cuts are focused on information technology, performance 
measurement and financial management. They are structured to 
improve our program coordination and to tackle problems across 
agencies in a cohesive and consistent manner.
    Last year when this panel discussed information technology 
including our fiscal year 2000 conversion project, Congressman 
Horn had downgraded the Department's status because, quite 
frankly, while we were confident of our approach, we had not 
made enough visible progress to prove we were getting the job 
done in a timely manner. We worked extremely hard in that area, 
and though I believe our progress is of A caliber, we readily 
embraced the recently announced grade of B from the gentleman.
    So far, to date, we have worked with our 53 State 
employment security agencies and successfully met our first 
unemployment insurance system major year 2000 challenge. In 
early January, the State UI agencies began processing new 
claims which had benefit year ending dates beyond the year 
2000, requiring the State systems to be able to process those. 
All of the States were able to process benefit claims the first 
business day of this January with no service delivery impact. 
Our Inspector General is currently in the process of evaluating 
State systems, as we were when we were here this time last 
year, for the upcoming quarterly report, and we will be able to 
provide you with an updated report on his on-site findings of 
how the States have utilized the money we were able to put 
forth for them from this committee.
    Within the Department, with our systems, we have 61 mission 
critical; as you know, 51 are compliant. Seven are becoming 
compliant over the next 7 days and we fully expect all of them 
to be compliant by March 31. Our independent verification and 
validation will be completed by the end of June, and we are 
working on our business continuity contingency plans which we 
will be testing through June and July, so that we have a backup 
in the event that any of the systems are not fully compliant 
for January 1st of 2000.
    In our outreach to our private sectors and business 
exchange programs, we have done outreach to over 700,000 
private sector pension plans in terms of ensuring that they 
were aware and cognizant of the year 2000 effort. We have done 
outreach to over 4.5 million other employee benefit plans through our 
Pensions and Welfare Benefits Administration. To exploit the many 
benefits of this progress, the Department is requesting again an IT 
crosscut initiative for fiscal year 2000, which is totaling $30.7 
million and 22 FTE related to legislative mandates to improve our IT 
management and to handle the increasing demands for web services across 
our program agencies.
    The Department has made substantial progress across the IT 
spectrum towards developing our enterprise-wide IT architecture 
and a department-wide security plan. For the second consecutive 
year, the Department of Labor's Office of the Inspector General 
issued an unqualified opinion on the Department's consolidated 
financial statements, and while I and our chief financial 
officer will not put on rose-colored glasses, there are some 
things we need to work on for improvement. In last year's audit 
of our financial statements, the IG identified compliance 
issues in seven of our subsidiary financial systems. Two of 
those have been corrected and five are on schedule to be 
corrected by the beginning of the year 2000.
    Keeping, with the positive momentum that we have, the 
budget includes several increases totaling 2.8 million to 
support additional improvements in our financial management 
activities across several agencies. For our GPRA enhancements, 
we are requesting a total of 7.5 million and 4 FTE to increase 
our capacity to become a results-oriented, performance-based 
organization. The resources are in the areas of performance 
measurement development, expanding data capacity to establish 
baselines and data collection for the measurement of outcomes 
and establish procedures for ensuring the validity and 
reliability of our data systems.
    As we work to serve the American worker, we have not 
overlooked our own 17,000-plus employees and are engaged in a 
number of in-house initiatives that foster greater productivity 
and are aimed at making the Department a model workplace, such 
as lifelong learning, balancing work and family, enhancing our 
work force diversity, safety and health initiatives as well as 
what we view to be yeoman efforts in the Federal Welfare-to-
Work Program.
    I too would like to submit my full written statement for 
the record and certainly am available to answer any questions, 
sir.
    Mr. Porter. Thank you, Ms. Lattimore.
    [The information follows:]

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                     Mr. Boehne's Opening Statement

    Mr. Porter. Mr. Boehne.
    Mr. Boehne. Good morning. Thank you, Mr. Chairman, Mr. 
Cunningham. It is my pleasure to be here with you this morning.
    As you know, the Board Members testified before the 
Subcommittee last Thursday, March 18, concerning the Railroad 
Retirement Board's budget request for fiscal year 2000. Our 
agency is requesting an appropriation for administrative 
expenses of $94 million. The Board administers comprehensive 
retirement/survivor and unemployment/sickness insurance benefit 
programs for railroad workers and their families under the 
Railroad Retirement and Railroad Unemployment Insurance Acts. 
The Board also has administrative responsibilities under the 
Social Security Act for certain benefit payments and Medicare 
coverage for railroad workers. During fiscal year 1998, we paid 
$8.2 billion in retirement and survivor benefits to 772,000 
beneficiaries. We also paid unemployment and sickness insurance 
benefits of $92 million to 31,000 claimants.
    To help ensure our success in carrying out these 
responsibilities and to fully comply with the Government 
Performance and Results Act of 1993, we developed a strategic 
plan in 1997 covering fiscal years 1997 through 2002. That plan 
contains several goals organized around four main themes: 
first, to provide excellent customer service; second, to 
safeguard our customers' trust funds through prudent 
stewardship; third to align resources to effectively and 
efficiently meet our mission; and fourth, to expand our use of 
technology and automation to achieve our mission. We have been 
diligent in our efforts to meet those strategic goals and to 
achieve our annual performance appraisal objectives.
    As we approach the millennium, we are continuing to focus 
closely on the Year 2000 project to ensure that our systems 
will function accurately with dates that would include the year 
2000 and beyond. As of January 15, we have implemented 100 
percent of our mission-critical systems and 68 percent of our 
non-mission-critical systems.
    During the remainder of fiscal year 1999 and the first 
quarter of fiscal year 2000, we will focus on completing all 
non-mission-critical systems, integration testing for systems 
already converted, and independent verification and validation. 
We are confident that we will be able to bring this project to 
a successful conclusion before the turn of the century.
    After the Y2K project, the major challenge we face is to 
solidify our plans to support our vision of how the Railroad 
Retirement Board should conduct business in the 21st century. 
We envision our customers having a variety of choices when 
contacting the agency, whether in person or by telephone, mail, 
interactive voice response system, or the Internet.
    Our customers should know that in almost all cases, they 
will be able to conclude their business within that context of 
one initial contact. With careful planning and investments, we 
believe we can establish a framework for an efficient and 
effective information technology environment that supports our 
vision and our strategic goals well into the future. To make a 
successful transition, however, the agency needs sufficient 
funds in the near term to support an adequate staffing level 
and to finance strategic information technology investments.
    I want to thank you for the opportunity to appear before 
you today. I would be happy to answer any questions you may 
have.
    Mr. Porter. Thank you, Mr. Boehne.
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                           Opening Statement

    Mr. Porter. John Dyer.
    Mr. Dyer. Thank you, Mr. Chairman and Congressman 
Cunningham, for inviting me to discuss the management of the 
Social Security Administration.
    Sound management of SSA is absolutely vital because of the 
scope and complexity of our work. In fiscal year 2000, we will 
pay monthly benefits to more than 49 million people, issue more 
than 16 million new and replacement Social Security number 
cards, post 259 million earnings items to workers' earnings 
records and handle nearly 60 million calls to our 800 number.
    Our overall budget for fiscal year 2000 is roughly $441 
billion in total outlays and represents one-fourth of all 
Federal spending.
    Over the years, we have been concentrating our efforts on 
improving customer service. In the more recent 2 or 3 years, we 
have increased our focus and attention on the stewardship of 
our programs. We believe that strategic planning and 
performance measurement are integral to successful management. 
The SSA's strategic plan and our annual performance plan and 
accountability reports help guide our efforts.
    I would note that the audited financial statements have 
been prepared by SSA since 1987 and that we have received an 
unqualified opinion of our financial statements for each of the 
past 2 years from PriceWaterhouseCoopers, an independent public 
accounting firm.
    Certainly the interest and support of this committee over 
the past several years have played a large part in the 
management successes that SSA has achieved, and we are very 
appreciative not only for the budgetary support but for our 
joint early efforts to move to performance budgeting.
    In terms of performance budgeting, in fiscal year 1998 we 
met or exceeded our commitments in initial disability claims 
pending and processing time, hearings pending, CDR case 
processing, SSI nondisability redeterminations, 800 number 
service, personal earnings and benefit estimate statements 
issuance, and the length of time the public spends waiting in 
field offices. Although we did not meet all our ambitious 
hearings and appeals commitments, we were able to meet the goal 
of reducing our hearings backlog.
    In my written statement, I focus on a broad range of 
management issues. At this point let me briefly cite examples: 
Our Y2K efforts, and our emphasis on improved management of the 
Supplemental Security Income (SSI) program, and the disability 
program.
    Y2K: Since October all payments have been made with Year 
2000 compliant systems at both SSA and the Treasury Department. 
SSA has worked closely with the Treasury Department, Federal 
Reserve, and Postal Service to ensure that Social Security and 
SSI payments due January 2000 and beyond will be paid on time 
to the 49 million Americans who depend on them.
    Supplemental Security Income program: SSA has also been 
working to improve agency management of the SSI program which 
is so vital to the nation's needy aged, blind, and disabled 
population. Our plan to strengthen program management is 
embodied in a comprehensive report released last October. It 
identified four broad areas in which SSI programs can be better 
managed: improving overall payment accuracy, increasing 
continuing disability reviews, expanding our efforts to combat 
program fraud, and improving debt collections. In each area, we 
have set achievable but aggressive goals that are outlined in 
my written system.
    Let me cite just one here: In fiscal '97, the payment 
accuracy rate, a widely employed gauge of how well the program 
is being administered, was about 94.7 percent. We believe we 
can do better. Our goal is to increase the accuracy rate to 96 
percent by 2002.
    Disability programs: If we now turn to Social Security and 
SSI disability programs, I am happy to note that earlier this 
month SSA issued a plan which presented a broad, comprehensive 
vision to improve the administration of these programs. These 
programs account for services to about 10 million people and 
about $75 million in expenditures a year.
    We are taking concerted actions in several areas. We are 
addressing long-standing issues of administrative efficiency and 
greater consistency in our decision-making. We are also providing equal 
emphasis to safeguard the integrity of the programs, improve return-to-
work opportunities for people with disabilities, and increase our 
understanding of disability issues through targeted research.
    In the area of program integrity, I want to take this 
opportunity to thank the subcommittee for providing additional 
funds for conducting continuing disability reviews. We are now 
in our fourth year of the 7-year plan to become current in 
processing periodic CDRs and have made very good progress 
towards our goal. Over the course of our 7-year plan, we 
expect, on average, to realize lifetime program savings of 
about $6 for every dollar of administrative cost.
    In conclusion, let me say I am proud of SSA's management of 
the many and varied challenges we face. In this regard, we were 
heartened by the fact that in one of the most comprehensive 
studies of government management ever conducted, the Maxwell 
School of Citizenship and Public Affairs at Syracuse University 
recently gave the Social Security Administration the highest 
marks among Federal and State agencies surveyed.
    This, I believe, is a tribute to the dedication and skill 
of every agency employee. As others have mentioned here, our 
work force too is beginning to age. We expect a higher 
attrition rate in the next decade, and as part of our strategic 
planning now, we are beginning to plan for the eventual changes 
so that we can continue to provide service to the American 
public.
    Thank you for the opportunity to discuss our management 
accomplishments and challenges, and I welcome any questions you 
may have.
    Mr. Porter. Thank you, Mr. Dyer.
    [The information follows:]

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                          Chairman's Statement

    Mr. Porter. Let me thank all of our panelists. Frankly, I 
like very much what I hear. It seems that each of you is 
looking at the long term first.
    Second, you are integrating information technology in what 
you do in a very strong manner; and thirdly, you seem to look 
at the bottom line, the kind of service you provide to the 
American people, your customers, and are attempting to measure 
that and to bring it up to the highest possible level.
    This is not all the result of a good economy. It is really 
the result--I have said this many times, but it seems to me 
both the Congress and the executive branch are on the same 
wavelength in their goals in serving the American people and 
spending the dollars wisely and getting good results and I 
think all of you represent the kind of managers who approach 
your tasks with those goals in mind and each of you are doing a 
very, very fine job, and I want to commend you for that.
    That doesn't mean we don't have questions, though.
    Let me say in regard to Y2K--and I have said it before and 
I want to say it again as strongly as I possibly can, failure 
is not an option. Problems are not even an option; obviously 
there may be some problems, but I want you to do everything, as 
you obviously are, to head off any possible problems so that 
when the news breaks on January 2, 2000, there isn't a front 
page article saying that any of your departments or agencies 
failed in getting this job done. And I think each of you is 
focused very well on that.
    The second message I would have, and you already know this 
as well, is that GPRA is the highest priority with this 
subcommittee. We believe that this is the heart of better 
service to the American people and wiser spending of the 
public's money and getting results in each of the programs that 
your departments and agencies administer, and I hear in your 
testimony you are also placing this at a very high priority in 
doing the kind of job that we expect of you in setting and 
meeting GPRA standards.
    Dr. Callahan mentioned and John Dyer, you mentioned and I 
am sure it is on the minds of each of you that there are work 
force problems that you have to face, and I certainly am very 
cognizant, like any other endeavor, government gets what it 
pays for, and if we don't provide good wages and good benefits 
for government workers, we are not going to attract the kind of 
people that we need, especially in the kind of economy that we 
are running today where there are so many options for good 
employees. And I think we realize that this is a great concern 
to all agencies of Government and something we are going to 
have to do a good job in addressing if we are going to continue 
to get the kind of people that we need to make your missions 
work.

               USE OF INTERNET FOR STUDENT FINANCIAL AID

    I was very interested, Dr. Callahan--excuse me, I guess it 
was Dr. Smith who said that you are using the Internet for 
applications for direct student loans. Are you aware that this 
is also an option for the guaranteed program? Is this being 
used this way as well?
    Dr. Smith. I said we are using it for student financial aid 
in general. Both the direct student loans and the FFEL program, 
which, as you know, involves lots of different banks and other 
secondary markets show very extensive use of the Internet for 
all sorts of things. It is not just application work, but also 
interrogating the bank or the holder of the loan for what the 
status of the loan is, when your last payment was made--all of 
the things that you associate with good banking. I think, we 
are now beginning to go on-line almost universally in the loan 
programs.
    Mr. Porter. Did you say that you doubled the amount of use 
of the Internet for this purpose over the last year?
    Dr. Smith. What I said was, we have doubled the amount of 
hits on the education web page. We are beginning to think of 
this as our front door. This is a place where people initially 
go when they want to find out about education at the Federal 
level; and we are getting 8 million hits a month--some of them, 
as you know, just passing, when somebody passes through.
    But it indicates a huge amount of interest, I think, in 
education across the country, and it has got to include a lot 
of returning people who come back for more and more 
information. So we are delighted at that. We are increasing, on 
the other side of your question, the use of student financial 
aid applications and almost all other uses of the Internet have 
gone up dramatically in the last year.

                          YEAR 2000 COMPLIANCE

    Mr. Porter. Dr. Callahan, you said you are going to be--I 
made a note, and I am not sure I am right, but you said you are 
going to be 95 percent mission-critical compliant by what date?
    Mr. Callahan. March 31, 1999. That is the governmentwide 
deadline for all mission-critical systems, and we anticipate 
that there will be about 10, maybe 12, of our mission-critical 
systems that will not be Y2K compliant at that time. There will 
be about eight or nine in HCFA, one in the Indian Health 
Service and one at the Program Support Center. So they will 
obviously be the subject of continued aggressive effort to make 
them compliant as soon as possible.
    I will also say this with regard to HCFA, which hopefully 
will give you some further assurance. HCFA Administrator Nancy-
Ann Min DeParle has sent a letter to all 1.25 million Medicare 
providers--these are doctors, hospitals--reminding them of the 
need on their side of the fence, if you will, to make sure the 
systems are Y2K compliant, so that they can interact with us 
electronically. Otherwise, they would have to go back to 
submitting paper billings to us, which we don't want.
    Secondly, she has asked that as of April 5, all providers 
use a four-digit date format when they send us requests for 
billing. So in addition to dealing with their own systems, we 
are trying to push the message out to the providers, that they 
must do the work that they need to, whether they are a hospital 
or doctor, to help us help them.
    Mr. Porter. Actually, of course, it matters that you are 
compliant, but if they are not compliant, the whole system goes 
down, in a sense, does it not? You can't handle all that paper 
submission obviously.
    Mr. Callahan. You are right. I think one of the things that 
we are grappling with--and this gets very sensitive in terms of 
prospective payments to providers--is knowing what they would 
bill us for. I would say in general terms, Mr. Chairman, we do 
not want to have the Y2K crisis exacerbated by cash flow 
problems.
    HCFA has taken as its mission ensuring that cash flow will 
not be a problem in the health care system, or the Medicare 
system. There are some sensitive issues that we would have to 
confer with you and with other congressional committees about, 
some of the elements that relate to payment. But we would 
certainly do that in order to ensure that this isn't a problem.

                          BIOTERRORISM FUNDING

    Mr. Porter. Dr. Callahan, the Secretary plans to use your 
transfer authority to provide an additional $11 million for 
metropolitan medical response systems. As I remember, your 
original fiscal year 1999 budget included $2 million for this 
purpose, and the bioterrorism budget amendment that followed 
included an additional $12 million of which $3 million was to 
come from HHS and $9 million from the Department of Justice; is 
that right?
    Mr. Callahan. Yes, that is correct. However, we did not 
receive the $9 million from the Department of Justice.
    Mr. Porter. So none of it was provided.
    Why not?
    Mr. Callahan. The $9 million from the Department of Justice 
was not provided because it wasn't accounted for in their 
appropriations bill.
    But I will say in general about the transfer, if I may, 
HHS, with the cooperation of the subcommittee, is now engaged 
in a multipart effort to counter bioterrorism. As you know, one 
part of this is the pharmaceuticals stockpile; another part is 
enhancing our electronic surveillance systems around the 
country so that we can immediately identify bioterrorism. But a 
critical element, as the subcommittee knows, is ensuring that 
the first responders, which in the case of biological incidents 
will be medical personnel, have the ability to identify and to 
appropriately respond to any bioterrorism incident.
    We have fielded those services, in I think somewhere on the 
order of 35 metropolitan areas. It is the goal of the 
Department, and I think we have substantial congressional 
support, to expand the number of such sytems to about 120 
metropolitan areas over the next several years. And given the 
sensitivity of this issue, Mr. Chairman, the Secretary felt it 
was appropriate to seek the 1 percent transfer.
    Mr. Porter. You quote in your recent testimony Attorney 
General Janet Reno in your justification. And I can see where 
we might want to approve the transfer of $2 million within HHS 
to bring the Department up to the budget request level, but why 
should we approve the amount the administration didn't get from 
the Department of Justice?
    Mr. Callahan. Well, Mr. Chairman, in the judgment of the 
Secretary--and the President also made an announcement on this 
about a week ago--there is a tremendous amount of work to be 
done here, not just in terms of law enforcement first 
responders, the National Guard, police, fire departments, et 
cetera, but also the medical response efforts.
    As you know, if we were to have a medical emergency 
throughout the country right now, we would activate the Office 
of Emergency Preparedness. They would then activate what we 
call ``disaster medical assistance teams.'' These are almost 
like medical reserve individuals who volunteer, who are 
available to deal with either chemical or biological incidents.
    The scale of a biological incident could be rather 
dramatic, and we feel that there really isn't any time to waste 
in terms of fielding these teams. So time is really pressing on 
us to such a degree that we felt it was appropriate to make the 
transfer.
    Obviously, as we get into the issue of coordinating all the 
different ways we have to deal with chemical and biological 
incidents, there is an appropriate need for the Justice 
Department to do its work as well. But again, we felt because 
of the urgency of this matter, we should go forward with it.
    Mr. Porter. Well, we agree with the need. If you'll talk to 
Mr. Young and get our allocation up there, we would be happy to 
take care of it.
    Mr. Callahan. We are with you, Mr. Chairman.

                            RAILROAD GANDYS

    Mr. Porter. Mr. Cunningham was here at the start of the 
hearing, and left, but you are back. Mr. Cunningham.
    Mr. Cunningham. Thank you, Mr. Chairman. Mr. Boehne, do you 
know what a gandy is?
    Mr. Boehne. I don't.
    Mr. Cunningham. You don't? You are in the railroads and you 
don't know what a gandy is?
    Mr. Boehne. No, I don't.
    Mr. Cunningham. A gandy is one of those guys that sit out 
there and fix the railroad tracks. When I was in high school, I 
went one summer and lived in a boxcar with winos. As a matter 
of fact, the railroad charged me $9.25 for lunch for a piece of 
baloney and cheese and dry bread and a hot milk.
    If you are a railroad guy, you have got to know what a 
gandy is.
    Mr. Boehne. When I went to college, a number of my 
classmates did do similar jobs that you are talking about.
    Mr. Cunningham. I didn't like it.
    Mr. Boehne. They didn't like it either. They are not 
working there now.
    Mr. Cunningham. My father said I should go out and see what 
the world is like, and it made me wise enough to know I wanted 
to go back to school. I think he did it on purpose.
    I thought I would throw that in.
    We are not going to solve all the problems here, and when I 
speak about problems I am a dove, not a hawk. I am a well-armed 
dove. Even in the Department of Defense, if I was to look into 
a lot of things, I would find a lot of problems with them too, 
but I am looking at some things that really bother me.

               IMPACT AID AND ADVANCED PLACEMENT TESTING

    I focus primarily on defense, on medical research and 
education; and my wife is an Administrator in the Encinitas 
school district. My sister-in-law is Director of all the 
Special Education programs in San Diego. She works for Alan 
Bersin, who is a good guy. And one of the problems that they 
are having is the timeliness of both education Impact Aid and 
AP Testing payments.
    Now, I authored the AP testing for children that couldn't 
afford to take an AP test. We talk about children, and the 
Department right now has delayed those so much that the funding 
comes after the tests are taken. So we want the children to be 
able to see if they are qualified to go to college, especially 
those who are low income, and this has got bipartisan support 
from both sides of the aisle. But there tends to be a problem 
on the financing.
    Now, the President cut education Impact Aid for those who 
live off base. I want to tell you, for example, in San Diego, 
the Marine Corps is going to build a whole housing project out 
in an area. Those students impact those schools. Yet, the 
schools and the State don't receive any reimbursement because 
they say, oh, they are paying property tax. The majority of 
people that are in the service that live off base, because they 
are going to get moved every couple of years, rent. So the 
school don't even get that. And the Department is later and 
later in paying the impact aid. And in both cases, my wife is 
having to borrow money for the school district for these 
programs and pay interest.
    Has the Department even considered paying back the schools 
the interest they are having because of the late payments?
    Dr. Smith. I don't believe that we are planning to do that, 
Mr. Congressman. I would be glad to look into it. I don't know 
the legal issues or anything else, so I can certainly look into 
that and get back to you.
    [The information follows:]

    Title VIII of the Elementary and Secondary Education Act, 
which authorizes Impact Aid, provides no authority for interest 
payments. Impact Aid funds are distributed under a statutory 
formula that does not allow discretionary payments.

    Mr. Cunningham. I would appreciate it. I am sure you don't 
want children of low income not to be able to qualify for--you 
know the criticality of this; the timing is very important both 
for the SATs and the AP.
    Dr. Smith. I agree with you. This is the first I have heard 
of the delay of AP payments. I will definitely look into that. 
Impact aid, I know has been a problem. We have been working on 
it. It was partly due to--it is not an excuse, but was partly 
due to the Y2K conversion and use of a new system for 
allocating it; and my understanding is that that system is now 
working well, and next year we are going to have it as quickly 
as we possibly can after the appropriation and on time.
    The school year, as you know, starts in September. 
Appropriations typically don't come until late September, early 
October, so it is always a little bit late because this is a 
current funded program, but I mean I certainly agree with you 
completely that we need to get the funds out as fast as we 
possibly can.
    Mr. Cunningham. I was dean of a college at one time. When 
you talk about dollars being delayed coming and planning your 
budgets, it is a nightmare.
    Dr. Smith. Mr. Congressman, I wasn't an airplane pilot, but 
I was a dean. My wife is a principal in a school. I have a son 
who is a special ed teacher. So we have a lot in common.

                         GAO MANAGEMENT REPORT

    Mr. Cunningham. Even Alan Bersin is talking about, 
especially the education program, is a monster right now that 
he is having. The Department of Education is the subject of a 
GAO high-risk report. You can just provide me answers to the 
issues raised in this report.
    I don't have enough time to go through all of these, but if 
you just give them to me for the record, I would appreciate it. 
It is the GAO recent performance and accountability series 
paper titled ``Major Management, Challenges and Department 
Risk.'' It identified several serious problems in the 
management.
    One of those was liabilities associated with the student 
loan program. When that came up, the government shut down. We 
got blamed for it, but the President wanted 100 percent of 
student loans to come from direct lending. At that time, GAO 
said it cost a billion dollars more annually to manage it and 
also about $4 billion more to collect it, and that was when it 
was capped at 10 percent. I can't imagine the problems involved 
with those.
    Dr. Smith. This is the Direct Loan program you are 
referring to?
    Mr. Cunningham. Yes. That is a direct loan, but other----
    Dr. Smith. I would be delighted to respond to this.
    [The information follows:]

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                      GAO REPORT ON HHS MANAGEMENT

    Mr. Cunningham. But the other loan programs as well.
    The other area is in Medicare. It identified serious 
problems in management, Department of Health and Human 
Services, but it did say--there is some progress being made, 
the Assistant Secretary said.
    But it also stated that our Medicare for seniors is at high 
risk. Can you address the report's critique, point by point, 
noting each program in the Department that GAO deems to be high 
risk?
    Mr. Callahan. Yes, sir, we have already reviewed the report 
and will give you a full response to that.

                      GAO REPORT ON DOL MANAGEMENT

    Mr. Cunningham. The other areas in labor, the Department 
lacks reliable data to justify several programmatic and 
regulatory activities. Small Business Administration makes a 
harsh assessment of Department's so-called safety and health 
programs. If you could address those, Madam Secretary.
    [The information follows:]

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    The labor accountability and program funding, approximately 
10 percent. This is one you may have time to answer now. If 
not, if you would provide it for the record.
    There is between 7 and 10 percent of private sector in 
labor unions, whereas I would like to know what percentage of 
the Department grants for training and research are made to 
labor unions, labor organizations or organizations directly 
affiliated with labor unions, both by dollar value and number 
of grant awards. I will give you a copy of this, if you want.
    Similarly, what percentage of the Department's grants for 
training and research are made to other organizations, such as 
research universities, employer organizations and the like, 
dollar by dollar and number of the grants?
    Ms. Lattimore. We will be glad to provide that to you, sir.
    [The information follows:]

                        Labor Department Grants

    Of the $8,600.8 million in total grants in FY 1998, 
$8,561.5 million (or 99.54%) fall in the category of other 
which includes grants to states. In FY 1998 there were a total 
of 1,368 grants and 1,314 or 96.1% were in the other category.
    The percentage of grants made to Labor Unions and Labor 
Organizations equal $10.6 million or .12%. A total of 14 grants 
were issued in this category or 1.02% of the DOL total.
    The percentage of DOL grants made to Employer Organizations 
total $1.4 million or .02%. A total of 3 grants fall into this 
category or .22% of the number of grants given by DOL.
    Finally, DOL issued a total of $27.4 million in grants to 
Educational Institutions or .32%. This amounted to a total of 
37 grants or 2.7% of total DOL grants.

    Mr. Cunningham. That is all I have, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Cunningham.
    Mr. Jackson.

             ELECTRONIC FILING OF STUDENT AID APPLICATIONS

    Mr. Jackson. Mr. Chairman, I just have two questions. Thank 
you very much, Mr. Chairman.
    Deputy Secretary Smith, I see that you expect 25 percent of 
financial aid applications to be filed electronically. I am 
wondering, are you dedicating more resources to electronic 
filing of such applications?
    The reason I ask that question is because many students in 
the Second District of Illinois, the district I represent, 
don't have access to computers yet. I want to make sure the 
Education Department is going to continue to process their 
non--let me say their snail-mail applications much quicker than 
the electronic filing applications. I want to make sure they 
are being processed at the same rate and speed.
    Dr. Smith. Congressman, we haven't stepped away from that 
at all. In fact, I think it is faster this year than it has 
been in years, the snail mail as well as the electronic filing.
    There is also capacity now in many community colleges, in 
many high schools, in districts all over the country, so that 
people who don't have access at home to their own e-mail 
systems or computer systems do have access there.
    We are, as I am sure you know, investing in what is almost 
storefront computer centers, starting in L.A. and now going 
across the country. I think there are going to be computer 
centers available to an awful lot of folks that don't have the 
resources to buy computers, and they will have them in their 
own neighborhood. So we are working hard to do this, as you 
know.
    Again, the e-rate, which discounts funds and discounts 
computers and wiring and so on for schools over the country, 
has already had a tremendous impact. I think it has only been 
in existence for about 6 months. So we are beginning to get 
there. It is taking some time, as you know.
    Mr. Jackson. I appreciate that.
    What percentage of resources are you dedicating to the 
electronic filing process?
    Dr. Smith. Well, it is a very small percentage. It is small 
because, once you develop the programs for this, there is not a 
lot of other resources you need to put into it. You need some 
servers and you need some other things in order to take in the 
messages that come through the Internet, but that is very 
small.
    Mr. Jackson. It is becoming more efficient?
    Dr. Smith. Much more efficient. The great thing is, because 
it is interactive, it checks you as you go through it. If you 
make an error going through it that can be picked up by cross-
checking, it flags that error for you and tells you you have 
made an error. So the number of errors havebeen reduced from 
about 10 percent to about 1 percent. That saves everybody time and 
money.
    Mr. Jackson. Thank you very much.
    Assistant Secretary Lattimore, I notice you are proposing a 
sizable increase for the information technology at the 
Department of Labor. I wonder to what extent is some of this an 
outgrowth of the Y2K problem and how important are IT 
investments to your ability to do your job?
    Ms. Lattimore. IT investments are extremely critical to 
doing our job. The increases we are looking forward to are more 
aimed at legislative mandates dealing with the Computer 
Security--Clinger-Cohen and the Paperwork Reduction Act. We 
believe that the approximately $27 million we have invested to 
date puts us in good stead for year 2000, in addition this 
committee enabled us, with $200 million, to help for the 
States' employment security agencies, with their unemployment 
systems.
    So the additional increases we believe will continue to 
keep our IT program up-to-date and will enhance it to meet 
requirements of legislative mandates. We believe we have our 
Y2K adequately covered.
    Mr. Jackson. Thank you, Mr. Chairman.

                          MEDICAID Y2K EFFORTS

    Mr. Porter. Dr. Callahan, you have spoken about HCFA, Y2K 
preparations and Medicare. What progress have you made in 
Medicare and how are the States doing in their appropriation?
    Mr. Callahan. You mean in Medicaid?
    Mr. Porter. Yes.
    Mr. Callahan. Medicaid, as you know, is a federally-
supported, State-administered program. On Tuesday of next week 
we are meeting with all of the State Chief Information Officers 
to talk with them about their progress on making Medicaid 
systems Y2K compliant. Because we can only give them the 
appropriations that you provide us, it is up to them to make 
sure the money gets out to their Medicaid providers.
    We are also providing technical assistance from HCFA to all 
50 States. We are having an independent contractor, I think it 
is TRW, give each of them an independent assessment of how they 
are doing with regard to Y2K compliance in the Medicaid system. 
That means they will have the best independent information as 
to where they stand.
    Most States are making substantially good progress. There 
will probably be some that are a little bit behind the curve in 
this regard. But helping them is what this technical assistance 
is attempting to do.
    Mr. Porter. This worries me greatly. While you point out 
this is a program administered by the States, this is a program 
that serves the poorest people among us. If this breaks down, 
we have some serious problems.
    Mr. Callahan. You are absolutely correct, Mr. Chairman. I 
didn't mean to suggest that we are not mindful of that. But, as 
you know, the States actually administer the program. There is 
probably no feasible way in which, the Health Care Financing 
Administration, just to use a hypothetical, if some State 
system breaks down, can come in the next day and run that 
system. So what we are doing is working aggressively with the 
States to give them the technical assistance that they need. 
And it is provided at no charge to them.
    Additionally, we are working with them to get the full 
scope of their contingency plans, match them up with our 
contingency plans, and make every possible effort to ensure 
there is no disruption of service for the State Medicaid 
systems.
    I think a number of the State CIO's, including your own in 
Illinois, might come and talk to you individually about their 
issues. But I also think a lot of them are making very good, 
substantial progress. Again, it is a complex issue and we have 
to be there as best we can. But there are some things that the 
Federal Government will not be able to do in and of itself. It 
will have to be a shared effort between ourselves and the 
States.
    Mr. Porter. I recognize the differences there, but I also 
recognize that, if there is a serious problem, I suspect the 
Federal Government will be the one to be blamed.
    Mr. Callahan. I understand this.
    Mr. Porter. It is a Federal program, although it is 
administered by the States.
    Mr. Callahan. We will, in cooperation with this committee, 
make you fully aware of all the efforts we are doing with the 
States. We will provide this information to the committee.
    Mr. Porter. Make us aware of where the problems are and 
whether you think you can get them solved by the end of the 
year.
    Mr. Callahan. Let me add one comment, if I may, Mr. 
Chairman.
    As you know, all of the Departments represented here have 
been ``graded'' on their Y2K compliance systems. There has also 
been some effort to grade the States on their compliance. 
Obviously, the States are very sensitive about this. They want 
our technical assistance and they want our cooperation. But, if 
I may say, they are not integrating the same way that we have 
been here. So we want to continue to cooperate with them very 
aggressively, as I know some of our other partners have done. 
But the object is to get the job done and done right; not to 
have a quick grade, if you will, of the States.
    Mr. Porter. Well, cooperate with them, yes. Lean on them 
also, please.
    Mr. Callahan. Absolutely.

                     DEPARTMENTAL FINANCIAL SYSTEMS

    Mr. Porter. Ms. Lattimore, in his most recent report, the 
Labor IG indicated the Department's financial systems do not 
meet all Federal accounting and financial standards. Why is 
this so and will the Department of Labor be able to come into 
compliance within fiscal year 2000?
    Ms. Lattimore. We believe we will. The IG's report 
identified seven systems. Two of them we corrected, and they 
are fully in compliance with the Federal Financial Management 
Improvement Act. The remaining five, two that are tied to our 
wage and hour system, one tied to our mine safety and health 
penalty tracking system and two tied to internal Job Corps 
management systems, are currently under way by our CFO, and our 
chief financial officer fully anticipates they will be fully in 
compliance on or before the start of the year 2000.

                   FINANCIAL AND ACCOUNTING STANDARDS

    Mr. Porter. All right. Now, I know some of you already 
testified on this point, but let me ask you, each of you, the 
same question with a brief answer on your financial systems, 
whether they are fully in compliance with Federal financial and 
accounting standards. Dr. Callahan.
    Mr. Callahan. Is this with regard to obtaining a clean 
audit opinion?
    Mr. Porter. This is in regard to the standards, that is 
right.
    Mr. Callahan. Yes. I think we have made a lot of progress, 
but we still have two areas we are trying to deal with. One is 
the Medicare accounts receivable vis-a-vis HCFA, and that has 
proven to be a problem. We are going to devote substantial 
internal departmental resources to clearing up that problem in 
1999.
    The other one is with regard to the new financial 
statements we completed this year as result of FASAB. A number 
of our Operating Divisions were unable to do that. Some it is 
brand new, and it was a little bit more of a tussle for them. 
We will have that done this year so that they, in essence, will 
be able to have a clean opinion next year. So in that sense, we 
will be right on top of our financial management standards.
    Mr. Porter. Dr. Smith.
    Dr. Smith. Mr. Chairman, we had a clean opinion last year 
for the first time in the history of the Department. This year 
I am hoping we will have a clean opinion, but I am less secure 
about it than I would like to be. We have been working hard to 
do a lot of reconciliation in this Department, reconciling 
accounts that go back many, many years. As a consequence, we 
are a little bit behind where we want to be for this past 
fiscal year, 1998. So we intend to work very hard to try to get 
a clean opinion next year.
    Mr. Porter. I am not sure we are talking about the same 
thing. I am talking about the financial and accounting 
standards set by FASB and not necessarily the opinion.
    Dr. Smith. Fine. Our accounting system, as far as I know, 
is fully up to date on those. The two new reports that John 
just mentioned, we have the capacity to deliver on those 
reports. What I was answering actually was a question whether 
or not I think we are going to deliver this year in the way I 
want us to deliver. I am not secure about that.

                            FASAB COMPLIANCE

    Mr. Porter. All right. Mr. Dyer.
    Mr. Dyer. We are in compliance with the existing FASAB 
standards.
    Mr. Porter. All right. And Mr. Boehne?
    Mr. Boehne. Yes, as you may recall last year, the Inspector 
General noted three material weaknesses with our systems, and 
basically by looking at those financial statements; and now he 
is down to one material weakness with regards to the control 
environment.
    Also, we have a disclaimer of opinion with regards to the 
statements, and that deals with the financial interchange we 
have with the Social Security Administration and the Health 
Care Financing Administration. On that note, we are working 
with the IG in trying to resolve the accounting issue that is 
involved there. I hope that we can come to some resolution this 
year on that.
    What it amounts to is that, come September 30th, our Chief 
Actuary's office performs estimates as to what that interchange 
is going to be. The actual amounts are determined in the 
spring, right now; and in June we make that actual transfer.
    In the past, the estimates have been substantially 
different than the actual, but we have closed the gap on that, 
and we are kind of hoping to show that, by looking at what the 
gap is, compared to total revenue, that it is not material. So 
we are hoping to close the gap as far as possible and resolve 
this issue with our Inspector General.
    Mr. Porter. Thank you.
    Mr. Cunningham.
    Mr. Cunningham. I don't have any further questions, Mr. 
Chairman.
    Mr. Porter. Mr. Jackson.
    Mr. Jackson. I have no further questions, Mr. Chairman.
    Mr. Porter. I do.
    Mr. Cunningham.  What is scary to some of us, when you are 
talking about the Department of Labor, that we feel that many 
of us--that the union bosses over a period of time want and 
support big government. They want health care controlled by the 
government, education, whether it is training or what. So I 
challenge you to look at that.
    I yield back, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Cunningham.
    Mr. Jackson.
    Mr. Jackson. I am not going to respond to that, Mr. 
Chairman.
    Mr. Porter. You weren't seeking recognition, as far as I 
knew.

                          RENT CHARGES TO GSA

    The Treasury, Postal Service Subcommittee, which has 
jurisdiction over the General Services Administration, has 
raised questions concerning the rent charges paid by the Social 
Security Administration. I believe that the issue has also come 
up with respect to the Railroad Retirement Board.
    Mr. Dyer and Mr. Boehne, could you discuss how your rent 
charges to GSA are calculated? And if you are paying less than 
other agencies, what is the justification for the reductions?
    Mr. Dyer. Mr. Chairman, the way our rent calculations are 
paid right now, is we only pay actual costs for those dollars 
that we pay into the building fund for those costs that we 
incur as part of our title II program. This is a practice that 
the Congress endorsed in 1974 in committee report language, the 
view being twofold: One, many of the buildings that we 
currently use, we actually bought with trust funds, so there 
was a question of why do we need to actually put funds into the 
building trust fund. The second is the question of using taxes 
derived from the FICA tax to, in essence, subsidize building 
and construction of other buildings across the government. So 
we have always been heldat just cost.
    The proposal that GSA has come back with now is we, like 
all other agencies, should contribute the full amount, which in 
essence puts additional money into paying for future building 
purchases, and future fixing of buildings not used for trust 
fund programs. We have gone back to GSA and want to sit down 
and talk to them about this.
    Mr. Porter. Mr. Boehne.

                             RRB RENT COSTS

    Mr. Boehne. Similar to what Mr. Dyer just reported, we have 
the same arrangement. It was provided in appropriations 
language since fiscal year 1975. We were paying actual cost and 
still are paying actual cost. We disagree with GSA on this 
issue. We believe that the Railroad Retirement trust funds 
should not be assessed this additional charge.
    First and foremost, we believe that Railroad Retirement 
trust funds should pay only charges that are actual costs for 
us being in these buildings. The trust funds established for 
these programs should be used by law to pay benefits and 
necessary administrative expenses. The actual costs paid by the 
Railroad Retirement Board include depreciation, protective 
services, nonrecurring repairs and alterations, as well as 
GSA's general administrative costs.
    The RRB is paying the full purchase price for the 
headquarters building we have in Chicago over a 30-year period. 
That started in 1975 and will be finished in 2004. We also pay 
for the cost of improvements which are amortized over the life 
expectancy of those improvements, usually about 10 years.
    As we have done for over a decade, we continue to operate 
the headquarters building under an agreement with GSA. Under 
that agreement, we pay for the utility expenses, the costs for 
cleaning and the expenses of operating the heating and cooling 
systems and the elevators. We also pay for the minor repairs 
and alterations and for administrative expenses related to the 
operation and maintenance of the headquarters building. So we 
believe we are paying all costs associated with our building, 
including the amortized costs of any improvements made by GSA 
over, usually a 10-year period, and the original purchase price 
of the building over a 30-year period.
    Mr. Porter. Thank you.

                   CARRYOVER SALARY AND EXPENSE FUNDS

    This is a question for each one of you. In the fiscal year 
1999 bill, the committee gave each of your agencies the ability 
to carry over salary and expense funds if some emergency or 
unforeseen event made the obligation of all funds impossible or 
unwise. In the committee report, we stated it is the 
committee's intention to have this extended period of 
obligation used only sparingly for emergency or abnormal 
situations; and it is specifically not the intention of the 
committee to have the effective fiscal year for these accounts 
become January 1 to December 31. It is my understanding that, 
in spite of this clear direction, the Office of Management and 
Budget attempted in a number of cases to apportion funds into 
the fifth quarter, absent any emergency or unforeseen 
circumstance.
    Now, the question--there are actually three questions: Did 
any of your agencies receive any proposed or actual 
apportionments from OMB that directed spending of fiscal year 
1999 funds in the first quarter of fiscal year 2000? That is 
the first question. Secondly, what was your response to those 
apportionments? Thirdly, do you have any salary and expense 
accounts that in the past have been apportioned on a fiscal 
year basis that now have funds apportioned to the fifth 
quarter?
    Let's start with Ms. Lattimore.
    Ms. Lattimore. No, we do not. Therefore, the second one is 
not applicable. And, to the third question also, sir.
    Mr. Porter. Dr. Callahan.
    Mr. Callahan. No to the first question, Congressman Porter. 
We do not intend to apportion any funds for a fifth quarter 
unless there is an emergency pursuant to the committee's 
dictate. And then, no, to the third question.
    Mr. Porter. Dr. Smith.
    Dr. Smith. No to the first question, the second doesn't 
really apply, and no again.

                  APPORTIONMENTS FOR FISCAL YEAR 1999

    Mr. Porter. All right. Mr. Dyer.
    Mr. Dyer. No to the first question. The language you gave 
us is slightly different than the other agencies here at the 
table, so it is no to the second and third question, too.
    Mr. Porter. And Mr. Boehne.

            APPORTIONMENT OF RRB FUNDING IN FISCAL YEAR 1999

    Mr. Boehne. Yes to the first question. And to give you a 
little bit of information on that, our appropriation for fiscal 
year 1999 was $90 million. Earlier this year, OMB apportioned 
$88.5 million for fiscal year 1999 and $1.5 million for the 
first quarter of fiscal year 2000.
    With regard to your second question, the agency's reaction, 
we continued to submit reapportionment requests asking for that 
money to be made available, that the $1.5 million be made 
available in fiscal year 1999.
    Mr. Porter. What was the emergency or abnormal situation, 
if any?
    Mr. Boehne. I don't believe there was any emergency or 
abnormal situation.
    Mr. Porter. All right.
    Mr. Boehne. Just before our hearing last week, the 
appropriations hearing on March 18th, the day before that, on 
March 17th, OMB did sign an apportionment which made that $1.5 
million available for fiscal year 1999. So we have the full $90 
million available this fiscal year.
    Mr. Porter. And your answer to the third question then 
would be no, also?
    Mr. Boehne. Currently, all the money is available for this 
fiscal year.

                          BIOTERRORISM FUNDING

    Mr. Porter. Okay. Thank you all.
    Dr. Callahan, one final question on bioterrorism. Last 
year, when the budget amendment for bioterrorism arrived, there 
was neither supporting documentation for outyear plans nor 
indication of where the offsets would come from. I do remember 
reading, though, that HHS entered into fixed-price contracts 
with 25 of the 27 cities for medical response systems 
development and that these contracts required the systems to be 
in place by the end of 1998. How much is in the base for these 
contracts that can now be used to assist other cities in 
systems development?
    Mr. Callahan. I will have to get that detailed information 
for you for the record, Mr. Chairman.
    Mr. Porter. Please provide that.
    [The information follows:]

           Funding for Metropolitan Medical Response Systems

    In FY 1997, following prototype development in Washington, 
D.C. and Atlanta, HHS entered into fixed-price contracts with 
25 cities for the development of Metropolitan Medical Response 
Systems (MMRS). These contracts totaled $10.2 million--$3.6 
million for HHS appropriated funds and $6.6 million transferred 
on a one-time-only basis from the Department of Defense (DoD). 
In FY 1998, no funds were appropriated to HHS for MMRS 
development, and DoD funds were not available to HHS; 
therefore, the FY 1998 base for MMRS development was zero. In 
FY 1999, the HHS appropriation provided $3.0 million for MMRS 
development; the Secretary has also used her one percent 
transfer authority to provide an additional $11.0 million, 
bringing total funding for MMRS development in FY 1999 to $14.0 
million. These funds will allow MMRS development in 20 
additional cities, and for biological components to be added in 
the 27 current MMRS cities. For FY 2000, the President's Budget 
requests $16.5 million for MMRS development, which will begin 
25 additional city systems and further strengthen the systems 
already initiated.

                          PERFORMANCE MEASURES

    Mr. Porter. This is for each of you. Each of your offices 
manages administrative services that, in many cases, are 
susceptible to measurement under the Results Act. Can each of 
you give the subcommittee a flavor of the kinds of measures you 
have applied in these operations, how often you receive data 
reports on success in meeting these performance standards, and 
the personnel mechanisms you use to provide incentives or to 
ensure that your offices are meeting their goals?
    Let's start with Ms. Lattimore.
    Ms. Lattimore. Several of our measures are focused on the 
administrative area, mainly in information technology and 
financial management. The flavor of the systems that we have 
for information technology includes measures that challenge us 
to complete our common architecture well within the 
requirements of the Clinger-Cohen act, put our capital planning 
process in place so it comports with the ITPS system and with 
OMB and develop a comprehensive departmental computer security 
activity for the coming year.
    In the financial management arena, our goals address the 
correction of any system weaknesses in four of our six systems 
to make sure they are in compliance with the Federal Financial 
Management Improvement Act and address enhancing our Employment 
Standards Administration and our Employment Training 
Administration systems that link to our internal administrative 
systems. Those are being tracked quarterly under our 
departmental tracking system.
    Mr. Porter. So you receive data reports quarterly?
    Ms. Lattimore. Yes.
    Mr. Porter. And the personnel mechanisms used to provide 
incentives or to ensure your offices are meeting their goals?
    Ms. Lattimore. Well, the incentives are basically that 
those are our performance contracts. As an assistant secretary 
or the chief financial officer, neither one of us has an 
inclination to fail.
    Mr. Porter. Dr. Callahan.
    Mr. Callahan. Mr. Chairman, as you know, my office, the 
Assistant Secretary for Management and Budget, is a small 
office. Most of our administrative services for the Department 
are provided by the Support Center. We do have performance 
goals for the Program Support Center.
    For example, in the area of payroll and personnel systems, 
they are seeking to reduce their average per unit cost by 6 
percent for fiscal year 1999. We will make sure that they 
report their achievements. We also have some goals for 
ourselves--electronic commerce, acquisition reform, et cetera--
which are in our GPRA report. We are updating the system to 
track those, and we will report those to the subcommittee at 
the end of this fiscal year.
    Mr. Porter. Are there any special incentives that are put 
in the system?
    Mr. Callahan. In my own shop, we have performance contracts 
with our career SES employees. These are basically objective 
requirements to meet certain performance objectives in major 
areas. I meet with them incessantly about these things. But we 
do that, and we encourage our managers to do likewise with the 
workers under their supervision.
    Mr. Porter. Dr. Smith.
    Dr. Smith. Mr. Chairman, we have got a variety of different 
performance measures. You can break them I think into two 
categories. One is kind of ongoing performance areas in 
management and in customer service standards, for example, 
student aid applications and so on and into, hopefully, one-
time kinds of events, like the Y2K issues. We track all of 
those, including things like financial management, default 
rates, whether or not the audits are on time, whether or not 
our grants are coming out by May and so on.
    The data timing varies based on the nature of the 
indicators and of the particular problem we are trying to 
address. Typically, we see things, often weekly, sometimes 
monthly. Sometimes we report them--they are reported directly 
through electronic means to me, sometimes to thesenior officers 
meeting on Monday mornings. So there is a wide variation there.
    In terms of performance incentives, we have the same kind 
of thing HHS has, that is, performance agreements with our 
senior managers. We also try to use bonuses for this and 
rewards, particularly for groups of people. When they have put 
together something that really seems to work, it is great to 
honor them with small bonuses and a party. That seems to work 
as well as anything.

                 MEASUREMENT OF ADMINISTRATIVE SERVICES

    Mr. Porter. Thank you, Dr. Smith.
    Mr. Dyer.
    Mr. Dyer. In the administrative area, we basically monitor 
how effectively people are moving the workloads through. Are 
they meeting the goals? We also have measures of customer 
service to see what the customer thinks of those workloads as 
we move them through. We also can break it out by unit costs 
for our unit services and look at trend lines to see how we are 
doing in that area.
    On the other side, in the program area, for instance, we do 
continuing disability reviews. We are putting in systems so we 
can actually see how much money we are saving, how many people 
we are taking off the roles that should no longer be on the 
roles. We have ways to measure information technology, the 
investments. Did they result in what we expected them to result 
in? We will do post-review audits.
    In terms of the day-to-day tracking of it, we have an 
executive tracking system that lays out all our major 
objectives and workloads. The Commissioner and I review it on a 
monthly basis. On a quarterly basis, I sit down not only with 
the top deputy commissioners and executives in Baltimore, but 
we bring in the regional commissioners, people from all the 
major operations across the country for a 1-day to 2-day 
session to go over where they are, where they stand, what are 
the problems with the issues we need to resolve to keep on 
track.
    In terms of incentives, we are very similar to HHS and 
Education. We have the SES program, the awards program and 
other things we try to track back and tie to performance.
    Mr. Porter. You seem to include programmatic standards 
rather than administrative services. I am really kind of 
focusing on internal administrative services in the agency 
rather than what you do for the consumer.
    Mr. Dyer. I would say internally we do, for instance, a lot 
of things centrally, such as purchasing; and we have been able 
to do analysis to show the things we can buy centrally we get a 
better price than if we were to let our offices do it across 
the country. As you know, systems is a very large area of 
investment for us on an annual basis, and we actually go 
through to track to see if the software and products are being 
delivered on time, and where they are. Every month's delay is 
costing us a lot. So we track it that way.
    Mr. Porter. Mr. Boehne.

                      RRB PERFORMANCE MEASUREMENT

    Mr. Boehne. Our performance goals are very detailed, and 
they support each one of our strategic goals, and the very 
first one deals with customer service.
    But to get more into what you just mentioned with regards 
to administrative services, we do have goals there with regards 
to finance and with regards to procurement and to ensure that 
we have the support systems in place. We track these goals 
periodically and get periodic reports from our staff on these, 
and we expect that we will do quite well when the final 
reporting comes in at the end of this fiscal year.
    How we basically reward our staff, we have a number of 
incentives, but one of them particularly is that we give out 
special service awards. And particularly for the Y2K efforts, 
where people have not just done the work but gone over and 
above and made the extra effort, we have recognized those 
people for getting that project done. We also give out special 
service awards for other types of performance
    With regards to customer service, back on that, that is our 
primary function is to serve the railroad retirement community. 
We track these strategic goals through the annual performance 
plans all the way down to the individual claims examiners' 
performance appraisals. So besides having it in my performance 
appraisal plan for how well I do as the Chief Financial 
Officer, we also track it to the individual claims examiners 
for how well they do.
    Mr. Porter. Thank you all very much.

                        AUTOMATIC APPORTIONMENTS

    As I understand it, to spend money after an appropriation, 
you are required to seek an apportionment from OMB, as we 
discussed earlier. In the case of continuing resolutions, the 
apportionments are automatic, and after the regular bill, you 
submit and receive actual apportionments for the year. The 
Department of Labor had an antideficiency violation. It seems 
that after the 1998 bill was passed, a paperwork foul-up 
resulted in no formal apportionment for OSHA for almost 2 
months, yet the Department finance systems continued to allow 
obligations, acting as if the Department were still under the 
automatic apportionment of a CR.
    I understand that Labor is addressing this problem, Ms. 
Lattimore. My question is whether automatic apportionments 
assumed in the edits of your financial systems would allow a 
similar problem in other agencies?
    Ms. Lattimore. Are you asking me?
    Mr. Porter. I am asking all of you.
    Ms. Lattimore. From our standpoint, I can answer.
    Mr. Porter. Let me repeat the question. My question is 
whether automatic apportionments assumed in the edits of your 
financial systems would allow a similar problem in the other 
agencies, your agency and the others?
    Ms. Lattimore. We have corrected our system and that will 
not occur again. Absent documentation of a signed apportionment 
or in the absence of the formula-driven basis, obligations 
cannot occur.
    Mr. Porter. Dr. Callahan.
    Mr. Callahan. It would not occur in our system. We make 
sure that, unless we have an actual apportionment, we do not 
spend the money.
    Dr. Smith. It won't occur with the discretionary funds in 
our system. It is conceivable the mandatory student loan 
programs could incur obligations before an apportionment.
    Mr. Porter. All right. Mr. Dyer.
    Mr. Dyer. It would not occur under our system. We have a 
lot of interim controls, so it cannot happen.
    Mr. Boehne. It cannot occur in our system.
    Mr. Porter. Thank you all.

              CONTRACTING OUT OF ADMINISTRATIVE FUNCTIONS

    Dr. Callahan, as you know, we included in last year's 
committee report a request for information on competition 
between the Program Support Center and the private sector. 
There have been several bills introduced into the last Congress 
having to do with this matter. When the Program Support Center 
administers an activity, payroll, financial services, drug 
purchasing, et cetera, does it exclusively use Federal 
employees? What contract resources are used, if any? How do the 
other departments and agencies usecontract resources to carry 
out these administrative functions?
    Mr. Callahan. Some of the services that the Program Support 
Center provides are not done through Federal employees but are 
done through contract. For example, in administrative services, 
building security, are done through contractors. In some cases, 
administrative services are provided through Federal employees.
    Another part of our component, for example, is the Federal 
Occupational Health service, which is related to the Program 
Support Center. They have I think 20-some odd full-time Federal 
employees and 1,200 contractors. We do use not only in the 
support center but throughout the Department quite a number of 
contractors.
    Mr. Porter. All right. Ms. Lattimore.
    Ms. Lattimore. In the administrative arena, we augment our 
Federal workforce through contractors, mainly in the area of 
building security and information technology.
    Mr. Porter. All right. Dr. Smith.
    Dr. Smith. A very similar answer to the Labor Department. 
We augment our workforce to some extent through some things 
like building security or some of the building activities but 
also in information technology and in a large number of 
activities in the student financial aid organization.

                        USING CONTRACT RESOURCES

    Mr. Dyer. We use them pretty similarly to everybody else--
custodial service, guard, security, information technology 
services, purchases. Also, for our health units, we will 
contract out for nursing services. Also, for paying our payroll 
and the management of that, we use the Department of the 
Interior, Bureau of Reclamation.
    Mr. Boehne. Very similar to the others. We use contractual 
services for building security, the cleaning services and other 
functions like that. We also use it to supplement our data 
processing efforts, where we go to specific contractors to help 
us with such major projects as our frame relay.

                        TIMING OF APPORTIONMENTS

    Mr. Porter. This is the final question, for each of you. As 
I understand it, OMB apportions most accounts on a quarterly 
basis. It is also my understanding the percentage of funding 
allocated by quarter remains unchanged from year to year. What 
useful purpose, from your perspective, is achieved by these 
yearly apportionments, and would it not make sense and reduce 
workloads to have permanent apportionments when the quarterly 
allocations do not change?
    Ms. Lattimore. Given the recent increased scrutiny we are 
paying to our internal processes for apportionment, it probably 
would not reduce our workload at all if we did not have to do 
it because of the quarterly measures we put in place in our own 
system. It would have a negligible effect on us.
    Mr. Callahan. It would have a relatively negligible effect 
on HHS, but there are some areas with regard to block grants 
and I think some NIH funding where we need a bit more 
flexibility.
    Dr. Smith. We have quarterly apportionments only for our 
administrative funds. We don't have them for program funds. 
They come once a year. Ideally we would prefer annual 
apportionments.

                           OMB APPORTIONMENTS

    Mr. Dyer. OMB apportions our limitation on administrative 
expenses on an annual basis.
    Mr. Porter. All right. Mr. Boehne.
    Mr. Boehne. OMB apportions ours also on an annual basis.
    [The information follows:]

              Clarification Concerning RRB Apportionments

    Although apportioned annually, OMB distributes the 
administrative funds by quarter within the apportionment.

    Mr. Porter. All right. Thank you all for answering all of 
our questions very forthrightly. Thank you for the fine job you 
are doing. I think that the record speaks for itself, that 
great progress is being made in terms of efficient management 
and wise spending of Federal dollars. We thank you for the work 
you are doing.
    The subcommittee stands in recess until 2 p.m.
    [The following questions were submitted to be answered for 
the record:]

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                                         Wednesday, April 28, 1999.

                        INSPECTORS GENERAL PANEL

                               WITNESSES

CHARLES C. MASTEN, INSPECTOR GENERAL, U.S. DEPARTMENT OF LABOR
MICHAEL F. MANGANO, PRINCIPAL DEPUTY INSPECTOR GENERAL, U.S. DEPARTMENT 
    OF HEALTH AND HUMAN SERVICES
JOHN P. HIGGINS, JR., ACTING INSPECTOR GENERAL, U.S. DEPARTMENT OF 
    EDUCATION
JAMES G. HUSE, JR., ACTING INSPECTOR GENERAL, SOCIAL SECURITY 
    ADMINISTRATION
MARTIN J. DICKMAN, INSPECTOR GENERAL, RAILROAD RETIREMENT BOARD

                       Introduction of Witnesses

    Mr. Miller. Good morning. Mr. Porter will be here shortly, 
and they have asked if I would go ahead and begin the session 
this morning.
    So we have with us the Inspectors General panel. I have 
been looking forward to this one, too. We will let whatever 
order you all would like to go in.
    We will start with Mr. Masten. If Mr. Masten would begin.
    Mr. Masten. Good morning, Mr. Chairman and members of the 
subcommittee. Thank you for inviting me to testify before you 
in my capacity as Inspector General of the U.S. Department of 
Labor.

                         FY 2000 Budget Request

    I am pleased to appear before you today to discuss our 
fiscal year 2000 appropriations request and proposed 
activities. I will summarize my full statement and ask that it 
be entered into the record in its entirety.
    The OIG fiscal year budget requests total $55,496,000 and 
445 full-time equivalent positions, also referred to as FTEs. 
This includes $5,250,000 and 22 FTEs to carry out four 
initiatives. Also included in this request is a modest increase 
to replace obsolete computer equipment.
    My full statement details the types of activities that we 
propose to fund in fiscal year 2000, including areas where we 
plan to increase our attention.

                           FY 2000 Priorities

    Mr. Chairman, in fiscal year 2000, we will focus our 
program activities on audits, investigations and evaluations 
that will provide quality information regarding the 
effectiveness, efficiency and integrity of key programs and 
operations. Our primary goal is to ensure that the information 
provided to DOL and Congress will be useful in their management 
or oversight of the Department. Our proposal is to carry out 
activities and special initiatives in the areas of departmental 
management, employment and training, occupational safety and 
health, workers benefit, and labor racketeering.

                        DEPARTMENTAL MANAGEMENT

    From a departmental management perspective, we will need to 
increase our audit attention in the areas of financial 
management and GPRA performance systems and data. This includes 
expanding the scope of the annual financial statement audit to 
assess DOL's compliance with the new cost accounting standards. 
We will also provide oversight of the work conducted by 
independent public accountants under the Single Audit Act.
    With respect to GPRA, we will provide audit services and 
assistance to the Department to help ensure that the data 
systems produce timely, accurate and meaningful information on 
the results and full costs of Federal programs and activities. 
In order to accomplish the additional financial management and 
GPRA work, our budget proposes an increase of $2,500,000 and 
seven FTE.

                        EMPLOYMENT AND TRAINING

    To enhance performance and accountability of employment and 
training programs, we will focus our resources on the 
Department's effectiveness in implementing two major components 
of the Nation's job training systems: the Welfare-to-Work 
program, a key component of welfare reform, and the Workforce 
Investment Act, which replaces the Job Training Partnership Act 
as the Nation's major job training program.
    In the areas of safety, health and workplace standards, we 
plan to evaluate the effectiveness of certain aspects of mine 
safety and health enforcement and continue our focus on the 
integrity of those individuals administering DOL's safety and 
health programs.

                            WORKER BENEFITS

    In the worker benefits area, we plan to increase our 
attention to weaknesses in the Unemployment Insurance Program, 
which provides economic security to workers and their families 
who lose their jobs through no fault of their own. Over the 
past few years, we have identified numerous weaknesses that 
affect the integrity of this multibillion dollar program and 
which result in substantial losses to the UI Trust Fund.
    To address these integrity issues, we are proposing an 
increase of $1,250,000 and eight FTEs to conduct a 
comprehensive, nationwide UI integrity initiative. Through this 
initiative, we will conduct high-impact criminal investigations 
to target and investigate schemes used to defraud the UI 
program, conduct audits to identify and correct systemic 
weaknesses and provide fraud detection and investigative 
training to State government personnel.

                     OIG LABOR RACKETEERING PROGRAM

    In carrying out the OIG Labor Racketeering Program, we will 
give priority to organized crime influence or manipulation of 
labor unions, union-affiliated employee benefit plans, and 
labor-management relations. In particular, we plan to increase 
our work in the pension arena, focusing on selected service 
providers to pension plans. To this end, our budget includes a 
proposed increase of $1,500,000 and seven FTE to carry out a 
proactive investigative probe in this area.

                          CROSS-CUTTING ISSUES

    Mr. Chairman, in my full statement I also discuss concerns 
related to selected program issues that cut across the various 
OIGs under this appropriation.

                          MONETARY RECOVERIES

    Finally, I would like to update you on the issue of 
monetary recoveries resulting from our work. We recently 
received, for the first time, a report on recoveries obtained 
from criminal cases of the Department of Labor. We have 
analyzed the data and met with DOJ about establishing a system 
to identify those recoveries that pertain to our efforts. We 
are continuing to work with them to this end so that we may be 
even more responsive to the subcommittee's request in the 
future.
    Mr. Chairman, this concludes my prepared statement. I would 
like to thank you for inviting me to appear today, and I would 
be glad to answer any questions you or any member may have.
    Mr. Miller. Thank you.
    [The statement of Mr. Masten follows:]

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    Mr. Miller. Mr. Mangano.

                            FUNDING SOURCES

    Mr. Mangano. Thank you, Mr. Chairman, for this opportunity 
to present our fiscal year 2000 budget as well as discuss some 
of the work of our office.
    The HHS OIG is supported by two funding sources, primarily 
the Health Care Fraud and Abuse Control program, authorized by 
the Health Insurance Portability and Accountability Act, which 
funds all of our Medicare and Medicaid work. We would receive 
in the fiscal year 2000 between $110 million and $120 million 
from that funding source. Our discretionary request is for 
$31.5 million to cover all the work that we do in the programs 
other than Medicare and Medicaid at our Department. Thus, we 
would have about 78 percent of our time and resources devoted 
to Medicare and Medicaid and the other 22 percent to the other 
programs of the Department.

                        IMPROVEMENT IN MEDICARE

    As a bottom line, I can report to you today that our 
audits, investigations, and evaluations reveal that Medicare is 
not always a prudent purchaser of goods and services and has an 
inherent vulnerability to making improper payments, but we 
believe we are making some progress in this area. I am pleased 
to say that the heightened focus on fraud and abuse by HCFA, 
the Department of Justice, FBI, the Congress, and our office is 
beginning to produce substantial results.
    The recent third annual review of the Medicare improper 
payments showed a decrease of 45 percent from 1996 to 1998. 
That is, the number of improper payments went down from $23.2 
billion in 1996 to $12.6 billion in 1998, just this past year. 
That is encouraging news, but the loss is still too great.

                                ACTIVITIES

    The work of our office can be categorized in one of two 
ways, either detecting and correcting fraud, waste and abuse 
where it exists or preventing its future occurrence. We believe 
we have been successful in doing both of those in the last 
fiscal year.
    With regard to detecting and correcting fraud and abuse, we 
achieved over 261 criminal convictions, 927 civil actions. In 
addition, we recorded over $515 million in investigative 
receivables and $146 million in audit disallowances.
    On the prevention side, our recommendations that the 
Congress and Administration have implemented into law have 
resulted in $10.9 billion in savings to the taxpayers, bringing 
our total monetary accomplishments for the last year to $11.6 
billion.

                          VOLUNTARY COMPLIANCE

    The cornerstone of our prevention effort, however, is the 
development of voluntary compliance program guidance to help 
health care providers bill appropriately the first time. We 
have worked with industry to issue voluntary guidance for 
clinical laboratories, hospitals, home health aid agencies and 
third party billers. We are also working right now with the 
nursing home and durable medical equipment industry to come up 
with this voluntary compliance guidance.

                              PARTNERSHIP

    I want to make one thing clear about the accomplishments of 
our office. Many organizations contribute towards the success I 
am reporting here this morning. Our standard approach is to 
work together with the operating agencies of our department, 
other law enforcement agencies, State and local government, the 
Congress, and the public and private sectors. It is the 
combined efforts of all of these groups that produce the 
results that we have talked about.

                            1998 INITIATIVES

    I want to conclude by just mentioning three initiatives 
that our office was involved in last year. The first is our 
continuing effort to help the Department achieve full financial 
accountability. Our audit of the Department's FY 1998 financial 
statement was qualified, reducing the number of exceptions to 
just two now: first, the continuing problems with the Medicare 
contractor accounts receivable and failures of certain 
operating divisions to prepare auditable accounting records.
    Second, we have an ongoing review of the Department's level 
of readiness to become Y2K compliant. Medicare is especially 
vulnerable, given the number of contractors and the close to 
one billion claims they have to pay each year.
    Finally, child support enforcement is an area we are 
devoting significant resources to. It is a Federal offense for 
a non-custodial parent to cross a State line in order to avoid 
paying child support. Since 1995, we have opened up 650 cases, 
arrested 159 subjects, with the result that 105 individuals 
have been ordered by the courts to repay their child support 
enforcement delinquent payments; and over $7.5 million in 
delinquency payments have been ordered by those courts.
    We have recently established with the Office of Child 
Support Enforcement, State and local government, FBI, 
Department of Justice an interjurisdictional interagency task 
force located right now in Illinois, Michigan and Ohio to deal 
with the most severe cases of absent parents refusing to pay 
their lawfully required child support enforcement payments.
    We have also launched a number of audits and evaluations 
looking for better ways to establish paternity identification, 
review and adjust child support orders, and ensure medical 
support coverage.
    Mr. Chairman, that completes my summary. I would be happy 
to answer any questions at the appropriate time.
    [The statement of Mr. Mangano follows:]

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                           Opening Statement

    Mr. Higgins. Mr. Chairman, Mr. Miller, thank you for the 
opportunity to discuss our Fiscal Year 2000 budget request to 
support salaries and expenses for the Department of Education's 
Office of Inspector General (OIG).
    I would like to submit my statement for the record and 
present a short summary of it for the Committee.
    Several years ago, the OIG made a strategic decision to 
change the focus of its work from primarily compliance-based 
auditing and investigating individual recipients, to work which 
identifies opportunities to improve the Department's programs 
and operations and which targets more complex institutional 
fraud. The results of that decision appear in our recent 
accomplishments.
    In the operations improvement area, we were able, with a 
combination of a specialized core of auditors and contractors, 
to provide the Department with a number of timely reviews of 
its information systems technology, financial systems and 
controls and student financial assistance information systems. 
Much of this work centered on ``front-end'' issues to assist ED 
in administering its programs and make its systems and millions 
of dollars less vulnerable to fraud, waste and abuse.
    Other examples of our program improvement activity were our 
efforts to assist in the reauthorization of the Higher 
Education Act (HEA) and the Elementary and Secondary Education 
Act (ESEA).In both instances, the OIG conducted audits over 
several years to identify issues and to develop and support 
recommendations for improving the programs. For HEA last October, 
Congress accepted a number of the proposals we made.
    While Congress is just beginning the reauthorization of 
ESEA, some of our recommendations were used in the recently 
enacted Ed-Flex bill.

                            ACCOMPLISHMENTS

    We also had some significant successes in our due diligence 
in student financial aid consultant investigations.
    In the past year, in one due diligence case, a loan 
servicer paid restitution of $28 million to the Department of 
Education and a $2 million fine to the Department of Justice.
    In a more recent due diligence case, a U.S. attorney filed 
a civil lawsuit earlier this month based on our investigation 
alleging that a bank submitted thousands of fraudulent 
insurance claims for defaulted student loans resulting in 
almost $12 million worth of payments.
    We are presently involved in 10 major fraud cases involving 
fraud by student financial aid consultants. In one case, an 
individual self-employed as a student financial aid consultant 
helped approximately 700 clients to use falsified financial 
documents to obtain financial aid funds. Thus far, the 
Government's recovered $1.6 million from this case.

                        FISCAL YEAR 2000 BUDGET

    Let me turn now to Fiscal Year 2000. The budget request for 
OIG is for $34 million, an increase of $2.7 million above the 
1999 appropriation. The request supports 285 positions, the 
same staffing level as 1999, and provides contractor support 
which will allow the OIG to accomplish a number of initiatives 
to support improvement in ED programs and operations.
    Rather than try to discuss all these activities today, I 
would like to use my time to focus on those that require 
additional contract funds for technical expertise to supplement 
our staff.
    To operate in today's complex and diverse computer 
environment, the OIG is developing a special ADP staff to guide 
our ADP-related functions. Much of the effort being planned is 
to meet requests by its senior ED officials for greater OIG 
presence as ED designs and implements its information systems. 
As you know, it is much more efficient and effective to 
identify and correct problems during the design stage than to 
wait until after the systems become operational and cause huge 
losses.
    This work, however, is very time sensitive and requires 
more resources than we have. Government salaries are not 
competitive for the skills we need, and developing our in-house 
skills will take time. The most effective means to acquire the 
additional skills we need in time for it to be useful is to 
contract for it.
    The second area we need additional contract funds is for 
the audit of the Department's Fiscal Year 1999 financial 
statement. The estimated cost of the audit has increased 
significantly because we had to expand the scope of the work to 
include a separate audit of the financial statements of the new 
performance-based organization managing the SFA programs. We 
have considered conducting the audit ourselves. However, we 
concluded that it is more efficient to contract for it.
    Let me conclude by saying that the OIG has set an 
aggressive agenda for itself. The agenda is based on: our 
statutory responsibilities; use of our resources in the most 
effective way; and our desire to provide high-quality results 
to Congress and the Administration.
    Mr. Chairman, Mr. Miller, this concludes my statement. I 
would be happy to respond to any questions.
    [The statement of Mr. Higgins follows:]

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    Mr. Huse. Mr. Chairman and Mr. Miller, let me begin by 
thanking this subcommittee for its support of our anti-fraud 
efforts and for the opportunity to discuss the Social Security 
Administration's Office of the Inspector General fiscal year 
2000 budget request.
    You have been provided a copy of my statement for the 
record, and today I would like to briefly discuss that.
    With this subcommittee's support and the FTE positions 
provided by the Commissioner of Social Security, we have 
increased our investigative force and audit productivity which, 
in turn, has resulted in an increase in our monetary 
accomplishments.
    The OIG's fiscal year 2000 budget requests $66,000,000 and 
536 FTE positions. This represents a $10,000,000 increase in 
the amount that was authorized for fiscal year 1999 and 74 
additional FTE.
    These resources will allow us to absorb the funding for the 
SSA fraud Hotline and expand two of our investigative 
initiatives, the Cooperative Disability Investigation teams and 
the fugitive felon project.
    The Cooperative Disability Investigation teams focus on 
preventing ineligible applicants from improperly receiving 
disability benefits at the application stage. In fiscal year 
1999, the initial start-up teams documented $2,900,000 in SSA 
program savings. These figures are a fraction of what we expect 
to report as we initiate more of these teams nationwide.
    Our fugitive felon project identifies supplemental security 
income recipients in fugitive status who are ineligible for 
SSI. Beginning in June, 1999, we will conduct computer matches 
of SSI databases against major law enforcement databases. We 
anticipate this will result in considerable savings through 
termination of benefits.
    Although we will be dedicating most of our resources to 
investigative operations, there are several crosscutting issues 
that affect both our audit and investigative work. I believe 
these issues also affect the other Inspectors General 
testifying here today.
    First, Social Security number misuse accounts for almost 40 
percent of the allegations we receive and 72 percent of our 
criminal convictions. The most common type of SSN misuse is 
identity fraud. Identity fraud affects the entire IG community 
as it encompasses a host of crimes ranging from the 
unauthorized use of a credit card to the comprehensive takeover 
of another person's identity.
    Second, within the Government Performance and Results Act 
context, we address such issues as the accuracy of benefit 
payments. In fiscal year 1999 we accelerated our hiring of 
audit professionals to specifically focus on GPRA.
    Third, it is critical that IGs ensure that their agencies 
have appropriate safeguards and security measures in place to 
reduce the vulnerabilities to unauthorized access and use of 
their information systems. A common concern for all IGs today 
is the daunting challenge of hiring competent technical staff 
since we are competing with the private sector for the best 
qualified IG professionals.
    Fourth, the enactment of statutory law enforcement 
authority for special agents will not in reality confer any new 
authority. It will, however, eliminate a costly and burdensome 
administrative process for the OIGs and the Department of 
Justice and clarify our law enforcement authority for OIG 
special agents.
    Finally, we are working with SSA, the Department of 
Justice, and this subcommittee to establish new and to modify 
existing systems to better track the status of our 
recommendations and investigative collections.
    I would like to thank the committee for its continued 
support. I am sure that with the approval of our fiscal year 
2000 budget request, this OIG will continue to garner 
significant and timely investigative and audit outcomes to the 
Congress.

                           OPENING STATEMENT

    Mr. Dickman. Good morning, Mr. Chairman and Mr. Miller. My 
name is Martin Dickman, and I am the Inspector General of the 
Railroad Retirement Board. I am here to ask your support for 
our fiscal year 2000 budget request of $5,400,000 and 60 FTEs. 
I wish to submit my testimony for the record and summarize our 
priorities for next year.

                            OFFICE OF AUDIT

    We will continue to audit the RRB's fiscal year 1999 
financial statements and perform the preliminary work for the 
2000 financial statements.
    We will continue to monitor the RRB's actions to meet the 
requirements of the Government Performance and Results Act. We 
will evaluate agency performance measures and targets and data 
used for measurement to ensure its reliability. We will also 
continue to focus our audits on those programs and operational 
issues that will assist us in evaluating the RRB's progress in 
meeting its strategic goals.
    We will work closely with the agency's Chief Information 
Officer and other managers as the agency expands its electronic 
records systems. We will review the statement of work and 
testing results from an outside firm that will conduct an 
independent verification and validation of selected mission-
critical systems to ensure Year 2000 Compliance. We will also 
conduct oversight activities Concerning the resolution of any 
Year 2000 Compliance issues that are identified after January 
1, 2000.
    We will evaluate agency efforts in using new electronic 
deposit systems to verify the accuracy and timeliness of 
railroad payroll taxes.
    We will continue our evaluations of the agency's investment 
committee and its practices and policies in managing the RRB 
trust funds which exceed $17,000,000,000.
    We will conduct audits relating to benefit payment accuracy 
and provide management with recommendations to reduce the 
number of administrative and adjudicative errors.
    We will monitor the agency's debt collection activities as 
outstanding receivables continue to remain high at $58,400,000.

                        OFFICE OF INVESTIGATIONS

    In fiscal year 2000, our Office of Investigations will 
focus its resources on the cases with the highest fraud losses. 
The current caseload totals about 800 active investigations 
with fraud losses of approximately $7,800,000.
    We will continue our investigations of railroad employers 
and unions which submit fraudulent reports to the RRB and do 
not submit payroll contributions as required.
    We will also continue to collaborate with other inspectors 
general and law enforcement entities. We will work closely with 
agency managers to ensure all fraud matters are appropriately 
referred to our office.
    This concludes my remarks, Mr. Chairman. I will be happy to 
answer any questions of you or other members of the committee.
    [The statements of Mr. Huse and Mr. Dickman follows:]

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    Mr. Porter [presiding]. Thank you all for your statements.
    I am sure Mr. Miller welcomed you. Let me add my welcome 
and apologize for being late returning from the vote.
    I also want to apologize to each of you for the need to 
reschedule this hearing. We had it originally scheduled several 
weeks ago and, as all of you know, Congress's schedule and the 
Committee's schedule often interfere with the Subcommittee's 
work, and we had to postpone that. I apologize to each of you 
for that. We do the best that we can. We thank you for being 
here this morning.
    Let me ask, two of you are acting, Mr. Higgins and Mr. 
Huse. Tell us the status of an appointment in the Department 
or--not the Department but in your full position?

                         STATUS OF APPOINTMENT

    Mr. Higgins. Actually, there has been a person nominated, 
and today on the Senate side the Health, Education, Labor, and 
Pensions Committee, is having an executive meeting to decide 
whether to send it to the Governmental Affairs Committee. It 
was scheduled for this morning at 9:30.
    Mr. Porter. Mr. Huse.
    Mr. Huse. In our case, the White House has indicated its 
intent to nominate me, and I am in the process of being vetted, 
but the President has not sent my formal nomination foward.
    Mr. Porter. Thank you both.

                        CHRONIC FATIGUE SYNDROME

    Mr. Mangano, for the record can you--or perhaps right now--
can you tell me when you will have a report on the issue of CDC 
spending on chronic fatigue syndrome?
    Mr. Mangano. Yes. We issued a draft report at the end of 
March to the Centers for Disease Control. We are awaiting their 
comments. They have told us that they will be delivered this 
week.
    If they are delivered this week, we should be able to turn 
the report out in final, I would say, 2 to 3 weeks from today.

                           YEAR 2000 PROBLEM

    Mr. Porter. Thank you.
    Several of you referred to the Y2K issue. Some others 
didn't. I wonder if each of you would now provide, and we will 
begin with Mr. Masten, a brief summary and then, for the 
record, a longer response on the status of your department's or 
agency's preparations for Y2K, particularly with respect to SSA 
and HHS. Could you also include your views as to how prepared 
State and local agencies are that administer Federal programs 
for the transition to the new millennium? Let's have a brief 
update, though, by each of you.
    Mr. Masten. Mr. Chairman, for the Department of Labor, they 
have gone on record for having the 61 mission-critical systems 
Y2K compliant as of the 31st of March. They are in the process 
of doing the independent verification and validation now.
    That area is something that we are very concerned about 
because it is being done through a desk review process. We are 
concerned with that and will spend a great deal of time and 
effort to make sure that that process is, in fact, an 
independent verification validation that those systems are, 
compliant. And I believe we are looking at getting a full 
report on that in June of this year.
    Mr. Porter. Excuse me, but are there any contractors that 
this would work into? In other words, are there others outside 
the Department that may cause problems if they are not 
compliant?
    Mr. Masten. All of the States and three territories would 
potentially be a problem. But, based on the report they have 
given us now, they are in fact compliant. The independent 
verification and validation that I am talking about, is a 
process that needs to continue below the Federal level. We will 
be vulnerable, if those systems are not in fact compliant--we 
will have a problem. We are still concerned about that area.

                             Y2K READINESS

    Mr. Mangano. With regard to our office and Department, we 
have been overseeing the Y2K compliance of all the agencies of 
the Department, and several of them are actually now fully in 
compliance, including the Administration for Children and 
Families.
    The primary difficulty area in our Department is going to 
be in the Medicare program. We have conducted over 200 
different site visits of the program across the country. We can 
separate the problem out in terms of the Medicare program 
within the Federal structure being Y2K compliant and in in 
terms of the contractors out in the field being compliant. 
Medicare has been going through the millions of lines of data 
that they need to make corrections on and are making very good 
progress on that. We believe they are almost fully compliant 
right now on that side of it.
    The area that has attracted most of the attention has been 
the contractors themselves. Seventy-five different contractors 
need to come in compliance because they issue over a billion 
claims payments each year.
    We believe that they are making steady progress on that. 
There are still a few obstacles to overcome. We are pretty 
hopeful they are going to make it and that they are going to 
make it this year to be compliant.
    There are a couple of things that would be important for 
you to know. On April 5, Medicare ran a test asking all their 
providers to submit their claims using the full eight digits, 
which would be a good identification as to whether they are 
going to be compliant or not; and I can tell you, as of 
yesterday, the rates ran something like this: 90 percent of the 
claimsunder part A were in full compliance with that eight-
digit capability, and 99 percent of the part B claims were in 
compliance. That is a pretty good indication that we are getting close 
to full compliance by the contractors themselves.
    One other bit of work that I might mention is that the 
Health Care Financing Administration asked us to take a review 
looking at the health care providers themselves, the hospitals, 
physicians, home health agencies and the like, to see how 
compliant they were. We did a survey of them in which we asked 
them to respond to a series of questions that would give us an 
indication where they were compliant. Those questions were 
answered at the beginning of January, and we had at that point 
half the hospitals saying they were in full compliance already 
and would be in compliance by the end of the year. Physicians 
were a little lower, and home health agencies a little lower as 
well.
    I think the best indication to you right now is the 
compliance rate that HCFA is finding in this April experiment, 
which is very encouraging.
    Mr. Higgins. In the Department of Education, we have been 
monitoring Y2K preparations very closely at the request of the 
Acting Deputy Secretary. He has asked us to take an independent 
look at it as well, as he is monitoring it very closely. The 
Department reported that all 14 of its critical systems are 
fully implemented and also its 161 important systems are fully 
implemented. During the independent verification and validation 
testing, we looked at the documentation as well as did site 
visits, and we believe that they are in compliance.
    There are a couple of minor issues that surround--off-the-
shelf packages that the Department is tracking, and they are 
taking action on them.
    There are four areas that we are still monitoring, and the 
first is internal testing within the Department. The majority 
of that has been done, but some remains to be done.
    Second, we are concerned about the trading partners. The 
Department has set up a plan to have testing windows for our 
partners to come in and test with us.
    Third, there is a draft contingency plan for the whole 
Department that went to OMB in March. The final plan should be 
finalized at the end of June.
    And then the last area that we are monitoring is the 
functionality of any new systems to make sure that they also 
will be tested.
    Mr. Huse. Mr. Chairman, as you probably know, the Social 
Security Administration has led the Federal Government in Y2K 
compliance; and, as of January 31st of this year, the automated 
systems for all of our State disability determination services 
were year 2000 compliant also.
    We in the Inspector General's Office have relied primarily 
on the General Accounting Office to look at Social Security's 
mission-critical systems Y2K compliance, since it represents 
such huge outlays of the Federal Government. In terms of 
mission-critical systems, SSA is prepared.
    We have looked instead at the next level of Y2K compliance, 
which is non-mission-critical systems, although that probably 
is not the appropriate term since many of these systems are 
really what govern the ancillary functions of government and 
the running of the actual bureaucracies themselves, 
particularly the commercial software that is used in these 
systems. We expect to issue a draft report on that shortly.
    Mr. Dickman. Mr. Chairman, at the Railroad Retirement Board 
since the early part of this year, all mission-critical systems 
have been converted. That includes the mainframe systems and 
all PCs. Also in place are bridge systems for any interactions 
with State and local governments or any other system that is 
not Y2K compliant.
    Mr. Porter. Thank you, gentleman.
    Mr. Miller.

                       MEDICARE IMPROPER PAYMENTS

    Mr. Miller. Thank you, Mr. Chairman.
    I thank you all for being here. You all have one of the 
most important jobs in government, to make sure we try to do 
the best job we can managing the taxpayers of this country.
    Let me raise some questions. There has been a lot of 
concern with HHS, though I have questions for the entire panel. 
There is no question we all want to get rid of waste, fraud and 
abuse. We hear that phrase all the time. The problem is when 
innocent people get caught up in this and how do we avoid that.
    For example, you say that you have cut--you call it 
improper payment rate from $23,000,000,000 down to 
$12,000,000,000. Obviously that is a good sign. How much of 
that would be--and of the remaining 12, how much of that is 
mistakes versus the fraudulent criminal type stuff?
    Mr. Mangano. We are very clear in pointing out in the 
report we make each year and the financial statement's error 
rate that that includes everything from an innocent mistake to 
fraudulent activity. There is no way of determining which one. 
It is not in the scope of our interest when we do this review 
to determine whether it is fraud or not because that would 
require in those cases where we suspected it was fraud that we 
pursue a case. It is a 2 or 3-year process before that kind of 
thing is adjudicated. The improper payment rate is everything 
from an innocent mistake to fraud.
    There are some cases of fraud that we do not look for when 
we do that improper payment review. For example, that review is 
basically a medical records review. We get into the medical 
records and see if they support the allegations. So a provider 
who had a pristine medical record which may be completely 
fictitious would pass our test in doing that improper payment 
test. Kickbacks also would not be included in that.
    So while that number includes everything from innocent 
mistakes to fraud, it does not include other kinds of fraud 
that could be committed.

                        PUBLIC WAR AGAINST FRAUD

    Mr. Miller. Local physicians back in my area in Florida 
where we have lots of retirees, it is an area of a lot of small 
medical practices. HMOs are not huge in my area because--mainly 
of retirees, so Medicare is a big issue, Sarasota, Bradenton, 
Florida area. They are concerned that they are being----
    Let me read one of the questions I was asked. How can HCFA 
justify a public war against fraud and abuse, perpetrating a 
public smear campaign against physicians, driving a wedge 
between physicians and their Medicare patients to attack a 
speculative risk crisis which, due to their own complex, myriad 
of regulations, even they admit cannot be quantified? How would 
you answer that question?
    Mr. Mangano. I think I know what they are referring to. 
There was a campaign that was a one-day blitz in which HCFA, 
our office, the attorney general and the AARP put on training 
sessions across the country to bring senior citizens from the 
Senior Citizen Network and AARP to train them on how to review 
their bills.
    What the basis of that campaign was is as follows: We still 
have over $12 billion being lost through improper payments. One 
group of persons who could be very helpful in curbing that are 
the senior citizens who are in Medicare today.
    That campaign was to ask the senior citizens to review 
their bills and take certain steps if they saw something wrong 
in their bills. For example, a service that they didn't get or 
a home health visit that they didn't get that was being billed 
to the Medicare program, we asked them to go through a three-
step process.
    The first step was to go back to their Medicare provider, 
the physician or the home health agency or the hospital, and 
try to resolve the problem right there. That is what we think 
should happen. They should go back to their provider. If it is 
not resolved there, if they think something is still awry, go 
to the Medicare contractor and see if they can resolve it 
there.
    If after taking those two steps they believe a problem has 
occurred that is potentially fraudulent, they should come to 
us. Call our hotline, and let us know about it.
    We are basically asking senior citizens to do no more than 
they do when they get their Visa bill each month. Review it. If 
there is a problem, call their provider.

                        PHYSICIAN ERROR V. FRAUD

    Mr. Miller. I don't disagree with you. From what I have 
read in the media, it has been a smear campaign against 
physicians, and you are creating this wedge. Every patient is 
part of the--going to bring the FBI in or the threat, and it 
can create a barrier or problem between physician and patient. 
I am just relating some of the comments that maybe it has gone 
overboard to some extent.
    There is no question we want to get rid of the fraud. If 
someone makes a mistake, is that considered fraudulent just 
because it is a mistake?
    Mr. Mangano. Oh, no, of course not. In order for it to be a 
fraud, there has to be an intention.

                           SEIZURE OF RECORDS

    Mr. Miller. I had a physician back in my area this one 
meeting I attended talk about how--it may have been FBI that 
came in. They were armed and scared the heck out of all of his 
office staff, seized records; and he had to pay thousands of 
dollars to get copies of the records in order to continue 
practicing medicine. I don't know the status of it. It was 
months ago and all that. In effect, he would have to shut down 
his practice unless he was willing to pay thousands of dollars 
to have records copied in order to continue. Is that normal?
    Mr. Mangano. That is an FBI case, you say?
    Mr. Miller. I don't know. I am not sure who it was.
    Mr. Mangano. There can be times----

                              ARMED AGENTS

    Mr. Miller. Armed people. You don't have armed people going 
into doctor's offices.
    Mr. Mangano. If there is a search warrant or there is an 
arrest, yes, our agents are armed. I am very happy to say arms 
have never been drawn by any of our agents, but you do need to 
control the situation. You do need to protect yourself. Records 
are taken----

                            SEARCH WARRANTS

    Mr. Miller. Small town, we are not used to that.
    Mr. Mangano. If people voluntarily hand over records that 
we have asked for, there is never a need for a search warrant. 
If they don't, then there is a need for a search warrant.
    Or you might find a situation where we have allegations 
that are credible and that a U.S. judge magistrate agrees that 
a crime has a good possibility of having been committed here 
will issue a search warrant and we will go in and seize the 
records to determine whether that is the case or not.

                          STATISTICAL SAMPLING

    Mr. Miller. How do you use--I am a former statistics 
professor. You come in and look at 15 records. You see five 
mistakes in them. That means one-third of all records are----
    Mr. Mangano. We sample records primarily through our Office 
of Audit Services, and our goal is to get either a 90 or 95 
percent confidence level on the sampling. So, depending on the 
number of records that are there, the sampling plan would 
change.
    Mr. Miller. How large of a sample do you normally take when 
you go to an audit?
    Mr. Mangano. I can't give you an answer to that, because 
every audit is so different. An audit of an individual practice 
is different than an audit of large hospital systems.
    Mr. Miller. Let's say an individual office I am talking 
about.
    Mr. Mangano. Usually about a hundred records.
    Mr. Miller. You would take a hundred records.
    Mr. Mangano. That would be usual in most of the audits that 
we do of a single provider. Now, there are certain cases like--
we did a review of home health. We just did a recent survey, 
one that I included in our testimony this morning, on partial 
hospitalization services. We were doing a five-State review, 
and we drew a national random sample of 250 claims and then 
went in and reviewed every service that was included on each 
one of the claims. In that particular review I believe there 
were 5,000 to 6,000 individual services.
    Mr. Porter. Mr. Miller, continue for as long as you wish.

                        TARGETING OF PHYSICIANS

    Mr. Miller. The physicians are really scared out there. 
There has been this fear and creating a real barrier between 
the patients--they are sincere about this. These are not huge 
medical practices, and they feel they are being individually 
targeted because these are doctors with one or two physicians 
in the group. In all honesty, they probably have a better 
chance of making a mistake than a large practice with a hundred 
physicians where you have a large billing staff.
    Mr. Mangano. We have received lots of letters like that 
ourselves. We are doing everything we possibly can to assure 
them that physicians are not targets of our investigations. 
Only where it is warranted will we investigate them. We are not 
interested in innocent billing mistakes or inadvertent billing 
mistakes.
    Let me give you a couple of statistics that may help, I 
hope, put you at ease on this. Last year we--investigations 
that we conducted resulted in convictions of only 12 physicians 
in the entire country. Now, there are 750,000 physicians in the 
Medicare program. Criminal convictions, 12 last year.
    On the civil side, where we had 927 civil actions, only 42 
were against physician practices for defrauding the government 
of the United States.
    We have asked each of the groups when they write us letters 
to say they believe they have been targeted, to give us the 
evidence of that. Present us a case that we have gone in either 
through our audit or our investigations where you think we have 
run amok. So far, we haven't received one response to that.
    We are delighted to talk with the groups. We meet with them 
all the time.

                     MEETING WITH PHYSICIANS GROUPS

    Mr. Miller. So you do meet with the physician groups.
    Mr. Mangano. Absolutely. We look forward to--we go to their 
national conferences where they ask us to come speak. We meet 
with them individually. In the last year we met with 
representatives of the AMA maybe six times.
    Mr. Miller. Do you ever go to regional areas for a meeting? 
Because I got beat up on. I want someone to share it with me.
    Mr. Mangano. I think that people are caught up in a 
hysteria here that is just not founded.
    Mr. Miller. It has created the hysteria because of some of 
the media hype on this that everybody is going to be an 
informant or something like that. That has created a fear 
there.

                   LIMITED RESOURCES TO PURSUE FRAUD

    Mr. Mangano. We don't have an interest or the resources to 
consider every potential case of a billing mistake is a fraud. 
We just don't have it. Last year, the total numbers of criminal 
convictions that we achieved were 261. The total number of 
civil actions was a little over 900. We don't have the kind of 
resources that I believe that people think we do have to go out 
and prosecute. We are only prosecuting those instances where we 
believe there has been intentional fraud going on.

                       JOINT MEETING IN DISTRICT

    Mr. Miller. Could I get somebody from there to have a joint 
meeting with me with the medical community in my district?
    Mr. Mangano. Absolutely. Have your staff call our office, 
and we have an office in Florida. We have got several offices 
in Florida. We would be happy to meet with them.
    Mr. Miller. Okay. Let me switch to another issue for all of 
you, and that is a question of official time. Have you all done 
any investigations of official time, as far as anything to do 
with official time?
    Mr. Huse. We have.
    Mr. Miller. Would you describe it and if anyone else has 
done one?
    Mr. Huse. Am I speaking alone here?
    We did an audit on the use of official time at Social 
Security Administration last year. As you may know, the Social 
Security Administration probably has the largest union in the 
executive branch. The sum of our audit was that the Social 
Security Administration needed to establish a better mechanism 
to account for official time so that when it was in place we 
could come in and really audit what official time was used for. 
It was impossible to determine its use based on the system that 
was in place.
    Since then, the agency has established an automated system 
to account for official time use. We will probably be in a 
position to return and audit that to see how official time is 
used and what the cost benefit issues are in relation to the 
amount of time and the amount of funds that are spent.
    Mr. Miller. When you talk about official time, is 
partnership considered part of it?
    Mr. Huse. Partnership is different.
    Mr. Miller. Is that going to be quantifiable?
    Mr. Huse. We also did an evaluation of partnership and 
found that there was no quantifiable data there or at least 
none in terms of giving us any way to parse it out and make any 
sense of whether there are returns for the investment in terms 
of what partnership is. It is a difficult area for an audit 
application.
    Mr. Miller. Can you clearly differentiate between official 
time for union activities versus for partnership? Is it a clear 
defining line? Or is there a gray area there?
    Mr. Huse. There are gray areas. All labor relations issues 
have a little bit of gray attached, and it is a daunting 
prospect for inspectors general because you have to approach 
these in a manner so that you are not reflecting some bias 
against labor relations issues when you go into them.
    But, nevertheless, I think we could do some work on 
official time use if the system turns out to be robust and 
accounts for the time. For a partnership, I don't know--because 
it is willfully left rather amorphous.
    Mr. Miller. Anybody?

                   TIME AND ATTENDANCE INVESTIGATIONS

    Mr. Higgins. We generally do not investigate time and 
attendance abuse. We do however, if there are egregious cases. 
There have been criminal actions and disciplinary actions 
taken. But, generally, we refer it back to the appropriate 
manager for them to take action.
    Mr. Masten. As far as investigation, we have done the same 
as just described by Education. If we get an allegation of 
fraud involving the use of official time, we will investigate 
it. But to do an audit, we have not done it.
    Mr. Mangano. It would be pretty much the same with us. We 
wouldn't be looking generally at time and attendance except 
that there is a case of fraud going on or suspected.
    Mr. Dickman. I concur. The same thing at the Railroad 
Retirement Board.
    Mr. Miller. Mr. Chairman.
    Mr. Porter. Thank you, Mr. Miller.
    Mr. Higgins, I understand that your office has recently 
issued a report indicating the costs of the direct student loan 
program are higher than the guaranteed loan program. I also 
understand that the Department disagrees with this report. 
Could you summarize your findings and objections to the 
Department and your office's response to them?

                         COSTS OF LOAN PROGRAMS

    Mr. Higgins. We said that either program, based on the 
prevailing economic conditions, could be more expensive in any 
given year. I don't know that the Department disagrees with 
that. I don't think they do disagree with that.
    There are two costs involved in these programs. You have 
subsidy costs, which are calculated based on credit reform; 
which is where the difference could occur based on the economic 
conditions. Then you have the administrative costs of the 
programs where we say that the Department could gain 
efficiencies in the way it does business for both programs. But 
we don't take a position on which program is more expensive in 
any given year.
    Mr. Porter. Has the Department responded to the 
administrative expenses suggestions that the OIG has spent?
    Mr. Higgins. Not specifically, but a lot of the 
inefficiencies we have identified were identified in previous 
audit reports which they have responded to. We made a 
comparison of the $13 that came from a Treasury study and the 
cost that we calculated was about $17. We think there are a lot 
of reasons for the inefficiencies, like the contracting process 
that we use and the lack of expertise there. There is a lack of 
management data, which affects the management of all the 
student aid programs, not just one program.
    Mr. Porter. Mr. Longanecker and Mr. Woods were here 
yesterday afternoon, and we discussed a lot of this directly. 
And, obviously, there are changes being made in terms of 
administration of the programs that undoubtedly you will look 
into further as time goes on.

                              PATH AUDITS

    Mr. Mangano, the path audit, what is the status? What is 
happening? That was a major subject, too, 1 year ago.
    Mr. Mangano. There are about 26 reviews that are under way 
right now. We have not started any new reviews to my 
recollection in probably the last 6 months to a year. So my 
guess is that, once those are completed, unless something 
causes us to change our mind, that would be the end of that 
review.
    Mr. Porter. And at the beginning, there were allegations 
that there were massive amounts of misbillings going on at 
academic medical centers. Is that what you have found in your 
subsequent audits?
    Mr. Mangano. I believe there are nine that have been 
completed. For about three of them, that was not the case; and 
for six of them there were substantial improper payments made.
    Mr. Porter. And you are getting cooperation by the 
institutions involved?
    Mr. Mangano. By and large, yes.
    Mr. Porter. Mr. Dickman, your testimony indicates that your 
office is concerned with the practices and policies of the 
Railroad Retirement Board Investment Committee. Can you 
describe this committee and how it operates? What are your 
concerns and how will allowing the Treasury Department to 
manage the funds resolve your concerns?

                          INVESTMENT COMMITTEE

    Mr. Dickman. Let me first state that, as far as allowing 
the Treasury Department to manage the funds, there was a 
recommendation--one recommendation--that I made I think mostly 
in frustration with what was going on with the Investment 
Committee.
    Basically, our concerns with the Investment Committee 
practices have been, number one, that the chief actuary is also 
the chief investment officer. That has recently been changed. 
The chief actuary is now a non-voting member of the Investment 
Committee. But a perusal of the Investment Committee minutes 
indicates that the actuary is really the main initiator of any 
investment strategy that is made by this committee.
    This conflict of interest of having the actuary also being 
the chief investment officer, whether in fact or not in fact, 
has been delineated not only by us but by Peat Marwick, the 
outside auditors performing the financial statement audit 
before we did it, and outside consultants hired by the Railroad 
Retirement Board itself. It still remains a concern to this 
office.
    Our concern, other than the conflict of interest, is the 
investment strategy and the lack of any expertise that the 
individuals on the committee have. I have, personally, a very 
conservative approach to investment practices based upon my 
past history as a member of the Chicago Board of Trade, being a 
trader and a broker for 19 years. I have personally a very 
conservative approach to investment.
    Looking at the investment strategy, I don't think it is 
really a strategy. The individual, the chief actuary, who is 
managing now $17,000,000,000 has no prior experience at all.
    Initially when I questioned him as to what his modus 
operandi was, well, he looked at the Wall Street Journal and 
used the Bloomberg Index, which was really kind of startlingto 
me. Because, in my years as a trader and broker, the Wall Street 
Journal was referred to as yesterday's news today. And the Bloomberg 
Index, while it might be an index that somewhat mirrors the portfolio 
of the Railroad Retirement Board, I don't think it is an accurate 
index. I think there might be other indexes that might be more accurate 
to use as a vehicle for investment policy and practices.
    Our real concern was the past history and what they 
continue to do towards creating capital gains. They have 
created capital gains of almost $1,000,000,000, and they have 
created these capital gains by selling off high-interest-rate 
bonds that have been accumulated over the years. I have 
questioned them as to this practice and why they have done it; 
and, to date, I have never received a logical explanation.
    When I initially questioned them, the Investment Committee 
had to go to an outside consultant, pay that individual $4,000 
for a four-page answer, which was kind of alarming to me if 
they could not themselves answer these four basic questions as 
to their policies and practices. They couldn't answer 
themselves but had to go to an outside consultant. It really 
raised some concerns for me.
    To maximize profits, obviously, is an objective, but to 
maximize profits at the expense down the road, as far as the 
rate of return that the investment is going to obtain, I don't 
think serves well the Railroad Retirement Board and the 
beneficiaries. Even though they have $17,000,000,000 in trust 
funds, they have an unfunded liability of some $30,000,000,000; 
and it will, as with the Social Security Trust Funds, go broke 
in 2025 or 2030, depending on the actuarial situations.
    There was no need to sell these high-interest-rate bonds 
that have been accumulated at 11 percent interest, 10 percent, 
7 percent, 9 percent, when they have a portfolio of par value 
specials which you could consider almost like cash. And if they 
wanted to lengthen the duration of the portfolio, instead of 
selling these high-interest-rate bonds and purchasing lower-
interest-rate bonds, they could keep these higher-interest-rate 
bonds and go to the par value special account which accounts 
for almost half of the $17,000,000,000, or a little less than 
half, and purchase whatever bonds they needed. But they didn't 
do that.
    So, in effect, they portray themselves by saying we created 
$1,000,000,000 in capital gains. In effect, if you did an 
analysis of that, and if they would have held on to those high-
interest-rate bonds until maturity and then purchased these 
other bonds from the par value specials, they really in effect, 
lost $300,000,000 in accumulated interest that they could have 
received over the life of these higher-interest-rate bonds.
    So those are the concerns that we have with the investment 
policy of the committee.
    Mr. Porter. Is it fair to say you are not getting the kind 
of cooperation in addressing this issue that you had hoped for?
    Mr. Dickman. In the past, we haven't; but in the present, 
we are.
    Mr. Porter. You are now.
    Mr. Dickman. We are now.
    [The following information was provided for the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Masten. I believe we can sometimes combine those, Mr. 
Chairman. We can use as an example the FECA legislation that 
was changed. A subject that was found guilty of defrauding that 
program would be incarcerated, but that person would still 
receive money while incarcerated, as a result of the way the 
legislation was on the books. We have convinced OWCP to put 
forth a recommendation to the legislation so that they can stop 
the payment. That is an example of funds being put to better 
use. You now can stop the payments for someone who has 
defrauded the program who is in jail. You have the funds to use 
otherwise. This is the reason that was combined.
    It doesn't happen in all cases, but that is an example of 
where funds put to better use and the legislative changes would 
be combined.

                       LEGISLATIVE RECOMMENDATION

    Mr. Porter. And then the second question, do other IG 
offices at the table include legislative recommendations in 
their calculations of funds put to better use?
    Mr. Mangano. We include the results of legislative and 
regulatory actions that been implemented by the Congress or the 
administration in the savings calculations that we do each 
year. Those recommendations that have been adopted and have 
been scored by the CBO for legislation and by the agency for 
regulations are included in it. We have been pretty successful 
over the years.
    This is anecdotal. About a year ago, Chairman Thomas of the 
Ways and Means Subcommittee on Health asked the GAO to do a 
review after they had completed action on the Balanced Budget 
Act and the Health Insurance Portability and Accountability 
Act. He was interested in knowing if they had acted on all the 
recommendations that GAO and our office had come up with in 
these areas. GAO produced a report from that, which basically 
verified the role of our recommendations toward those 
accomplishments.
    We were gratified at the results of that. But we think it 
is important to put that in there. The last comment I would 
make is that when we talk about the accomplishments of our 
office, in terms of dollars savings, particularly regarding 
legislative and regulatory proposals we couldn't do that 
without the help of the agencies, other law enforcement 
agencies, the Congress, and the Administration in general. All 
of them are involved in that process. And in no way would I 
ever stand before you and say it was our office alone that 
accomplished that.

                         FUNDING RECOMMENDATION

    Mr. Porter. Mr. Masten, the Department of Labor semiannual 
report and in the chart which you provided on funds put to 
better use, you seem to include both findings which management 
can implement through administrative action or regulation which 
cannot be implemented without congressional action. If you 
combined these two recommendations, what is the justification? 
To me, they seem to be quite different kinds of 
recommendations. Do the other IG offices at the table include 
legislative recommendations in their calculations of funds put 
to better use?
    Mr. Higgins. I believe there is only one instance that we 
have done that, and that was for the IRS match. We calculated 
what we thought would have been a better use of the funds based 
on the assumption that the match was in place. There has been a 
law passed, and there is going to be the match, but so far, it 
has not happened.
    Mr. Huse. We have one, Mr. Chairman, that we report, which 
is an audit we did on inconsistent beneficiary entitlement 
periods, and we put over $1.4 billion worth of funds to better 
use. That particular audit deals with the exact date that is 
used to calculate eligibility for old age and survivors 
insurance. And if it were changed by legislation, it would 
result in savings of that magnitude.
    Mr. Dickman. Mr. Chairman, we do not include legislative 
proposals in our funds put to better use.

                    INSPECTOR GENERAL ACT AMENDMENTS

    Mr. Porter. Okay. We thank each of you. As I understand, 
the Inspector General's Act is up for reauthorization. What 
changes are you recommending to the act, and what changes do 
you foresee in the final product?
    Mr. Masten.
    Mr. Masten. You asked what recommendations am I making on 
that?
    Mr. Porter. Yes.
    Mr. Masten. I had input on the suggestion that there be a 
term limit to an IG's position. I was opposed to that. That 
recommendation is in the proposed legislation, I believe now, 
for a term of 9 years. And I will go on the record for being 
opposed to that, because when you have a term limit, and 
management knows of that limit, they can outlast you on 
recommendations or doing some things that need to be done, 
until a new person gets on the block, and that can take a long 
time as you know.
    So I was opposed to the term limit. I didn't understand the 
reason for it. If the reason for it was to deal with IGs who 
can't do their job or don't do their job in place and you can't 
get rid of them, that is the wrong reason, because you can get 
rid of an IG who doesn't do his or her job. So I was opposed to 
that.
    The one thing that I was in favor of, and this is because 
you asked, is the legislative fix for statutory law enforcement 
authority for the OIG community. I was for that. That was not 
taken up. This is an issue that has been before the community 
for a long time. It is very costly not to have the authority. 
But we are working with the Department of Justice, and we have 
been working with them for a long time. That part is not there. 
There is a change in there, I believe, to reduce the IG's 
salary. I believe.
    Mr. Huse. Increase.
    Mr. Masten. To increase the IG's salary. But I was not in 
favor of that being part of the legislation, because that is 
fixed for too long. I have been an IG for a long time now. I 
have not gotten a raise for a long time. I think when you fix a 
salary in a law like that, you are going to limit the type of 
people you are going to get to be IGs because of a salary that 
is etched in stone. And you know as well as I know, it takes a 
long time to change it once it becomes law. I think you are 
going to defeat the purpose of getting qualified people for the 
position.
    So those are some of the areas that I took a position on, 
but the provisions are in, except for the law enforcement 
authority.

                    CHANGE TO INSPECTOR GENERAL ACT

    Mr. Mangano. Just to give an update of that, because I just 
happened to look just yesterday at Senator Collins' bill on 
that, with regard to the pay level. I believe that her bill 
establishes the pay for Inspectors General at the President's 
appointed--Inspector Generals at Executive Level III, which 
would mean that a number of IGs would stay exactly at the pay 
rate that they are at. Some IGs would get an increase.
    To counterbalance that, there was the prohibition against 
IGs being eligible for bonuses, which the IGs at the current 
time have opted not to do. So that there wouldn't be any 
favortism.
    The one recommendation I believe that we had made to the 
bill was to do an annual reporting process in which we would 
summarize the most important activities of the office, in the 
course of a year, as opposed to the process we have now, which 
is semiannual reporting of all actions that we have taken, all 
audits and evaluations. We think it would reduce the paperwork 
and help us concentrate more easily on those things that are 
more important and allow the Congress to focus once a year on 
this and taking a look at what we think are the most important 
issues.
    Mr. Porter. And is that in the proposed legislation?
    Mr. Mangano. Yes, it is. Yes.
    Mr. Porter. It is.
    Mr. Higgins.
    Mr. Higgins. I personally was supportive of three of the 
issues: the full law enforcement authority; the term limit; and 
also the annual reporting.
    Mr. Porter. And is the term limit in there; did you say?
    Mr. Masten. The term limit is proposed for 9 years I 
believe.
    Mr. Porter. Nine years.
    Okay. Mr. Huse.
    Mr. Huse. We certainly supported the IG issue on statutory 
law enforcement. But as has been noted, it didn't get in there. 
We are silent on the rest. The General Accounting Office, 
actually at the behest of Senator Collins, surveyed all IGs; 
and a lot of our views were incorporated into a study they did 
that basically proves the point. And I think my peers will 
agree with me, IGs rarely have consensus on anything, which is 
maybe a good thing and maybe not.
    Mr. Masten. We are thoroughly independent.
    Mr. Huse. We truly are. We do unite, though, I think, over 
this issue of trying to find a permanent law enforcement 
authority for our criminal investigators. Some of the IGs 
already have it. The Department of Defense does for its 
investigators. The Department of Agriculture does. And it would 
be good if others with significant investigative resources did 
also. It enables us then to really cooperate with local county, 
Federal, and State law enforcement and some of these really 
overarching investigative issues that we are responsible for, 
in my case, the issue of the Social Security number and 
identity fraud. It is a huge, huge issue, certainly way beyond 
what we could deal with on our own.
    Mr. Porter. Mr. Dickman.
    Mr. Dickman. I concur with Mr. Masten regarding the term 
limits. I don't see the need for that, and I don't think it 
really gives the IG the protection that some people think it 
will give them. I also am in favor of the statutory law 
enforcement. I think there is a view that given statutory law 
enforcement authority to IGs, that they are going to have a 
bunch of individuals running around with hand guns who are ill 
trained. It is quite to the contrary, that all of the 
investigators who are 1811's or law enforcement officers 
receive a tremendous amount of training at the Federal Law 
Enforcement Training Center in Glynco, Georgia.
    They are very well trained and--that is not just a one-stop 
training. They are continually trained during the course of 
their tenure as an investigator.
    Mr. Masten. Mr. Porter, if I may make another comment for 
the benefit of Mr. Miller who alluded to agents going into a 
business situation with guns, with search warrants and this 
kind of thing. If an agent goes in with a search warrant they 
have gone to a United States Attorney's office and gotten their 
judicial assessment of whether or not a search warrant is 
warranted, and whether it is important enough to have it and 
then they issue it. The IG does not do that on his or her own. 
You have outside objectivity involved before you have a search 
warrant going out to seize records. So that would not be an 
issue.
    Mr. Huse. And a Federal magistrate has also reviewed the 
exigent probable cause and signed it, that warrant is signed by 
a judicial official.
    Mr. Porter. Mr. Miller.
    Mr. Miller. Thank you. I heard one story, and it is just an 
anecdotal to one case. And I have no more information than the 
concerns that was expressed at this one meeting which I look 
forward to your--or someone joining me at another meeting.
    Mr. Huse. It happens all the time. You can't work in these 
benefit program areas and investigate the fraud, waste, and 
abuse without getting people's emotions up. It is a hard issue.

                            PERCENT OF FRAUD

    Mr. Miller. I guess I am from a relatively small community. 
The fraud issue--there is a number that keeps getting tossed 
around. GAO says there is 10 percent fraud rate in Medicare, 
that goes back, I think, to a long time ago. You said--you used 
the word improper rate is down to about what 7 percent?
    Mr. Mangano. Yes, for the Medicare program the improper 
payment rate within the definitions that I gave you, anything 
from inadvertent billing mistake through fraud but not 
including all possible kinds of fraud that would be included, 
it would be 7 percent.
    Mr. Miller. What was this number--I heard it----
    Mr. Mangano. Yes, that is the number, the 7 percent.
    Mr. Miller. The 10 percent number, it is with the word 
fraudulent.
    Mr. Mangano. I know where that came from. The General 
Accounting Office conducted a review. I believe, it was the 
beginning of the 1990s, 1991, 1992, and they were trying to get 
a handle on the extent of fraud in the health care area. 
Basically, the problem they had in doing their study is there 
is no empirical database to go to. So they interviewed people 
in the health care industry, the FBI, Department of Justice, 
our office, et cetera.
    And they came to the conclusion that--the general consensus 
seemed to be around a 10 percent area for fraud and abuse, so 
it went beyond just fraud itself. But it was based entirely on 
the views of people and not on an empirical study. The only 
studies that have been conducted are the runs that we do each 
year on the improper payment rate in the Medicare area.
    Mr. Miller. That not would be fraudulent because included 
in the fraudulent there is----
    Mr. Mangano. That is correct.
    Mr. Miller [continuing]. The mistakes. So that is a pretty 
broad generalization, we keep using the 10 percent.
    Mr. Mangano. We do not use that.
    Mr. Miller. You do not agree that, to describe it as 
mistakes in fraud, it would be maybe----
    Mr. Mangano. We wouldn't use it because we don't know if it 
is accurate or not. I would doubt it.

                         INTENT TO COMMIT FRAUD

    Mr. Miller. Is most fraud--if, you know, talking to a local 
sheriff about criminal problems is really the bad people who do 
all the bad problems, and that is a small percentage. Is that 
true a lot of times in your audits, that it is a small number 
that are the ones that are the real problems, they are the ones 
with the bad intent and that are trying to defraud the 
government?
    Mr. Mangano. You know, most of the cases of fraud that we 
investigate for criminal prosecution--if I laid the 261 cases 
on the table that we were successful at this year and I had the 
AMA representative in here, they probably would say ``Oh, 
absolutely, absolutely correct. You know, we want to throw 
those guys out too.'' And, in fact, we did that. When we had 
representatives from the AMA come in, I just started going down 
the list of the cases and they said, yeah, we agree with you on 
that, but it is these people that have made inadvertent billing 
mistakes that we are concerned about.
    We are not investigating people who make inadvertent 
billing mistakes. I think one of the problems is that people 
tend to categorize everybody the same. Part of the criticism is 
going back to HCFA on some of the changes that they have made 
in the program that providers feel are burdensome on them. For 
example, HCFA has, in the last 2 years, done more prepayment 
reviews; that is, look at a claim and ask for the medical 
records before they actually pay the claim. And that has slowed 
down the payment process and people feel that is a burdensome 
process.
    When we do our fraud reviews, we have found it absolutely 
essential to get beyond the individual claim and get down to 
the medical record itself. I'll give you one example when you 
are looking for examples of people who do intentionally bill 
the Medicare program improperly. One of the studies that we 
included in our testimony was partial hospitalization. This is 
an intensive psychiatric benefit that Medicare provides for 
persons to keep them for being institutionalized in a mental 
facility.
    And we looked at the community mental health centers that 
were providing that care. In a national review that we 
conducted, we found that over 90 percent of the claims that 
were submitted to Medicare for payment for this highly 
intensive benefit were either improper or highly questionable. 
What people were doing was taking senior citizens from nursing 
homes, assisted living facilities and putting them in, 
basically, adult daycare in which they would play bingo and 
other kinds of games for them.
    These were people that did not have the diagnosis that 
would be required to have this psychiatric treatment that would 
prevent them from going into a hospital. That is the kind of 
abuse that is absolutely outrageous, and the taxpayers and the 
beneficiaries ought to stop.
    In fact, when we did the review, we went out and talked 
with some of the beneficiaries who were in these programs and 
they were shocked that the Medicare program was being billed 
for psychiatric services when, in fact, they had a flier that 
says come to our hall today because we have a social for senior 
citizens.

                          MEDICARE COMPLEXITY

    Mr. Miller. You know, I think the goal is, we all agree I 
guess, it is not some of the tactics that I am hearing about. 
How abut the Medicare, it is such a complex thing, you know, 
you would agree how complex the whole system is. Do you ever 
look at, you know, how can it be simplified to make it so it is 
less----
    Mr. Mangano. Absolutely. We do. Most of the time, these 
results are from our investigations when we are out there 
looking for potential fraud. But the largest unit in our office 
is the office of audit services. A lot of their reviews are 
geared towards problems in the Medicare system, and we often 
come up with recommendations that would help the system run 
more efficiently.
    For example, the Medicare program right now allows each 
individual contractor to determine what clinical laboratory 
tests they will pay for. We think that is an arcane process. 
And we know now which laboratory tests should be covered by 
Medicare. There ought to be a national policy on that. If there 
was a national policy, then labs across the country would know 
that, for this test, Medicare will pay or will not, instead of 
having to rely on the local contractor to make that 
determination. So there are instances where the Medicare 
policies ought to be streamlined to be made clear.

                              HMO CLOSINGS

    Mr. Miller. When HCFA was here before, I made the comment 
that IRS used to be the most disliked agency we have in the 
government. And HCFA has now become that, it is not Inspector 
General. We have cases where constituents, HMOs were shut down 
in my area or they decided not to continue to participate so 
they had to get out of HMOs. So you have got the beneficiaries 
upset, the home health agencies have been forced closed left 
and right.
    And again, it is not the Inspector General, but it is the 
change in the system, at the same time as the fear factor that 
the Inspector Generals created. And so, you know, just as IRS 
is changing their ways, I mean there is--we have got a way to 
work together so it doesn't create that fear. And there is a 
fear there that is real.
    And I am glad someone is going to come down to my area with 
me and hear on the front line, with all due respect for the 
AMAs and such--I mean I want you to come down and see.
    Mr. Mangano. I would be delighted to do that.
    Mr. Miller. I look forward to that. We all agree on the 
goal, and it is a challenge. And, you know, I have great 
admiration and respect for the Inspectors Generals' job and 
office.
    And I have one quick question. You mentioned the issue of 
vetting your--going through the Senate process. You know you 
hear this--this is for anyone going to an appointed position by 
the President that has to be approved by the Senate, that there 
is a real barrier for getting the right people in the job.
    How much of a problem is that, because as professionals, 
you know, this is not the same political appointment that some 
positions are? Is this process--has it gotten so unbearable 
that, you know, it needs to be totally revisited? I know it is 
a Senate prerogative. Since you are going through it right now, 
I don't want to put you on the spot, maybe you don't want to 
answer it.
    Mr. Huse. It is a daunting process, you know, I have been a 
Federal employee for 34 years from the day I took my commission 
in the Army 34 years ago. And over the years, I have heard, you 
know, increased--I climbed the ladder slowly. And I have had 
increasing responsible positions in national security agencies. 
So I have been investigated over and over, hundreds of times.
    And yet this particular process of being vetted, you know, 
to be placed in nomination is without a doubt the most--it is 
frustrating. I mean it is the only way to describe it. You 
literally have to think very carefully if you want a total 
review of your life. Most of us live lives, I hope, that can 
sustain that.
    But you have to really think through if you want all of 
your family--I mean even to the lady that cleans my house once 
a week, ensuring that they pay their FICA taxes. To me--it goes 
beyond national security. And so if it does that, perhaps, we 
need to look to see where the pegs should be.
    Mr. Miller. Anyone else want to comment about that?
    Mr. Dickman. It is an intimidating process. Very 
intimidating.
    Mr. Miller. You all--most of you all have had careers in 
the Federal Government. It is not the true political appointee 
that would be a question of the Attorney General or something 
like that. But it is an intimidating thing. It is like the 
Inspector General going after the local doctors.
    Mr. Huse. Touche.
    Mr. Miller. Thank you, Mr. Chairman.

                       FINANCIAL STATEMENT AUDITS

    Mr. Porter. Thank you, Mr. Miller.
    The Departments of Labor and Education and the Social 
Security administration have received clean opinions on their 
fiscal year 1997 financial statements.
    Based on each of your audit work to date, can you give to 
the subcommittee an estimate of how your department or agency 
will fair with respect to the fiscal 1998 statement?
    Mr. Masten.
    Mr. Masten. How it will fair to the 1997 statement as being 
a clean opinion or not or----
    Mr. Porter. Yes.
    Mr. Masten. Until we audit the data used for that 
statement, I can't give you an answer. However 1998 is already 
clean.
    Mr. Porter. 1998 is already clean?
    Mr. Masten. Yes. I mean that is a clean opinion.
    Mr. Porter. We thought 1997 was the last one that was 
clean, fiscal 1997.
    Mr. Masten. No.
    Mr. Huse. The consultative opinion hasn't been issued yet.
    Mr. Masten. 1998 was a clean opinion.
    Mr. Porter. Okay. Does anyone else want to answer the 
question? Is 1998 the one?
    Mr. Mangano. We issued our 1998 audit report, and it was a 
qualified opinion. There were two exceptions, one is the 
Medicare accounts receivable, and the other one was some of the 
agencies did not have readily available accounting records that 
we could use in the review.
    Mr. Higgins. Education had a clean opinion in 1997. We are 
still in the process of doing the 1998 statements. We don't 
anticipate we will be done until October. The Department was 
experiencing some delays in the reporting function, so we just 
recently got the trial balances and the financial statements.
    Mr. Porter. And do you have any kind of estimate as to 
whether it will be clean or not?
    Mr. Higgins. Not really because we are just really getting 
started.
    Mr. Porter. Not yet. All right.
    Mr. Huse.
    Mr. Huse. We have a clean opinion. But in the management 
letter that supports the opinion by our contract auditor, 
Price, Waterhouse, Coopers, we have identified three control 
weaknesses, we did in fiscal year 1997 and it continued into 
the fiscal year 1998 report.
    And those are on primarily around the systems, computer 
systems, that really underpin all of what Social Security does; 
that is, SSA needs to strengthen its controls to protect its 
information; that it needs to accelerate efforts to improve and 
fully test its plan for maintaining the continuity of its 
operations, because of those systems.
    And, third, that it needs to improve its controls over the 
separation of duties of its employees in terms of the weakness 
that comes from, you know, aggregating too many duties to one 
person and internal control issues.
    Now, the contract auditor indicated there had been some 
improvement, I forget the term, the adjective, significant 
improvement or manifest improvement over fiscal year 1997. But 
we are still not all the way there.
    Mr. Dickman. Fiscal year 1997 had three material 
weaknesses. Fiscal year 1998 has reduced that to one material 
weakness, which is the agency's overall control environment. A 
major area of concern is the financial interchange between the 
Railroad Retirement Board and the Social Security 
Administration, which accounts for something over $3 billion in 
assets that are interchanged between Social Security and the 
Railroad Retirement Board.
    There is a lag period between these two and the way the 
statute is written, you would need a legislative change, either 
a legislative change to change the date or to also change the 
accounting system from an accrual to a cash basis. And neither 
of those have occurred. Although we are working with the agency 
to try and rectify that, but the agency has not made 
substantial progress.
    Mr. Porter. Let me thank each of you. My next question was 
going to be on GPRA performance both within your departments 
and agencies and within your own offices. I am going to ask 
that for the record, because a vote has just been called, and 
your answers would then undoubtedly go beyond the time that we 
have available.
    I want you to know this is a very important question, and I 
think a very important area of concern for all of us. And I 
would like a very full answer, if you would provide that for 
me.
    There are several other questions for the record that we 
ask that each of you respond to.
    Let me say that we consider the function that you perform a 
very, very important one. We are anxious to stay with you on 
what you are doing in respect to each of your departments and 
agencies and to provide you, of course, the resources that you 
need to do your job.
    So thank you all for appearing today. Thank you for 
answering our questions very candidly and straightforwardly. 
The subcommittee will stand in recess until 2:00 p.m.
    [The following questions were submitted to be answered for 
the record:]

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Anderson, B.E....................................................   297
Boehene, K.P.....................................................   383
Borrego, Espiridion..............................................   127
Bramucci, R.L....................................................   127
Callahan, John...................................................   383
Dickman, M.J.....................................................  1055
Dyor, J.R........................................................   383
Fraser, J.R......................................................   297
Herman, Hon. A.M.................................................     1
Higgins, J.P., Jr................................................  1055
Huse, J.G., Jr...................................................  1055
Jeffress, C.N....................................................   211
Lattimore, P.W...................................................   383
Mangano, M.F.....................................................  1055
Masten, C.C......................................................  1055
McMullen, James..................................................   297
Smith, M.S.......................................................   383


                               I N D E X

                              ----------                              

                           Secretary of Labor

                                                                   Page
Alien Labor Certification Program............................70, 81, 84
Avoidance of Labor-Management Disputes...........................    96
Blacklisting Regulation Issue....................................   104
Black Lung Disability Trust Fund.................................43, 89
Black Lung Trust Interest Payments...............................    43
BLS:
    Budget Increases............................................63, 112
    Study on Racial Discrimination...............................    65
    Security Procedures..........................................    74
    Significant Data Gaps........................................   118
    Surveys......................................................   117
Child Labor Initiatives..........................................    33
Combining Labor Certification Services with Enforcement..........    93
Compatibility with NLRB Requirements.............................    82
Contract Compliance Programs.....................................    88
Cooperative Compliance Program...................................    99
Core Labor Standards, Budget Request for.........................   110
CPI Revisions....................................................   115
Cross Departmental Cooperation...................................    46
Davis Bacon:
    Prevailing Wage..............................................51, 53
    School Construction..........................................    53
    Wage Surveys.................................................    32
Definition of Repeat Violations..................................    95
Desk Audit Issue.................................................   104
Detailed Employee Salary and Employment History..................    79
Dislocated Workers:
    Assistance...................................................   111
    In Workforce Investment Systems..............................    76
Employee Involvement in Safety and Health........................    82
Employee Participation Committees................................    83
Ergonomic Standard:
    Compatibility with NLRA Requirements.........................    98
    Draft Ergonomics Proposal....................................    47
    Ergonomics Litigation........................................    97
    Ergonomics Studies...........................................    98
    New OSHA Regulations.........................................    24
    Prevalence and Costs of Ergonomics Injuries..................    97
    Scientific Basis for Ergonomic Standard......................28, 30
    Scope of Proposed Ergonomics Standard........................    97
Equal Pay Initiative.............................................31, 56
Family and Medical Leave Act.............................65, 78, 80, 87
Federal Poverty Level by Family Size.............................   107
Funding for Compliance Assistance................................    38
Health Care Enforcement..........................................    57
Helper Regulations...............................................    41
H-2A Program.....................................................    86
Immigration Status Verification for Employees....................    92
Individuals with Disabilities:
    Employment Opportunities for.................................    44
    Unemployment Rates for.......................................    45
International Labor:
    ILO Annual Budget............................................    69
    Increase.....................................................    68
    Increase for Bilateral Technical Assistance..................    70
    Standards....................................................    40
Introduction of Witness..........................................     1
Labor Department Foreign Aid.....................................    92
Labor Department Grants..........................................   101
LM-2 Form:
    LM-2 Form....................................................    33
    Labor Management Reporting...................................    35
    Status of Electronic Filing System for LM Forms..............    36
Minimum Wage:
    Demographic Data on Minimum Wage.............................   106
    History of Minimum Wage......................................   105
    Minimum Wage Increase.......................................48, 105
    Minimum Wage.................................................    50
Minority Youth Unemployment......................................    38
Older Worker Program.............................................   101
One Stop Career Centers..........................................    27
Opening Statement................................................     2
Patient's Bill of Rights.........................................    61
Pension Security.................................................   123
Portal-to-portal Issue...........................................   100
Proposed Claims Regulations......................................    43
PWBA FY 2000 Increases...........................................   119
Safety and Health Programs Rule:
    Proposed Safety and Health Programs Rule.....................    25
    Requirements of Safety and Health Program Rule...............   100
    Safety and Health Partnership Efforts........................    44
    Small Business Impact........................................    37
    Vice President's Recommendations.............................    37
SBA Contractor Report on Safety and Health Programs..............    99
Serving the Newly Unemployed.....................................    75
Small Business Outreach..........................................    28
Staff Increases:
    DOL Staffing Increases.......................................    90
    Program Direction and Support................................    66
State Apprenticeship Councils....................................    42
Training in Technology...........................................    40
Trends in the Private Pension System.............................   120
Unemployment Insurance System, Funding of........................    76
User Fees........................................................    73
Welfare-to-Work..................................................    26
Work Incentives Grants...........................................   112
Work Opportunity Tax Credit.....................................46, 123
Workforce Investment Act.........................................    78
Workplace Discrimination Based on Genetic Information............   124

                 Employment and Training Administration
                   Veterans' Employment and Training

Employment and Training Administration:
    Agency Priorities............................................   127
    AgNet........................................................   195
    Alien Labor Certification Shift..............................   205
    Annual Performance Plan...................................1738-1861
    Budget Request...............................................   129
    Budget Justification......................................1396-1737
    Chicago Job Corps Center.....................................   172
    Contracting Procedures.......................................   175
    Dislocated Workers.........................................170, 200
    Employment Service.........................................180, 190
    Evaluations..................................................   130
    Job Corps:
        Business Linkages........................................   208
        Child Care.............................................177, 206
        General Information..........................168, 172, 202, 208
        Teachers' Salaries.......................................   206
    Labor Market Information.....................................   193
    Opening Statement............................................   127
    Right Track Partnerships...............................175-177, 179
    Serving the Newly-Unemployed.................................   199
    TANF Funding for Employment and Training.....................   179
    Unemployment Insurance:
        General Information....................................196, 200
        Postage Costs............................................   198
        Year 2000 Computer Conversion Costs......................   198
    Welfare-to-Work..............................................   184
    Work Incentive Grants........................................   192
    Workforce Investment Act...................................166, 201
    Workforce Investment System Partnerships.....................   171
    Youth Opportunity Grants.....................................   177
Veterans' Employment and Training:
    Annual Performance Plan...................................2828-2856
    Budget Justification......................................2789-2827
    Eligibility of Homeless Veterans.............................   173
    ETA/VETS Efforts.............................................   148
    GPRA Performance Measures....................................   167
    Homeless Veterans Reintegration Project....................168, 174
    Licensing and Certification..................................   148
    Management Process...........................................   149
    National Veterans Training Institute.......................180, 181
    Opening Statement............................................   148
    Performance Measures.........................................   149
    Program Results..............................................   164
    Reimbursement from the Department of Defense.................   181
    Special Job Training Needs for Veterans......................   178
    State Employment Service Offices.............................   182
    Transition Assistance Program................................   182
    VA Activities................................................   165
    Veterans Employment Problems.................................   173
    Witness Background...........................................   164

             Occupational Safety and Health Administration

Annual Performance Plan..........................................  2198
Budget Justification.............................................  2144
Budget Priorities................................................   244
Challenges to Rulemakings........................................   230
Compliance Assistance Programs...................................   259
Compliance Assistance Requested Increase..................242, 245, 247
Compliance Officers:
    Need for Additional Compliance Officers......................   272
    Workload.....................................................   257
Congressional Office of Compliance...............................   294
Consultation Emphasis..........................................264, 271
Cooperative Compliance Program.......................219, 227, 245, 277
Coordinated Compliance Assistance Pilot Project..................   248
Costs of Regulations Estimated...................................   292
Enforcement:
    Examples of Actions..........................................   291
    Request......................................................   246
    U.S. Post Office.............................................   228
Equal Access to Justice Act......................................   281
Ergonomics:
    Companies with Programs......................................   236
    Compatibility with NLRA Requirements.......................269, 277
    Chronology of Rulemaking.....................................   285
    Draft Proposal...............................................   246
    Elements of Proposal.........................................   233
    Examples of Programs.........................................   234
    Legislative History..........................................   282
    Litigation...................................................   276
    Need for Federal Standard....................................   264
    Outreach.....................................................   241
    Prevalence and Costs of Ergonomic Injuries...................   275
    Proposed Standard/Summary..................................222, 281
    Scientific Basis for Standards.............................224, 241
    Scope of Standard.....................................222, 261, 275
    Studies......................................................   276
    Success Stories............................................236, 288
    Timing of Standard....................................223, 226, 237
Evaluation and Training of OSHA Employees........................   254
Freedom of Information Act (FOIA) Policy.........................   252
Guidelines on Workplace Violence.................................   293
High Hazard Workplaces/Targeting...............................221, 237
Information Technology Request...................................   244
Injuries/Illnesses:
    Decline in Rates.............................................   250
    Definition of Workplace Fatality...........................263, 267
    Fatality Rates.............................................251, 266
    Prevalence and Costs of Ergonomic Injuries...................   275
Interim Targeting Plan...........................................   245
Labor-Management Disputes/Avoidance of Disputes..................   274
Lookback Studies.................................................   272
Negotiated Rulemakings...........................................   273
New Technology...................................................   218
New Cooperative Approach.........................................   219
Opening Statement................................................   211
Outreach to Small Business.....................................238, 293
Peer Review of Rulemakings.......................................   229
Peer Review......................................................   232
Performance Measurement..........................................   244
Performance Oriented Standards...................................   242
Plain Language Standards.........................................   239
Reinvention Efforts..............................................   218
Reinvention of Rulemaking Process................................   220
Safety and Health Program Rule:
    Alternatives to Rule.........................................   264
    Compatibility with NLRA Requirements.......................269, 277
    Economic Impact of Programs..................................   266
    Meetings.....................................................   267
    Requirements.................................................   279
    Scope......................................................262, 266
    Self-Inspection Programs.....................................   271
    SBA Contractor Report on Safety and Health Programs..........   279
    SBREFA Panel on Rule.........................................   268
    Studies on Programs..........................................   265
    Summary of Draft Rule........................................   288
    Training.....................................................   265
Training Grants:
    Distribution of Grants.......................................   260
    Evaluation of Train Grants...................................   260
    Susan Harwood Training Grants..............................248, 259
Violations:
    Citations and Penalties......................................   280
    Definition of Repeat Violations............................270, 273
    Most Commonly Cited..........................................   249
    Paperwork Violations.........................................   250
Whistleblower Protections........................................   235
Work-Related Musculoskeletal Disorders...........................   258

                  Employment Standards Administration

Agriculture Industry Compliance--Wage Hour.......................   351
Alien Labor Certification--Wage Hour:
    Foreign Labor Certification..................................   327
    Foreign Labor Certification Transfers........................   313
    Immigration Status Verification for Employers................   353
    User Fees....................................................   331
Annual Performance Plan..........................................  2097
Black Lung:
    BLDTF and Relationship to Proposed Regulations...............   347
    Program......................................................   338
    Regulations..................................................   346
Blacklist Regulation Issue.......................................   356
Budget Justification:
    Black Lung Disability Trust Fund.............................  2082
    Salaries and Expenses........................................  1996
    Special Benefits.............................................  2061
Child Labor Violations...........................................   308
Davis-Bacon--Wage Hour program:
    Cost Summary of Reengineering................................   333
    Davis-Bacon Act..............................................   331
    Reengineering/Reinvention....................................   331
    GAO Report...................................................   348
    Spending Plan................................................   336
    Wage Determination Process...................................   341
    Wages Surveys................................................   337
Discrimination Measurement.....................................326, 352
Equal Pay Initiative.............................................   308
EEOC Memorandum of Understanding.................................   326
Family and Medical Leave (FMLA)--Wage Hour:
    Commission on Family and Medical Leave Act...................   317
    Family and Medical Leave Act.................................   318
    FMLA Complaints from Employers.............................318, 320
    FMLA Proposals...............................................   314
    Imact of FMLA on Small Businesses..........................321, 349
Foreign Labor Certification......................................   327
Foreign Labor Certification Transfers............................   313
Helper Regulations.............................................338, 345
Immigration Status Verification for Employers....................   353
Introduction of Witnesses........................................   297
Labor Department Grants..........................................   356
LM-2 Electronic Reporting........................................   339
LMRDA Electronic Reporting and Publicly Accessible Database......   344
Low-Wage Workers Initiative......................................   322
Measurement of Discrimination..................................326, 352
OFCCP:
    Blacklist Regulation Issue...................................   356
    Data Collection/Scheduling Letters...........................   311
    Desk Audit Issue.............................................   357
    Discrimination Measurement.................................326, 352
    Equal Pay Initiative.........................................   308
    Initiatives..................................................   323
    New Regulations..............................................   352
    Office of Federal Contract Compliance........................   352
Opening Statement................................................   297
``No-Sweat'' Anti-Sweatshop Program..............................   357
Portal-to-Portal Issue...........................................   355
Race Reconciliation Initiative...................................   322
User Fees........................................................   331
Wage Hour:
    Agriculture Industry Compliance..............................   351
    Child Labor Violations.......................................   308
    Compliance in the Agriculture Industry.......................   351
    Low-Wage Workers Initiative..................................   322
    ``No-Sweat'' Anti-Sweatshop Program..........................   357

                 Mine Safety and Health Administration

Certification Fees...............................................   377
Coal Dust Monitoring:
    Eleventh Circuit Court Ruling................................   368
    Mine Dust Problem............................................   374
    Monitoring of Dust Sampling..................................   371
Coal Mining Production...........................................   369
Fatalities:
    Accident Trends at Metal & Nonmetal Mines....................   381
    Fatal Injuries...............................................   370
Information Technology...........................................   366
Mine Dust........................................................   368
Mining Training Regulations......................................   378
New Program Initiatives..........................................   364
Nonmetal Mines...................................................   379
Opening Statement..............................................359, 362
Prior and Current Year Accomplishments...........................   363
Resources for Black Lung Disease.................................   370
Sand and Gravel..................................................   367
Training Rule....................................................   372
Witnesses........................................................   359

                  Consolidated Management Hearing: DOL

Annual Performance Plan:
    Office of the Solicitor (SOL)................................  2673
    Bureau of International Labor Affairs (ILAB).................  2704
    Office of the Assistant Secretary for Administration and 
      Management (OASAM).........................................  2718
    Women's Bureau (WB)..........................................  2759
    Office of the Chief Financial Officer (OCFO).................  2770
Advanced Placement Test Fee Subsidy Program......................   490
Apportionments:
    Apportionments for FY 1999...................................   481
    Automatic Apportionments.....................................   485
    Carryover Salary and Expense funds (5th quarter apport.).....   481
    Timing of Apportionments.....................................   487
A Vision for the Future..........................................   395
Bioterrorism Funding...........................................462, 482
Budget Justification:
    Departmental Management......................................  2483
    Working Capital Fund.........................................  2857
Carryover Salary and Expense Funds...............................   481
Contracting Out Administrative Functions.........................   486
Direct Loan Cost Estimates.......................................   488
Education Reform.................................................   391
Financial Systems................................................   478
GAO Management Report.....................................465, 469, 491
HHS: GAO High Risk...............................................   496
HHS: Y2K Compliance Issues.......................................   496
Impact Aid and Advanced Placement Testing......................463, 489
Introduction of Witnesses........................................   383
Investing in Human Capital and Technology........................   392
Labor Department Grants..........................................   475
List of New Initiatives--who originally suggested ideas..........   509
Management Summary...............................................   385
Medicaid Y2K Efforts.............................................   476
Measurement of Administrative Services...........................   484
Opening Remarks..................................................   383
Performance Measures.............................................   482
Rent Charges to GSA..............................................   480
Source of New Initiatives........................................   488
Student Financial Assistance:
    Internet/Electronic Application Filing.....................460, 475
    PBO..........................................................   389
    Programs...................................................384, 466
Timing of Apportionments.........................................   487
Written Statement for the Record:
    DOL FY 2000 Budget Request...................................   416
    One Stop Outreach to Workers Cross-cut.......................   417
    One Stop Outreach to Employers Cross-cut.....................   418
    Innovative Enforcement Cross-cut.............................   418
    Strategic Management Cross-cut...............................   419
    Government Performance and Results Act (GPRA).........391, 419, 483
    GPRA FY 2000 Cross-cut.......................................   422
    Information Technology.......................................   422
    Year 2000 Conversion.............................384, 387, 422, 468
    Capital Investment Management................................   424
    IT Strategic Planning........................................   425
    IT Architecture..............................................   425
    IT Systems Security..........................................   426
    IT FY 2000 Cross-cut.........................................   427
    Financial Management.........................................   427
    Financial Management FY 2000 Cross-cut.......................   428
    Model Workplace Initiatives..................................   428
    Lifelong Learning............................................   428
    Balancing Work and Family....................................   430
    Workforce Diversity..........................................   430
    Safety and Health Initiative.................................   431
    Federal Welfare-to-Work......................................   431
    Civil Rights.................................................   432

                      Office of Inspector General

Accomplishments..............................................1080, 1084
Activities.......................................................  1069
Armed Agents.....................................................  1101
Audits:
    Financial Statement......................................1090, 1120
Benefit Payment Accuracy.........................................  1094
BCCPS's..........................................................  1127
Changes to Inspector General Act.................................  1115
Chronic Fatigue Syndrome.........................................  1097
Compliance Testing...............................................  1127
Cost of Loan Program.............................................  1105
Cross-Cutting Issues.........................................1057, 1063
Debt Collection Activities.......................................  1094
Departmental Management..........................................  1056
Deterrence Activities............................................  1086
Employment and Training..........................................  1056
Financial Statement Audits.......................................  1120
Funding Sources..................................................  1069
Funding Recommendation...........................................  1113
FY 1998 Accomplishments..........................................  1066
FY 2000:
    Budget Request.....................................1055, 1080, 1082
    Priorities...................................................  1055
    Proposed Activities and Enhancements.........................  1060
FY 2000 Performance Goals/Objectives.........................1083, 1123
GPRA Measures..........................................1084, 1123, 1129
GPRA Compliance..............................................1093, 1141
HMO Closing......................................................  1119
Improvement Activities:
    Information Systems......................................1084, 1093
    Year 200 (Y2K) Readiness.....................1084, 1099, 1122, 1140
Improvement in Medicare..........................................  1069
Independent Verification and Validation Issues...................  1127
Inspector General Act Amendments.............................1114, 1116
Intent to Commit Fraud...........................................  1117
Interfaces and Data Exchanges....................................  1128
Introduction of Witnesses........................................  1055
Joint Meeting in District........................................  1103
Joint Response of Board Members' on Investment Practices.........  1108
Legislative Recommendations......................................  1113
Limited Resources To Pursue Fraud................................  1103
Management Concurrence on OIG Report Findings....................  1122
Masten Biographical Sketch.......................................  1068
Medicare Complexity..............................................  1118
Medicare Improper Payments.......................................  1100
Meeting with Physicians Groups...................................  1103
Monetary Recoveries..............................................  1057
Number of Reports Concurred in by Management.....................  1134
Office of Audits.............................................1090, 1093
OIG's Concerns Related to Progress...............................  1126
OIG Labor Racketeering Program...................................  1056
Opening Statements...........................................1059, 1080
Partnerships.....................................................  1070
PATH Audits......................................................  1105
Percent of Fraud.................................................  1116
Physician Error v. Fraud.........................................  1101
Public War Against Fraud.........................................  1100
Search Warrants..................................................  1102
Seizure of Records...............................................  1101
SESA's...........................................................  1128
Statistical Sampling.............................................  1102
Summary of Preparation...........................................  1125
Targeting of Physicians..........................................  1102
Time and Attendance Investigations...............................  1105
Voluntary Compliance.............................................  1069
Summary of Preparation...........................................  1125
Worker Benefits..................................................  1056
Y2K Readiness....................................................  1098
Worker Benefits..................................................  1056

                 Pension Benefits Guaranty Corporation

Opening Statement................................................  1364

              Pension Welfare and Benefits Administration

Opening Statement................................................  1371

                       Bureau of Labor Statistics

Opening Statement................................................  1385

                                
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